February 18, 1982
Mr. Michael E. Sebastian
Brule County Deputy State's Attorney
Post Office Box 109
Kimball, South Dakota 57355
Official Opinion No. 82-12
Revenue Sharing Funds for Municipal Hospital
Dear Mr. Sebastian:
You have requested an official opinion from this office in regard to the following factual situation:
FACTS:
Brule County, South Dakota, has received a request that they share in the funding of a new hospital built in Brule County. The County Commissioners have determined that they would like to contribute to this project. The contribution would be in revenue sharing funds.
The hospital facilities are owned by a corporation known as Mid-Dakota Hospital Association, Inc. This corporation leased the facilities to the City of Chamberlain. The City then subleased the facility back to the corporation. By leasing the hospital facilities, the City acted pursuant to SDCL 34-9-5 by making provisions 'for the erection, construction, equipment and operations of a public hospital.'
Based on the above facts, you have asked the following questions:
QUESTIONS:
1. May the County, pursuant to SDCL 34-9-7.1, authorize the use of revenue sharing funds for the purchase of equipment for the hospital?
2. If the answer to Question No. 1 is yes, may the County transfer the funds directly to Mid-Dakota Hospital Association, Inc., or must the money be transferred to the City of Chamberlain with the understanding that the funds will then be transferred to the hospital?
IN RE QUESTION NO. 1:
The Federal Regulations dealing with Revenue Sharing funds set forth the purposes for which the funds may be used by the entities receiving the funds. 31 C.F.R. § 51.100(c) states:
A recipient government which receives entitlement funds under the [State and Local Fiscal Assistance] Act shall:
(c) Provide for the expenditure of entitlement funds in accordance with the laws and procedures applicable to the expenditure of its own revenue.
Because the Federal Regulations allow an entity receiving Revenue Sharing funds to use the funds for any purpose for which the entity can use its own funds, a review of the state statutes is also necessary. SDCL 34-9-7.1 allows for the provision of financial aid by county governments for municipal hospitals. That statute, in part, states:
Whenever a city has established a hospital as provided by § 34-9-5, and without regard to whether a county has participated in the cost of its construction as provided in § § 34-9-5 to 34-9-7, inclusive, the board of county commissioners may, by appropriate resolution, render financial aid to such city for the cost of equipment, operation and maintenance of such hospital.
Based on this statute, it appears that a county can provide financial aid for municipal hospitals. Therefore, it is my opinion that the answer to your first question is YES, the county may authorize the use of revenue sharing funds to provide financial aid for municipal hospitals.
IN RE QUESTION NO. 2:
State statute provides for financial grants by local governments for the provision of medical services. SDCL 34-8A-1 states:
Notwithstanding any other provisions of law to the contrary, the board of county commissioners and/or the local governing body may, by unanimous vote of its members, grant, loan or pay to an individual, upon such terms and on such conditions as the board shall set forth, moneys from any source of funds available to them for the purpose of ensuring the availability of professional medical services within the county.
The question becomes whether Mid-Dakota Hospital Association, Inc. falls within the term 'individual,' as that term is used in SDCL 34-8A-1.
In Official Opinion 77-6, my predecessor reviewed a question similar to the one presented in your request. In that opinion, the question was whether a municipality could loan funds to a nonprofit corporation to ensure the continued operation of a dental clinic. In concluding that the municipality could make such a loan, the opinion states (emphasis in original):
Statutes are to be interpreted so as to fully effectuate their purpose and intent. The intent of SDCL 34-8A-1 is to permit governing bodies of municipalities and counties to exercise discretion in expending funds to attract professional medical personnel to their locality. Said governing bodies may loan, grant or pay such funds on such terms as are negotiated when the agreement is finalized. (SDCL 34-8A-3.) Therefore, the fact that a non-profit corporation acts as an intermediary in negotiating for funding for securing medical services should not defeat the obvious interest of the law.
Although your opinion does not indicate whether Mid-Dakota Hospital Association, Inc. is a nonprofit corporation, it does not appear that such a designation is necessary before a unit of local government may provide financial aid to retain professional medical services. The intent of the statute is to ensure the availability of professional medical services within the county. Mid-Dakota Hospital Association, Inc. is providing medical services in Brule County. Therefore, it is my opinion the answer to your second question is YES, the County may transfer funds directly to Mid-Dakota Hospital Association, Inc., pursuant to SDCL 34-9-7.1 and SDCL 34-8A-1, in order to provide financial assistance to the new municipal hospital in Chamberlain.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
