Filed Date: 12/23/1981
Status: Precedential
Modified Date: 7/5/2016
Honorable Edward V. Regan Comptroller of the State of New York Department of Audit and Control
This is in response to the inquiry of your counsel whether Cornell University should transmit to the State Treasury out of compensation received by the University's statutory colleges from grants and contracts, the portion that represents recovery of expenditures for overhead expenses covered by State appropriations. Your counsel cites State Finance Law, §
The statutory colleges at Cornell receive a substantial amount of funding through federal, state and local government grants and contracts as well as from gifts, grants and contracts from other outside sources such as foundations, corporations, alumni and research groups. Certain federal, state and local grants and contracts provide for recovery of overhead costs associated with the funded projects. Your counsel indicates that under current practice the overhead costs thus recovered remain with the colleges even though a substantial portion of such overhead costs have been paid initially with funds appropriated by the State Legislature.
The Cornell statutory colleges occupy a unique status. They are defined as colleges furnishing higher education operated by private institutions on behalf of the State pursuant to statute, Education Law §
Section
In 1899 this office considered the question of whether money received by teachers in the school of nature study in the then Department of the College of Agriculture at Cornell University as tuition from out-of-state students had to be turned over to the State Treasury under a predecessor section of section
In 1928 this office ruled that while the statutory colleges at Cornell University were institutions supported by the State and subject to the supervision of the Education Department, their teachers and employees were not State employees covered by the State Insurance Fund (1928 Op Atty Gen 215).
The State has been held not liable for the negligent operation of an automobile by a statutory college employee (Green v State,
Again, a claim for damages arising out of the negligence of a statutory college was dismissed as against the State since it involved a tort of Cornell University rather than of the State (Effron v State,
Besides the separate status of the statutory colleges for various purposes, there appears to be statutory authority under various provisions of the Education Law for such colleges to retain overhead recoveries.
Thus, Cornell University is directed to keep all money appropriated for the New York State College of Veterinary Medicine or "derived from other sources in the course of administration thereof" in a separate fund exclusively for the College of Veterinary Medicine (Education Law, §
Implicit in these provisions is legislative recognition that the statutory colleges do receive income that is not to be paid into the State Treasury. These references to money derived from other sources in the course of administration are expressed in broad terms and are comprehensive enough to include overhead recoveries.
From all the foregoing I conclude that State Finance Law, §
While Cornell University is allowed to retain such overhead recoveries in the respective colleges' separate funds, the fact that the State through appropriations has borne much of the cost of such overhead should not be minimized. The State can insist that Cornell University employ appropriate accounting procedures and that the various colleges identify the amount and nature of overhead recoveries that are realized on grant and contract funded projects. Wherever feasible, Cornell should apply these overhead recoveries to cover the same or similar overhead costs at the respective colleges. When the Division of the Budget draws up the proposed executive budget and legislative committees review the fiscal needs of the statutory colleges, they should take into account the amounts of overhead recoveries on grants and contract funded projects of the statutory colleges actually received or anticipated. In that manner appropriations can give effect to the overhead recoveries realized by the statutory colleges.
"Moneys managed by non-State agencies such as the statutory and contract colleges at Cornell University and Alfred University are exempt from the provisions of this section and the new section 53-b added by section eighteen of the bill because they are not State agencies."
(Page 2. Section 53-b restricts applications for certain grant or contract-supported programs.)