- , 

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 authority exists to 

permit those current local 

funds of higher educational 

Institutions in the State 

Treasury (a8 specified In 

Article 2543c, V.A.C.S.) 

which are reasonably estimated 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 questions of this office: 

"1 . Does sufficient authority now exist to 

permit the current local funds of.hlgher educational institutions In the State Treasury specified 

in Article 2543c, Vernon's Texas Civil Statutes, 

which are reasonably estimated not to be needed 

in any given period of time, to be placed on a 

tlme deposit basis? 

"2 . If sufficient authority does exist: 

"a. Does the duty for putting these 

State funds to work and for negotiating with 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 responsibility for determining the amount of such funds 

-974- 
: ,: i# ( 

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

available for placement on a time 

deposit basi8 lie with the State 

Depository Board 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as Article 2543c, Vernon's Civil Statutes, specifically repealed 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 

pertinent provisions of Article 2543~~ are set out as follows: 

'Section 1. The Governing Board8 of the State 

Institutions of higher education of this State are 

directed to designate special depository banks, subject to the approval of the State Treasurer, for the 

purpose of receiving and keeping certain receipt8 of 

the lnstltutlons of higher education of 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 provisions of 

Title , as amended, o e evlse V tatutes 

of 1925, usually referred to as the~state Depository 

Law; providing, however, the llmltatlon of deposits 

contained In Article 2532 of Vernon's Texas Civil 

Statute8 shall not apply Insofar as the specific 

funds enumerated In this Act are concerned. 

(mphasls added.) 

It Is noted that Section 2 of Article 2543c, Vernon'8 

Civil Statutes, expressly retained and Implemented the provlslons 

of the State depository law, with one exception. Consequently, 

the provlelons of Article 2525, Vernon'8 Civil Statutee, et 8eq., 

are applicable to the handling of fund8 under Article 2543~. 

Article 2525 reads, In part, a8 follows: 

-975- 
Hon. C. H. Cavness, page 3 (M-203) 

"The State Treasurer, a8 secretary, together 

with one (1) citizen of the state, appointed by 

the Governor . . .and the Banking Comml8sloner, 

shall conatltute the State Depository Board. Said 

Board shall have the right and the power to make 

and enforce such rules and regulations governing 

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 renulatlons shall be In writing and entered unon 

the ml&tes of the Board. Said Board shall have the 

The list of receipts which may be controlled by Governing Beards of Institutions of Higher Learning are found In Article 

2654d, Vernon's Civil Statutes, which reads, In part, a8 follows: 

'Section 1. The governing boards of . . ., 

may retain control respectively of the following 

sums of money collected at each of said several 

Institutions In carrying out the functions of an 

educational Institution. such as funds collected 

from student fees of ali klnds;~chsrges for use 

-of room8 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 publications or other student activities; 

receipts from sale of publication products and 

miscellaneous supplies and equipment; students' 

voluntary deposits of money with said schools 

for safe keeping; all other fee8 and local institutional Income 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, Includes the llat of funds In 

control of the Governing Boards of Institutions In Article 2654d, 

-976- 
. . 

Hon. C. H. Cavness, page 4 (M-203) 

Section 1, Vernon's Civil Statutes~, which are required to be 

deposited In the depository bank 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 conflict were 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 sufficient authority now exists to permit the funds 

specified In Article 2543~ to be placed on a time deposit basis. 

In answer to your question No. 2, (a) and (b), Article 

2543~ expressly provides that the State Depository Law Is applicable under Section 2 thereof. Therefore, pursuant to Article 

2525, the State Depository Board would have the duty of determining 

both the amount of such funds available for placement on a time 

deposit basis and for negotiating a contract for the rate of 

return for such funds, whether on demand or time deposit, with 

the local depository banks. 

The chronological passa e of these laws, the State 

Depository Law In 1931, Article 2 g 54d In 1941, and Article 2543~ 

In 1951, with the progresslve.requlrements for placing state money 

on earnings, Indicates the continuing concern of the Legislature 

by specific designation of duties and methods. 

Only those receipts specifically mentioned In Section 

1 of Article 2654d are under the control of the Governing Boards 

of Institutions for these purposes, and such boards~are speclflcally directed by the provisions thereof to deposit such funds 

In the depository bank or banks at an agreed rate of Interest as 

provided In Section 2 of said Article. 

SUMMARY 

Sufficient authority now exists to permit 

the current local fund8 of higher educational 

Institutions In the State Treasury, as specified 

In Article 2543c, V.C.S., to be placed on a time 

deposit basis with local depository banks. The. 

State Depository Board under provisions of Article 

2525, V.C.S., ha8 the duty~ of negotiating the contract for the rate of return (interest) with the 

local depository banks and also has the responsibility for determining the amount of such fund8 

available for placement on "demand deposits" and 

on "time deposits." 

-977- 
Hon. C. H. Cavness, page 5 (M-203) 

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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