AGO 84-11.

Case Date:July 09, 1984
Colorado Attorney General Opinions 1984. AGO 84-11. July 9, 1984Department of Law Attorney General Opinion FORMAL OPINION of DUANE WOODARD Attorney General Opinion No. 84-11 AG Alpha No. LW CU AGAMU Dr. Arnold R. Weber, President University of Colorado 914 Broadway, Campus Box B-35 Boulder, CO 80309 RE: Self-insurance of workmen's compensation by the University of ColoradoDear Dr. Weber: I write in response to your questions about the authority of the University of Colorado to self-insure the payment of workmen's compensation. QUESTIONS PRESENTED AND CONCLUSIONS Does Colorado Constitution art. XI, sec. 1, prohibit public entities from providing security to insure the payment of workmen's compensation? No. Does the Board of Regents have authority to establish and provide for a trust fund specifically set aside to secure the payment of workmen's compensation? Yes. ANALYSIS Article XI, section 1 of the Colorado Constitution prohibits the state or any county, city, town, township, or school district from lending or pledging its credit or faith for any purpose whatever. But a state cannot be said to have lent its credit in violation of this provision unless a debt or obligation of the state is created. In re Interrogatories By Colorado State Senate (Senate Resolution No. 13) Concerning House Bill No. 1247 51 General Assembly, 193 Colo. 298, 566 P.2d 350 (1977). In the constitutional sense a debt is an obligation that requires revenue from a tax, otherwise available for general purposes, to meet it. Id. at 355. The prohibition is designed to prevent the pledging of state revenues of future years. Id. at 355. Pledging current assets as security does not obligate future revenues. Similarly, pledging security for this reason does not fall within the policy of section 1, to prohibit mingling of public funds with private funds. In re Interrogatories by Colorado State Senate, supra; McNichols v. City and County of Denver, 101 Colo. 316, 74 P.2d 99 (1937). No such mingling can occur when a public entity provides security to insure the payment of its own obligation. Neither does indemnification of a surety who guarantees payment of the entity's obligation in case of default amount to pledging revenues in support of a private debt. The surety is merely reimbursed for payments made on the entity's debt in the first...

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