HonorableJoe Lucas

El Paso County **Attorney** Room 201, City-CountyBuilding El Paso, Texas 79901 OpinionNo. JM-773

Re: Whether an independent school district is authorized to use an electronic funds transfer system for direct depositof employeepaychecks

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 chosenby the employee.

InAttorneyGeneral OpinionMW-213 (1980).this office considered whether the state comptroller could tissue a single pay warrant on magnetic tape covering all employeeswho designateda particularbank
as their depository. Such a practice, the opinion stated, "would thwart the Comptroller'sability to complywith 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 transferof informationonmagnetic 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 establishand operatean electronic funds transfer system to transferdirectly 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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(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 individualwarrants 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 imposemany archaicprocedures.hinderingmodern techniquesfor 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 forkpayment of county officers and employees. V.T.C.S. art. 3912n (tobe 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 GovernmentCode,Acts 1987, 70thLeg., 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 reasonablynecessary to the operation of the school district.
Section 23.26 of the Education Code sets out the powers of the trusteesof an independentschooldistrict:

(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 theirhands.
(b)The trusteesshallhave the exclusivepower to manage and govern .thepublic free schools in the district.

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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 theymay deem proper. (Emphasisadded.)

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.2d406 (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 frombelonging to fraternitiesand sororities,saying,

[School boards] may make all such rules and regulationsas 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,unreasonableor inviolation of law.

190 S.W.2dat 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)(providingthat employees of common school districts are to be paid “on a checkdrawn on the county depositoryfor the district”). See generally Educ. Code 9923.25 through 23.50 (provisionsgoverning 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 employeesare tobe paid, the legislatureleft it to the discretionof schoolboards to determinehow to make such payments. Payment in the form of a traditional check or warrant is not inherently more reasonablethanpaymentby more modernmeans. Indeed, the legislative history of article 4344b. section 3, which states that existing statutesgoverningthe state comptrollerwere “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 specificrequirements%verning transferof fundswithin 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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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 specificallyauthorized 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 traditionalwarrants. Section 3912nmay 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 systemby a county. See also Canales v. Laughlin, 214 S.W.Zd 451 (Tex. 1948) (county has only those powers conferred upon it specificallyor by necessary implication). Statutesgoverning independentschooldistricts, in contrast, simplyauthorizepayment 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 EducationAeencv. an indeuendentschooldistrictmav use an electronic funds transfersystem topay

An independent electronic funds employees. its employees.

SUMMARY

school district may use an transfer system to pay its

Very trulyyour 

# LJb

A;, JIM MATTOX AttorneyGeneral of Texas

MARY KELLER ExecutiveAssistantAttorneyGeneral

JUDGE ZOLLIE STRAXLEY SpecialAssistantAttorneyGeneral

RICK GILPIN Chairman,Opinion Committee
Preparedby SarahWoelk AssistantAttorneyGeneral

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