AGO 2001-07.

• Case Date: December 03, 2001
• Court: Indiana

Indiana Attorney General Opinions 2001. AGO 2001-07. December 3, 2001Advisory Opinion 2001-7Soil Conservation Board Attn: Stephanie Roth Indiana Government Center South Indianapolis, IN 46204 RE: Use of proceeds of fundraising activities by a Soil and Water Conservation DistrictDear Ms. Roth: This letter responds to the request of the Soil Conservation Board for an advisory opinion on the following questions:

1. May a Soil and Water Conservation District create a charitable trust for the purpose of providing scholarships, educational loans and grants to its county residents who demonstrate an interest in environmental or agricultural issues?

2. May a Soil and Water Conservation District create a charitable trust from public funds?

3. Do funds received by a Soil and Water Conservation District from the sale of trees and/or other proceeds to the public constitute public or private funds?

We conclude that a Soil and Water Conservation District may neither create a charitable trust, nor fund or endow scholarships. Based on the facts presented, we further conclude that the funds raised by PCSWCD tree sales are public funds. BACKGROUND AND FACTS In its audit of the years January 1, 1998 - December 31, 1999, the State Board of Accounts learned that Porter County Soil and Water Conservation District (hereinafter PCSWCD) had created the Porter County Soil and Water Conservation Trust (the Trust) using PCSWCD money and had transferred PCSWCD funds to the Trust in apparent violation of its statutory authority. The Board of Accounts issued a critical report pursuant to Ind. Code § 5-11-5-1(a), and PSWCD responded in writing. PCSWCD did not dispute that it created the trust and funded a charitable trust. Letter, PCSWCD to State Board of Accounts, November 10, 2000 (hereinafter, November 10 Letter). PCSWCD contended that its actions were appropriate and legal because all monies used to fund the charitable trust are traceable to the proceeds from previous tree sales, and as such, no public funds acquired from the State were used to fund the trust. Id. The history of the PCSWCDs tree sales is best explained by PCSWCD itself:

It all started with the purchase of 500 white pine trees from Hensler Nursery in 1988. Our District Administrator, Alice Deardorff convinced John Hensler to give us credit until the trees were sold.

This earth day tree sale has grown into a 30,000 plus yearly tree sale with many civic and commercial organizations participating. This self-supporting activity generates funds which have been dedicated to youth and adult educational and natural resources/AG activities including our scholarship program. After much thought and deliberation on the part of your Porter County Soil and Water Conservation District, the District decided in August of 1999 to use these Earth Day tree sale monies to form a charitable trust known as the Porter County Soil and Water Conservation Trust. We have applied for and received our non-profit status and our 501.c.3 Foundation status. This not only assures the continuence [sic] of our district activities but also gives us the opportunity to apply to other foundations to expand our programs. At this time we also express our appreciation to you for your support and participation. Letter to the Citizens of Porter County from the Porter County SWCD Board and Staff, March 2, 2000. ANALYSIS The questions addressed here have been raised by the Soil Conservation Board (the Board) established at Ind. Code § 14-32-2-1 within the Department of Natural Resources. The Board is authorized to offer appropriate assistance to the supervisors of soil and water conservation districts [hereinafter Districts] to carry out district powers and programs, Ind. Code § 14-32-2-12(3) and to keep the supervisors of [D]istricts informed of the activities and experience of all other districts and facilitate cooperation and an interchange of advice and experience among districts. Ind. Code § 14-32-2-12(4). The Board also appoints District supervisors based upon nominations submitted by District supervisors, Ind. Code § 14-32-4-10, and is authorized upon notice and a hearing, [to] remove a [District] supervisor for neglect of duty or malfeasance in office, but for no other reason. Ind. Code § 14-32-4-15. Furthermore, we have been advised that the Board provides surety bonding to District supervisors under Ind. Code § 14-32-2-12(1) and Ind. Code § 14-32-4-22(1). ...