I keep hearing “Gift of Public Funds” – what is it all about?

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Question: Where does the Education Code talk about gift of public funds?

Response: The answer is not in the Education Code; it is in Article 16, Section 6 of the California State Constitution and the Government Code Section 8314.

The gift of public funds is a concept whereby a government entity cannot give away public money to individual employees.  This includes gift cards, movie tickets, hats, gas cards, money, hotel rooms or any other item that only an individual can use.

Where we find the problem most is when school districts or other government agencies want to have a safety incentive program.  A safety incentive program can be crafted, but you must reward the department as a group and purchase only items that will continue to belong to the school district – think new tools, lunch tables, vending machines, etc.

California Constitution § 6. Public credit and gifts; Subscriptions of corporate stock; Transfer of funds

The Legislature shall have no power to give or to lend, or to authorize the giving or lending, of the credit of the State, or of any county, city and county, city, township or other political corporation or subdivision of the State now existing, or that may be hereafter established, in aid of or to any person, association, or corporation, whether municipal or otherwise, or to pledge the credit thereof, in any manner whatever, for the payment of the liabilities of any individual, association, municipal or other corporation whatever; nor shall it have power to make any gift or authorize the making of any gift, of any public money or thing of value to any individual, municipality or other corporation whatever; provided, that nothing in this section shall prevent the Legislature granting aid pursuant to Section 3 of Article XVI; and it shall not have power to authorize the State, or any political subdivision thereof, to subscribe for stock, or to become a stockholder in any corporation whatever; provided, further, that irrigation districts for the purpose of acquiring the control of any entire international water system necessary for its use and purposes, a part of which is situated in the United States, and a part thereof in a foreign country, may in the manner authorized by law, acquire the stock of any foreign corporation which is the owner of, or which holds the title to the part of such system situated in a foreign country; provided, further, that irrigation districts for the purpose of acquiring water and water rights and other property necessary for their uses and purposes, may acquire and hold the stock of corporations, domestic or foreign, owning waters, water rights, canals, waterworks, franchises or concessions subject to the same obligations and liabilities as are imposed by law upon all other stockholders in such corporation; and

Provided, further, that this section shall not prohibit any county, city and county, city, township, or other political corporation or subdivision of the State from joining with other such agencies in providing for the payment of workers’ compensation, unemployment compensation, tort liability, or public liability losses incurred by such agencies, by entry into an insurance pooling arrangement under a joint exercise of powers agreement, or by membership in such publicly owned nonprofit corporation or other public agency as may be authorized by the Legislature; and

Provided, further, that nothing contained in this Constitution shall prohibit the use of State money or credit, in aiding veterans who served in the military or naval service of the United States during the time of war, in the acquisition of, or payments for, (1) farms or homes, or in projects of land settlement or in the development of such farms or homes or land settlement projects for the benefit of such veterans, or (2) any business, land or any interest therein, buildings, supplies, equipment, machinery, or tools, to be used by the veteran in pursuing a gainful occupation; and

Provided, further, that nothing contained in this Constitution shall prohibit the State, or any county, city and county, city, township, or other political corporation or subdivision of the State from providing aid or assistance to persons, if found to be in the public interest, for the purpose of clearing debris, natural materials, and wreckage from privately owned lands and waters deposited thereon or therein during a period of a major disaster or emergency, in either case declared by the President. In such case, the public entity shall be indemnified by the recipient from the award of any claim against the public entity arising from the rendering of such aid or assistance. Such aid or assistance must be eligible for federal reimbursement for the cost thereof.

And provided, still further, that notwithstanding the restrictions contained in this Constitution, the treasurer of any city, county, or city and county shall have power and the duty to make such temporary transfers from the funds in custody as may be necessary to provide funds for meeting the obligations incurred for maintenance purposes by any city, county, city and county, district, or other political subdivision whose funds are in custody and are paid out solely through the treasurer’s office. Such temporary transfer of funds to any political subdivision shall be made only upon resolution adopted by the governing body of the city, county, or city and county directing the treasurer of such city, county, or city and county to make such temporary transfer. Such temporary transfer of funds to any political subdivision shall not exceed 85 percent of the anticipated revenues accruing to such political subdivision, shall not be made prior to the first day of the fiscal year nor after the last Monday in April of the current fiscal year, and shall be replaced from the revenues accruing to such political subdivision before any other obligation of such political subdivision is met from such revenue.

Govt Code 8314 as of 7-6-09
8314. (a) It is unlawful for any elected state or local officer,
including any state or local appointee, employee, or consultant, to
use or permit others to use public resources for a campaign activity,
or personal or other purposes which are not authorized by law.
(b) For purposes of this section:
(1) “Personal purpose” means those activities the purpose of which
is for personal enjoyment, private gain or advantage, or an outside
endeavor not related to state business. “Personal purpose” does not
include the incidental and minimal use of public resources, such as
equipment or office space, for personal purposes, including an
occasional telephone call.
(2) “Campaign activity” means an activity constituting a
contribution as defined in Section 82015 or an expenditure as defined
in Section 82025. “Campaign activity” does not include the
incidental and minimal use of public resources, such as equipment or
office space, for campaign purposes, including the referral of
unsolicited political mail, telephone calls, and visitors to private
political entities.
(3) “Public resources” means any property or asset owned by the
state or any local agency, including, but not limited to, land,
buildings, facilities, funds, equipment, supplies, telephones,
computers, vehicles, travel, and state-compensated time.
(4) “Use” means a use of public resources which is substantial
enough to result in a gain or advantage to the user or a loss to the
state or any local agency for which a monetary value may be
estimated.
(c) (1) Any person who intentionally or negligently violates this
section is liable for a civil penalty not to exceed one thousand
dollars ($1,000) for each day on which a violation occurs, plus three
times the value of the unlawful use of public resources. The
penalty shall be assessed and recovered in a civil action brought in
the name of the people of the State of California by the Attorney
General or by any district attorney or any city attorney of a city
having a population in excess of 750,000. If two or more persons are
responsible for any violation, they shall be jointly and severally
liable for the penalty.
(2) If the action is brought by the Attorney General, the moneys
recovered shall be paid into the General Fund. If the action is
brought by a district attorney, the moneys recovered shall be paid to
the treasurer of the county in which the judgment was entered. If
the action is brought by a city attorney, the moneys recovered shall
be paid to the treasurer of that city.
(3) No civil action alleging a violation of this section may be
commenced more than four years after the date the alleged violation
occurred.
(d) Nothing in this section shall prohibit the use of public
resources for providing information to the public about the possible
effects of any bond issue or other ballot measure on state
activities, operations, or policies, provided that (1) the
informational activities are otherwise authorized by the constitution
or laws of this state, and (2) the information provided constitutes
a fair and impartial presentation of relevant facts to aid the
electorate in reaching an informed judgment regarding the bond issue
or ballot measure.
(e) The incidental and minimal use of public resources by an
elected state or local officer, including any state or local
appointee, employee, or consultant, pursuant to this section shall
not be subject to prosecution under Section 424 of the Penal Code.

2 thoughts on “I keep hearing “Gift of Public Funds” – what is it all about?

  1. I am concern that the Parlier City Council is paying the city manager 14,250 a month to run the everyday business at City Hall. However this city manager is not working in city hall but he at home. My questing is it a gift of public funds. As a city manager he is suppose to be working in city hall and supervising the daily activities at city hall. He can not run city hall from home. Furthermore he is not being monitored if he indeed is doing work for the city from home.

    1. Not sure, but you should raise your concerns to City Council at the next meeting. There are many arrangements that could be above board.

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