B-152505, AUG. 19, 1965

B-152505, AUG. 19, 1965

TO MR. GEORGE D. LOBINGIER, TREASURER, THE AMERICAN SOCIETY FOR ENGINEERING EDUCATION, WESTINGHOUSE EDUCATIONAL CENTER:

YOUR LETTER OF MAY 14, 1965, RAISES A QUESTION CONCERNING INTEREST EARNED ON GRANTS MADE BY THE NATIONAL SCIENCE FOUNDATION (NSF) TO THE AMERICAN SOCIETY FOR ENGINEERING EDUCATION (ASEE).

THE FACTS GIVING RISE TO THE QUESTION, AS DISCLOSED BY YOUR LETTER, ARE SET FORTH BELOW.

SINCE 1955, OR THEREABOUTS, ASEE HAS BEEN RECEIVING RESEARCH GRANTS FROM NSF IN SUPPORT OF CERTAIN STUDIES IN HIGHER EDUCATION CONDUCTED THROUGH ASEE AND DIRECTLY CONCERNED WITH ENGINEERING EDUCATION AT THE ENGINEERING COLLEGES AND UNIVERSITIES OF THE COUNTRY. IN MANY INSTANCES ASEE HAS ACTED AS THE ADMINISTRATIVE ARM OF THESE COLLEGES AND UNIVERSITIES WHICH CONDUCTED THE ACTUAL RESEARCH AND RECEIVED THE FUNDS FOR THAT PURPOSE.

OFTEN, WITH THE GRANTS IN THE EARLIER YEARS OF THIS CONTINUING ARRANGEMENT BETWEEN NSF AND ASEE, THE MONIES FOR THE RESEARCH GRANTS WERE RECEIVED BY ASEE IN LUMP SUMS UPON APPROVAL OF THE GRANT; THE FUNDS WERE THEN HELD BY ASEE AND DISBURSED BY IT OVER A PERIOD OF TIME AS THE RESEARCH PROGRESSED. IN ACCORDANCE WITH THE POLICY OF ASEE FOR THE TEMPORARY INVESTMENT OF ITS OWN OPERATING FUNDS, IT INVESTED SOME OF THE GOVERNMENT FUNDS AND EARNED INTEREST THEREON. THIS PROCEDURE HAS NOT BEEN FOLLOWED SINCE ABOUT A YEAR AGO, THE MONIES WHEN TRANSMITTED FROM GOVERNMENT AGENCIES IN PROGRESSIVE PAYMENTS BEING MAINTAINED IN SEPARATE BANK ACCOUNTS AND NOT COMMINGLED WITH ASEE FUNDS.

EARLY IN 1964 THE NSF VERBALLY REQUESTED THAT CONSIDERATION BE GIVEN BY ASEE TO THE RETURN OF INTEREST EARNED, EVEN THOUGH THERE WAS NO STATED CLAUSE IN THE CONTRACTS WITH ASEE REQUIRING THAT THIS BE DONE. YOUR AUDITORS SINCE THAT TIME HAVE ESTIMATED THAT THE AMOUNT OF INTEREST EARNED UNDER THE EARLIER PROCEDURE IS BETWEEN $8,000 AND $9,000.

YOU STATE THAT ASEE LEARNED OF OUR LETTER OF SEPTEMBER 30, 1964, B 152505, TO THE PRESIDENT OF THE AMERICAN COUNCIL ON EDUCATION, FOLLOWING THE PASSAGE OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE APPROPRIATION ACT, 1965. IN VIEW OF THE LANGUAGE OF SECTION 205 OF THAT ACT, AND THE CIRCUMSTANCES SET FORTH IN YOUR LETTER, YOU REQUEST AN OPINION AS TO WHETHER THE POSITION TAKEN IN OUR LETTER OF SEPTEMBER 30, 1964, CONCERNING THE REFUNDING OF INTEREST EARNED ON GRANTS TO COLLEGES AND UNIVERSITIES IS APPLICABLE TO GRANTS MADE BYNSF TO ASEE.

WE HAVE LONG HELD THAT INCOME REALIZED BY A GRANTEE BY WAY OF INTEREST OR OTHERWISE FROM THE INVESTMENT OF FUNDS GRANTED BY THE UNITED STATES, BELONGS TO THE UNITED STATES, RATHER THAN TO THE GRANTEE, AND UNDER SECTION 3617, REVISED STATUTES, 31 U.S.C. 484, IS REQUIRED TO BE DEPOSITED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS (24 COMP. DEC. 403; 1 COMP. GEN. 652; 3 ID. 956, A-91340, JANUARY 12, 1938; 20 COMP. GEN. 610; 40 ID. 81), REGARDLESS OF WHETHER IT IS SPECIFICALLY SO PROVIDED IN THE GRANT AGREEMENT (42 COMP. GEN. 289). WE REAFFIRMED OUR POSITION IN B-152505, JANUARY 30, 1964, AND ADVISED THE PRESIDENT OF THE AMERICAN COUNCIL ON EDUCATION THAT:

"* * * IT IS OUR VIEW THAT INTEREST AND OTHER INCOME EARNED ON FUNDS GRANTED BY THE PUBLIC HEALTH SERVICE OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE AND BY OTHER AGENCIES, FOR RESEARCH AND TRAINING PURPOSES, UNDER THE AUTHORITY CONTAINED IN THE PUBLIC HEALTH SERVICE ACT AND SIMILAR LEGISLATION, BELONG TO THE UNITED STATES AND WHEN PAID OVER TO THE UNITED STATES ARE FOR DEPOSIT INTO THE TREASURY PURSUANT TO 31 U.S.C. 484. * * *"

SUBSEQUENTLY ON SEPTEMBER 19, 1964, THERE WAS ENACTED INTO LAW THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE APPROPRIATION ACT, 1965, PUB.L. 88-605, 78 STAT. 963. SECTION 205 OF THAT ACT (78 STAT. 979) PROVIDES AS FOLLOWS:

"NONE OF THE FUNDS CONTAINED IN THIS ACT SHALL BE USED FOR ANY ACTIVITY THE PURPOSE OF WHICH IS TO REQUIRE ANY RECIPIENT OF ANY PROJECT GRANT FOR RESEARCH, TRAINING, OR DEMONSTRATION MADE BY ANY OFFICER OR EMPLOYEE OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE TO PAY TO THE UNITED STATES ANY PORTION OF ANY INTEREST OR OTHER INCOME EARNED ON PAYMENTS OF SUCH GRANT MADE BEFORE JULY 1, 1964.'

IN CONNECTION WITH THE ABOVE-QUOTED LANGUAGE WE STATED IN B-152505, SEPTEMBER 30, 1964, THAT:

"WHILE THE QUOTED LIMITATION BY ITS SPECIFIC TERMS APPLIES ONLY TO FUNDS CONTAINED IN THE ACT, THE LEGISLATIVE HISTORY OF THE PROVISION DISCLOSES THAT ITS INTENDED PURPOSE WAS TO PROTECT THE COLLEGES AND UNIVERSITIES AND INSURE THAT THEY WOULD NOT BE REQUIRED TO REIMBURSE THE FEDERAL TREASURY FOR THE INTEREST EARNED ON PAYMENTS OF FEDERAL GRANT FUNDS MADE PRIOR TO JULY 1, 1964. ACCORDINGLY, WE PLAN TO TAKE NO FURTHER ACTION TOWARD THE RECOVERY OF INTEREST OR OTHER INCOME EARNED PRIOR TO JULY 1, 1964, ON FEDERAL GRANTS MADE TO COLLEGES AND UNIVERSITIES UNDER THE PUBLIC HEALTH SERVICE ACT OR UNDER OTHER STATUTES PROVIDING FOR GRANTS TO COLLEGES AND UNIVERSITIES FOR SPECIFIED PURPOSES.'

IT IS CLEAR FROM THE ABOVE-QUOTED LANGUAGE THAT OUR DECISION NOT TO TAKE ANY FURTHER ACTION TOWARD THE RECOVERY OF INTEREST OR OTHER INCOME EARNED PRIOR TO JULY 1, 1964, ON FEDERAL GRANTS MADE TO COLLEGES AND UNIVERSITIES BY FEDERAL AGENCIES OTHER THAN THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE (HEW) IS BASED ON THE INTENDED PURPOSE OF SECTION 205 AS DISCLOSED BY THE LEGISLATIVE HISTORY THEREOF. WE FELT THAT OUR DECISION WOULD BE CONSISTENT WITH THE CONGRESSIONAL PURPOSE TO PROTECT COLLEGES AND UNIVERSITIES IN ENACTING SECTION 205. HOWEVER, THAT DECISION IS NOT FOR APPLICATION TO GRANTS MADE BY NSF TO OTHER THAN COLLEGES AND UNIVERSITIES.

THE WORD "COLLEGE" IS GENERALLY EMPLOYED IN THIS COUNTRY TO INDICATE AN INSTITUTION OF HIGHER LEARNING HAVING CORPORATE POWERS AND POSSESSING THE RIGHT TO CONFER DEGREES. LOOKED AT WITH REFERENCE TO ITS EDUCATIONAL WORK, A COLLEGE CONSISTS OF THE TRUSTEES, TEACHERS AND SCHOLARS, THEY MAKING UP THE MEMBERSHIP OF THE COLLEGE AND REPRESENTING ITS ACTIVE WORK. NORTHHAMPTON COUNTY V. LAFAYETTE COLLEGE, 18 A. 516; EPSTEIN V. KUVIN, 88 A.2D 531. A "UNIVERSITY" IS "AN AGGREGATION OR UNION OF COLLEGES.' COMMONWEALTH V. BANKS, 48 A. 277.

WE UNDERSTAND THAT ASEE IS A NONPROFIT, NONACADEMIC ORGANIZATION WHICH WAS FOUNDED IN 1893 AND CURRENTLY HAS ABOUT 10,500 INDIVIDUAL MEMBERS, COMPOSED PRIMARILY OF COLLEGE AND UNIVERSITY ENGINEERING TEACHERS, AND ABOUT 500 INSTITUTIONAL MEMBERS, COMPOSED PRIMARILY OF EDUCATIONAL INSTITUTIONS AND INDUSTRIAL ORGANIZATIONS. THE ASEE MAINTAINS A STAFF WHICH CURRENTLY NUMBERS 11.

THUS, WHILE--- AS INDICATED IN YOUR LETTER--- ASEE MAY BE AN "EDUCATIONAL ORGANIZATION" FOR TAX PURPOSES AND ITS MEMBERSHIP CONSISTS OF, AMONG OTHERS, COLLEGES AND UNIVERSITIES, IT IS NOT A ,COLLEGE" OR "UNIVERSITY" WITHIN THE GENERALLY ACCEPTED MEANING OF THOSE TERMS. SINCE ASEE IS NOT A "COLLEGE" OR "UNIVERSITY," THE STATEMENT IN OUR DECISION OF SEPTEMBER 30, 1964, THAT WE WOULD TAKE NO FURTHER ACTION TO RECOVER INTEREST EARNED ON FEDERAL GRANTS TO COLLEGES AND UNIVERSITIES WOULD NOT BE FOR APPLICATION TO GRANTS MADE BY NSF TO ASEE.

CONCERNING THE ABSENCE OF A CLAUSE IN THE GRANT AGREEMENT PROVIDING FOR THE REFUNDING OF INTEREST, WE ARE ADVISED BY NSF THAT ITS BROCHURE GOVERNING GRANTS GENERALLY, PROVIDES FOR THE REFUND OF INTEREST TO THE GOVERNMENT AND THAT NSF BELIEVES THAT ALL NSF GRANTEES ARE AWARE OF THE INTEREST REFUND REQUIREMENTS. IN ANY EVENT, WE HAVE HELD THAT INTEREST EARNED ON FEDERAL GRANTS IS FOR REFUNDING TO THE UNITED STATES REGARDLESS OF WHETHER IT IS SPECIFICALLY SO PROVIDED IN THE GRANT AGREEMENT.

IN LIGHT OF THE FOREGOING IT IS OUR VIEW THAT INTEREST EARNED BY ASEE ON NSF GRANTS IS FOR REFUNDING TO THE UNITED STATES.