Arizona Court of Appeals Division One Holds That Funds From Special Fund Of The Industrial Commission of Arizona Are Public Funds That Can Be Transferred To The State’s General Fund.

This case concerns legislation that moved money from various state funds, including the ICA’s special fund, into the state’s general fund.  The ICA filed suit to enjoin the transfer.  The superior court granted a temporary restraining order and subsequently summary judgment for the ICA.  The State appealed. 

The Court of Appeals reversed, holding that the Special Fund is subject to legislative control and that no constitutional provision clearly prohibits the legislature from transferring monies from the fund.  The Court’s analysis began with the determination that the Fund is an appropriation—created and funded through legislation.    The Court also determined that the Fund is a public fund, as the monies do not go to the ICA but rather to the state treasurer for the benefit of the ICA. 

As to the question of whether the transfer of monies from the Fund is unconstitutional, the Court held that no constitutional provision limits the legislature’s authority to transfer money from this Fund.  Nor do the Special Fund’s enabling statutes create a legal trust that might limit the legislature’s use of the funds. 

The Court acknowledged that employers and injured workers have vested interests in the continued vitality of the Special Fund, but noted that there was no evidence here that the sweep of funds would impair the ability of the Fund to meet its obligations.  The Court further noted that there is a statutory provision that would require funds to be transferred to the Special Fund if it is not actuarially sound. 

Judge Portley authored the opinion; Judges Timmer and Gould concurred.