AGO 1993-058.

Case DateDecember 20, 1993
CourtOhio
Ohio Attorney General Opinions 1993. AGO 1993-058. December 20, 1993OPINION NO. 1993-058Donna Pope, Director Ohio Student Aid Commission P.O. Box 16610 Columbus, Ohio 43266-0610 Dear Director Pope: Your predecessor requested an opinion concerning various issues relating to the possible restructuring of the Ohio Student Aid Commission ("OSAC").(fn1) In accordance with subsequent conversations between our offices, this opinion is intended to address the principal threshold issue raised by the request, with the remainder of the issues to be addressed in a supplemental opinion if necessary. In particular, your predecessor's letter states: O.R.C. Section 3351.07(A)(2) provides in part:
The commission may acquire property or moneys for its purposes by the acceptance of gifts, grants, bequests, devises, or loans, provided that no obligation of the commission shall be a debt of the state, and the commission shall have no power to make its debts payable out of moneys except those of the commission.
This language has been considered by some to mean that the guarantee obligations of the [OSAC] to lenders making educational loans under the guaranteed student loan program are not backed by the full faith and credit of the State of Ohio.
However, Ohio Const. art. VI, section 5 provides that it is in the public interest and a proper public purpose for the state to guarantee the repayment of educational loans made to Ohio residents. It further exempts laws passed to carry section 5 into effect, and the guarantees themselves, from the debt creation and credit extension limitations of Ohio Const. Art. VIII, and validates, ratifies, confirms and approves in all respects the enactments which, then and now, contain the limiting language of 3351.07(A)(2) quoted above.
Are the guarantee debts of [OSAC] debts of the State of Ohio and backed by the full faith and credit of the State? Are some debts of [OSAC] debts of the State while others are not, and if so, what debts are not debts of the State? Can the answers to these questions be ascertained with certainty without further clarification from the General Assembly?
The essence of these questions is whether the obligations incurred by the OSAC in the form of guarantees, debts(fn2) or otherwise are payable solely from moneys held as part of the funds of the OSAC, or whether such obligations are also backed by the full faith and credit of the State of Ohio,(fn3) so that the obligee thereof would have recourse to other funds of the State of Ohio for the payment of such obligations.
Constitutional Authority For Establishment of OSAC
Article VI, §5 of the Ohio Constitution provides as follows:
To increase opportunities to the residents of this state for higher education, it is hereby determined to be in the public interest and a proper public purpose for the state to guarantee the repayment of loans made to residents of this state to assist them in meeting the expenses of attending an institution of higher education. Laws may be passed to carry into effect such purpose including the payment, when required, of any such guarantee from moneys available for such payment after first providing the moneys necessary to meet the requirements of any bonds or other obligations heretofore or hereafter authorized by any section of the Constitution. Such laws and guarantees shall not be subject to the limitations or requirements of Article VIII or of Section 11 of Article XII of the Constitution.(fn4) Amended Substitute House Bill No. 618(fn5) enacted by the General Assembly on July 11, 1961, and Amended Senate Bill No. 284(fn6) enacted by the General Assembly on May 23, 1963, and all appropriations of moneys made for the purpose of such enactments, are hereby validated, ratified, confirmed, and approved in all respects, and they shall be in full force and effect from and
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