Honorable Joe Lucas 

El Paso County Attorney 

Room 201, City-County Building 

El Paso, Texas 79901 

Opinion No. JM-773 

Re: Whether an independent 

school district is authorized 

to use an electronic funds 

transfer system for direct 

deposit of employee paychecks 

Dear Mr. Lucas: 

You ask whether an independent school district may use an 

electronic funds transfer system to deposit an employee's paycheck 

directly into an account chosen by the employee. 

In Attorney General Opinion MW-213 (1980). this office considered 

whether the state comptroller could tissue a single pay warrant on 

magnetic tape covering all employees who designated a particular bank 

as their depository. Such a practice, the opinion stated, "would 

thwart the Comptroller's ability to comply with various statutes" such 

as article 4358, V.T.C.S.. which required that different classes of 

pay warrants be printed on specific colors of paper and that the 

warrants be numbered serially. Furthermore, such requirements 

indicated that a "warrant" could not be Issued solely by transfer of 

information on magnetic tape. 

In 1981 the legislature amended article 4344b, V.T.C.S.. to add 

section 3, which provides: 

Notwithstanding the provisions of any other 

statute, the Comptroller of Public Accounts may 

establish and operate an electronic funds transfer 

system to transfer directly Into their accounts in 

financial institutions only: (i)employees' gross 

state salaries hSS deductions specifically 

authorized by state or federal law or 

reimbursement for travel and subsistence of 

employees, (ii) payments to annuitants by the 

Employees Retirement System of Texas or the 

Teacher Retirement System of Texas under either 

system's administrative jurisdiction, (iii) 

recurring payments to governmental entities, and 

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Honorable Joe Lucas - Page 2 (m-773) 

(iv) payments to vendors designated by the 

Comptroller. An authorized payee must request in 

writing to participate in any electronic funds 

transfer system established and operated by the 

Comptroller of Public Accounts. A single transfer 

may contain payments to multiple payee8 without 

the necessity of issuing individual warrants for 

each payee. The Comptroller shall establish 

procedures for administering the system and may 

use the services of financial institutions, 

automated clearinghouses, and the federal 

government. The use of electronic funds transfer 

or any other payment means does not create any 

rights that would not have been created had an 

individual state warrant been used as the payment 

medium. . . . 

A bill analysis for that bill that contained that provision states 

that the bill addresses the problem that the comptroller's "statutory 

duties impose many archaic procedures. hindering modern techniques for 

processing and handling funds, such as electronic fund transfers." 

Bill Analysis to S.B. 233, as amended, 67th Leg. Also, in 1985 the 

legislature enacted a statute to allow counties to use an electronic 

funds transfer system fork payment of county officers and employees. 

V.T.C.S. art. 3912n (to be recodified after September 1, 1987, in the 

Local Government Code, Acts 1987, 70th Leg., ch. 149). See V.T.C.S. 

art. 1709a. 54 (requiring that counties expend money "bycheck or 

warrant") (to be recodified after September 1, 1987, in the Local 

Government Code, Acts 1987, 70th Leg., ch. 149). 

You ask whether an independent school district may use an 

electronic funds transfer system absent specific statutory authority 

to do so. We think that it is within the discretion of the trustees 

to adopt such a system if it is reasonably necessary to the operation 

of the school district. 

Section 23.26 of the Education Code sets out the powers of the 

trustees of an independent school district: 

(a) The trustees shall constitute a body 

corporate and in the name of the school district 

may a;Fdirteand hold real and personal property, 

sue sued, and receive bequests and 

donations or other moneys or funds coming legally 

into their hands. 

(b) The trustees shall have the exclusive power 

to manage and govern .the public free schools in 

the district. 

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Honorable Joe Lucas - Page 3 (JM-773) 

C 

(c) All rights and titles to the school 

property of the district, whether real or 

personal, shall be vested in the trustees and 

their successors in office. 

(d) The trustees may adopt such rules, 

regulations, and by-laws as they may deem proper. 

(Emphasis added.) 

The delegation of power to school trustees has been liberally 

construed. Attornev General Oainion E-398 (1974). The court in 

Wilson v. Abilene independent School District; 196 ~S.W.2d 406 (Tex. 

Civ. App. - Eastland 1945, writ ref. w.o.m.1 held that it was within 

the authority of a school board to adopt a regulation prohibiting 

students from belonging to fraternities and sororities, saying, 

[School boards] may make all such rules and 

regulations as in their judgment are necessary to 

maintain an ‘efficient’ system of schools, subject 

to the limitation that there be no abuse of 

discretion, and that such regulations be not 

arbitrary, unreasonable or in violation of law. 

190 S.W.2d at 412. 

Section 20.48 of the Education Code provides that school funds 

may be used to pay the salaries of teachers and other school 

employees. Nothing in the statutes applicable to independent school 

districts, however, details how an independent school district is to 

make such payments or other authorized expenditures. cr. Educ. Code 

§22.08(h)(providing that employees of common school districts are to 

be paid “on a check drawn on the county depository for the district”). 

See generally Educ. Code 9923.25 through 23.50 (provisions governing 

the budget and fiscal accounting system for independent school 

districts); Educ. Code §§23.71 through 23.80(provisions governing 

school depositories). We think that by failing to specify how 

employees are to be paid, the legislature left it to the discretion of 

school boards to determine how to make such payments. Payment in the 

form of a traditional check or warrant is not inherently more 

reasonable than payment by more modern means. Indeed, the legislative 

history of article 4344b. section 3, which states that existing 

statutes governing the state comptroller were “archaic” and “hindered” 

use of .modern payment mechanisms, suggests that the legislature 

considers electronic funds transfer systems to be a quite reasonable 

system of payment. See Attorney General Opinion JM-66 (1983) (absent 

specific requirements%verning transfer of funds within the treasury, 

state treasurer may use wire transfer system, instead of the 

historically used draft system, for the movement of funds within the 

treasury). 

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Honorable Joe Lucas - Page 4 (JM-773) 

Furthermore, we do not interpret the enactment of article 4344b, 

section 3. or article 3912n--statutes that specifically authorize 

certain governmental bodies to use electronic funds transfer 

systems --to mean that a political subdivision may not use an 

electronic funds transfer system unless it is specifically authorized 

to do so. As indicated, legislation was necessary to allow the 

comptroller to use such a system because existing statutes required 

payment in the form of traditional warrants. Section 3912n may have 

been necessary to enable counties to use electronic funds transfer 

systems since the requirement in article 1709a. section 4. that 

counties expend money “by check or warrant” might otherwise prevent 

the use of such a system by a county. See also Canales v. Laughlin, 

214 S.W.Zd 451 (Tex. 1948) (county has only those powers conferred 

upon it specifically or by necessary implication). Statutes governing 

independent school districts, in contrast, simply authorize payment to 

employees; the exercise of discretion in doing so is not limited by 

statutes that govern how they are to pay employees. Thus, unless use 

of such a system is prohibited by a valid regulation of the Central 

Education Aeencv. an indeuendent school district mav use an electronic 

funds transfer system to pay 

An independent 

electronic funds 

employees. 

its employees. 

SUMMARY 

school district may use an 

transfer system to pay its 

Very truly your LJ A;, b 

JIM MATTOX 

Attorney General of Texas 

MARY KELLER 

Executive Assistant Attorney General 

JUDGE ZOLLIE STRAXLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Sarah Woelk 

Assistant Attorney General 

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