Is Money Transfer from Public Trusts Fund Into a General Revenue Fund Legal
In Barber v. Ritter, 196 P.3d 238, 253-54 (Colo. 2008), the petitioners argued that three funds from which monies were transferred into the general revenue fund were public trusts and the transfer of monies from those funds into the general revenue fund constituted a misappropriation of the trust corpus. Barber, 196 P.3d at 252-53.
The Colorado Supreme Court accepted for the sake of argument, without deciding, that the three funds were public trusts. Barber, 196 P.3d at 253.
The Barber court stated that the petitioners' argument turned on the implicit premise that the Colorado General Assembly lacked the authority to alter or amend the statutes creating the trusts. Barber, 196 P.3d at 253. Therefore, the amendments providing for the transfer were ineffective and "constituted a misappropriation of the trust corpus." Barber, 196 P.3d at 253.
Specifically, the petitioners argued "the General Assembly's lack of power to amend the statutes in question arises from the special status of the funds created by those statutes as trusts." Barber, 196 P.3d at 253.
The court noted that Colorado follows the view that once a trust is created it cannot be revoked by the settlor without all of the beneficiaries' consent unless the settlor explicitly reserved the power to do so unilaterally. Barber, 196 P.3d at 253.
However, the court concluded the legislature could not limit its absolute power to appropriate funds by creating an irrevocable public trust:
"None of the statutes creating the funds explicitly reserve to the General Assembly the power as settlor to revoke or amend them.
However, we have repeatedly recognized that the General Assembly's power over appropriations is constitutionally derived and have characterized this power as 'absolute' and 'plenary.'
To hold that the General Assembly could limit this plenary power to appropriate by creating an irrevocable public trust would be to effectively hold that the General Assembly could abrogate its constitutional powers by statute.
This is not the law.
We therefore decline to read the cash funds' enabling legislation as creating irrevocable trusts that would unconstitutionally restrain the legislature's plenary power over appropriations.
The status of the three cash funds as public trusts does not, and constitutionally cannot, have any limiting effect on the legislature's plenary power to amend or repeal those funds' enabling statutes.
The legislature's amendment of the cash funds' enabling statutes to allow for the transfer of funds to the General Fund did not, therefore, constitute a misappropriation of the trust corpus, and did not trigger a fiduciary obligation to repay the transferred monies.
Thus, we hold that, even if the cash funds are public trusts, they are not irrevocable trusts, and the legislature has the authority to amend them to allow for the transfer of monies to the General Fund." Barber, 196 P.3d at 253-54.