December 28, 1988
Mr. Alfred F. Hurley Opinion No. JM-999
Chancellor
University of North Texas Re: Use of Higher Education
Texas College of Osteopathic Assistance Fund established
Medicine by article VII, section 17,
P. 0. BOX 13737 of the Texas Constitution to
Denton, Texas 76203-3737 renovate facilities at the
University of North Texas
(RQ-1475)
Dear Mr. Hurley:
you ask several questions involving the interpretation
of article VII, section 17, of the Texas Constitution, which
creates the Higher Education Assistance Fund. Article VII,
section 17, of the Texas Constitution was adopted by the
voters in 1984. &= H.J.R. 19, 0 1, Acts 1983, 68th Leg.,
at 6701. It appropriates $100 million per year for a
college construction fund for 26 specified institutions of
higher education including the University of North Texas.
The eligible institutions may use these funds
for the purpose of acquiring land either with
or without permanent improvements, con-
structing and equipping buildings or other
permanent improvements, major repair or
rehabilitation of buildings or other
permanent improvements, and acquisition of
capital equipment, library books and library
materials.
Tex. Const. art. VII, g 17(a).
This provision also permits the governing board of
each institution to issue bonds and notes for most of the
purposes for which the fund may be used. Id. 5 17(e). The
institutions designated to benefit from the fund may not, as
a general rule, receive additional funds from the general
revenue of the state "for acquiring land with or without
permanent improvements, for constructing or equipping
.buildings or other permanent improvements, or for major
repair and rehabilitation of buildings or other permanent
P. 5121
Mr. Alfred F. Hurley - Page 2 (JM-999)
improvements." Id. 5 17(j). There are exceptions for
appropriations made to replace an uninsured loss due to fire
or natural disaster and for appropriations by two-thirds
vote of the legislature in cases of demonstrated need.
Your questions concern the interpretation of
subsection (f) of the constitutional provision which
restricts the use of the Higher Education Assistance Fund as
follows:
(f) The funds appropriated by this
section may not be used for the purpose of
constructing, equiphx-f, repairing,
rehabilitating buildings or other per-mane::
improvements that are to.be used for student
housing, intercollegiate athletics, or
auxiliary enterprises.
Tex. Const. art. VII, § 17(f).
Your first question is as follows:
May the University use Higher Education
.-
Assistance Fund (HEAF) dollars to reno vats
portion of a building used for both educaf
tional and general (E&G) and auxiliary
purposes when that portion which is renovated
with HEAF funds is a separate area of the
building and is used exclusively for E&G
purposes 100% of the time; e.cr.8 renovate
available space in a dormitory into class-
rooms, labs, or faculty offices?
The educational and general functions for which state
colleges and universities receive legislative appropriations
are defined at length in the instructions for preparing
and submitting appropriations requests published by the
Legislative and Executive Budget Offices. See General
Appropriations Act, Acts 1987, 70th Leg., 2d C.S., ch. 78,
at 726. Included are expenditure items relevant to giving
instruction, administering the institution, and providing
support necessary to operate an institution of higher
education. Excluded are student services for which fees are
authorized under section 54.503 of the Texas Education Code
and all auxiliary enterprise operations and costs related
thereto. Governor's Budget Office & Legislative Budget
Office, Detailed Instructions for Preparing and Submitting
Requests for Legislative Appropriations for the Biennium
Beginning Sept. 1, 1987, Supplement A, "Definitions of the
P. 5122
Mr. Alfred F. Hurley - Page 3 (JM-999)
Elements of Institutional Costs.U' See also V.T.C.S. art.
6252-5c, 5 l(1) (defining "auxiliary enterprise" as
business activity conducted at institution of highez
education that provides a service to institution but is not
funded through appropriated funds).
A former constitutional provision also designated as
article VII, section 17, was adopted in 1947 and repealed in
1982. See S.J.R. No. 4, Acts 1947, 50th Leg. at 1184;
H.J.R. No. 1, 5 3, Acts 1982, 67th Leg., 2d C.S., at 52.
This provision established a state property tax to finance
construction at 17 universities. The tax was used to create
a special fund
for the purpose of acquiring, constructing
and initially equipping buildings or other
permanent improvements at the designated
institutions of higher learning provided
that none of the DrOCeedS
. * of this tax shall
be used f enterDriseg . . . .
(Emphasis azieda)
S.J.R. No. 24, Acts 1965, 59th Leg., at 2197. The under-
lined language was added by a 1965 amendment to former
article VII, section 17, of the Texas Constitution. It
imposed a restriction on the expenditure of constitu-
tionally authorized tax revenues similar to the restrictions
currently imposed by subsection (f) of article VII, section
17, of the Texas Constitution. Opinions of this office
which discussed the restriction under the former version of
article VII, section 17, assist us in answering your first
question.
The phrase "buildings or other permanent improvements@'
as used in former article VII,.section 17, includes a wing
building other permanent structure. Attorney
gkezal Opinion V?427 at 8 (1952). Attorney General Opinion
H-1248 (1978) established that a stadium and a special
events center for intercollegiate athletic events were
auxiliary enterprises within the constitutional restriction.
It then considered whether the constitutionally authorized
tax funds could be used to pay for a portion of a stadium or
special events center designated for educational purposes,
such as classrooms. The opinion stated as follows:
We believe that these funds may be used to
fund a part of a building, if there is
actually a separation of auxiliary and
educational uses. How this actually will be
P- 5123
Mr. Alfred F. Hurley - Page 4 (JM-999)
-.
accomplished in a given case will depend on
facts as to the design and operation of the
building. Since we do not resolve fact
questions in the opinion process, we cannot
give a comprehensive answer to your question.
Attorney General Opinion H-1248 at 2 (1978).
The University may use Higher Education Assistance Fund
dollars to construct, repair, or rehabilitate buildings or
other permanent improvements, which may include a wing, an
addition, or other portion of a building used for educa-
tional purposes. Tex. Const. a*. VII, 5 17(a): Attorney
General Opinion H-1248 (1978); see also Attorney General
Opinion MW-101 (1979). Accordingly, these funds may be used
to renovate a separate portion of a building into facilities
used exclusively for educational and general purposes, such
as classrooms, labs, or faculty offices. Although the
renovated portion of the building was formerly used for
auxiliary purposes and the rest of the building will be used
for auxiliary purposes in the future, there is no violation
of subsection (f) of article VII, section 17, of the Texas
Constitution.
Subsection (f) bars the use of constitutional funds to
construct, repair or rehabilitate buildings "or other
permanent improvements that are to be used for student
housing, intercollegiate athletics, or auxiliary enter-
prises.n Id. § 17(f) (emphasis added). This restriction
applies to a building QI a permanent improvement other than
a building that will be used in the future for auxiliary
purposes. As we have already pointed out, a "permanent
improvement" may be a wing or other separate part of a
building. In this case, it is the part of the building
renovated for education and general purposes. This
permanent improvement will not be used for any of the
purposes set out in article VII, section 17(f) of the Texas
Constitution.
Your second question is as follows:
May a university use HEAF funds to renovate a
portion of a facility used for both E&G and
auxiliary purposes when the purpose of the
renovation and the ultimate use of that
portion of the facility which is renovated is
exclusivelv used for educational purposes;
e.s., when fold-up desk arms are added to a
university's theatre to provide writing -.
P. 5124
Mr. Alfred F. Hurley - Page 5 (JM-999)
surfaces s~o that the theatre may be used as a
large classroom for a.portion of a day? E&G
appropriations are used to support the faci-
lity partially because of its instructional
(E&G) use.
You inform us that the University of North Texas has
used HEAF funds to install fold-up desk arms on the seats in
its University Theatre. The theatre was previously used for
auxiliary purposes 100% of the time but is now reserved for
several hours each weekday for use as a classroom. You also
state that the fold-up desk arms have no use other than for
instructional purposes. We will assume that these state-
ments are correct and base our answer to your second
question on them.
We believe that the literal language of subsection (f)
of article VII, section 17, prevents this expenditure of
HEAF funds. The funds appropriated by the constitutional
provision "may not be used for . . . equipping, repairing,
or rehabilitating buildings or other permanent improve-
ments that are to be used for . . . auxiliary enterprises."
Although the desk arms themselves may be devoted exclusively
to educational purposes, they were added to a facility used
in part for auxiliary enterprises. In our opinion, they
were used to equip or rehabilitate a building or other
permanent improvement "to be used for . . . auxiliary
enterprises." The expenditure is therefore within the
subsection (f) prohibition.
Your third question is as follows:
May a university use HEAF dollars to renovate
a portion of a building used for both E&G and
auxiliary purposes, when auxiliary funds and
HEAF funds share proportionately the cost of
the renovation; e.s., replace" a roof on a
building that is occupied 50% by E&G and 50%
by an auxiliary enterprise? Accordingly,
HEAF funds are used to pay for 50% of the
roof replacement and auxiliary funds pay for
the other 50%.
Your question concerns replacing the roof on a building
which is devoted in part to dormitory space and in part to
education and general purposes. The subsection (f) restric-
tion is formulated in terms of tangible structures and
facilities, specifically, "buildings or other permanent
improvements." We believe that it permits the use of 'HEAF
P. 5125
Mr. Alfred F. Hurley - Page 6 (JM-999)
funds only on facilities that are physically distinct in
some degree from facilities for student housing, inter-
collegiate athletics, auxiliary enterprises. It
therefore does not peA:t combining HEAF funds with
auxiliary funds to finance a unified renovation to a
building used both for an auxiliary enterprise and for
educational and general purposes. Separating the sources of
funding as an accounting matter will not satisfy the
requirement of physical separateness implicit in the
language of subsection (f).
Your fourth question is as follows:
May a university use HEAF monies to share
proportionately with auxiliary funds in the
cost of an item of canital eouinment used for
both E&G and auxiliary purposes; e.cr., to
install a lighting system in the University
Theatre when the theatre is used as a large
classroom for a portion of each day? In
conformance with State law, E&G appropria-
tions may be, and are, used to support the
facility because of its instructional use.
Subsection (f) of article VII, section 17, of the Texas
Constitution provides that the constitutionally appropriated
funds may not be used to equip buildings or other permanent
improvements that are to be used for auxiliary enterprises.
As our answer to your third question indicates, the language
of subsection (f) prevents the use of HEAF funds to equip
buildings or improvements which are not physically distinct
from auxiliary enterprise facilities. Where the equipment
is used for both auxiliary and for educational and general
purposes, the requirement of physical separation is not met.
Consequently, HEAF funds may not be used for the combined
purpose inquired about in your fourth question.
You inform us that appropriations for educational and
general purposes are used to support the facility because of
its instructional use. This information does not change our
conclusion that subsection (f) prohibits the expenditure of
HEAF funds in partial payment for an item of capital eguip-
ment used for educational and general purposes and for an
auxiliary enterprise. State colleges and universities have
statutory authority to establish and operate auxiliary
enterprises. See, e.cr Educ. Code § 54.503 (student
services): Educ. Code, Ah. 55 (financing permanent improve-
ments including student housing); Attorney General Opinions
H-1312 (1978); H-513 (1975); Letter Advisory No. 6 (1973).
P. 5126
Mr. Alfred F. Hurley - Page 7 (JM-999)
H-1312 (1978); H-513 (1975); Letter Advisory No. 6 (1973).
The applicable statutes and appropriations act provisions
control the expenditure of legislative appropriations by
state colleges and universities. See. e.a:, Letter Advisory
No. 50 (1973). unaware of any constitutional
provision prohibiti:: g:z use of educational and general
funds to operate facilities used for auxiliary enterprises
as well as for educational and general purposes.
Your final question is as follows:
May the University use bond proceeds gained
through any future HEAF bond sales to pur-
chase wital eouioment for an E&G building
which has not been newly constructed, e.q.,
use HEAF bond proceeds to buy capital equip-
ment for a ten year old E&G building used for
research and instruction?
You ask about the future use of bond funds to purchase
"capital equipment," but in discussing this question you
refer to both ~@equipment~~ and "capital equipment." Article
VII, section 17, of the Texas Constitution uses both terms.
-. We will address the significance of these two terms in
answering your question. We have not been asked whether any
particular item of equipment is "capital equipment," and we
do not address any such question.
Subsection (a) of section 17 states the purposes for
which the funds it appropriates may be used:
acquiring land either with or without per-
manent improvements, constructing and
cruioninq buildings or other permanent im-
&zovements major repair or rehabilitation of
buildings Ar other permanent improvements,
and acquisition of caoital ecuioment, library
books and library materials. (Emphasis
added.)
Tex. Const. art. VII, 5 17(a).
Subsection (e) of section 17 defines the authority of
the eligible institutions to issue bonds:
Each governing board authorized to parti-
cipate in the distribution of money under
this section is authorized to expend all
money distributed to it for any of the
P. 5127
Mr. Alfre-d F. Hurley - Page 8 (JM-999)
purposes enumerated in Subsection (a). In
addition, . . . such governing board may
issue bonds and notes for the purposes
of... acquiring land. either with or
without permanent improvements, constructing
and eouiuninq buildings or other permanent
improvements, and for major repair and
rehabilitation of buildings or other per-
manent improvements, and may pledge up to 50
percent of the money allocated to such
governing board pursuant to this section to
secure the payment of the principal and
interest of such bonds or notes. (Emphasis
added.)
Tex. Const. art. VII, § 17(e).
Subsection (a) of section 17 permits the constitutional
appropriation to be used for constructing and equipping
buildings or other permanent improvements, and for the
acquisition of capital equipment, library books and library
materials. Subsection (e), in contrast, permits the
issuance of bonds for constructing and equipping buildings
-
or other permanent improvements, but does not authorize the
issuance of bonds to acquire capital equipment. The term
l@eguipment*' describes a category which includes "capital
equipment"; thus, the proceeds of bonds issued under section
17(e) of article VII for %onstructing and equipping
buildings or other permanent improvements" may be used to
acquire the capital equipment necessary to equip the
building. The absence of authority to issue bonds for
"capital equipment" alone indicates that equipment may be
purchased only in connection with constructing a building or
other permanent improvement, and not as a separate item to
be installed in an existing structure.
Our interpretation of the constitutional provision is
consistent with the interpretation given the former version
of article VII, section 17 by the opinions of this office.
The former version of article VII, section 17, established
a fund "for the purpose of acquiring, constructing &
initially equipping buildings or other permanent improve-
ments at the designated institutions . . . .*I S.J.R. NO.
4, Acts 1947, 50th Leg. at 1184 (emphasis added). Attorney
General Opinion V-931 (1949) determined that the constitu-
tional fund could not be used to equip space in an existing
building as a college printing shop to be operated in
connection with the Department of Journalism. The space had
"never been equipped, initially or otherwise, for that -.
P- 5128
I
.
Mr. Alfred F. Hurley - Page 9 (JM-999)
purpose." Attorney General Opinion V-931 (1949). The
opinion stated as follows:
Article VII, Section 17, was intended to
provide for the construction or acquisition
of buildings and other permanent improvements
and for the initially equipping of such
buildings or permanent improvements. There
is no provision in the amendment for 'ini-
tially equipping' existing buildings . . . .
It will be noted also that the amend-
ment does not say 'for the purpose of
acquiring, constructing er initially eguip-
ping buildings . . .' It uses the conjunc-
tive word 'and' rather than the disjunctive
word *or.' (Emphasis in original.)
Attorney General Opinion V-931 at 3 (1949).
We believe Attorney General Opinion V-931 controls the
answer to your question. Although the modifier "initially"
does not appear .in the present version of article VII,
section 17, this omission is not significant because
Attorney General Opinion V-931 did not rely on that term to
reach its conclusion. The present constitutional provision
uses the conjunctive "and" rather than the disjunctive "or."
Bonds may be issued under subsection (e) of section 17 for
81constructing and equipping buildings or other permanent
improvements . . . .II Tex. Const. art. VII, 5 17(e).
Accordingly, the University may not use the proceeds of
bonds issued under article VII, section 17(e), to purchase
capital equipment for a building which has not been newly
constructed.
SUMMARY
Funds appropriated by article VII, section
17, of the Texas Constitution may be used to
renovate a portion of a building used for
both educational and general purposes and
auxiliary purposes, if the renovated portion
is a wing, addition, or other physically
distinct part of the building and if it is
used exclusively for educational and general
purposes.
Section 17(f) of article VII prohibits the
expenditure of such funds to construct,
P. 5129
1
.
Mr. Alfred F. Hurley - Page 10 (JM-999)
equip, repair, or rehabilitate buildings or
other permanent improvements to be used for
student housing, intercollegiate athletics,
or auxiliary enterprises. Subsection (f)
prevents the use of the constitutionally
appropriated funds to assist in renovating a
building or other permanent improvement which
is used part of the time for educational and
general purposes, and part of the time for
auxiliary purposes. The constitutional fund
may not be applied toward the purchase of
capital equipment used for educational and
general purposes and for auxiliary purposes.
The proceeds of bonds issued pursuant to
article VII, section 17 of the constitution
may not be used to purchase capital equipment
for an existing educational and general
building.
zzti
MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Susan L. Garrison
Assistant Attorney General
P. 5130