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.
3. 88-305
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.
4. 88-305
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).)
10. 88-305
(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.
* * * * *
11. 88-305