May 4, 1977
Mr. A. P. Fuller
Spearfish City Attorney
Post Office Box 898
Lead, South Dakota 57754
Official Opinion No. 77-39
Municipal volunteer fire department funds
Dear Mr. Fuller:
You have requested an opinion based on the following factual situation:
FACTS:
The Spearfish Volunteer Fire Department has existed in the City of Spearfish for some time. The city ordinances of the City of Spearfish create a Spearfish Fire Department to be made up of the Chief, Assistant Chiefs, and as many members as the Chief designates.
The City of Spearfish does budget funds for the Volunteer Fire Department, but doesn't budget money to be paid to any of the volunteers for any services rendered, except for the officers of the department.
Every year the Volunteer Fire Department has made a drive for donations to the Volunteer Fire Department. These donations have always been administered by the Volunteer Fire Department for its members and for the benefit of the Volunteer Fire Department, as well as for the ultimate benefit of the city.
The solicitation of these funds is done by the Volunteer Fire Department by driving the fire trucks owned by the city out of the garages and around town to collect the moneys. The Volunteer Fire Department members are dressed in uniform and appear, obviously, as firemen. The citizenry of the City of Spearfish are advised that these funds are collected for the Volunteer Fire Department to assist in its expenditures for the year.
Based on the above factual situation you have asked the following questions:
QUESTIONS:
1. Are the members of the Volunteer Fire Department employees of the City of Spearfish?
2. Are the funds derived from the donations from the citizens of the City of Spearfish moneys belonging to the city, or are they moneys belonging to the Volunteer Fire Department, which is an association made up of volunteers?
3. Are the moneys derived from these donations subject to the control of the City Council of the City of Spearfish, or are these funds to be administered solely by the Volunteer Fire Department?
4. Does the city have the authority to demand that the city be able to audit the funds of the Volunteer Fire Department?
5. Does the city have the right to administer and expend the funds of the Volunteer Fire Department derived from these donations I have heretofore mentioned?
6. The ordinances of the City of Spearfish provide that:
All officers and employees of the City shall receive such salaries as may be provided from time to time by ordinance. No officer or employee receiving a salary from the City shall be entitled to retain any portion of any fees collected by him in the performance of his duties as a municipal officer or employee in the absence of a specific ordinance to that effect.
When the Volunteer Fire Department goes out and solicits and receives donations from the citizenry of the City of Spearfish for the benefit of the Volunteer Fire Department and for the benefit of the citizenry for fire protection, are those volunteer firemen collecting a “fee”?
IN RE QUESTION NO. 1:
There is no absolute answer to your first question. The law defines “employee” differently for different purposes. As examples, SDCL 9-14-31 defines employee, for purposes of eligibility for certain group insurance coverages, as persons receiving more than fifty percent of their compensation for services rendered to the municipality. However, SDCL 62-1-5 includes volunteer firemen as employees for purposes of worker's compensation benefits even if they receive no compensation from the municipality. I assume your question is prompted by the language in the ordinance establishing a fire department and designating certain offices therein. If this is, in fact, the substance of the ordinance, it is my opinion that said ordinance is primarily a recognition of the volunteer organization and not an attempt to make volunteer firemen municipal employees except where state law so requires. Spearfish volunteer firemen are municipal employees only for those purposes and in those situations expressly provided for by statute or ordinance.
IN RE QUESTION NO. 2:
Your second question is whether donations collected by members of the Volunteer Fire Department are public funds. State public funds are defined as “cash, checks, bills, notes, drafts, stocks, bonds, and all similar mediums of exchange which are received or disbursed under law” (SDCL 4-4-2). SDCL 9-22-1 refers to municipal funds as all money “derived from taxation, licenses, fines, forfeitures, the operation of waterworks or other public utility owned or operated by it, or from any other source, . . . .”
In my opinion, donations to a private organization do not fall into the category of public funds. Although municipalities have the authority to accept gifts (SDCL 9-12-1(2)), the facts you present clearly indicate that donees are informed that their contributions are to the Volunteer Fire Department and not to the City.
IN RE QUESTION NO. 3:
The answer to your third question is implicit in the provisions of SDCL 9- 22-1 et seq. which designate the municipal treasurer as custodian of all moneys belonging to the municipality (SDCL 9-22-2).
Since I have concluded in my answer to your second question that donations are not public funds, it necessarily follows that said donations are not subject to control and administration by a public employee.
IN RE QUESTION NO. 4:
SDCL 9-22-21 requires the municipal auditor or clerk to compile, publish and file with the Auditor General an annual report of the financial condition of the municipality. SDCL 4-11-4 requires the Auditor General to conduct periodic formal audits of municipal records. All funds budgeted for the Volunteer Fire Department by the City of Spearfish are public funds and subject to audit. As is indicated in my previous answers, donated moneys are not public funds and not subject to the above-cited provisions.
In addition, if the Spearfish Volunteer Fire Department is incorporated SDCL 4-11-2.1 is applicable. This section provides:
4-11-2.1 All charitable or nonprofit corporations receiving appropriated funds from the state or its political subdivisions either directly or through a state agency shall be required to file an annual financial report disclosing the receipt and disbursement of all appropriated funds with the department of legislative audit in form and contents as prescribed by the auditor-general. The auditor-general shall be authorized to examine all books, accounts, and reports of such corporations relating to the receipt and disbursement of appropriated funds, if he deems it necessary and in the public interest that they be examined.
IN RE QUESTION NO. 5:
This issue has been discussed in answer to several of your previous questions and is no. Privately donated funds to the fire department are not subject to administration by the municipality.
IN RE QUESTION NO. 6:
In my opinion, the cited ordinance is not applicable to the factual situation you have presented. First, I have earlier concluded that the volunteer firemen are not employees of the municipality in the ordinary sense of the word and, therefore, would have no duty to collect fees for the municipality. Furthermore, it is my opinion that the fees referred to are those charges or fees which state law or ordinance specifically requires an employee to collect by virtue of his holding of a particular office.
The answer to your sixth question is no.
Respectfully submitted,
William J. Janklow
Attorney General
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