%-HE 

# A ORNEY

May5, 1950
Hon. Theophilus 3. Painter, President TheUniversity of Texas Austin, Texas OpinionBo. V-1052. Re: The legality of invest-~ ing the Permanent University Fund in bonds of commonand independent sohool districts Dear Sir: of Texas.

Wequote from your inquiry as follows: "The investments of the Permanent University Fundare madepursuant to the authority delegated to the Board of Regents by Artiole 259la, Vernon's Annotated Civil gtatutes of Texas, andby Section 11 of Article VII of the Constitutionof Texas, as amended. Wewould appreciate very muchyour opinion as to whether or not the term 'School Bonda of Munloipalitiesl in the oonstitution and statute8 inaludes the bonds of oommonand Independent school distriots of this State?" TheConstitution of this State by Section 11 of Article VII, as amended, declares that the Permanent University Funds "shall be invested in bonds of the United States, the State of TexBs, or oounties of said State, or in Sohool Bonds of munioipalities, or in bonds of anycity of this State, or in bonds issued under andby virtue of the Federal FarmLoan Aot

. . an

In oonformanoe with the oonstltutional provision, es amended, Article 25918 of Vernon's Civil Statutes was enacted. Section 1 of that statute provldea in part: "The Board of Regents of the University of Texas la authorieed to invest the Permanent Fund of the University of Texas inrRon, Theophilus 3. Painter, page 2 (y-1052)

Bonds of the State OSTexas; Bonds of the United States 5 Bonds of countiea of the State of Texas; sohool bonds of munioipalities of the State of Texas; bonds of oities in the State of Texas;” Webster’s RewInternational Dictionary, 2ndRdition, defines “munioipality” to be:

“Atown, oity or other distriat having powers of local self-government; amunioipal oorporation; also, the oommunity under the jurisdiction of a munioipal government. 0

.’ In Love Y. City of Dallas, 120Tex. 351, 40 S.W. 2d 20 (1931) our SupremeCourt, speaking on the nature, status andproperty rights of school dietriots OSTexas, said :

“Sohool distriots are loo01 publlo oorporetiona OSthe aamegeneral oharaoter as munioipal 00 So hool Diat

.“porations. ThomaaonY. Rlmo Ind.

TeX&iv.App.) 2%

9S.W. 868,870; Royee Ind. Sohool Diat. Y. Reinherdt (Tex.Civ. App.) 159S.W. 1010 (writ refused). They are defined as quasi-munioipel oorporations and :!;;a their powera by deleget on born the a They are state sgenoie8, erected end emplwed for the purpose OSedminiatering the state’s system of pub110 sohoola. 24 Ruling Case Law, pp- 562 to 565, a# 6 and 7
. e . Cities andtowns andmunioipal oorporations are OSthe aamageneral nature as queei-munioipal corporetiona, in 80 far as here involved, andthe right of the Legislature to oreate, abolish, enlarge or restriot themin their territory 

### orpowers la, unless restrained by apecial constitutional provisions, similar to the authority of the Legislature over quasi-munioipal corporations 0 Both are agenoies of the government - the one with amore limited sphere than the other

. o .” **And** from Hatcher Y. State, 125Tex. 84, 81 S.W. 2d 499 (1935) wequote:

” o eSohool Diatriota, whether independeni or oommonsohool distriota, are not_. ‘

. Hon. Theophilua S. Painter, page 3 (V-1052)
primarily sgenaies of the state, but they are loo61 public corporations of the same generzl character as 

### q unloipel corporations

. . .

Furthermore, school distriots of Texas, whether classified as commonor independent, are by statute constituted bodies politic end corporate. Arts. 2748, 2780, V.C.S.; Hatcher Y. State, aupre.

The authorities above quoted demonstrate that sohool districts of this State are munlclpalities, local public corporations, oreated by the State for the purpose of conducting In their localities the certain govertusentel educational functions delegated by the State.

In our opinion, the phrase "sohool bonds of munlcipelltiesR as used in Section 11 of Artiole VII of the Constitution andArticle 2591a should bs construed to include sohool bonds of commonand independent school distriotsof Texas. Further, that the words "OSmunioiPalitiea" were employed to restrict the investment o? permanent University Sunds (insofar asschool bonds are conoerned) to investments in public school bonds as distingulshed from bonds of private school corporations.

It is important to note that the sameprovlsions in the Constitution end etetute considered herein further authorize investment of such funds "in bonds OS anycity of thin state." Thequoted phrase immedletely Sollows the language under oonsideretlon. School bonds of municipally controlled sohool diatriots are issued by the city. such bonds are city obligations, oity bonds. Poteet Y. Bridnea, 248 S.W. 415 (Tex.Civ.Agp. 1923); A.0. apinions v-334 V-690. Being city bonds, investment of permanent Unlvksity funds in samewould olearly ba e+ thorlsed by the clause, "bonds of any olty of this &ate."

IS it were the purpose of the Constitution with nspatt to investments In school bonda to rastrlat investments of said funds to Wore sohool bonds issued b;r munioipelly oontrolled school districts, swh intendwentRon. Theophilus 3. Painter, page 4 (V-1052) .- ._

could and, wethink, would have been aocompllshed simply by omission from the law o? that phrase ‘school **bonds** of municipelities,” and leaving ttarain only the phrase

“bonds of 8~ oity of thf;s State. It Is oleer that “munioipellties end “city, as wad in the Constitution end statutes were intended to have dlfierent meaninga from om another.

In construing the Constitution aid statutes, as wehave, to euthotise investment o? permanent University funds in oommonandindependent sohool district bonds, as well as in the muniolpelly oontrolled school district bonds, meaning Is given to the phrase “sohool bonds of munioipallties 0 ” Construed otherwire that phrase bwomes useless, having nomeaning. Such apnsumption should not be ascribed to the people whosdopted the amendedoonstltutional provision, nor to the Degisleture in its enactment in sooordeuce therewith.

Investments of the Permanent University Fundmaybe madein the bonds of commonend Independent school distrlots OSthis Stats. Art. VII, Seo.11, Tex. Const.; APt. 25918, Seo.1, V.C.S. APPROVED

: Yours vary truly, J, C. Davis, JP. County ASfairs Division Joe Qreenhill FPrst Assistant PRICRDARIXL Attorpy .Cenerel

Prioe Daniel Attorney Genepal cBo:mw