Opinion 99-11

This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

BONDS AND NOTES -- Destruction of (not required by State Comptroller's regulations)

CONSTITUTIONAL LAW -- Gifts and Loans (authority to provide framed bond as token of appreciation to retiring employee)

MUNICIPAL FUNDS -- Appropriations and Expenditures (in recognition of long-time service - framed municipal bond)

PUBLIC OFFICERS AND EMPLOYEES -- Award Program (authority to provide framed bond as token of appreciation to retiring employee)

LOCAL FINANCE LAW, §63.10; EDUCATION LAW, §§1709, 1804; STATE CONSTITUTION, ARTICLE VIII, §1: A school district, as part of a personnel management program, may present a framed, cancelled bond issued by the school district to retiring teachers as a token of appreciation for long-time service to the school district, so long as the frame is of nominal value.

You ask whether it is proper for a school district to pay for the framing of a cancelled bond issued by the school district, to be presented to a retiring teacher as a token of appreciation for service.

At the outset, we note that there is no requirement for a school district to destroy a cancelled obligation. Section 63.10 of the Local Finance Law contains provisions relative to the cancellation and destruction of obligations. That section provides for the State Comptroller to designate the manner of cancellation or destruction of paid obligations. It states as follows:

When obligations are paid ... they shall be cancelled or destroyed in such manner as the state comptroller shall prescribe by rule or order ...

Pursuant to section 63.10, the State Comptroller has promulgated regulations, set forth in 2 NYCRR, Part 55, for the cancellation and destruction of municipal obligations. In general, the regulations require that paid obligations be cancelled by either perforating the obligation with the word "Paid" or "Cancelled" and the date of payment, or by writing or stamping the word "Paid", as well as the date of payment, on the obligation, and undertaking certain additional actions (2 NYCRR §55.1). The regulations further provide that the cancelled obligations:

... may be destroyed, after prior cancellation, by the burning, pulverizing or shredding of such obligation by the chief fiscal officer of the issuer or by his duly delegated deputy or by a duly authorized paying agent, except that registered obligations shall not be destroyed until six years after the date of payment .... (2 NYCRR §55.2).

Thus, the regulations authorize, but do not require, the destruction of cancelled bonds (but see 2 NYCRR §55.6 and 1980 Opns St Comp No. 80-351, p 106, concerning record-keeping requirements).

With respect to whether a paid cancelled obligation may be presented to a retiring teacher, we note that article VIII, §1 of the New York State Constitution prohibits a school district from, inter alia, giving or loaning money or property to or in aid of any individual. Generally, this provision prohibits a municipality or school district from expending moneys to provide a gratuitous benefit to individuals (see, e.g., Antonopoulou v Beame, 32 NY2d 126, 343 NYS2d 346; Piro v Bowen, 76 AD2d 392, 430 NYS2d 847 lv denied 52 NY2d 702, 437 NYS2d 1025). It is well established, however, that an expenditure in furtherance of a proper purpose of the municipality or school district will not violate article VIII, §1 if it confers only an incidental benefit on the private individual (see, e.g., Murphy v Erie County, 28 NY2d 80, 320 NYS2d 29; 1987 Opns St Comp No. 87-10, p 17).

This Office has expressed the opinion that municipalities and school districts have implied authority to present to officers or employees tokens of appreciation, such as "years of service" pins and medals, plaques or other similar mementos of nominal value, in accordance with a personnel management program for recognizing long and faithful service (see, e.g., 1979 Opns St Comp No. 79-882, p 203; 31 Opns St Comp, 1975, p 134; 1963 Opns St Comp, No. 63-581, unreported; see also 1983 Opns St Comp No. 83-57, p 66; 1990 Opns St Comp No. 90-63, p 144). In such situations, we believe that any personal benefit to a municipal officer or employee would be incidental to the municipal or school district purpose of recognizing long-time service to the municipality or school district.

Here, since the cancelled school district bond could have been destroyed, it is evident that it has no appreciable value. Consequently, the only expense the school district would be incurring is that of the frame. As long as the frame is of nominal value and the framed bond is presented as part of a personnel management program, it is our opinion that it would be a proper district expense to pay for the framing.

December 24, 1999
Barbara A. Scheiner, Business Manager
Unatego Central School