Newspaper Page Text
State of fayifot
butane TKatufu*? T>cfa Position, of State and /tfCKCcU
StatCHteHt orf (ZunneKt (fywUtcaH
OBLIGATIONS—State Authorized . _ ~ 10 ,. on ioja
SEPTEMBER 30, 1946 * Dec. 31. 1940 Dec. 31, 1942 Dec. 31. 1945 Sept. 30, 1946
se.io3. 3S ?a SlS. = (i,
/ * Me * 5Z::::::::: r.™™* j.™™* **»***> m
527,869,341.63 County Refunding Cer, if. of 1931 13,333,954,73 0 °
Ca»h and Co.h Item, in hand, of Stole Deportment. 35,409,537.89 W& A Rental Discount of 1931 and 1938 4,860,000.0 ' ' ’ on? 000 00 * 0
Cash due from U.S. Government on Reimbursement 1- 741 - 82442 Hospital Authority Bond, of 1939 2,390,000.00 2,294,000.00 2,132.000.00 0
T , , r . A $65,020,703.94 Tattnall Prison Debt 1,051,088.27 0_ .
Total tosh A,set, $38,641,279,78 $35,961,630.38 $21,304,580.45 $25,265,797.33
jliatkUUeA less Cashs
Accumulated Operating Deficit (-)16,723,906.31
CURRENT Accumulated Operating Surplus 0 7,619,494.57 591,230.09 562,375.20
Account. Payable * 4.847,665.30 Highway ContrQcf Reserye 0 0 8,103,378.28 18,064,297.38
RESERVES Sinkin9 Fund Reserves 2,195,040.00 2,546,720.00 13.201.202.17 7,201,500.00
For Commitment, Out.tanding $ 3,937,406.06 Tota , (*)514.528,866.31 $10.166,214.57 $21,895,810.54 $25,828,172.58
for Sinking Fund to retire State Bond, and County Certificate. (See opposite Ne , Qbligatlon.-State of Georgia $53,170,146.09 $25,795,415.81
forTald of Regent.' Bond Fund.'for Con.iruc.ian' ! ! 3,'569,'736.51 Net General State Surplus $ 591,230.09 $ 562,37_5.20
•For Highway Contract, to Mature 18,064,297.38 *Net cash deficit.
For Matching Federal Road Funds accrued to Sept. 30, 1946 8,485,335 30 OBLIGATIONS—Regents Authorized
For Land Title Guarantee Fund 5,428.55 | ~ !~~ ' ' 7
For Federal Fund, on hand SETT *£&"•» «
For Agency Fund, on hand ‘ Total Regents authorized Obligation, $ 3,750,000.00
For Teacher Retirement Trust Fund 4,U4/, 54j.su .
For Unearned Income nfcioM OO Sinking Fund Reserve I°2.
For Revolving Fund of Agencies j,/ou,uuu.u ■ j t 3 750 000 00
. . c l-.i. 3 350391 99 Net Obligations—Regents Authorized . 1 u,/su,uuu.uu
For Maintaining Aid to Common Schools o.oou.jzi.zv a a ■■ , Qn
For Memorandum Operating Allotments 00 Net Obligations-State and Agencies . . $53,170,146.09 $25,795,415.81 $ 3,187,62 .80
for Income Equalization Reserve Net General Surplus-State and Agencies $ 591,230.09
Total Reserve. $59,610,663.44 “
Total Accounts Payable and Reserves $64,458,328.74 (l)-"Highway Obligations"-The amount of State Funds required to complete all contracts outstanding and there is a cash reserve
to liquidate this item which is payable as work progresses.
(2)-AII "General State Bonds" outstanding are past due, but have not been presented for redemption. Cash reserve of $103,500.00
' is held in State Treasury to liquidate this obligation.
SURPLUS: (Cosh over Accounts Payable and Reserves Applied on fixed debt, page 3) $ 562,375.20 (3)-Of the "Highway Refunding Bonds" outstanding $25,000.00 in bonds are past due but have not been presented for redemption,
$2,650,000.00 in bonds mature March 15, 1947 and $2,650,000.00 mature March 15, 1948. Cash Sinking Fund is held in
lit® State Treasury to liquidate this obligation in full.
(4)—Of the "W & A Rental Discount" warrants outstanding $18,000.00 in warrants are past due but have not been presented for
redemption, the remaining $1,755,000.00 mature $45,000.00 on the first day of month beginning October 1, 1946, and for
I*) Highway Department Contracts to Mature Active Suspended Total each month thereafter through December 1, 1949. Cash Sinking Fund is held in the State Treasury to liquidate this obligation
Total Contract. $29,418,178.20 $ 568,085.59 $29,986,263.79 ln fu ,|.
Regular Federal Fund Participation 11,898,447.39 23,519.02 11,921,966.41 (^"Obligations--Regents Authorized." Payable from dormitory rentals, maturing in part on each May 1. 1949 through 1978.
Net State Obliaa.ion for Contracts to Mature $17,519,730.81 $ 544,566.57 $18,064,297.38 The Regents by exercising the powers of a corporate entity issued the Dormitory Revenue Bonds for the benefit of the Georgia
y i =======: ======= School of Technology. There is no specific act of the General Assembly authorizing the issuance of these bonds, nor was the action sub-
See Page 3 for Summary of Current and Future Maturing Debt Position. jecl to the approval of the Governor, Attorney General or the Budget Bureau of Georgia. See Auditor's notes for opinion of Attorney
See Page 4 for Auditor's Notes on Financial Condition. General as to the legal status of this obligation.
Auditor's Notes
Bu: B. E. THRASHER. JR.. Stale Auditor
INTRODUCTION
This report of the financial condition of th6“Btate of Geor
gia us of September 30, 1846, has been delayed until this date
In order to obtain an opinion from the Attorney General of
Georgia as to the legal status of the $3,150,000.00 In Revenue
Bonds Issued by the authority of the Board of Regents through
a corporation known as the Regents of the University Sys
tem of Georgia. In later paragraphs of these notes the legal
status of these bonds is discussed.
Because of this condition which has developed since my
Juno 30, 1946 report and In view of the opinion of the Attor
ney General I find It necessary to humbly apologise to the
people of Georgia and to the members of the General Assembly
for my erroneous public statement made under date of Feb
ruary 38, 1945 In which reference was made to the "mo
mentous Hems affecting the finances of the State" as pro
vided In the new Constitution, Including the statement that
the proposed Constitution curried forward "such outstanding
features that provided for the prevention of any current In
debtedness In the future." It Is now quite evident that I was
over-zealous as to the Invincibility of the provisions of the
State Constitution.
FINANCIAL CONDITION
On September 30, 1946, the State of Georgia, at least that
part under control of the General Assembly, the Governor and
the Budget Bureau, has a cash surplus of $562,375.20 after
providing reserves to meet every approved outstanding obliga
tion at September 30 whether due today or In the future. See
later paragraph on Stale Condition which lakes Into considera
tion the Revenue Bonds Issued by the Regents.
In the reserves there Is $6,485,335.10 held In the State
Treasury to match Federal road funds accrued to the benefit
of the Stale to September 30, 1946. This does not take Into
consideration the full annual Federal funds which are avail
able for the year July 1, 1946, to June 30, 1947, but does take
Into consideration one-fourth of the funds, which Is considered
to have been accrued for the three months July 1, 1946, to
September 30, 1946.
There Is also reserved $18,064,297.38 In cash to liquidate
the Stale’s part of highway contracts which have been let or
are In the process of letting *at September 30, 1946. The lull
amount of the contracts Is $29,986,263.79 of which the Federal
Government finances $11,021,966.41, thus leaving the $18,064,-
807.38 Stale fund requirement, which has been reserved.
There Is also In the State Treasury $7,201,500.00 In the
Sinking Fund to retire the balance outstanding of the General
State Bonds, the Highway Refunding Bonds, and the Western
and Atlantic Railroad Rental Discounts.
There Is another obligation which has been created by the
Board of Regents through a corporation known as "Regents of
the University System of Georgia," without a specific Act of
the General Assembly authorizing or limiting the obligation,
and the creation of this obligation was not subject to the ap
proval of the Governor, the Attorney General, or Budget Bu
reau of Georgia. The Item Is $3,750,000.00 Revenue Bonds Issued
by the authority of the Regents tor the purpose of building
dormitories at Georgia School of Technology. The legal status
of this Item Is discussed In following paragraph.
Taking Into consideration this Item of Indebtedness cre
ated by the Regents, the financial condition of the State and
Agencies at September 30, 1946 was net obligations of State and
Agencies In excess of cash available of $3,187,624.80, as com
pared to a net general surplus of $591,230.09 at December 31,
1945 when the State finally cleared Its books of all obligations
In excess of cash on hand.
REVENUE BONDS OF THE REGENTS OF THE
UNIVERSITY SYSTEM OF GEORGIA
In receiving Information from the State Agencies as to
their financial condition as of September 30, 1946, It was re
ported that on May 1, 1946 $3,750,000.00 In Revenue Bonds had
been Issued by the authority of the Board of Regents through
the corporation known ns the Regents of the University System
of Georgia for the purpose of building dormitories and are
payable from dormitory rents In the years 1949 through 1978.
State Auditor’s Request for Legal Opinion
Under date of October 10. 1946 your State Auditor wrote the
following letter to the Honorable Ellis Arnall, Governor:
"I am In the process of preparing the Financial Statement
of Georgia for the period ended September 30, 1946, and since
the last quarterly slateihent I find that the Board of Regents
has authorized and Issued $3,750,000.00 In Revenue Bonds
to be paid In the years 1949 through 1978.
Inasmuch as there Is no specific Act of the General As
sembly authorizing the Issuance of these Bonds, nor was the
action approved by you, the Attorney General, or the Budget
Bureau of Georgia, 1 do not have any legal basis to guide me
In the treatment of this obligation, particularly since new
financing laws have been passed and the Constitution of the
Elate of Georgia rewritten.
I am told that the Board of Regents serves In two capaci
ties; one being as a State Agency subject to all rules, regu
lations, and limitations Imposed by the Constitution and laws
of the Stale; the other Is us a corporation which can make
its own rules and regulations and can by-pass any of the legal
restrictions.
I am unwilling to concede that anybody representing the
State of Georgia collecting funds under the authority of the
laws of the State of Georgia can be given powers which will
nullify the provisions of the Slate Constitution and the gen
eta! laws enacted by the General Assembly of Georgia.
If this condition exists we should find out now so that the
Legislature can take the necessary action to correct the sit
uation, as I do not believe that It Is good and sound govern
ment for any Agency of the State to be given powers which
cannot be controlled by the General Assembly of Georgia.
Inasmuch as you, ns Governor, arc the only official who
can ask the Attorney General for official opinion, and Inas
much as It Is necessary for me to have an Interpretation of
the laws pertaining to this subject In order to perform the
duties required of me by the General Assembly. I most re
spectfully ask that you request an opinion from the Attorney
General to clarify this situation, so that I will know how to
report this transaction.”
Governor’s Request for Opinion of Attorney General
Under dates of October 10 and October 21 Governor Arnall
In letters to the Attorney General, asked for an opinion on the
following questions, and also made the following comments:
The above is a reprint of the Sept. 30, 1946 report of State Auditor 15. E. Thrasher, Jr., and is published as a matter of public information at the direction of Governor Arnall and paid
for by the Executive Department of the State of Georgia.
THE HOUSTON HOME JOURNAL, PERRY, GEORGIA
"Are these revenue bonds Issued by the State Board of Re
gents legal obligations of the State and should they be listed
as State obligations?
Are they legal obligations of the Board of Regents?
Are they authorized by the Constitution and laws of Geor
gia?
Is the power of the Regents to Issue self-liquidating bonds
unlimited?
Are these revenue bonds Issued by the Regents new obli
gations of the State?
Must they be considered as State debts?
Are they legal?
Are the members of the State Board of Regents public offi
cials subject to all limitations and restrictions of constitu
tional and statutory law ns public officers?
Can the Board of Regents transfer to a corporation Income
received by the Board of Regents as provided by law?
As you know, I have worked very assiduously to pay the
State out of debt and to wipe out State obligations.
I am tremendously anxious that the dormitory bond Issue
of Georgia Tech not be charged up against the State govern
ment as a Slate debt. Moreover, for bookkeeping purposes, the
legal aspects of the transaction should be definitely deter
mined."
Attorney General’s Opinion
Under dates of October 18th and 24th, 1946 Attorney General
Eugene Cook rendered the following opinions on the questions
above recited. For the convenience of the reader, your State
auditor has caused to be printed in BOLD TYPE the para
graphs which give the opinions of the Attorney General on
the questions asked.
"The Supreme Court of Georgia on July 28, 1934, in the
case of State of Georgia v. Regents of the University System
of Georgia (179 Ga. p. 210) passed on questions very similar
to those now under consideration relating to the laws govern
ing the Board of Regents. In this case the Court held as
follows:
“(1) The Regents of the University System of Georgia Is a
distinct corporate entity and is governed by a Board of Re
gents. Through the board It can exercise any power usually
grunted to such incorporations, necessary to its usefulness,
and not In conflict with the constitution and laws. An obli
gation Incurred by the corporation, or the Board of Regents
Is not a debt of the State, and therefore Is not affected by
constitutional limitations upon Stale indebtedness.”
"(6) The loan agreement as made by the corporation and
Its Board of Regents with the Federal Government under
which bonds will be Issued by the Regents and purchased by
the government for the purpose of providing funds for stated
university uses, the bonds to be paid exclusively out of de
scribed special funds, does not Involve any illegal undertaking
on the part of the Board of Regents, and Is within the pow
ers granted to the corporation and its Board of Regents by
the laws of this State. The court properly refused to enjoin
the execution of such agreement."
The above decision seems to be a complete answer to your
questions ns of the date of July 28. 1934. Our Inquiry Is there
fore limited to the sole question of whether the laws have been
changed or altered subsequent to the date of that decision In
such away as to render the Judgment of the Court Inoperative
at this time. In order to determine this question, It becomes
necessary to examine all laws subsequent to July 28, 1934,
In 1935 the General Assembly passed an Act (Ga. L. 1935,
pp. 171-173) which provides In part as follows;
“That the corporation created under section 45 of the Act
approved August 25, 1931, as embodied in title 32, section 32-
101, of the Code of Georgia of 1933, and known as ‘Regents
of the University System of Georgia,’ Is hereby declared to
be a governmental agency of the State of Georgia, and all
property held by said corporation under said Act of August
25, 1931, as embodied In title 32 of the Code of Georgia of
1933 Is hereby declared to be the property of the State of
Georgia, and subject to all the limitations and restrictions
Imposed upon other property of the State of Georgia by the
Constitution and laws of this State. The members of the
Board of Regents of the University System of Georgia, as
provided for by said Act, are hereby declared to be public
officers of the State of Georgia and subject. In all their
actions as such, to all the limitations and restrictions Im
posed by the Constitution and laws of this State upon other
public officers."
"(3) Tuition, matriculation fees and proceeds of the sale
of personalty shall be reported and remitted to the Secre
tary-Treasurer of the Board of Regents, who shall transmit
the same to the State Treasurer, and the same are hereby
appropriated as a continuing appropriation to the branch or
division of the University System from which they originate,
to be drawn out of the Treasury upon a requisition Just as
other funds are drawn. The proceeds from dormitory rentals,
mess hall charges, proceeds of athletic contests, and other
similar revenue shall remain with the Institution originating
the same, and shall not be paid Into the Treasury under this
Act. All such receipts, however, shall be reported to the Sec
retary-Treasurer of the Board of Regents and shall be avail
able to the Governor, to the General Assembly and to the
Board of Regents: and all such revenue Is declared to be un
der the control of the Board of Regents, which control may
be exercised directly or through such athletic associations or
organizations ns It may authorize, provided, such associations
and organizations remain always subject to the control of the
Board of Regents."
The above Act of 1935 clearly changed the law as dealt with
by the Court In State of Georgia vs. Regents of (he University
System of Georgia, et al.. supra. To this effect, see Ramsey
vs. Hamilton .181 Ga. p. 365. decided October 19, 1935, In which
the Court held:
"(41 By the act of 1935 (Ga. L. 1935, p. 171) the status of
the Regents of the University System of Georgia Is declared
to be a governmental agency of the State of Georgia, and
the title to all property held by the same to be In the State.
Theteforc a suit against the said regents Is In effect a suit
against the State of Georgia, and Cannot be maintained with
out its consent."
On page 378 of this opinion, the Court, In dealing with
the change of legislative intent on this question, stated:
"It Is a matter of current history that the Act of 1935 from
which we have quoted was adopted by the General Assembly
and approved by the Governor lor the purpose of changing
the status and relation which the Regents of the University
System of Georgia sustained to the State under the previous
law. ns pointed out in the decision of this Court In State vs.
Regents, supra; and since the passage of that Act it Is ap
parent that the Regents of the University System of Georgia
Is now, and was at the time of the filing of the present suit.
a governmental agency of the State In charge of property
of which the title Is In the State."
See also, State of Georgia vs. Davidson, 198 Ga.
p. 27.
However, on February I, 1940, an Act was approved which
repealed in Us entirety the Act of 1935 above referred to, and
in addition thereto provided as fallows;
"The status of the title to the property and the status and
of powers of the Regents of the University System of Geor
gia and of the Board of Regents are hereby restored to the
full extent as it said Act had never been enacted.”
It seems clear that the Legislature has manifested a posi
tive intent to restore the status of the Regents of the Univer
sity System and of the Board of Regents to the same position
they held when the case of State of Georgia vs. Regents of
the University System of Georgia, supra, was decided by the
Supreme Court of this Slate. In other words, after the passage
of the Act of February 1,194 G. the Regents of the University
System of Georgia again became a distinct corporate entity
governed by a Board of Regents. This would mean that an
obligation incurred by the corporation or the Board of Regents.
Is not a debt of the State, and therefore is not affected by
constitutional limitations upon State indebtedness.
There was another change in the law since the decision in
State of Georgia vs. Regents of the University System of Geor
gia, supra, which must be considered in order to determine
whether or not that decision should be operative under existing
law. On August 7, 1945, when the Constitution of this State
was revised, the following pertinent provisions were Inserted
therein in relation to the Board of Regents. In Paragraph 1,
Section 4 of Article 8, the following provisions are stated:
"There shall be a Board of Regents of the University Sys
tem of Georgia, and the government, control and manage
ment of the University System of Georgia and all of its in
stitutions in said system shall be vested in said Board of Re
gents of the University System of Georgia. . . . The said
Board of Regents of the University System of Georgia shall
have the powers and duties ns provided by law existing at
the time of the adoption of this Constitution, together with
such further powers and duties as may be hereafter pro
vided by law/’
Two questions are Immediately posed by the above provisions
of the Constitution. First, does the fact that the government,
control and management of the University System and its in
stitutions are vested in a Board of Regents necessarily prevent
the said Board of Regents from operating this system through
the Regents of the University System of Georgia as a distinct
corporate entity as was done at the time of the decision in
State of Georgia vs. Regents of the University System of Geor
gia, et al?
My answer to this question is that the constitutional pro
vision above referred to does not prevent the Regents from op
erating as a corporate entity as provided for by statutory en
actment. The mere fact that the control and management of
the University System are vested in the Board of Regents by
the Constitution docs not in my opinion prevent or prohibit the
Regents from operating as a distinct corporate entity. This
point of law was passed on in
State of Georgia vs. Regents of the Univ. System of Geor
gia, supra,
where on p. 179 of the opinion the Court dealt specifically with
a statute which is similar to the constitutional provision now
under consideration. The Court quoted Section 48 of the Act
of 1931, and held as follows;
“By Section 48, as in case of the former trustees, it was
provided that ‘the government of the University of Georgia
and all of its branches ... is vested in a Board of Regents.
. . .’ It is thus seen that the Regents of the University Sys
tem of Georgia is a distinct corporate entity, though con
trolled by a Board of Regents which is designated as a de
partment of the State Government.”
From the above decision of the Supreme Court, I am of
the opinion that the constitutional provision docs no more tiian
make the Board of Regents constitutional officers of this State,
and as such, the Board of Regents becomes a department of
the Stale government. However, in keeping with the decision
of the court, this does not mean that the corporate entity
is a department of State. It therefore follows in my opinion
that the decision of the Court clearly applies to the constitu
tional provision now under consideration, since this provision
is very similar to the statute (Section 32-113 of the Code of
Georgia) which the Court had under consideration. Since this
is true, it must necessarily follow that the corporation is fully
authorized to enter into any contract or issue revenue bonds
which, in its reasonable discretion, may be necessary for the
usefulness of the University System or any one of its institu
tions. This liability incurred in the corporate name is not a
liability of the State, but rather a separate legal obligation
of the corporation.
The second inquiry concerning the constitutional provision
which provides that the A Board of Regents . . . shall have the
powers and duties as provided by law existing at the time of
the adoption of this Constitution, together with such other
powers and duties as may hereafter be provided by law" does
not in my opinion mean that the provisions contained in the
Act of 1935 are permanently retained as powers and duties of
the Board of Regents. The framers of the Constitution were
careful ,to provide that the Board of Regents should not only
have the powers and duties existing at the time of the adop
tion of the Constitution, but that the said Board was to have
such further powers and duties which mav be subsequently
provided by law. The Act of 1935 primarily deals with the
status of the Regents and the members of the Board of Re
gents over State property. As shown by the caption of the Act,
another purpose of this legislation was "to limit and restrict
the powers of the Regents of the University System and the
members of the Board of Regents.” On the other hand, it seems
that the Constitution desires to protect all powers and duties
of the Board of Regents and to be sure that this authority is
not later taken away from the Board by subsequent legislation.
The Act of 1946 in repealing the Act of 1935, does not sub
stantially take away any previous authority which the Board
of Regents may have had, but on the contrary, this latter Act
by repealing the Act of 1935 with Us limit and restriction on
the powers of the Board, seems, if anything, to enlarge the
scope of the powers and duties of the Board of Regents This
Is certainly in keeping with the latter part of the constitutional
provision which authorizes the Legislature to grant further
powers and duties to the Board of Regents.
The above construction of the Constitution seems to be in
line with the weight of authority on the subject. In Am. Jur,
at page 660, there are numerous cases cited on the follow
ing proposition:
"It is proper to assume that a Constitution is Intended to
meet and be applied to new conditions and circumstances as
they may arise In the course of progress of the community.
The courts in this country have shown a determination to
give our written constitutions, by interpretation, such flex
ibility as will bring them into accord with what the courts
believe to be public Interest.”
Applying the rule of flexibility to the stated provisions of
the Constitution above, it seems that we should give great
weight to the opinion of the Legislature in reference to defining
just what matters are believed to be in the public interest. It
would be a rather harsh rule to rigidly apply the Constitution
to such an extent that the Legislature would be powerless to
promote public interest by future legislation, unless of course
such legislation was in conflict with the Constitution.
From the above provisions of law, 1 am of the opinion that
the State Board of Regents are constitutional officers of this
State, and as such as subject to all State laws and regulations.
However, the Regents of the University System of Georgia is
a distinct corporate entity and is subject to the control of the
Board of Regents. The decision of the Supreme Court in State
of Georgia vs. Regents of the University System, supra, is now
in lull force and effect under the laws existing at this time.
It therefore follows that the revenue bonds issued by the State
Board of Regents in its corporate capacity are not obligations
of the State. These bonds do not create a debt against the
State. On the contrary, the corporate entity had the authority
to enter into these contracts by virtue of Section 32-121 of the
Code of Georgia which granted to the Board of Regents tin*
power “to exercise any authority usually granted to such cor
poration, necessary to its usefulness, which is not in conflict
with the Constitution and laws of this State.”
You ask the further question of whether the power of th©
Regents to issue self-liquidating bunds is unlimited. The Court
in State of Georgia vs. Regents of the University System, supra,
seems to give a satisfactory answer to this inquiry. On page
218 of tiie opinion the Court holds:
“So long as the board does not exercise its power caprici
ously or arbitrarily, or so as to thwart the purpose of tho
legislature in establishing a system of university education,
the board itself must determine what is necessary for the
usefulness of the system, and thus will govern the University
of Georgia* and its several branches. The powers granted are
broad and comprehensive, and, subject to the exercise of a
wise and proper discretion, the regents are untrammelled ex
cept by such restraints of law as are directly expressed, or
necessarily implied. The legislature does not pretend to gov
ern the system, but has entrusted this responsibility to th©
Board of Regents.”
“It is my definite opinion that tho members of the Stale
Board of Regents are public officials and are subject to all
limitations and restrictions of law to the same extent as other
public officials of this State. The members of the Board of Re
gents are constitutional officers. (See Par. 1 of Section 4 of
Article 8 of the Constitution.)”
The Legislature has likewise declared the Board of Regents
to constitute a department of the State government of Georgia.
(See Code Section 32-101.) To the same effect, see
State of Georgia vs. Regents of the University System of
Georgia, 179 Ga. p. 210, at p. 218, where the Court held:
“It is thus seen that the Regents of the University System
of Georgia is a distinct corporate entity, though controlled by
a Board of Regents which is designated as u department of
the State Government.”
Your second inquiry is whether the Board of Regents may
transfer to a corporation income received by the Board of Re
gents as provided by law. You state that this question is sup
plemental to those propounded in your letter of October 10, 1940,
and X therefore assume that your question is directly related
to the issuance of revenue certificates by the Board of Regents
payable out of certain specified income derived from particular
property.
In State of Georgia vs. Regents of University, supra, th®
Court held that “the bonds do not constitute general obliga
tions, but are payable only out of special funds.” The Court
in that case concluded by holding that the Regents as a cor
poration were authorized to pay such bonds out of the stipu
lated income, but that “if the payment of any of these bonds
from the income as pledged should by any cnance cause such
u drain upon the resources of the affected institution that ifc
might be in need of increased appropriations in order to func
tion properly as an educational unit, the State would still be
under no obligation to supply the deficit, even though it might
desire to do so and actually do so.”
From the reasoning of the Court advanced In the above
case, it seems that the Regents as a corporate entity has con
trol over the fees and income which have been speciiically des
ignated for the payment of these certificates. It should bo
pointed out in this connection that the Supreme Court dealing
with this question placed certain limitations and restrictions
on the authority of the Board. On page 218 of the above opin
ion the Court held;
It is further true that the corporation, by and through
the Board of Regents, exercises any power usually granted
to like corporations, which is necessary to the usefulness of
the particular corporation and is not in conflict with the
laws of this State. So long as the board does not exercise its
powers capriciously or arbitrarily, or so as to thwart the
purpose oi the legislature in establishing a system of uni
versity education, the board itself must determine what is
necessary for the usefulness of the system, and thus will
govern the University of Georgia and its several branches,
fhe powers granted are broad and comprehensive, and, sub
ject to the exercise of a wise and proper discretion, the re
gents are untrammeled except by such restraints of law as
are directly expressed, or necessarily implied. The legisla
ture does not pretend to govern the system, but has entrusted
this responsibility to the Board of Regents.”
The Board of Regents would not be authorized to pledge
money appropriated by the Legislature or from some other
source, other than the income from the property specifically
designated by the corporation for such purpose, to pay any in
debtedness created by the issuance of these revenue certificates.
All funds not directly collected by the Regents as a corporate
entity would be subject to the same provisions of law as gov
ern all other appropriations made by the General Assembly. Ail
appropriations made by the General Assembly should be made
to the Board of Regents who are constitutional and public of
ficials of this State. The Board of Regents as such public offi
cials would not be authorized to transfer such appropriated
funds to the Regents of the University System of Georgia to
liquidate any indebtedness resulting from the issuance of these
revenue certificates. These certificates or bonds are payable
only from the pledged income, and as stated by the Supremo
Court on page 222 of its opinion in State of Georgia vs. Re
gents f the University System, supra,
gardless of the stipulations made, the State of Georgia
could never be called upon to pay these bonds.”
I am therefore of the opinion in keeping with the above
decision that the Board of Regents would not be authorized to
transfer income received by the Board of Regents to the cor
poration in question for the purpose of liquidating the rev
enue bonds previously issued by that corporation.”
