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FREEDOM OF INFORMATION COMMISSION |
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In
the Matter of a Request |
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Advisory Opinion #85 |
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State of Connecticut, Auditors of Public Accounts,
Applicant |
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On June 22, 1994, the Commission considered and agreed to respond to a request for an advisory opinion filed by the Auditors of Public Accounts.
In their request, the applicants seek the Commission's opinion as to the applicability of the Freedom of Information ("FOI") Act to the Connecticut Student Loan Foundation ("CSLF").
The Commission scheduled a hearing on the matter for July 18, 1994, at which time the applicants and the CSLF appeared. At the hearing, CSLF requested that it be made a party to these proceedings, which request was granted. CSLF then moved to dismiss these proceedings claiming that the Commission lacks jurisdiction to entertain the applicants' request by virtue of §1‑21j‑48 of the Regulations of Connecticut State Agencies. That motion was denied by the Hearing Officer in a written Decision on Motion to Dismiss dated April 4, 1995. Thereafter another hearing was held on May 15, 1995, at which the applicants and the CSLF appeared, stipulated to certain facts and presented testimony, exhibits and argument on the subject of this advisory opinion.
To determine whether the FOI Act is applicable to the CSLF the Commission must decide whether the CSLF is a public agency within the meaning of Conn. Gen. Stat. §1-18a(a). The Connecticut Supreme Court has provided guidance in matters where, such as here, "it is unclear whether a hybrid public/private entity" is a public agency for purposes of the FOI Act. Conn. Humane Society v. FOI Commission, 218 Conn. 757, 759 (1991); Board of Trustees v. FOI Commission, 181 Conn. 544, 554 (1980). And in this regard, it has interpreted §1-18a(a) to include "an entity that is the functional equivalent of a public agency." Conn. Humane Society, supra at 760.
In considering whether an entity is the functional equivalent of a public agency, the court has constructed a test consisting of four criteria:
(1) whether the entity performs a governmental function; (2) the level of government funding; (3) the extent of government involvement or regulation; and (4) whether the entity was created by the government.
Id. at 760.
In addition, the court has urged a case‑by‑case analysis to
ensure that the general rule of disclosure underlying this state's . . . (FOI Act] is not undermined by nominal appellations which obscure functional realities. (Citations omitted.] "All relevant factors are to be considered cumulatively, with no single factor being essential or conclusive." [Citations omitted.)
Id. at 761.
The parties have provided a comprehensive record from which the question of whether the CSLF is the functional equivalent of a public agency based on the foregoing criteria can be determined. In addition, the CSLF has presented an erudite brief. The CSLF argues forcefully that it is not the functional equivalent of a public agency under the established criteria, and therefore it is not subject to the FOI Act. In support of this position, the CSLF cites the following factors, which among others offered, the Commission finds to be the most persuasive in support of the CSLF's position:
1. The CSLF is a non‑profit tax‑exempt corporation;
2. The CSLF's annual revenues are
approximately $18,000,000, of
which $50,000 annually comes directly from the State of
Connecticut and is given to students as part of a rebate program that is being
phased out;
3. CSLF employees are not subject to the statutes, rules and
regulations governing public employees;
4. The CSLF has not been
represented by the Attorney General and
has always been represented by counsel engaged by it;
5. The CSLF owns real estate in
its own name, and
did not seek or
receive any approvals from state or local government for the purchase,
construction or mortgaging activities related to its real estate activities;
6. The debts of the CSLF are not debts of the state; and
7. The reserve funds of the CSLF are
considered as belonging to the
federal government.
Taking these factors into account, as well as the other factors presented by the CSLF, the Commission nevertheless believes that the CSLF is the functional equivalent of a public agency when all relevant factors are considered, as required.
The CSLF concedes, as it must, that it was created by the government. But, in addition, unlike many other corporations created by the government, the CSLF was created by a public act, rather than a special act. That public act is now codified as Conn. Gen. Stat. §10a‑201 and sets forth the CSLF's purpose as follows:
to improve educational opportunity. Improving educational opportunity shall include, but not be limited to, the following: (1) guaranteeing loans to persons who (A) are attending or plan to attend eligible institutions in the state; (B) are residents of the state who are attending or plan to attend eligible institutions outside of the state; or (C) receive loans made by an eligible lender; (2) guaranteeing loans for persons to assist them in meeting the expenses of postsecondary education; (3) lending funds to persons to assist them in meeting the expenses of postsecondary education; and (4) providing appropriate services incident to the administration of programs which are established to improve educational opportunities, all in accordance with the provisions of this chapter.
Thus, not only was the CSLF created by the government, its legislative purpose and the fact that it was created by a public act establish a particularly strong continuing nexus between the government and the corporation.
With respect to the criterion concerning the level of government funding, the CSLF notes that it receives (and then passes along to qualifying students) from the state approximately $50,000 per year of its approximately $18,000,000 annual revenue. Although $50,000 is a significant sum of money in itself, it is obviously only a small percentage of $18,000,000. But this amount does not circumscribe the full extent of state contingent and indirect funding or the financial support of the CSLF by the state.
For example, by state statute, the CSLF is exempt from all the requirements for nonstock corporations under Chapter 600 of the General Statutes. Conn. Gen. Stat. §10a‑201. Likewise, gifts to it are tax deductible and the CSLF is tax exempt from taxes and assessments by the state and its political subdivisions. Thus, the state indirectly supports the CSLF by not requiring the fees and taxes required of other nonstock corporations.
Moreover, while no obligation of the CSLF is a debt of the state under Conn. Gen. Stat. §10a‑204(b), that section also provides that
if state appropriations are not sufficient to pay that portion of any loans which are to be repaid by . . . [the CSLF] under the provisions of . . . [Conn. Gen. Stat. §10a‑206 (c)], the state shall guarantee to make such payments when due.
In addition, under Conn. Gen. Stat. §10a-206a, the State Comptroller shall, in certain circumstances, withhold state payments from borrowers of the CSLF who are in default of their loans to the CSLF. Under Conn. Gen. Stat. §10a-213, the CSLF, in certain circumstances, may borrow money from the state's General Fund. And under Conn. Gen. Stat. §§10a-214 and 10a-215, the State Bond Commission may issue state general obligation bonds in principal amounts necessary to provide funds to the CSLF's Restricted Fund up to $5,000,000, or more than $5,000,000 in any one biennium.
In light of the above, it is the Commission's opinion that the level of government funding, for purposes of the functional equivalent test, is substantial.
Similarly, it is the Commission's opinion that the extent of state involvement in and regulation of the CSLF, for purposes o the functional equivalent test, is substantial. Conn. Gen. Stat. §10a-203(a) provides that the CSLF shall be governed by a board of directors, all of whose members are either state officials or the appointees of state officials. Conn Gen. Stat. §10a-203(b) even goes so far as to provide that directors who miss three consecutive meetings, or more than 50% of the board's meetings during a calendar, shall be deemed to have resigned.
Other sections of Chapter 187a of the General Statutes regulate in great detail what the CSLF may do and how. They also set forth the state's intimate involvement with the CSLF. Such involvement includes the provision that the State Treasurer shall carry about the purposes and provisions of Chapter 187a, or of Title IV, Part B of the Higher Education Act of 1965, where applicable, if the Internal Revenue Service determines that the CSLF is not eligible for tax-exempt status. See Conn. Gen. Stat. §10a‑204(e). It also requires an annual report to the Governor, as is required by statute of all budgeted state agencies, as well as to the Board of Governors of Higher Education and to the General Assembly. See Conn. Gen. Stat. §10a‑210(a).
Furthermore, Chapter 187a
includes the provision that the CSLF and "its corporate existence shall
continue until terminated by law upon a finding that there no longer exists any
need for such a corporation." See Conn. Gen. Stat. §10a‑211. In other words,
the CSLF may not even dissolve itself. It must be dissolved, if at all, by the
state. Moreover, upon dissolution of the CSLF or cessation of its activities,
all of its property and moneys shall be vested in the state's General Fund with
certain exceptions. Id.
This leads the Commission to a consideration of the remaining criterion of the functional equivalent test -- i.e., whether the CSLF performs a governmental function. Again, it is the Commission's opinion that the CSLF does perform a governmental function.
Although, the purpose of the CSLF, as set forth in Conn. Gen. Stat. §10a-201, is not an historical or traditional function of state government, at least prior to 1965, it is clear from the statutory scheme of Chapter 187a that it now performs such a function. Indeed, under Conn. Gen. Stat. §10a-204(e), if the CSLF were not to have federal tax-exempt status, the State Treasurer would assume its function. And under §10a-11, the state reserves for itself exclusively the power to determine whether there is a need for the continuing existence of the CSLF.
Finally in this regard, Conn. Gen. Stat. §10a-221, part of Chapter 187b concerning the Connecticut Higher Education Supplemental Loan Authority, states that not only is it the purpose of that chapter, but that it is the policy of the State of Connecticut "to provide a measure of financial assistance to students in or from the state, their parents and others responsible for the costs of their [higher] education. It is clear that this statement of public policy precisely reflects the legislative intent and purpose behind Chapter 187a, as set forth in Conn. Gen. Stat. §10a-201. Thus, it is likewise clear that the state has assumed the responsibility of implementing this policy as a function of government through the statutory creation of the CSLF, providing it with the authority, power and financial means for accomplishing this policy, involving itself intimately in the CSLF's management, and regulating its functions in considerable detail.
For the foregoing reasons, it is the Commission's opinion that the CSLF is the functional equivalent of a public agency within the meaning of Conn. Gen. Stat. §1-18a(a). Accordingly, it is the Commission's opinion that the FOI Act is applicable to the CSLF.
By
Order of the Freedom of
Information Commission
____________________________
Frederick E. Hennick, Chairman of
of
the Freedom of Information
Commission
Dated: ___________________
Ordered:_________________
Elizabeth
A. Leifert,
Acting Clerk of the Commission
PURSUANT TO SECTION 4‑180(c), G.S. THE FOLLOWING ARE THE NAMES OF EACH PARTY AND THE MOST RECENT MAILING ADDRESS, PROVIDED TO THE FREEDOM OF INFORMATION COMMISSION, OF THE PARTIES OR THEIR AUTHORIZED REPRESENTATIVE.
THE PARTIES TO THIS ADVISORY OPINION ARE:
Kevin P, Johnston, State Auditor
State Capitol, Room 114 ‑ 116
210 Capitol Avenue
Hartford, CT 06106
Robert G. Jaekle, State Auditor
State Capitol, Room 114 ‑ 116
210 Capitol Avenue
Hartford, CT 06106
Ralph G. Elliot, Esq.
Tyler, Cooper & Alcorn
Hartford, CT 06103‑3488
__________________________
Elizibeth A. Leifert
Acting Clerk of the Commission