Can a Mississippi school district spend public money to fix up school property and then give that property to a nonprofit?

Plain-English summary

The Greene County School District owned a piece of property it was no longer using. A 501(c)(3) nonprofit organization with an educational mission asked the District to (1) make improvements to the property and (2) ultimately transfer the improved property to the nonprofit. The District's attorney asked whether that combined plan was legal.

The AG split the question into its two parts and answered the second part squarely.

Conveying unused property to a nonprofit: Probably permissible. Mississippi Code Section 37-7-471 lets a school board sell, lease, or otherwise dispose of property when the board finds that (a) the property is no longer needed for school purposes, (b) selling in the ordinary way is not necessary or desirable, and (c) the use the property will be put to will promote the community's development. Those findings, recorded on the board's minutes, support a conveyance. The conveyance can be at "nominal" consideration. Reversionary clauses are sometimes required.

Spending public funds to improve the property as part of that conveyance: Not permissible. The opinion explicitly says no. Article 4, Section 66 of the Mississippi Constitution prohibits a "donation or gratuity in favor of any person or object" except by two-thirds vote of each branch of the legislature. The expenditure of public funds to improve property for the purpose of donating it to a private nonprofit is exactly the kind of public-to-private transfer Section 66 prohibits without legislative supermajority approval.

The opinion drew on the 2005 Creekmore opinion, which addressed an analogous situation: could the City of Amory build and lease a building free to the Mississippi Department of Public Safety? The AG said no, even though the city had general authority to lease property. Spending city funds to construct a building specifically to give it away (or give its use away) is an unlawful donation. The same logic applies to a school district improving property to give it away.

The footnote made the scope clear: the opinion is not about the school board's general authority to improve school district property for school purposes. It is specifically about the donation problem: improving property when the purpose is to gift it to a nonprofit.

What this means for you

For Mississippi school boards considering property transfers

Under the opinion, a school board may convey property no longer needed for school purposes under § 37-7-471 (on the findings the statute requires, "spread upon its minutes," and at "consideration, nominal or otherwise"). What it may not do is "use public funds to make improvements to school district property if the purpose of making those improvements is to convey the property to a non-profit organization"; that "would constitute an unlawful donation under Article 4, Section 66."

For school board attorneys

The opinion distinguishes the board's general authority to improve property for school purposes (which footnote 1 says it does not analyze) from spending public funds to improve property "for the ultimate purpose of donating it," which it holds is an unlawful donation absent explicit statutory authority. Section 37-7-477(1) also "requires certain conveyances of school property to include a reversionary clause."

For Mississippi nonprofit organizations seeking school property

The opinion allows a school district to convey property to a 501(c)(3) under § 37-7-471, but it bars the district from spending public funds to improve the property as part of that gift. Article 4, § 66 permits a donation "in favor of any person or object" only "by the concurrence of two-thirds of the members elect of each branch of the legislature."

For Mississippi state legislators

The opinion frames § 66 as a supermajority requirement, not an absolute bar: a donation may be authorized by a law passed with "the concurrence of two-thirds of the members elect of each branch of the legislature." Absent that explicit authority, the AG treats the improve-then-donate plan as an unlawful donation.

Common questions

Q: Can the school just sell the property at full market value, with no donation issue?
A: Yes. Section 37-7-471 allows sale at "such consideration, nominal or otherwise." Selling for full value is fine and avoids the donation issue entirely. The donation issue arises when the district transfers for less than value AND spends district money to enhance the value.

Q: What if the school improves the property for school use first, then later decides it is not needed?
A: That is a different situation. The improvements were for school purposes, not to enhance a future gift. After the property is improved, the district can later determine it is no longer needed and convey it (per Section 37-7-471). The donation problem arises when the improvement is undertaken for the purpose of the gift, not when subsequent events lead to a conveyance.

Q: Does this apply to leases too?
A: Yes. The Creekmore opinion the AG relied on involved a no-charge lease. Building (or improving) public property and then leasing it for free is treated the same as building/improving and donating. The constitutional prohibition reaches the substance of the transaction, not its form.

Q: What is the two-thirds legislative authorization mechanism?
A: Article 4, Section 66 says: "No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the legislature, nor by any vote for a sectarian purpose or use." If a particular donation is desired, the legislature can authorize it by a bill that passes both chambers with the supermajority.

Q: Does this apply to Sixteenth Section School Trust Lands?
A: The opinion expressly assumed the land was not Sixteenth Section School Trust Land, which it noted "cannot be disposed of except under very limited circumstances" (citing Janus). It did not analyze the donation question for Sixteenth Section land.

Q: What about modest improvements like cleaning up the lot?
A: The opinion did not draw a de minimis line. Its holding is directed at "spending public funds to improve school district property for the purpose of transferring the property to a non-profit organization."

Q: Can the district condition the conveyance on the nonprofit's use?
A: The opinion notes that § 37-7-477(1) "requires certain conveyances of school property to include a reversionary clause within the conveying instrument." It did not otherwise detail what conditions a board may impose.

Background and statutory framework

Section 37-7-471 is the conveyance authority the opinion relies on. It lets a school board, on findings "spread upon its minutes" that the property is no longer needed for school purposes, that an ordinary sale is not necessary or desirable, and that the intended use "will promote and foster the development and improvement of the community," sell, convey, lease, or otherwise dispose of the property "for such consideration, nominal or otherwise," subject to § 37-7-477.

Article 4, Section 66 of the Mississippi Constitution is the donation limit the opinion applies: "No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the legislature, nor by any vote for a sectarian purpose or use." The AG reads this to mean that using public funds to improve property "without explicit statutory authority" for the purpose of donating it is an unlawful donation.

The interplay the opinion draws: a school board may convey property under § 37-7-471, but cannot use that conveyance authority to justify spending public funds to improve the property for the recipient. As the opinion puts it, "[n]otwithstanding a school board's authority to lawfully convey real property pursuant to Section 37-7-471, spending public funds to improve that property for the ultimate purpose of donating it would constitute an unlawful donation."

The AG relied on its 2005 Creekmore opinion, which concluded that the City of Amory's authority to convey or lease land did "not extend to permit the expenditure of county or municipal funds to construct a building for the sole purpose of donating the use of it to the State." The opinion applied the same rationale to a school board improving property to donate it.

The opinion also flagged Sixteenth Section School Trust Lands, which it noted "cannot be disposed of except under very limited circumstances" (citing Janus), but it expressly assumed the property at issue was not such land.

Citations and references

Constitutional provision:

• Miss. Const. art. IV, § 66, prohibition on donations except by two-thirds legislative vote

Statutes:

• Miss. Code Ann. § 37-7-471, school board authority to convey property no longer needed
• Miss. Code Ann. § 37-7-477, terms and conditions on conveyances
• Miss. Code Ann. § 37-7-477(1), reversionary clause requirements

Prior AG opinions:

• MS AG Op., Janus (Oct. 13, 2006), limited circumstances for disposition of Sixteenth Section land
• MS AG Op., Creekmore (Feb. 18, 2005), Amory cannot build building to lease free to state agency; unlawful donation

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/07/J.-Rimes-June-28-2021-Authority-to-Improve-School-District-Property-for-the-Ultimate-Purpose-of.pdf

Original opinion text

June 28, 2021

Jeffrey B. Rimes, Esq.
Attorney, Greene County Board of Education
1022 Highland Colony Pkwy, Ste. 101
Ridgeland, Mississippi 39157

Re: Authority to Improve School District Property for the Ultimate Purpose of Conveying the Improved Property to a Non-Profit Organization

Dear Mr. Rimes:

The Office of the Attorney General has received your request for an official opinion.

Background Facts

The Greene County School District (the "District") owns property that, according to your request, is currently serving no need or purpose of the District. The District is considering making improvements to the property so that such property can be used by a non-profit organization that has an educational purpose, and the District has been asked to, ultimately, transfer the property to the non-profit organization.

Question Presented

Would it be legal for the District to make improvements to District property for the ultimate purpose of transferring the property to a 501(c)(3) non-profit organization?

Brief Response

No. Spending public funds to improve school district property for the purpose of transferring the property to a non-profit organization would constitute an unlawful donation under Article 4 Section 66 of the Mississippi Constitution.¹

Applicable Law and Discussion

Mississippi law authorizes a school board to donate school district property under certain circumstances. Specifically, Mississippi Code Annotated Section 37-7-471 provides:

Whenever the school board of any school district shall find and determine, by resolution duly and lawfully adopted and spread upon its minutes:

(a) That any school building, land, property or other school facility is no longer needed for school or related purposes and is not to be used in the operation of the schools of the district or that such school building, land, property or other school facility may yield a higher long-term economic value to the district, in the discretion of the local school board;

(b) That the sale of the property in the manner otherwise provided by law is not necessary or desirable for the financial welfare of the school district; and

(c) That the use of the school building, land, property or other school facility for the purpose for which it is to be sold, conveyed or leased will promote and foster the development and improvement of the community in which it is located and the civic, social, educational, cultural, moral, economic or industrial welfare thereof, the school board of such school district shall be authorized and empowered, in its discretion, and upon the terms and conditions set forth in Section 37-7-477, to sell, convey, lease or otherwise dispose of same for any of the purposes set forth herein. Such sale, conveyance, lease or other disposition, including retention of partial interest, or undivided interest or other ownership interest, shall be made upon such terms and conditions and for such consideration, nominal or otherwise, as the school board may, in its discretion, deem proper in consideration of the benefits which will inure to the school district or the community in which the school building, property or other facility is located by the use thereof for the purpose for which it is to be sold, conveyed, leased or otherwise disposed of . . . .

Miss. Code Ann. § 37-7-471 (emphasis added).²

Assuming the land in question is not Sixteenth Section School Trust Lands, which cannot be disposed of except under very limited circumstances, MS AG Op., Janus at *4 (Oct. 13, 2006), the school board may convey District property, by whatever terms are deemed appropriate by the board, in accordance with Section 37-7-471. However, we find no statutory authority that would allow a school board to use public funds to make improvements to school district property if the purpose of making those improvements is to convey the property to a non-profit organization. Doing so without explicit statutory authority would constitute an unlawful donation under Article 4, Section 66 of the Mississippi Constitution, which provides:

No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the legislature, nor by any vote for a sectarian purpose or use.

MISS. CONST. art. IV, § 66.

In 2005, our office was asked whether the City of Amory could build and lease, at no charge, a building to the Mississippi Department of Public Safety. MS AG Op., Creekmore (Feb. 18, 2005). In that opinion, we stated:

[A]uthority to convey or lease land would necessarily include any existing structure on that land. However, this authority does not extend to permit the expenditure of county or municipal funds to construct a building for the sole purpose of donating the use of it to the State. As we are aware of no specific statutory authority for a county or municipality to donate cash or in-kind services to the Department of Public Safety, the expenditure of county or municipal funds in this fashion would constitute an unlawful donation.

MS AG Op., Creekmore at *1 (Feb. 18, 2005) (internal citations omitted). This rationale applies to a school board's conveyance of school district property. Notwithstanding a school board's authority to lawfully convey real property pursuant to Section 37-7-471, spending public funds to improve that property for the ultimate purpose of donating it would constitute an unlawful donation.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Abby Cummings
Abby Cummings
Special Assistant Attorney General