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February 19, 1968

Honorable C. H. Cavness State Auditor Sam Houston State Office Building Austin, Texas

Dear Mr. Cavness: Opinion No. M- 203
Re: Whether authorityexists to permit those current local funds of higher educational Institutionsin the State Treasury (a8 specified In Article 2543c, V.A.C.S.) which are reasonablyestimated not to be needed in any given period of time, to be placed on a time depO8it basis, and related que8tlon.s.
In reference to your recent request for our opinion,you ask the following questionsof this office:

"1

. Does sufficientauthority now exist to permit the current local funds of.hlgher educational institutionsIn the State Treasury specified in Article 2543c, Vernon's Texas Civil Statutes, which are reasonablyestimatednot to be needed in any given period of time, to be placed on a tlme deposit basis? "2

. If sufficientauthority does exist:
"a. Does the duty for putting these State funds to work and for negotiatingwith the depositories on such matters as the rate of return lie with the State Depository Board or with the governing boards of the colleges and unlversltles Involved? "b

. Does the responsibilityfor determining the amount of such funds

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Hon. 

### c. H. Cavness, page 2 (n-203)

available for placementon a time deposit basi8 lie with the State DepositoryBoard or with the goxernlng boards of the Institutions?
Act8 1951, 52nd Legislature, R.S., chapter 474, codified as Article 2543c, Vernon's Civil Statutes, specifically repealed In Section 5 thereof, Article 2654d,Vernon's Civil Statutes. The pertinentprovisions of Article 2543~~ are set out as follows:

'Section 1. The GoverningBoard8 of the State Institutionsof higher educationof this State are directed to designate specialdepositorybanks, subject to the approval of the State Treasurer, for the purpose of receiving and keeping certain receipt8 of the lnstltutlonsof higher educationof this State separate and apart fron.'funds now deposited in the Treasury. The receipts here referred to are de8- crlbed In Section 3 of thle Act.
. , . "Sec. 2. Nothing In this Act shall Invalidate, repeal, or in anywise affect the provisionsof Title , as amended, o e evlse V tatutes of 1925, usually referred to as the~stateDepository Law; providing,however, the llmltatlonof deposits contained In Article 2532 of Vernon's Texas Civil Statute8 shall not apply Insofaras the specific funds enumerated In this Act are concerned. (mphasls added.)

It Is noted that Section 2 of Article 2543c, Vernon'8 Civil Statutes, expresslyretained and Implementedthe provlslons of the State depository law, with one exception. Consequently, the provlelonsof Article 2525, Vernon'8 Civil Statutee,et 8eq., are applicableto the handling of fund8 under Article 2543~.

Article 2525 reads, In part, a8 follows:

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"The State Treasurer, a8 secretary,together with one (1) citizen of the state, appointedby the Governor
. . .and the Banking Comml8sloner, shall conatltutethe State DepositoryBoard. Said Board shall have the right and the power to make and enforce such rules and regulationsgoverning the eStabli8hment

and conduct of State Depositories and the handling of funds therein as the public lnterest may require,not lnconsletent with the provisions of the laws governing euch depO8itOrie8, which rules and renulatlonsshall be In writing and enteredunon the ml&tes of the Board. Said Board shall have the

The list of receipts which may be controlled by Governing Beards of Institutionsof Higher Learningare found In Article 2654d, Vernon's Civil Statutes, which reads, In part, a8 follows:

'Section1. The governing boards of

. . ., may retain control respectivelyof the following sums of money collected at each of said several InstitutionsIn carrying out the functionsof an educationalInstitution.such as funds collected from student fees of ali klnds;~chsrgesfor use -ofroom8 and dormitories;receipts from meala., cafes and cafeterias;fees on deposit refundable to students under certain conditiona: receiata From school athletic activities; Income from student publicationsor other student activities; receipts from sale of publicationproductsand miscellaneoussupplies and equipment;students' voluntarydeposits of money with said schools for safe keeping; all other fee8 and local institutionalIncome of a strictly local nature ax-isinn out of and bv virtue of the educational _--_--. --. -- _.-- - activities,or research or demOn8tratlOn carried on by each and all of said several schools: IEmphasIs added.) For purposes of discussion of this question It. Is assumed that the excluded funds set out In Article 2543c, Section 3, Vernon's Civil Statutes, Includesthe llat of funds In control of the GoverningBoards of InstitutionsIn Article 2654d,
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Hon. C. H. Cavness,page 4 (M-203)

Section 1, Vernon's Civil Statutes~, which are required to be deposited In the depositorybank or banks at an agreed rate of interest,as provided In Section 2 of 8UCh Article. Under such assumption,no conflict Is found between the two provisions. If a conflictwere to be found, then Article 2543~ would control because of the express repealer contained In Section 5 thereof.
From a plain reading of the statutes,therefore, It Is apparent that sufficientauthoritynow exists to permit the funds specified In Article 2543~ to be placed on a time deposit basis.

In answer to your questionNo. 2, (a) and (b), Article 2543~ expresslyprovides that the State DepositoryLaw Is applicable under Section 2 thereof. Therefore,pursuant to Article 2525, the State DepositoryBoard would have the duty of determining both the amount of such funds available for placement on a time deposit basis and for negotiatinga contract for the rate of return for such funds, whether on demand or time deposit, with the local depositorybanks.

The chronologicalpassa e of these laws, the State DepositoryLaw In 1931, Article 2 54d g In 1941, and Article 2543~ In 1951, with the progresslve.requlrements for placing state money on earnings, Indicates the continuingconcern of the Legislature by specificdesignation of duties and methods.

Only those receipts specifically mentioned In Section 1 of Article 2654d are under the control of the GoverningBoards of Institutionsfor these purposes,and such boards~are speclflcally directed by the provisions thereof to deposit such funds In the depositorybank or banks at an agreed rate of Interest as provided In Section 2 of said Article. SUMMARY Sufficientauthority now exists to permit the current local fund8 of higher educational InstitutionsIn the State Treasury, as specified In Article 2543c, V.C.S., to be placed on a time deposit basis with local depositorybanks. The. State DepositoryBoard under provisionsof Article 2525, V.C.S., ha8 the duty~ of negotiatingthe contract for the rate of return (interest) with the local depositorybanks and also has the responsibility for determining the amount of such fund8 available for placement on "demanddeposits"and on "time deposits."
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truly youre,

Prepared by Pat Cain Assistant Attorney General APPROVED: OPINION COMMITTEE Hawthorne Phillips,Chairman Xerns Taylor, Co-Chairman
W. V. Geppert Scott Garrison Bill Allen Bill Craig
A. J. CARUBBI,JR. Executive Assistant

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