DISTRICTS ‑- SCHOOLS ‑- FUNDS ‑- INTERSCHOLASTIC ATHLETICS ‑- LEGAL STATUS OF STATE TOURNAMENT REVENUES
(1) Revenues, such as the receipts from the sale of admission tickets and paid advertisements, which are realized from the conduct of state athletic tournaments by the Washington Interscholastic Activities Association constitute private funds of the association and not public funds of the participating school districts and/or their student bodies.
(2) The expenditure of public funds by a school district to pay travel, lodging, salary and other expenses incurred by the district as a result of the district's participation in a state athletic tournament conducted by the Washington Interscholastic Activities Association does not constitute a gift of public money or property to the association in violation of Article VIII, § 7 of the Washington Constitution.
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September 24, 1980
Honorable Frank B. Brouillet
Superintendent of Public Instruction
Old Capitol Building
Olympia, Washington 98504
Cite as: AGO 1980 No. 19
By letters previously acknowledged, you requested our opinion on the following two questions pertaining to state athletic tournaments conducted by the Washington Interscholastic Activities Association:
"Question (1): Are revenues such as the receipts from the sale of admission tickets and paid advertisements which are realized from the conduct of state athletic tournaments by the Washington Interscholastic Activities Association subject to the ownership and control of the association or of the school districts and their student bodies whose teams participate in a tournament?
[[Orig. Op. Page 2]]
"Question (2): Assuming that state tournament revenues belong to the Washington Interscholastic Activities Association, does the expenditure of public funds by a school district to pay travel, lodging, salary and other expenses incurred by the district as a result of the district's participation in a tournament constitute a gift of public money or property to the WIAA in violation of Article VIII, § 7 of the state constitution?"
We answer question (1) as set forth in our analysis and question (2) in the negative.
In posing your questions, you also provided us with the following factual background:
"The majority of school districts are members of the WIAA, a private not for profit corporation. School districts sustain membership in the WIAA by annually executing a delegation of authority to the WIAA and paying an annual state‑wide total of approximately $16,000 in membership fees. The delegation of authority (copy enclosed) expressly recognizes that the rules of the WIAA 'provide for private sponsorship of post-season tournaments for extracurricular activities by the WIAA.'
"Annually the WIAA sponsors and conducts various state interscholastic activity tournaments. Teams which have been certified as eligible by their WIAA district are allowed, but not required, to participate in a state tournament.
"In the event a school district elects to enter an eligible team in a state tournament, the district initially pays all its expenses including travel expenses and the coach's salary. Participating districts are subsequently reimbursed a portion of their expenses pursuant to a distribution [[Orig. Op. Page 3]] formula adopted by the WIAA. The formula (copy enclosed) provides for the allocation of approximately one quarter of the WIAA's annual revenues to districts for expenses incurred in connection with both revenue raising and nonrevenue raising state tournaments. The remaining revenues are budgeted for the maintenance and operation of the WIAA during approximately the first three quarters of the next fiscal year.
"The arrangements for the state tournaments are made and paid for by the WIAA. In this respect, the WIAA rents the facility within which an event is conducted; employs and compensates promoters, event managers, ticket takers, crowd control personnel, ushers, program sales persons, electricians and other personnel deemed necessary by the WIAA; and, provides for other arrangements such as the printing of programs and the sale of advertisements and admission tickets. The revenue realized from the foregoing activities is retained by the WIAA."
Your first question involves the status or characterization of the revenues derived by the WIAA from such state tournaments. Although "retained" by that association, are they, nevertheless, truly student body funds of the school districts which participate in the tournaments? Or, instead, do they constitute private funds of the WIAA?
This question presumably has arisen in light of the fact that most (although not all) of the tournament participants are public school athletic teams and the further fact that the WIAA is an organization whose members are predominantly public school districts. Thus, it may appear to some that those school districts and the WIAA are one and the same for the purpose of determining the nature of the revenues in question. Initially, however, we reject any notion that either school district participation in a state tournament or school district membership in the WIAA, alone, constitutes a legal basis for characterizing the resulting revenues as student body funds of the participating districts.
[[Orig. Op. Page 4]]
(a)School District Membership:
We are informed that the WIAA has actually existed in one form or another since at least 1920. Until its recent establishment as a nonprofit corporation, however, it existed as an unincorporated association. Its membership consists exclusively of those private schools and public school districts which annually pay a membership fee and execute an agreement delegating their authority respecting certain interscholastic activities (inclusive of athletics) to the WIAA.1/ The mere fact that a school district is a member of the WIAA, however, does not in itself give rise to a claim of ownership by the district to any particular asset of that organization. Both voluntary unincorporated associations and nonprofit corporations are legal entities separate and apart from their members‑-and no member has individual exclusive ownership of any particular segregated part of the association or corporation property. See,Apostolic Faith Mission of Portland, Oregon v. Christian Evangelical Church, et al., 55 Wn.2d 364, 367, 347 P.2d 1059 (1960); andThe State of California v. The State Tax Commission, et al., 55 Wn.2d 155, 157, 346 P.2d 1006 (1959).
(b)School District Participation:
Nor, in our opinion, does participation in a state tournament, by itself, give rise to a claim of ownership of the revenues from the tournament. To be sure, a state athletic tournament could not be conducted‑-any more so than could the Olympic Games or any other such event or tournament‑-without participants. But likewise, the particular tournament would not occur in the first instance except for its organization and conductby and at the expense of the WIAA. Those teams which participate do so voluntarily and are availing themselves of an opportunity to compete for purposes of their own fulfillment in an event made available by another. Therefore, in the absence of such an additional factor as a contractual or agency relationship to the contrary, we cannot perceive of a legal basis for concluding that a school district would have an [[Orig. Op. Page 5]] enforceable claim to tournament revenues solely as a result of participation in the tournament. Accord,City of South Portland v. State Principals' Association, Me., 293 A.2d 525 (1972).2/
(c) Possibility of a Contractual Claim:
Next, we note that no facts have been brought to our attention which establish the existence of such a contractual arrangement between the WIAA and participating school districts as would entitle those districts to the revenues from a state tournament on that basis.
(d)Possibility of an Agency Relationship:
The issue which remains, then, is whether the WIAA is nevertheless acting as agent on behalf of the participating school districts‑-or of school districts, generally‑-in the course of conducting the subject state tournaments.
If such an agency relationship were to exist between the WIAA and school districts‑-whereby the WIAA would conduct the tournaments on behalf of the participating districts and their student body organizations‑-it would then necessarily follow that the gate receipts and other tournament revenues would be funds of the districts and their student bodies. That would be so since the events would then constitute school district student body activities‑-so that the revenues would then be subject to so much of RCW 28A.58.113 and 28A.58.120 as provide that any gate receipts derived from extracurricular athletic events of a school district (together with any funds generated through the programs and activities of a student body) are to be deposited in the district's associated student body program fund.3/
Here in fact, as previously explained, each school district which is a member of the WIAA annually executes an agreement whereby certain authority respecting the conduct of interscholastic activities is "delegated" to the WIAA. The basis for so doing will be found in so much of RCW 28A.58.125 as reads as follows:
[[Orig. Op. Page 7]]
"Each school district board of directors is hereby granted and shall exercise the authority to control, supervise and regulate the conduct of interschool athletic activities and other interschool extracurricular activities of an athletic, cultural, social or recreational nature for students of the district. A board of directors may delegate control, supervision and regulation of any such activity to the Washington Interscholastic Activities Association or any other voluntary nonprofit entity and compensate such entity for services provided, subject to the following conditions:
". . ."
The form of delegation agreement you have advised us is currently being used, a copy of which accompanied your opinion request, contains the following pertinent exception to the matters which a school district otherwise delegates to the WIAA to be performed in behalf of the district:
"WHEREAS the board of directors of ___________School District being otherwise fully informed of the rules and regulations of the Washington Interscholastic Activities Association as approved by the State Board of Education andrecognizing that said rules and regulations provide for private sponsorship of post-season tournaments for extracurricular activities by the WIAA, consent to abide by such rules and regulations." (Emphasis supplied)
In addition, we are further informed that the rules of the WIAA which are thus referenced in the above‑quoted delegation agreement specifically provide that "[r]evenue from these [state championship] tournaments shall accrue to WIAA as determined by the Executive Board." Article 29, § 29.11.6,1979-80 and 1980-81 Handbook.
It thus seems clear to us‑-based upon the membership arrangement between the WIAA and the various school districts‑-that the WIAA does not act as agent in behalf of its member school districts in the course of conducting any such post-season or state athletic tournaments. Instead, the delegation or membership instrument expressly disclaims any delegation of such tournament functions to the WIAA. Furthermore, the formal understanding between the WIAA and each school district (inclusive of member districts that ultimately participate in a state tournament) is that the revenues from those tournaments accrue to the WIAA.
[[Orig. Op. Page 8]]
We also note that the above‑quoted language of RCW 28A.58.125 originated as part of § 1, chapter 32, Laws of 1975-76, 2nd Ex. Sess. (Senate Bill No. 3138) and, from our review of the Senate Journal at pp. 315-16, was actually looked upon by its sponsors as involving something other than a true delegation of school district authority to the WIAA or other private organization involved. Instead, the measure was primarily conceived of as one providing for certain restrictions on the previously unregulated relationship between the districts and the WIAA. Therefore, in reality, the concept of a delegation of powers, in the traditional sense, was not truly involved‑-even though the word "delegate" was used.
Thus, in summary, there appears to be no firm foundation which springs from either the law of agency or the law of contracts upon which to premise a conclusion that the subject athletic tournaments are conducted by or on behalf of the participating school districts. And therefore, in response to your first question, we conclude that such revenues as are derived by the WIAA from the conduct of those athletic tournaments‑-which are sponsored and conducted by the WIAA (1) exclusively in its capacity as a nonprofit corporation and (2) wholly at its expense‑-do, indeed, belong to and are subject to the control of the WIAA.
Your second question assumes the foregoing answer to question (1) and then asks:
". . . does the expenditure of public funds by a school district to pay travel, lodging, salary and other expenses incurred by the district as a result of the district's participation in a tournament constitute a gift of public money or property to the WIAA in violation of Article VIII, § 7 of the state constitution?"
Article VIII, § 7 reads, in pertinent part, as follows:
"No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, . . ."
[[Orig. Op. Page 9]]
School districts are included within the term "municipal corporation" and therefor are subject to this provision. Maxon v. School District No. 34, 5 Wash. 142, 31 Pac. 462 (1892). Nevertheless, in order for your question to be answerable in the affirmative, there would have to be some gratuitous transfer of school district money or property to the WIAA. Here, however, the facts presented indicate only that a school district which elects to participate in a WIAA state tournament then pays all (or at least some) of its travel and other expenses incident to participation. These expenses are incurred as a result and in direct support of an authorized educational activity which the district has elected to provide to its students.4/ Accordingly, there is simply no such transfer or giving of school district money or property to the WIAA as would constitute an unconstitutional gift.
We recognize, however, the possibility of an argument to the effect that a participating school district might be indirectly making a gift of money and property by providing a publicly funded "service" to the WIAA which, in turn, enables that organization to conductand realize revenues from its state tournaments. Assuming for the sake of argument that "services" are a form of money or property within the contemplation of Article VIII, § 7,supra, we still are not persuaded that a court would hold a school district to have made an unconstitutional gift under the circumstances.
It is axiomatic that an order for a transfer of public money or property to fall under the "gift" prohibition of Article VIII, § 7, the transfer must be made gratuitously without consideration to the government entity making the transfer. State ex rel. O'Connell v. Port of Seattle, 65 Wn.2d 801, 399 P.2d 623 (1965). In other words, a transfer of money or property by a municipal corporation to a private entity is not prohibited by the constitution if the municipality receives adequate consideration or value in return. Furthermore, the Court has indicated that if an intent to make a gift is lacking, the elements of a gift are not present‑-and Article VIII, § 7 does not apply. Scott Paper Company v. Anacortes, 90 Wn.2d 19, 578 P.2d 1292 (1978).
[[Orig. Op. Page 10]]
We can find no basis within the factual pattern here present for concluding that those school districts which participate in WIAA state tournaments either intend to make gifts of money or property (directly or indirectly) to the association or fail to receive adequate consideration as a consequence of their participation.
First, it seems to us that in the absence of facts to the contrary, we must attribute the apparent and proper motivation to a participating school district. That is, the district elects to participate in a state tournament by reason of the honor incident to such participation and the unique, education related experience afforded its students to play against other superior athletes‑-and not for the purpose or with the intent of assisting the WIAA to raise funds.
Second, we think that a strong defense against any assertion of a gift in violation of Article VIII, § 7 may be premised upon the return benefits provided tournament participants by the WIAA. In this respect a district receives, in addition to the intrinsic value of the opportunity to participate, the benefit of the WIAA's acquisition and preparation of the site and of its organization and conduct of a tournament.5/
Therefore, in answer to your second question, we do not think, under the circumstances described above, that a school district's participation in a WIAA revenue producing state athletic tournament constitutes a gift of money or property in violation of Article VIII, § 7,supra. We thus answer that question in the negative.
[[Orig. Op. Page 11]]
We trust the foregoing will be of assistance to you.
Very truly yours,
ROBERT E. PATTERSON
Assistant Attorney General
*** FOOTNOTES ***
1/Article IV of the Articles of Incorporation of the WIAA filed April 8, 1980, provides that "[t]he membership of the corporation shall consist of all private schools and public school districts in the State of Washington desiring to join the corporation."
2/In that case, claims by school districts which participated in a state tournament to a certain percentage of the tournament revenues were rejected in the absence of a contractual right to the revenues.
3/These two statutes read, in material part, as follows:
"The board of directors of any common school district may establish and collect a fee from students and nonstudents as a condition to their attendance at any optional noncredit extracurricular event of the district which is of a cultural, social, recreational, or [[Orig. Op. Page 6]]athletic nature: . . . Fees collected pursuant to this section shall be deposited in the associated student body program fund of the school district, and may be expended to defray the costs of optional noncredit extracurricular events of such a cultural, social, recreational, or athletic nature, or to otherwise support the activities and programs of associated student bodies." RCW 28A.58.113.
". . .
"All moneys generated through the programs and activities of any associated student body shall be deposited in the associated student body program fund. Such funds may be invested for the sole benefit of the associated student body program fund in terms enumerated in RCW 28A.58.440 and the county treasurer may assess a fee as provided therein. Disbursements from such fund shall be under the control and supervision, and with the approval, of the board of directors of the school district, and shall be by warrant as provided in chapter 28A.66 RCW: . . ." RCW 28A.58.120.
See also, the definitions of "associated student body program" and "associated student body moneys" set forth in WAC 392-138-010(2) and (4). These definitions jointly establish that the revenues from activities conducted by or on behalf of a student body constitute student body funds subject to RCW 28A.58.120, supra. In addition, WAC 392-138-085 establishes that the revenues from "joint inter and intra" school district athletic league activities are student body funds subject to RCW 28A.58.120, supra.
4/See, AGO 1974 No. 21 (copy enclosed) at page 13.
5/In addition, tournament participants and other members of the WIAA receive the benefit throughout the succeeding year of WIAA services funded with tournament revenues. Taken as a whole, that benefit is significant. For example, the 1979 statement of the WIAA's cash receipts and disbursements shows the following: During the 1979 fiscal year the operating costs of the WIAA totaled $541,369.00 (inclusive of approximately $177,585.00 in disbursements to districts). Of this amount, revenues from state meets accounted for $397,896.00 while membership fees accounted for a mere $16,435.00. Thus, the cost to school districts and their taxpayers for the services provided by the WIAA would be substantially higher if it were not for the revenues from state meets or some other nonschool source.