Untitled California Attorney General Opinion

TO BE PUBLISHED IN THE OFFICIAL REPORTS

OFFICE OF THE ATTORNEY GENERAL

State of California

JOHN K. VAN DE KAMP

Attorney General

---------------------------
:

OPINION :

:

of :

: No. 88-305

JOHN K. VAN DE KAMP :

Attorney General : July 19, 1988

:

ANTHONY S. DaVIGO :

Deputy Attorney General :

:

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THE HONORABLE GARY K. HART, MEMBER OF THE CALIFORNIA

STATE SENATE, has requested an opinion on the following question:

May two or more school districts establish a Joint Powers

Agency to contract with a private entity to secure agreements by

suppliers to furnish supplies to member districts at guaranteed

minimum prices for a designated period, if the private entity

complies with the competitive bidding procedures applicable to

school districts?

CONCLUSION

Two or more school districts have no authority to

establish a Joint Powers Agency to contract with a private entity

to secure agreements by suppliers to furnish supplies to member

districts at guaranteed minimum prices for a designated period.

ANALYSIS

We are advised that school districts in California spend

millions of their limited dollars each year on necessary supplies

and equipment. Although necessary, these supplies are often

purchased through inefficient means. School districts are often

limited to purchasing supplies in the geographical area in which

they operate. Furthermore, they are often forced to purchase at

market prices reflecting the low quantities which are ordered.

They also face storage and warehousing constraints, as well as an

inability to calculate future needs when supply quantities must be

ordered.

We are further advised in the premises that, faced with

increasing budgetary constraints, school districts are attempting

to become more efficient in their operation. Many school districts

in California have expressed an interest in forming a joint powers

agency (JPA) which would contract with a private third party to

secure agreements by suppliers to furnish supplies to member

districts at a guaranteed minimum price for one year. The private

entity would comply with the competitive bidding procedures

applicable to school districts, but on a broader scale and

geographical area. The supplier would by its bid and confirmation

after notice of award, agree to fill all orders of member districts

at the designated price for one year. Pursuant to this agreement,

each member district would order supplies as needed from the listed

providers. We are asked whether such an arrangement would be

lawful.

The Joint Exercise of Powers Act is codified in

Government Code section 6500 et seq. The latter section provides

that, as used in the Act, the term "public agency" includes, inter

alia, a "public district of this state." "Public district"

includes "school district." (15 Ops.Cal.Atty.Gen. 108, 109

(1950).) Section 6502 provides in part:

"If authorized by their legislative or other

governing bodies, two or more public agencies by

agreement may jointly exercise any power common to the

contracting parties, even though one or more of the

contracting agencies may be located outside this state.

"It shall not be necessary that any power common to

the contracting parties be exercisable by each such

contracting party with respect to the geographical area

in which such power is to be jointly exercised."

It is clear from that section that each member agency of a JPA must

have independent authority to perform the activity agreed to be

performed jointly. In this regard we stated in 66

Ops.Cal.Atty.Gen. 183, 185 (1983):

"The Joint Exercise of Powers Act was construed in

The City of Oakland v. Williams (1940) 15 Cal.2d. 542,

549 as follows:

"'The statute means nothing if it does not mean that

cities may contract in effect to delegate to one of their

number the exercise of a power or the performance of an

act in behalf of all of them, and which each

independently could have exercised or performed. A

statute thus authorizing the joint exercise of powers

separately possessed by municipalities cannot be said to

enlarge upon the charter provisions of said

municipalities. It grants no new powers but merely sets

up a new procedure for the exercise of existing powers.'

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 "In 30 Ops.Cal.Atty.Gen. 73, 74 (1957) we pointed

out that section 6502 'requires that each of the public

agencies which are parties to an agreement must have the

independent power to do the act for which they contract

under the Joint Powers Act.' (See also 56

Ops.Cal.Atty.Gen. 571, 581 (1973); 60 Ops.Cal.Atty.Gen.

148, 151 (1977) and 60 Ops.Cal.Atty.Gen. 206, 207

(1977).)"

In the last cited opinion we pointed out that while the Act grants

no new powers, it does provide for the joint exercise of existing

allocated powers, including by implication all those essential to

the specific allocation. (60 Ops.Cal.Atty.Gen., supra, 207.)

We are not concerned at this juncture whether the

activity here in question involves the use of discretion. It is

generally true, of course, that a public agency may not, unless

authorized by law, delegate a function constituting a public trust

the exercise of which inescapably requires the use of such reason

and discretion as may only be accomplished by action of the agency

itself (Cf. Webster v. Board of Education (1903) 140 Cal. 331;

Knight v. City of Eureka (1898) 123 Cal. 192, 194-195; 63

Ops.Cal.Atty.Gen. 240, 243 (1980).) However, Government Code

section 6502, supra, expressly allows for the exercise of any

common power.1 Examples of powers which we have found are properly

exercised by school districts under a JPA include the building and

operation of a common gymnasium (15 Ops.Cal.Atty.Gen. 108 (1950)),

the adoption of a system of group insurance for the benefit of

employees (23 Ops.Cal.Atty.Gen. 146 (1954)), and the employment of

private counsel for legal services in connection with employee

relations (60 Ops.Cal.Atty.Gen., supra, 206.)

Manifestly, each school district is authorized to enter

into a contract for the procurement of materials and supplies.

Public Contract Code section 20111 provides:

"The governing board of any school district shall

let any contracts involving an expenditure of more than

fifteen thousand dollars ($15,000) for work to be done or

more than twenty-one thousand dollars ($21,000) for

materials or supplies to be furnished, sold, or leased to

the district, to the lowest responsible bidder who shall

give such security as the board requires, or else reject

all bids. This section applies to all materials and

supplies whether patented or otherwise."

Inasmuch as the inquiry presented for consideration supposes

compliance with the bidding requirements of this section, it will

1
Our observation in 60 Ops.Cal.Atty.Gen., supra, 207, note 1,

is disapproved to the extent of inconsistency.

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be assumed for purposes of this opinion that the contracts in

question involve an expenditure of more than twenty-one thousand

dollars.

The question remains whether a school district may

delegate its power to contract for the procurement of materials and

supplies to a private entity. If a school district may not

delegate the exercise of its essential powers and functions to a

private association when acting on behalf of the school district

(cf. Knight v. Eureka, supra, 123 Cal. 192) apart from the Act, it

could not do so under the Act. (23 Ops.Cal.Atty.Gen., supra,

148.)2

The quest for authority to delegate to a private entity

the school district's power to contract for the procurement of

supplies appropriately begins with article IX, section 14, of the

California Constitution:

"The Legislature shall have power, by general law,

to provide for the incorporation and organization of

school districts, high school districts, and community

college districts, of every kind and class, and may

classify such districts.

"The Legislature may authorize the governing boards

of all school districts to initiate and carry on any

programs, activities, or to otherwise act in any manner

which is not in conflict with the laws and purposes for

which school districts are established."

2
In 1957, Government Code section 6506 was amended to add the

words italicized:

"The agency or entity provided by the agreement to

administer or execute the agreement may be one or more of

the parties to the agreement or a commission or board

constituted pursuant to the agreement or a person, firm

or corporation, including a nonprofit corporation,

designated in the agreement. One or more of the parties

may agree to provide all or a portion of the services to

the other parties in the manner provided in the

agreement. The parties may provide for the mutual

exchange of services without payment of any consideration

other than such services."

Read in the context of the Act as a whole, it is apparent that the

amendment does not constitute independent authority to delegate

power to a private entity where no such authority exists with

respect to each member district.

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Prior to the addition of the second sentence at the general

election on November 7, 1972, operative July 1, 1973, the courts

had taken a narrow view of the powers of a school district, namely,

that a school district had only those powers that were conferred by

a specific statutory grant. (Grasko v. Los Angeles City Bd. of

Educ. (1973) 31 Cal.App.3d 290, 301; Elder v. Anderson (1962) 205

Cal.App.2d 326, 333; 65 Ops.Cal.Atty.Gen. 326, 327 (1982); 63

Ops.Cal.Atty.Gen. 851, 852 (1980).)

Pursuant to the constitutional grant of authority, the

Legislature enacted section 35160 of the Education Code:

"On and after January 1, 1976, the governing board

of any school district may initiate and carry on any

program, activity, or may otherwise act in any manner

which is not in conflict with or inconsistent with, or

preempted by, any law and which is not in conflict with

the purposes for which school districts are established."

This section effectively rendered the strict rule inapplicable (63

Ops.Cal.Atty.Gen., supra, 852; 60 Ops.Cal.Atty.Gen. 177, 180

(1977)) and "profoundly alters the analytic focus of a

determination of a school district's authority in any given case.

In essence, we now must look to whether particular conduct is

precluded, where previously we searched for express or implied

authorization for such conduct." (60 Ops.Cal.Atty.Gen., supra,

327-328.)

However, we have previously determined, based upon an

examination of the Detailed Analysis by the Legislature Counsel in

the voters' pamphlet (Proposition 5) at the general election on

November 7, 1972, that the broad powers contemplated by the

constitutional amendment are limited to those which are "related to

school purposes" (64 Ops.Cal.Atty.Gen. 146, 147-148; and cf. 60

Ops.Cal.Atty.Gen. supra, 208), i.e., which are directed toward

educational needs (60 Ops.Cal.Atty.Gen., supra, 180-181). It has

been determined in this regard that the "permissive" standard does

not allow any latitude in terms of compliance with the bidding

procedures set forth in Public Contract Code section 20111, supra.

(Associated General Contractors v. San Francisco Unif. Sch. Dist.

(9 CA 1980) 616 F.2d 1381, 1384-1385.)

The question remains whether the delegation to a private

entity of the school district's power to contract for the

procurement of supplies is authorized by law. It is apparent that

the responsibility in question involves in numerous respects, such

as the determination of the lowest responsible bid, the exercise of

discretion. As a general rule, powers conferred upon public

agencies and officers which involve the exercise of judgment and

discretion are in the nature of public trusts and cannot be

surrendered or delegated to subordinates in the absence of

5. 88-305

statutory authorization. (California Sch. Employees Assn. v.

Personnel Com. (1970) 3 Cal.3d 139, 144.) In that case, it was

held that a school district's personnel commission lacked the

authority to dismiss an employee without prior approval of the

school's governing board. In Webster v. Board of Education,

supra, 140 Cal. 331, it was held that the superintendent of

schools, and ex officio member of the board of education, could not

delegate the performance of his duties on such board to a deputy.

In Schecter v. County of Los Angeles (1968) 258 Cal.App.2d 391, it

was held that a county civil service commission could not delegate

the duty of final classification of positions to the secretary and

chief examiner of the commission. In Moss v. Board of Zoning

Adjustment (1968) 262 Cal.App.2d 1, it was held that the board

could not delegate to its secretary its authority to make findings.

In similar vein, this office has determined that the law

enforcement agency having primary traffic investigative authority

on the highway where a hazardous materials incident occurs may not

delegate scene management responsibility to another agency (65

Ops.Cal.Atty.Gen. 32 (1982); that the State Controller cannot

authorize a deputy to vote or otherwise act for him as a member of

the State Board of Equalization (56 Ops.Cal.Atty.Gen. 399 (1973));

and that a member of the county board of supervisors cannot appoint

another in his place for the purpose of exercising the sovereign

powers of government (54 Ops.Cal.Atty.Gen. 154 (1971)).

While each of the foregoing cases and opinions involved

an attempted delegation to another public agency or to a

subordinate public officer, we perceive no basis for a different

result had the attempted delegation been to a private entity. In

an early case, Morton Bros. v. Pacific Coast S.S. Co. (1898) 122

Cal. 352, such an attempt was made with predictable results. The

court held improper certain action of a steamship company to which

the harbor commissioners had delegated the power "to set apart and

assign suitable wharves . . . for the exclusive use of its

vessels," and granting exclusive privileges on piers occupied by

its vessels. The court stated (id. at 356):

"These commissioners had power to grant to the

steamship company only rights and interests which the

statute declares they may grant. For the power and

control over the waterfront delegated by the statute to

the commissioners may be exercised by them alone, and

they can delegate none of those powers, and no part of

that control, to third parties. (122 Cal. at p. 354.)

"The measure of the power of the harbor commissions

is found in [the] language . . . [of the statute (former

Pol. Code, § 2524), and construing the power 'to set

apart and assign suitable wharves . . . for the exclusive

use of vessels' as not to include the power to give the

6. 88-305

 entire control and occupancy of those wharves to an

assignee], the assignment to the steamship company only

gave that company the exclusive privilege of using these

piers in the loading and unloading of freight and

passengers. In all other things these piers are under

the control and authority of the harbor commissioners,

and subject to all reasonable rules and regulations they

may promulgate.

". . . [The] matter of granting or refusing

privileges of the kind here involved is a matter with the

harbor commissioners alone, and a matter which they

should control and manage by reasonable rules and

regulations."

We have previously observed that the rationale for not

permitting such secondary delegation has been based on various

theories, to wit, that their conference is in the nature of a

public trust; that their delegation would be anomalous; that the

original delegation is purely personal; and that there is a

presumption that the officer in which the powers are reposed was

selected because of his fitness and competence to exercise them.

(65 Ops.Cal.Atty.Gen., supra, 402.)

As previously noted, these cases prohibited delegation in

the absence of statutory authorization. (California Sch. Employees

Assn. v. Personnel Com., supra, 3 Cal.3d at 144.) Even where the

delegated activity does not involve the same degree of discretion

or judgment inherent in the above cases, but is ministerial, a

delegation made to an individual other than a deputy must be

authorized by law. In this regard, Government Code section 7

provides:

"Whenever a power is granted to, or a duty is

imposed upon, a public officer, the power may be

exercised or the duty may be performed by a deputy of the

officer or by a person authorized, pursuant to law, by

the officer, unless this code expressly provides

otherwise." (Emphasis added.)

Whether the delegation to a private entity of the

function in question is authorized by law for purposes of the

doctrine against delegation and Government Code section 7 requires

an examination of other provisions. Specifically, Government Code

section 53060 provides as follows:

"The legislative body of any public or municipal

corporation or district may contract with and employ any

persons for the furnishing to the corporation or district

special services and advice in financial, economic,

accounting, engineering, legal, or administrative matters

7. 88-305

 if such persons are specially trained and experienced and

competent to perform the special services required.

"The authority herein given to contract shall

include the right of the legislative body of the

corporation or district to contract for the issuance and

preparation of payroll checks.

"The legislative body of the corporation or district

may pay from any available funds such compensation to

such persons as it deems proper for the services

rendered." (Emphasis added.)

This section authorizes a school district to contract with a

private person or entity for "special services." The criteria for

determining the nature of special services were set forth in Darley

v. Ward (1982) 136 Cal.App.3d 614, 627-628:

"Whether services are special requires a

consideration of factors such as the nature of the

services, the qualifications of the person furnishing

them and their availability from public sources. (Jaynes

v. Stockton (1961) 193 Cal.App.2d 47, 51-52.) Services

may be special because of the outstanding skill or

expertise of the person furnishing them. (Kennedy v.

Ross (1946) 28 Cal.2d 569, 574; Jaynes v. Stockton,

supra, 193 Cal.App.2d at p. 52.) Whether services are

special is a question of fact. (California Sch.

Employees Assn. v. Sunnyvale Elementary Sch. Dist. (1973)

36 Cal.App.3d 46, 61; Jaynes v. Stockton, supra, 193

Cal.App.2d at p. 53.)"

Whether the function in question may be classified as a

special service is ultimately a question of fact. While no similar

case has been found, it has been held, for example, that hospital

management (Darley v. Ward, supra, 136 Cal.App.3d 614), research

and development (Calif. Sch. Emp. Assn. v. Sunnyvale Elementary

Sch. Dist. (1973) 36 Cal.App.3d 46), and special counsel as

prosecutor where the city attorney had not been vested with

prosecutorial powers (Montgomery v. Superior Court (1975) 46

Cal.App.3d 657; compare Jaynes v. Stockton (1961) 193 Cal.App.2d

47), are special services. However, we see nothing "special" in

contracting for school supplies. Contracting for supplies is part

of the ordinary and necessary business of school districts. While

Government Code section 53060 may authorize a school board to

employ outside experts for advice relating to such contracts, we

doubt that a court would find that the making of a contract for

school supplies in a "special service" under that section. In any

event, we now consider other more specific provisions which must,

in our view, be construed as prohibitions against such proposed

delegation.

8. 88-305

 It is apparent that the power to secure listings of

supplies at guaranteed minimum prices for a designated period

involves the execution of binding agreements between the lowest

responsible bidder of each item which is the subject of competitive

bidding, and the private entity. (Cf. Pub. Cont. Code, §§ 20111,

supra, 5101 and 5106.) Education Code section 39656 pertains

specifically to the delegation by a school district of its power to

contract:

"Whenever in this code the power to contract is

invested in the governing board of the school district or

any member thereof, such power may by a majority vote of

the board be delegated to its district superintendent, or

to such person as he may designate, or if there be no

district superintendent then to such other officer or

employee of the district as the board may designate.

Such delegation of power may be limited as to time, money

or subject matter or may be a blanket authorization in

advance of its exercise, all as the governing board may

direct; provided, however, that no contract made pursuant

to such delegation and authorization shall be valid or

constitute an enforceable obligation against the district

unless and until the same shall have been approved or

ratified by the governing board, said approval or

ratification to be evidenced by a motion of said board

duly passed and adopted. In the event of malfeasance in

office, the school district official invested by the

governing board with such power of contract shall be

personally liable to the school district employing him

for any and all moneys of the district paid out as a

result of such malfeasance." (Emphases added.)

Further, section 35161 of said code provides:

"The governing board of any school district may

execute any powers delegated by law to it or to the

district of which it is the governing board, and shall

discharge any duty imposed by law upon it or upon the

district of which it is the governing board, and may

delegate to an officer or employee of the district any of

those powers or duties. The governing board, however,

retains ultimate responsibility over the performance of

those powers or duties so delegated." (Emphasis added.)

The immediate concern presented by these statutes is that the

authority to delegate the power to contract on behalf of a school

district is expressly limited to its own officers and employees.

A certain ambiguity in section 39656 must be recognized.

Under that section the power to contract may be delegated by the

district board to its superintendent or to such "person" as he may

designate, or if there be no superintendent then to such "other

9. 88-305

officer or employee of the district" as the board may designate.

If the term "person" be construed as a reference to any, including

a private, person, then the authority to delegate is absolutely

unqualified insofar as the designation by a superintendent of a

delegatee is concerned. Whether the Legislature intended to confer

such unlimited authorization is questionable, particularly where,

in the absence of a superintendent, the designation by the board of

a delegatee is expressly limited to an officer or employee of the

district. If so, the board would in effect be authorized to

delegate through its superintendent to a greatly expanded class of

persons than that to which it could delegate of its own accord. In

addition, the last sentence of section 39656 pertains to the

personal liability for malfeasance as a delegatee of a school

district official, with no reference whatever to such conduct by a

private person so invested with the power of contract. Finally,

section 35161 governs the delegation by the district board of any

of its powers only to "an officer or employee of the district."

Thus it appears that these statutes construed together preclude the

delegation to a private party of the power to contract on behalf of

a school district.

In addition to the express limitation respecting the

recipients of delegated power are the mandatory constraints upon

the scope of the delegation. Specifically, section 39656 provides

that ". . . no contract made pursuant to such delegation and

authorization shall be valid or constitute an enforceable

obligation against the district unless and until the same shall

have been approved or ratified by the governing board, said

approval or ratification to be evidenced by a motion of said board

duly passed and adopted." Section 35161 also contains a proviso

retaining in the governing board ". . . ultimate responsibility

over the performance of those powers or duties so delegated." The

proposed procedure, on the other hand, contemplates neither the

approval or ratification by the JPA of any such contract entered

into by the private entity, nor the retention by the JPA of

ultimate responsibility over the performance of delegated powers.

It has been stated in this regard that where a statute

prescribes the mode by which a power may be exercised, the mode is

the measure of the power. (Uhl v. Baderacco (1926) 199 Cal. 270,

283; Crowell v. Martin (1872) 42 Cal. 605, 613; Bear River, Etc.

Corp. v. County of Placer (1953) 118 Cal.App.2d 684, 689; 64

Ops.Cal.Atty.Gen. 804, 808 (1981).)

". . . In the grants [of powers] and in the

regulation of the mode of exercise, there is an implied

negative; an implication that no other than the expressly

granted power passes by the grant; that it is to be

exercised only in the prescribed mode . . . ." (Wildlife

Alive v. Chickering (1976) 18 Cal.3d 190, 196; 70

Ops.Cal.Atty.Gen. 227, 230 (1987).)

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(See also Garson v. Juarique (1979) 99 Cal.App.3d 769, 774; Kirby

v. Alcoholic Bev. Cont. App. Bd. (1969) 3 Cal.App.3d 209, 221.)

Inasmuch as a school district may not delegate to a

private person or entity the ultimate responsibility to contract on

its behalf, two or more of them may not establish a JPA to delegate

to a private person such authority. Numerous alternative

procedures may be available. Under the provisions of Government

Code section 53060, supra, for example, authorizing a public agency

to enter into a contract for "special services and advice in

financial, economic, . . . or administrative matters if such

persons are specially trained and experienced and competent to

perform the special services required," a school district, and

therefore a JPA, may contract with a private party for expert

advice relating to the solicitation and evaluation of bids.

Further, as discussed above, a school district may delegate the

power to contract to an officer or employee of the district subject

to the constraints provided in Education Code sections 39656 and

35161, supra. Another alternative is authorized under Government

Code section 6506, providing that "[t]he agency or entity provided

by the agreement to administer or execute the agreement may be one

or more of the parties to the agreement . . ." and that "[o]ne or

more of the parties may agree to provide all or a portion of the

services to the other parties in the manner provided in the

agreement." Under this section, the agreement may designate one

member of the JPA to secure, in accordance with competitive bidding

requirements, agreements by suppliers to furnish supplies to member

districts at guaranteed minimum prices for a designated period.

However, under existing statutory provisions, two or more school

districts have no authority to establish a JPA to contract with a

private entity to secure such agreements.

* * * * *

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