Judges: RICHARD P. IEYOUB
Filed Date: 2/21/2003
Status: Precedential
Modified Date: 7/5/2016
Dear Mr. Henson:
You advised that the Department of Labor ("DOL") has expressed interest in voluntarily moving several subaccounts of the Employment Security Administration Fund (the "Fund") to the state treasury. The subaccounts involved are the Penalty and Interest Account (R.S.
Your questions are raised in light of La. Const. Art.
In reaching our determinations herein, we are guided by the following rules of statutory construction: Words and phrases shall be read with their context and shall be construed according to the common and approved usage of the language. LSA-R.S.
1. May the DOL voluntarily put its money into the treasury?
The Constitution in Art. IV, Sec. 9 sets forth the duties of the Treasurer, which include being the head of the department of the treasury and being "responsible for the custody, investment, and disbursement of the public funds of the state, except as otherwise provided by this constitution."
The redactors of the 1974 Constitution structured Art. VII, Sec. 9 of the Constitution so that all monies received by the state, with very few exceptions, would first be used to pay bonded indebtedness of the State and also that there be central cash management. See Records of theLouisiana Constitutional Convention of 1973: Convention Transcripts, Volume IX, Pages 2888-2891. Accordingly, all moneys received by the state, or by any state board, agency or commission must be deposited immediately upon receipt into the state treasury, unless one of the six listed exceptions in Art. VII, Sec. 9(A) applies. After deposit in the state treasury, Art. VII, Sec. 9(B) provides that all state money is credited to a special fund designated as the Bond Security and Redemption Fund, except money received as the result of grants or donations or other forms of assistance when the terms and conditions thereof or of agreements pertaining thereto require otherwise. After an amount is allocated from the Bond Security and Redemption Fund for the payment of debt service, the money remaining in the fund is credited to the general fund, except as otherwise provided by law.
The Constitution does not require the deposit into the state treasury of money received by the Employment Security Administration Fund, nor does the Constitution prohibit the deposit of monies into the state treasury that are not constitutionally required to be deposited into the treasury. Accordingly, the Louisiana Constitution does not prohibit the DOL from voluntarily depositing money into the treasury which is not constitutionally required to be deposited into the state treasury.
As to whether there is a statutory prohibition to the deposit of the subaccounts into the state treasury, we call your attention to R.S.
You specifically questioned whether the Special Assessment Account may be deposited into the state treasury in light of R.S.
2. Would the DOL money have to be separated from the general fund money, or could they be co-mingled for investment and just accounted for separately?
As you noted, R.S.
The Treasurer is constitutionally required to invest all money in his custody which is available for investment. La. Const. Art.
Based upon our understanding that (i) cash is fungible; (ii) it is standard procedure for the treasury to commingle cash belonging to the general fund and the dedicated funds in order to invest the cash in the state's bank account; (iii) it is financially prudent for the Treasurer to commingle cash for investment purposes in order to maximize the return on investments; and (iv) there is no statutory prohibition barring same, it is the opinion of this office that DOL monies (except those in the Special Assessment Account which cannot be deposited in the state treasury) may be deposited into the central depository bank account and combined with other cash monies for investment purposes, provided that the DOL monies are accounted for separately.
Alternatively, the treasury could, after determining the most financially preferable and prudent option, invest the DOL money as a separate investment portfolio.
3. What investments would be legal and appropriate for the DOL money?
The DOL monies (except those in the Special Assessment Account which cannot be deposited in the state treasury) may be invested in any investment which is permitted by law for the investment of state funds. A list, although not comprehensive, of permissible investments for funds on deposit in the state treasury is contained in R.S.
4. Would DOL money have to flow through the Bond Security and Redemption Fund if it is deposited into the treasury?
Because the Fund is not monies which are required to be deposited into the state treasury, it is our opinion that the monies in the Fund should not be credited to the Bond Security and Redemption Fund as they could not be used for the payment of debt service on full faith and credit obligations of the state.
5. Once the DOL money is in the treasury, would an appropriation be necessary to remove it?
If the DOL money is not in the state treasury, no appropriation would be required to withdraw the monies from the Fund. Ops.Atty.Gen. 95-247, 00-248. Once the DOL money is in the treasury, those monies cannot be withdrawn from the state treasury without an appropriation. La. Const. Art.
You next ask whether the language in R.S.
6. Where should the treasury put DOL's money if DOL does decide to put the above-referenced three accounts into the treasury?
You indicated that the treasury would like to put the DOL money in a new escrow account. An escrow account is used to hold monies pending determination of their ownership or to hold monies which do not belong to the State. For example, taxes paid under protest are kept in an escrow account pending resolution of the issues. R.S.
7. If DOL deposits these funds in the Treasury, would interest earned remain in these accounts?
Generally, interest is only allocated to special funds if the legislation creating the special funds so provides; otherwise, interest is deposited into the State general fund. R.S.
8. If these funds are in the treasury, would the year-end fund balances remain in the accounts and be carried over into subsequent fiscal years?
R.S.
This opinion presupposes that the deposit of the Fund into the treasury and its potential use for the payment of state general obligation debt service does not violate federal law; however, no opinion is given on such matter.
Trusting this adequately responds to your request, we remain
Yours very truly,
RICHARD P. IEYOUB ATTORNEY GENERALBY: ________________________________ MARTHA S. HESS Assistant Attorney General
RPI:MSH:jv
cc: Department of Labor
DATE RELEASED: February 21, 2003