Opinion Number ( 1997 )

Dear Mr. Kling:

On behalf of the Cash Management Review Board, you have requested our opinion regarding the application of the provisions of Louisiana Constitution Article VII, Section 9 to certain funds to be received by Southern University (Southern) pursuant to a cooperative endeavor with the United States Agency for International Development (USAID).

You have indicated that Southern has entered into this cooperative endeavor with USAID to implement the Zambia Democratic Governance Project and that all funding for the project comes from USAID. A project administration unit is to be established and operated by Southern in Lasaka, Zambia and a condition of the grant requires that funds for the project be accessible to the administration unit office in Lasaka. While we have not been presented with a copy of the grant agreement, you indicate that in order to accomplish this, the operating funds must be deposited in a Lasaka bank which, under Zambian law, are not required to be insured or collateralized.

Article VII, Section 9 of the Louisiana Constitution of 1974 provides:

Deposit in State Treasury. All money received by the state or by any state board, agency, or commission shall be deposited immediately upon receipt in the state treasury, except that received:

(1) as a result of grants or donations or other forms of assistance when the terms and conditions thereof or of agreements pertaining thereto require otherwise; . . .

R.S. 49:308 incorporates into the statutes verbatim the provision of the Constitution quoted above and further provides a definition of "state or state board, agency or commission" and excludes, among many others, by that definition, the Board of Supervisors of Southern University and Agricultural and Mechanical College, making clear the legislative intent to exempt Southern from this requirement. It is our opinion that this definition, together with the exception in Article VII, Section 9 (A)(1), operates to exempt Southern from the legal obligation to deposit the funds in question in the State Treasury. It appears from the USAID grant requirement that these funds do not actually become state funds, but rather remain USAID funds which are being administered by Southern for the purposes of the cooperative endeavor. As such, these funds would also fall outside the purview of La. R.S. 49:321 which requires security for deposits of state funds. Since these funds do not actually become state funds and are exempt from the constitutional requirement of deposit in the state treasury, the statutory provisions for security for deposits are moot and irrelevant.

I trust that this answers your inquiry. Please let me know if we may be of any further assistance to you in this matter.

Very truly yours,

RICHARD P. IEYOUB ATTORNEY GENERAL

By: ___________________________ GLENN R. DUCOTE Assistant Attorney General

RPI/GRD/cla