HomeMy WebLinkAboutSpplmnt Info - 2014 UW and Other Non-profits �-�-�
CITY OF PALM DESERT
� � OFFICE OF THE CITY MANAGER
INTEROFFICE MEMORANDUM
TO: Honorable Mayor and Members of the City Council
FROM: John Wohimuth, City Manager
DATE: January 8, 2014
SUBJECT: CHARITABLE CONTRIBUTION OPINION AND RESOLUTION
In one of my recent weekly meetings with the Mayor and Mayor Pro Tem, the Mayor Pro
Tem inquired about policies relating to City support of non-profits.
Although the attached resolution and legal opinion relates to our Outside Agency /
Charitable Contributions Funding Committee, it may be useful for the discussion on the
United Way item on tomorrow's (January 9) City Council agenda.
If you have any questions, please contact me.
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J N M. WOHLMUTH
� TY MANAGER
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Attachments (copies of Res. No. 2012-62 and Legal Opinion from City Attorney's Office)
H:IWPdataIWPDOCSIMemoslunited way agenda item-Jan9-2014.wpd
RESOLUTION NO. 2013- 62
"`�' A RESOLUTION OF THE C{TY COUNCIL OF THE CITY OF PALM DESERT,
CALIFORNIA, FORMALIZING THE OUTSIDE AGENCY / CHARITABLE
CONTRIBUTIONS FUNDING COMMITTEE
WHEREAS,the City of Palm Desert("City") receives many requests from citizens, groups
and agencies for charitable, public benefit, public welfare and educatianal contributions; and
WHEREAS, the City is constrained by applicable law regarding the donation of public
funds; and
WHEREAS, a Committee was established in the early history of the City ta review such
requests; and
WHEREAS, the City Council of the City of Palm Desert desires to maintain the review
committee to advise the City Council regarding consideration of charitable contributions and
funding for iocal agencies to be known as the "Outside Agency Funding Committee"; and
WHEREAS, the current Committee is comprised of the Mayor and Mayor Pro-Tempore or
their designees, City Manager, City Attorney, and Finance Director; and
WHEREAS, the City has established guidelines and procedures as set forth in Exhibit"A";
and
WHEREAS, the City desires to adopt the guidelines and procedures as•set forth in Exhibit
� "A" and formalty establish the Outside Agency Funding Committee.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert,
California, that an Outside Agency Funding Committee be formalized with the following
organization, objectives and responsibilities:
1. Committee Members. There is hereby formalized by the City of Palm Desert the
Outside Agencies / Charitable Contributians Committee consisting of the Mayor and Mayor Pro
Tempore or their designees, City Manager, City Attorney, Finance Director, and a staff member
appointed by the City Manager to represent volunteer organizatians.The Finance Director senres
as Chairman for Committee meetings.
2. Outside AQencv / Charitable Contributions Committee PurQose. The Outside
Agency Committee is responsible for reviewing all requests for funding received during its an�ual
application window, which is typically in the first qua�ter of the year.The Committee shaA evaluate
each application and make recommendations to the City Council based on each organization's
benefit to the community and budget constraints, among other factors. The Committee also
reviews Community Development Btock Grant (CDBG) applications and provides its
recommendations to Council.
3. Term of Office. There is no specific term of o�ce, but Council members may be
' ""�" rotated annually at the discretion of the City Council. Staff shall remain on the Committee
indefinitely.
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Page 1 of 2
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RESOLDTIOP N0. 2013-62
4. Time and Place of Meetings.The regular meeting of the Committee may be on cali '�'
of the Chairman of the Committee, and should be heid between the Outside Agency application
deadline and the beginning of the next fiscal year at a location to be determined by the Finance "'
Directo�.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Pafm Desert,
California, at its regular meeting held on the 14�day of November, 2013, by the following vote to
wit:
AYES: BENSON, SPIEGEL, TANNER, WEBER, and BARNIIC
NOES: NoxE
ABSENT: xorr�
ABSTAIN: NONE
f _
� JAN . ARNIK, MAYOR
ATTEST:
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H LE . K�AS , CITY CLE K
CtTY OF PALM DESERT, CALlFORNIA
APPROVED AS TO FORM:
Ll i.
DAVID J. WIN, CITY ATTORNEY
BEST, BEST& KRIEGER, LLP
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Page 2 of 2
RESOUITION N0. 2013-62 EXHIBIT"A"
�r CITY OF PALM DESERT
rt � � OUTStDE AGENCIES/CHARITABLE CONTRIBUTION
--- FUNDING REQUESTS
GUIDELINES FOR NON-PROFIT ACENCIES
1. The agency or group ("Appiicant") requesting funds must be in existence for a minimum of
five (5) years in order to be considered for funding by the Outside Agency Funding Committee.
2. The Agency must also be of verifiable non-profit status and presently providing cha�itable,
public benefit, public welfare or educational services to persons residing in the City of Palm
Desert or its sphere of influence (the"Ciry"),
3. The Applicant must have an existing program in place and a staff that is ready and willing to
provide services to the City for the benefit of its residents. Funds will not be contributed to any
agency or group for"startup"costs.
4. The Applicant should submit to the City an application setting forth in detail its request for
funding, including a statement of purpose detailing specifically the services it intends ko provide
for the City, how and where the contribution from the City will be allocated, and the quantity and
_ . quality of such proposed service.
5. The funds contributed to the Applicant will be donated for the purposes of providing services
`� � to the City of Palm Desert, or its sphere of influence, to the extent possible. Said funds are not
designated for capi#al improvement projects.
6. The Applicant agrees to use the funds granted by the City to provide only 1he services
represented in its application for funding. Additionally, the Applicant wi11 explain how the
services will benefit the City's residents.
7. The City must have the desire to have the seroices as detailed in the AppJicant's application
performed for the City and its residents by the agency or group.
8. The City witl review the Applicant's application and tax exemption certification and, upon
review and discussion, will determine if the expenditure of funds for these services is in the
public's interest.
9. Where the Applicant is an audited entity, the Applicant's independent auditor wiil need to
make a footnote in the financial statements confirming the use of the City's contribution in the
manner set forth above, as well as the executed agreement.
10. Where the Applicant received funding for the current fiscal year, all documents must be
submitted and agreement terms complete prior to funding disbursement for the following fiscal
year.
11.Application and all supporting documents are to be submitted by the designated deadline to
� • be considered for funding. Late or incomplete applications wili not be accepted.
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RESOLDTI01�1 I�TO. 013-62
Outside Agenciss/�,fi8ritattle Contributions EXHIBIT"A"
Funding Request Guidelines
Page 2 of 2
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12.The Agreement is for the period of July 1 through June 30 of the following year. Services
must be provided and funds must be disbursed during this lime period. No payment wifl be `�"
made for services rendered after June 30 of the designated year.
13.All organizations requesting funding for a special event after the deadline for the annual
review has passed musE complete an application for Outside Agency/Charitable Contributions at
least 45 days prior to the event.
14. Golf events and dinner sponsorships do not qualify for Outside Agency funding. Emergency
co�tributions for situations such as wildfire relief assistance and farm workers' aid and other
emergency situations should be funded from a source other than Outside Agency accounts, and
should be reviewed on a case-by-case basis to determine the appropriate source of funding.
ADDITlONAL CRITER/A FOR SCHOOL PARENT-TEACHER ORGAN/ZAT/ONS
In addition to the above guidelines for non-profit agenciss, the foliowing items are in effect:
15. For school organizations and clubs, instead of a grant, a 50% matching funds
reimbursement is awarded, whe�ein once the organization has spent the required funds, they
should submit the appropriate receipts for reimbursement by the City at a �ate of 50% of the
total receipts up to the amount awa�ded.
16.Appropriate items for school program reimbursement are approved by the Committee, and �+
generally include math- and science-oriented software, tutoring programs, and bully, drug and
gang prevention programs. Odyssey of the Mind, SAT preparation and other such activities .r
shoufd also be allocated from the awarded funds. Educationat fieid trip admission and
transportation must be pre-approved by the Committee at the time of application review to
ensure qual�cation for reimbursement.
17. Inappropriate programs include, but are not limited to, PTO fundraising event expenses,
assemblies, award and reward programs, and programs that do not directly benefit the
educationat advancement of students. A more comp{ete tist can be found in the funding
guidelines contained in the application for schools, and pre-approval is required for any
anticipated expenditure not listed herein.
18.All papervvork must be submitted by June 30 in order to receive reimbursement. No
reimbursemerrt will be processed unless aH required documerrts are receiveci and the
agreement is complete. Reimbursement requests must be reviewed and signed by the pri�cipal
prior to submittal to the City of Palm Desert. Failure to meet the teRns of the agreement and
submit requi�ed pape�nrorlc by the deadline will result in forfeiture of aN funds.
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Memorandum
To: Dave Erwin File No.: 72500.00000
From: Jill Tremblay
Date: October 21, 2013
Re: PALM DESERT: Outside Agency Funding Guidelines
I. Background
The City of Palm Desert is interested in adopting a Resolution that includes
revised/updated guidelines for Outside Agency Funding. Additionally, the City is asking whether
private schools with religious affiliations qualify for Outside Agency Funding. Specifically,
Desert Christian Academy has inquired about the program.
II. Questions Presented
A. Does the City have authority to fund nonprofit agencies under its Outside Agency
Funding Program?
B. Can the City contribute funds to religious-affiliated agencies/organizations under
the Outside Agency Funding Program?
C. Can the City contribute funds to private religious schools under the Outside
Agency Funding Program, such as Desert Christian Academy?
III. Brief Answers
A. Yes. The City has the authority to fund nonprofit agencies and schools under its
Outside Agency Funding Program.
B. Maybe. The City may contribute funds religious-affiliated organizations under the
Outside Agency Funding Program if the contribution(1) serves the public interest and provides
no more than an incidental benefit to religion; (2) is available to both secular and sectarian
institutions on an equal basis; (3)prohibits use of proceeds for"religious projects", and(4) does
not impose any financial burden on government. (Barnes-Wallace v. Boy Scouts ofAmerica
(2012) 704 F.3d 1067, 1078-1082.)
C. No. The City may not contribute funds to private religious schools under the
Outside Agency Funding Program because any sort of public funding to private schools is
unconstitutional under Article IX, Section 8 of the California Constitution.
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IV. Analysis
A. The City May Fund Nonprofit A�encies Under its Outside A�encv Fundin�
Pro r�am.
1. `No Gift of Public Funds'Rule Does Not Apply to Charter Cities.
Generally, a city may not make a gift of public funds unless it receives
consideration in exchange for the expenditure or the expenditure fulfills a public purpose. (Cal.
Const. art. XVI, §6; Allen v. Hussey (1950) 101 Cal.App.2d 457, 473; County of Alameda v.
Janssen (1940) 16 Ca1.2d 276, 281.)
This rule does not apply to charter cities. (Los Angeles Gas & Elec. Corp. v. City
of Los Angeles (1922) 188 Cal. 307.) Gift prohibitions may, however, be included in a city's
charter.
2. Palm Desert City Charter Encourages Funding to Support Economic and
Community Development.
The Palm Desert City Charter does not have an gift prohibitions or restrictions.
But, it does authorize the City "to utilize revenues from the general fund to encourage, support,
and promote economic and community development in the City." (Palm Desert City Charter art.
3, § 304.)
3. Intent Behind Outside Agency Funding Program is To Fund
Organizations That Will Benefit Citizens.
The City adopted the Outside Agency Funding Program (previously called
Charitable Contributions Program) in or around 1994—a few years before it became a charter
city. The intent behind the program was to provide funding to charitable organizations while
complying with the `no gift of public funds' rule, described above.
The previously adopted guidelines require each nonprofit applicant to submit a
detailed application explaining how its services will benefit the City. In addition to the
guidelines, the City developed an Agreement for Services, which lays out responsibilities of each
party, a scope of services, and progress reports.
Even though the City is now a charter city and not technically bound by the `no
gift of public funds' rule, the City believes that funds should only be given to stable
organizations that will provide a benefit to the citizens by promoting economic and community
development within the City.
Revised guidelines are proposed as Exhibit "A" to the Resolution accompanying
this memorandum.
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B. The Citv May Be Able to Provide Assistance to Other Reli�ious-affiliated
Agencies/Or�anizations under the Outside A�,encv Fundin�Pro�ram.
1. Establishment Clause of the ZIS Constitution
The "Establishment Clause" provides that "Congress shall make no law
respecting an establishment of religion..." (U.S. Const., 1 st Amend.)
To be constitutional, the government conduct at issue must: (1) have a secular
purpose, (2) have a primary effect that neither advances nor inhibits religion, and (3) not foster
an excessive government entanglement with religion. (Lemon v. Kurtzman (1971) 403 U.S. 602,
612-613.)
The following are circumstances where the regulations were found to be either
constitutional or unconstitutional under the Establishment Clause:
Wolman v. Walter (1977) 433 U.S. 229, 252- Lemon v. Kurtzman 403 U.S. 602, 607
255
Direct aid to religious schools in the form of
Therapeutic, guidance, and remedial services payment of all or part of the salaries of
may be provided to nonpublic school students teachers for instruction of secular subjects is
and furnished by public employees off the not permissible.
premises of the religious school.
Everson v. Board of Education (1947) 330 Meek v. Pittenger(1975) 421 U.S. 349
U.S. 1
Loaning instructional materials such as maps,
Reimbursement may be given to parents for charts, and science laboratory equipment to
fares paid by them to transport their children to religious schools is unconstitutional.
public or nonprofit private schools, including
religious schools, by public carrier.
Wolman v. Walter (1997) 433 U.S. 229, 238- Committee for Public Education v. Nyquist
240 (1973) 413 U.S. 756, 774-780
Public schools can loan text books to Direct money grants to parochial schools to
nonpublic school children. repair and maintain facilities and equipment is
not permissible.
Wolman v. Walter (1997) 433 U.S. 229, 238- Levitt v. Committee for Public Education
240 (1973) 413 U.S. 472, 479-482
Tests may be supplied to religious schools Grants to religious schools for preparation of
when they are prepared and scored by the state-mandated tests formulated by teachers of
public school authorities. religious schools are unconstitutional.
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2. California Constitution—Establishment Clause and No Aid Clause
a. Establishment Clause of California Constitution
The California Constitution also has an establishment clause similar to the one in
the U.S. Constitution: "The Legislature shall make no law respecting an establishment of
religion." (Cal. Const. art. I, sec. 4.) The California Supreme Court has held that the
Establishment Clause of the California Constitution creates no broader protection against the
establishment of religion than the Establishment Clause of the United States Constitution.
b. No Aid Clause - California Constitution Article XVI, Section 5
The No Aid Clause prohibits cities from "mak[ing] an appropriation, or pay[ing]
from any public fund whatever, or grant[ing] anything to or in aid of any religious sect, church,
creed, or sectarian purpose..."
The California Supreme Court has emphasized that merely conferring some
benefit on a sectarian organization does not ipso facto violate the No Aid Clause. (Cal. Statewide
Cmtys. Dev. Auth. v. All Persons Interested("Statewide Communities") (2007) 40 Cal. 4th 788,
1077.) Instead, a government assistance program is constitutional if it (1) serves the public
interest and provides no more than an incidental benefit to religion; (2) is available to both
secular and sectarian institutions on an equal basis; (3) prohibits use of proceeds for "religious
projects", and (4) does not impose any financial burden on government. (Barnes-Wallace v. Boy
Scouts ofAmerica (2012) 704 F.3d 1067, 1078-1082.)
The Program complies with and will comply with the No Aid Clause as long as it:
(1) serves the City's purpose (to benefit Palm Desert citizens) and provide no
more than an incidental benefit to religion;
(2) is multifarious and confers a similar benefit on both secular and religious
organizations;
(3) does not specifically fund "religious projects," like church displays, religious
pageants/performances, religious education, and the like; and
(4) does not impose a financial burden on the City. Since the Program is voluntary
and budgeted for, it will not impose a financial burden on the City.
The No Aid Clause is intended to ensure the separation of church and state and to
guarantee that the power, authority, and financial resources of the government are never devoted
to the advancement or support of religious or sectarian purposes. This includes aid in the
intangible form of prestige and power. (Sands v Morongo Unified Sch. Dist. (1991) 53 Cal.3d
863.)
Therefore, as long as each contribution meets the four-prong No Aid Clause test,
the funding will be constitutional.
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C. The Citv May Not Fund Private Reli¢ious Schools Under the Outside A�encv
Fundin�Pro rg am.
1. California Constitution Article IX, Section 8
Section 8 of Article IX of the California Constitution is even mare restrictive
regarding public assistance to any private and certainly sectarian schools. The Section states,
"No public money shall ever be appropriated for the support of any sectarian or
denominational school, or any school not under the exclusive control of the officers of the public
schools; nor shall any sectarian or denominational doctrine be taught, or instruction thereon be
permitted, directly or indirectly, in any of the common schools of this State." (Emphasis added.)
The provision above is much broader than the State and Federal Establishment
Clauses. For example, in California Teachers Association v. Riles (1981) 29 Ca1.3d 794, the
California Supreme Court held that a state program to loan public school curriculum textbooks to
private religious schools was invalid. Although the Court acknowledged that this program may
not have been prohibited under the Federal and State "establishment clauses", the programs
clearly constituted appropriation of public funds in support of sectarian schools and, therefore,
violated Article 16, Section 5 and Article 9, Section 8.
The California Constitution only leaves a very narrow class of benefits that the
government may provide to religious schools and institutions. To be valid, (1) the aid must be
indirect and (2) the nature of the aid must be merely incidental to the religious purpose of the
institution. (Sands v. Morongo Unified School District (1991) 53 Ca1.3d 863. Examples of
permissible indirect and incidental aid are:
• Free transportation of private religious school children on public buses. (Bower
v. Baker(1956) 73 Cal.App.2d 653.)
• "Generalized services government might provide to schools in common with
others" - such as fire and police protection, maintenance of public roads and sidewalks, those
services which have no doctrinal content and do not advance the education of the child. (Riles,
supra, at p. 811, citing Norwood v. Harrison 413 U.S. 455, 465.)
The type of indirect aid discussed in the two bullet points above is not the same
type of aid to be furnished under the Outside Agency Funding Program. Therefore, the City may
not provide funds to private schools, sectarian or secular, under the Outside Agency Funding
Program.
2. As an Alternative, the City Can Assist Private Schools Through a Bond
Program
Even though the City may not fund private schools through its Outside Agency
Funding Program, it may assist them through a bond program. The California Supreme Court has
found that a joint powers authority can issue tax exempt revenue bonds to finance development
at a religious school as long as the school offers a broad curriculum in secular subjects and
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provides information and coursework that is neutral with respect to religion. (California
Statewide Communities Development Authority v. All Persons Interested(2007) 40 Cal. 4th 788.)
The Court found that these bonds would be a form of"indirect assistance" since they would be
funded by private-sector purchasers of the bonds. Because of this, the Court found that the
government was merely providing access to favorable tax treatment and was not itself financing
the projects. This type of"pass through" or "conduit" financing will not violate the California
Constitution if it is provided to a school that offers a broad curriculum in secular subjects and
offers secular classes that consist of information and coursework that is neutral with respect to
religion.
V. Conclusion
Therefore, the City does have the authority to contribute public funds to nonprofit
agencies and schools. The City may contribute to certain religious-affiliated organizations as
long as the funding meetings to the No Aid Clause four-prong test. However, the City may not
provide any public money to private schools.
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