REQUESTED BY: Thomas S. Johnston, Executive Director, Nebraska Technical Community College Association.
QUESTION: May a non-profit corporate association engage in certain specific activities in assistance of the defeat of a ballot question.
The Nebraska Technical Community College Association (NTCCA) is a non-profit corporation. Its purpose is to generally promote the welfare and common good of Nebraska's technical community college areas and to advance the concept of technical community college education. Funding for the association is provided by the six members of the NTCCA in the form of dues. The activities include such things as lobbying.
The six members of the NTCCA are the technical community college areas established by the legislature through section 79-2638. Each of these technical community college areas constitute a body corporate. See section 79-2639. Among the powers of the board of governing these technical community college areas is the power to levy property taxes.
The NTCCA is considering engaging in activities in assistance of the defeat of proposed Amendment 405 which will appear on the November ballot. Amendment 405 is popularly referred to as either the 2% Solution or the 2% Lid. The NTCCA inquires whether it may engage in certain specific activities in opposition to the passage of Amendment 405.
Prior to considering the specific activities proposed by the NTCCA, we must consider a question which naturally arises in connection with a politically active association, all members of which are government bodies. That is, may a government body pay dues to an association which is engaged in activities in assistance of the nomination or election of a candidate, or the qualification, passage or defeat of a ballot question?
In Advisory Opinions #68, #82, #89, #95 and #112 the Commission has taken the position that section 49-14,101(4) prohibits a government body from expending public funds in assistance of the nomination or election of a candidate or the qualification, passage or defeat of a ballot question. A government body is defined by section 49-1424 as:
An authority, department, commission, committee, council, board, bureau, division, office, legislative body, or other agency in the executive, legislative, or judicial branch of state government or one or more political subdivisions thereof or a school district, state college, state university, or other state supported institution of higher education.
A technical community college area is a government body as defined by section 49-1424.
If one of the technical community college areas used its own funds for the purpose of supporting or opposing a candidate or ballot measure, it would violate section 49-14,101(4). The situation becomes somewhat different if the public funds are used to pay dues to an organization which on its face appears to be one which functions in a manner which is consistent with the use of public funds. In the matter before us, we note that the technical community college areas have as their goals the following as established by the legislature pursuant to section 79-2636:
1) To create locally governed and locally supported technical community college areas;
2) To emphasize occupational education.
The goals and purposes of the NTCCA as set forth in its bylaws include:
1) To promote the welfare and common good of Nebraska's technical community college areas and to advance the concepts of technical community college education;
2) To participate and cooperate with other persons, groups, organizations and governmental entities in the planning and operation of programs and policies beneficial to the technical community college areas;
3) To facilitate and enhance communication, cooperation, and coordination among the governors, officers, and administrators of Nebraska's technical community college areas.
It is our understanding that the funds or resources which the NTCCA proposes to use were received prior to any contemplation that the association would use the funds or resources to advocate the defeat of proposed Amendment 405.
Article XIII, section 3 of the Nebraska Constitution provide in part:
The credit of the state shall never be given or loaned in aid of individual, association, or corporation . . .
In State ex rel. Beck v. City of York, 164 NEB 223, 84 N.W. 2d 269 (1957) and Chase v. County of Douglas, 195 NEB 838, 241 N.W. 2d 334 (1976) the Nebraska Supreme Court interpreted this constitutional provision as requiring the public money be used for public purposes only. The term public purpose has generally been defined by the courts as one having "for its objective the promotion of the public health, safety, morals, general welfare, security, prosperity, and contentment of all the inhabitants or residents within the municipal corporation, the sovereign powers of which are used to promote such public purpose" State ex rel. Douglas v. Nebraska Mortgage Finance Company, 204 NEB 445, 283 N.W. 2d 12 (1979); State ex rel. Douglas v. Thone, 204 NEB 836, 286 N.W. 2d 249 (1979). It is well settled that a public purpose may be carried out through a private entity. "The test is in the end, not in the means". Chase v. County of Douglas, supra. See also United Community Services v. The Omaha National Bank, 162 NEB 786, 77 N.W. 2d 576 (1956).
In Allen v. City of Omaha, 136 NEB 620, 286 N.W. 286 916 (1939) the Supreme Court defined public funds as being:
Funds belonging to the state or any county or political subdivision of the state; or specifically taxes, customs, monies, etcetera raised by the operation of some general law, and appropriated by government to the discharge of its obligations, or for some public or governmental purpose; and in this sense it applies to the funds of every political subdivision of the state wherein taxes are levied for public purposes.
There is authority for the proposition that public funds legally paid out lose their identity as public funds. 63A Am Jur 2d Public Funds section 2; 27 ALR2d 1434. Assuming the money was paid out in dues for the purposes found in the bylaws and prior to a decision by the NTCCA to expend funds in support or opposition to a ballot question, the dues have lost their identity as public funds. Thus, we are considering the use of private funds by a private association.
Section 49-1469(1) of the Nebraska Accountability and Disclosure Act provides in part:
Any corporation, labor organization, or industry, trade or professional association, whether organized under the laws of this state or any other state or country and doing business in this state . . . may make expenditures or provide personal services.
Section 49-1419(1) defines expenditures in part as follows:
Expenditure shall mean a payment, donation, loan, pledge, or promise of payment of money or anything of ascertainable monetary value for goods, materials, services, or facilities in assistance of, or in opposition to, the nomination or election of a candidate, or the qualification, passage or defeat of a ballot question.
Section 49-1469(1) also provides that if a corporation, labor organization, industry trade or professional association makes an expenditure it must file a report of that expenditure with the Commission within 10 days after the end of the calendar month in which the expenditure is made or the personal service provided.
The NTCCA is certainly a corporation and may be an industry, trade or professional association. It falls within the provisions of section 49-1469(1).
We therefore address the specific situations posed by the NTCCA. However these responses should be read with due regard for the cautions contained at the conclusion of this opinion.
SITUATION A - Can the NTCCA, by board of resolution, oppose Amendment 405?
Yes. The passage of a resolution by the governing board of a private association stating that association's opposition to a ballot question is a mere expression and not regulated by the Nebraska Political Accountability and Disclosure Act. It is not a reportable expenditure.
SITUATION B - Can NTCCA board members actively campaign against Amendment 405 by contributing their own funds to a media campaign, by personally encouraging voters to vote against Amendment 405 or by using other communication means?
Yes. An NTCCA board member in his or her personal capacity may contribute his or her own funds to a media campaign and may personally encourage voters to vote against Amendment 405. Essentially, a board member acting in his or her own personal capacity has the same status as any other citizen of the State of Nebraska with regard to the ballot issue. If a board member is acting in his or her capacity as a board member as authorized by the board, his or her activities on behalf of the association and in opposition to Amendment 405 would constitute a reportable expenditure by the association.
SITUATION C - Can NTCCA staff work in opposition to the passage of Amendment 405 during office hours?
Yes. The services performed by the staff in opposition to the ballot issue would constitute reportable expenditures of the NTCCA. This answer presumes that the NTCCA Board, its Executive Director, or other usual NTCCA authority has instructed the staff to engage in these activities.
SITUATION D - Can the NTCCA staff use association facilities and equipment to prepare materials for distribution to the public in opposition to Amendment 405?
Yes. The value of the materials, equipment use, and association staff time would be reportable expenditures of the association. Again, this answer presumes that the staff has been instructed to engage in this activity.
SITUATION E - Can the NTCCA receive contributions from board members, technical community college faculty and staff members, members of the business community, and individuals for the purpose of opposing Amendment 405?
No unless the NTCCA establishes a separate segregated political fund. Section 49-1469(2) (a) provides in part that a corporation, labor organization, or industry trade or professional association may not receive contributions for the purpose of supporting or opposing the ballot measure unless it first establishes a separate segregated political fund. The establishment of a separate segregated political fund or PAC by the NTCCA would allow it to receive contributions for the purpose of opposing the ballot measure. However, the Nebraska Political Accountability and Disclosure Act limits contributions to those received from the officers, directors, employees, stockholders or members of the sponsoring organization. A separate segregated political fund of the NTCCA would be permitted to accept contributions from its board members, its officers, and its employees. The members of the association (i.e., the six technical community college areas) would be prohibited from contributing to the separate segregated political fund because each is a government body as defined by section 49-1424 and government bodies may not use public funds to support or oppose the nomination or election of a candidate or the qualification, passage or defeat of a ballot question. See Commission Advisory Opinions #68, #82, #89, #95, #111, and #112.
SITUATION F - Can the NTCCA solicit contributions on behalf of a ballot campaign committee from elected governing board members, technical community college faculty and staff, members of the business community, and people who support technical community college education?
To the extent that the NTCCA is contacting these people and encouraging them to make contributions to a ballot question committee, the answer is yes. These activities are reportable as in-kind contributions. The NTCCA itself may not receive contributions except as direct in the answer to Situation E.
SITUATION G - Can the NTCCA contribute its own funds which are derived from member dues to a ballot question committee?
Yes. The NTCCA is not a government body as defined in section 49-1424. As previously stated, it is an entity which falls within the provisions of section 49-1469(1) and is therefore authorized by law to make contributions of its own funds in assistance of the qualification, passage or defeat of a ballot question.
A question which is not currently before the Commission is whether the technical community college areas may continue to pay dues to the NTCCA once it has engaged in activities in assistance of the defeat of a ballot question. Again, public funds may be paid out to a private entity as long as the funds are to be used for a public purpose. If the NTCCA were to engage in activities discussed, a technical community college area paying dues thereafter would, in effect, be transferring public funds to an organization which shown that it may use the funds for a non-public purpose. A similar situation was considered by Nebraska's Attorney General in Attorney General Opinion #142 and #143 issued in 1974. In those opinions the Attorney General stated that a municipality could not pay dues to a chamber of commerce because some of the purposes of the chamber were incompatible with the use of public funds. These opinions went on to say that municipalities could provide money to a chamber of commerce for specific lawful purposes. One could conclude from these opinions that a government body paying public funds to a private entity knowing the funds will be used for non-public purpose, could find itself facing a taxpayers action. Particularly illustrative of this point is the opinion of the Supreme Court of Arizona in City of Glendale v. White 67 ARIZ 231, 194 P.2d 435 (1948). In that case the court was considering whether or a municipality could pay dues to belong to the Arizona Municipal League. The court reviewed the articles of the league which set forth its purposes. The court found that the purposes of the league were public purposes. It thus stated:
If perchance the league should get "out of bounds" by failing to adhere to the purposes for which it purportedly exists, the taxpayers of municipalities are not without remedy, for under such circumstances the courts would grant appropriate relief since membership in the league would no longer constitute a "public purpose" for the expenditure of public funds.
A private association which derives all of its funds from government bodies may wish to confine its activities to simply providing factual information on proposed Amendment 405 rather than advocating a position on the proposed amendment. That is, the association may wish to confine its activities to disseminating factual information on the effects of proposed Amendment 405 as long as this information does not urge a vote for or against the ballot measure. See Advisory #68, #82, #89, #95, and #112.
A private association which receives public funds may use resources and funds which have lost their public identity to support or oppose the qualification, passage, or defeat of a ballot question. A government body paying dues to a private association which uses the funds for activities not consistent with the public purpose doctrine potentially subjects itself to a challenge to prevent the payment of dues.
As stated above, the question of a payment of dues by government bodies is not before the Commission because it was not raised in the NTCCA's request for an opinion. We have discussed the subject merely because of our fear that the balance of this opinion would be misleading if we did not at least acknowledge the potential challenge to dues paying government bodies. It is our belief, however, that when a government body uses public funds for a purpose which on its face appears to be a public purpose, the Commission is without the jurisdiction to intervene. While it is the function of the Commission to interpret and enforce the Nebraska Political Accountability and Disclosure Act, it is not generally its function to substitute its judgment for that of duly constituted government bodies. Disputes regarding the public purpose of a government body's use of funds is best left to the courts.