The Honorable Jean Hough McGrath

Arizona House of Representatives

A. ABOR Policy Allows a University to Require Purchasers of Athletics Tickets to Contribute to a Booster Foundation That Supports University Programs. Under Arizona's Constitution, the ABOR is responsible for "the general conduct and supervision" of State universities. Ariz. Const. Art. XI, § 2. In recognition of the ABOR's constitutional responsibilities, enabling legislation establishes that ABOR "shall have and exercise the powers necessary for the effective governance and administration of the institutions under its control." A.R.S. § 15-1626(A)(1). Intercollegiate athletics is part of the educational mission of the State universities and is subject to the oversight of the ABOR. See ABOR Policy 5-209(A) (athletic policies). Although there are no statutes governing ticket policies to events at university facilities, the ABOR has established policies on this subject. ABOR Policy 5-209(H)(4). ABOR policies provide that "there is no implication of any obligation or responsibility on the part of the institutions to provide the public at large with entertainment." ABOR Policy 5-209(H)(5). According to ABOR policy, the price of admission to athletic events, and the policies as to seating and concessions are to be determined "by the appropriate university authorities on the basis of the best interests of the institutions and without regard to pressure from outside interests." ABOR Policy 5-209(H)(4). University presidents are responsible for enforcing the ABOR athletic policies. ABOR Policy 5-209(F). Thus, each university has the authority to establish ticket prices and seating requirements that are in the best interests of the institution. On its face, a contribution to a booster foundation dedicated to supporting the university's athletics programs is not inconsistent with this policy. B. Requiring Purchasers of Tickets to Athletic Events to Contribute to a Booster Foundation Does Not Violate the Gift Clause. You have also asked whether the practice violates Arizona Constitution's gift prohibition, which is intended to prevent government entities from depleting the public treasury by giving advantages to special interests. Industrial Dev. Auth. v. Nelson, 109 Ariz. 368, 372, 509 P.2d 705, 709 (1973); see also Ariz. Atty. Gen. Op. I98-003 (application of gift clause to charter school laws). Arizona's gift prohibition provides, in part: Neither the State, nor any county, city, town, municipality, or other subdivision of the State shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association, or corporation . . . . Ariz. Const. art. IX, § 7. Arizona courts have applied article IX, § 7, not only to direct expenditures of public funds, Wistuber v. Paradise Valley Unified School Dist., 141 Ariz. 346, 687 P.2d 354 (1984), but also to leases of public property, City of Tempe v. Pilot Properties, Inc. 22 Ariz. App. 356, 527 P.2d 515 (1974). By requiring a ticket purchaser to make a contribution to the booster foundation, the State university has arguably granted a "subsidy" to the foundation that implicates the gift clause. But cf. Kotterman v. Killian, 193 Ariz. 273, 288, 972 P.2d 606, 621 (1999), cert. denied, 67 U.S.L.W. 3671 (U.S. Oct. 4, 1999) (No. 98-1716) (allowing tax credit for contributions that support private schools does not implicate gift clause). For purposes of analyzing the issue presented, this Opinion will assume that the gift clause applies to the contribution requirement. The Arizona Supreme Court has established a two-part test to determine whether a transaction violates the gift prohibition in article IX, § 7. Wistuber, 141 Ariz. 346, 687 P.2d 354. First, the court must determine whether the transaction serves a public purpose. Id. at 349, 687 P. 2d at 357. Second, the court must evaluate the consideration involved because the constitution may be violated "if the value to be received by the public is far exceeded by the consideration being paid by the public." Id. The phrase "public purpose" is "incapable of exact definition," and its meaning changes to meet new developments and conditions. Id. at 348, 647 P. 2d at 356. Supporting State universities, including the universities' athletic programs, serves a public purpose. Thus, the first prong of the Wistuber test is satisfied. Where a transaction has a public purpose, a court must also assess the consideration involved. Wistuber, 141 Ariz. at 349, 687 P.2d at 357. The public benefit from the transaction is the "consideration" received in exchange for the "consideration" paid to the private entity (here, at least some of the contributions paid to the Sun Angels presumably could otherwise be included as part of the ticket price collected by the university). The consideration involved cannot be "so inequitable and unreasonable that it amounts to an abuse of discretion." Id. at 349, 678 P.2d at 357. In determining if the public benefit "is far exceeded by the consideration being paid by the public," a court must adopt a "panoptic view of the facts" of the transaction, must not be overly technical, and must give "appropriate deference" to the findings of the governmental body. Id. Applying these principles to the issue of ticket premiums, a court would defer to the judgments of the universities regarding the most effective way to raise funds to support their programs. Unless the benefit to the private foundation is so disproportionate to the benefit the public receives that it amounts to an abuse of discretion, a contribution requirement to such an organization is constitutional. When a booster foundation is dedicated to supporting the university, it logically follows that the university would benefit from the foundation's fund-raising efforts. In fiscal year 1998, for example, the Sun Angels provided more than $3 million in university support, which among other things, went toward support for university coaches, capital improvements, grants and scholarships. Sun Angel Financial Statements at 3. The same year Sun Angels received $2.3 million in revenue from the premium on football tickets. Sun Angel Foundation, Ten-Year Financial History. This would plainly satisfy the requirement of adequate consideration for that time frame. In sum, assuming the gift clause applies, a requirement that, in order to purchase certain tickets to an athletic event, a person contribute to a booster foundation that supports university programs is constitutional provided that the public benefits adequately from the transaction.

Conclusion