JIM MATTOX Attorney General

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# TheAttorney GeneralofTexas

June 28, 1983

Mr.JohnP. Parsons commissioner Credit UnionDepartment 914East Anderson Lane Austin, Texas 78752
Dear Mr. Parsons: Opinion No. JM-42
Re: Whether certain school funds may be deposited in credit unions

Youhave asked whether anindependent school district maydeposit "activity funds" in a credit union in Texas. In a letter to this office, you characterized "activity funds" as:

[Tlhose monies belonging tovarious organizations such as the PTA (Parent-Teachers Association), school bands, drill team clubs, and athletic booster clubs which are held byaschool district for safekeeping and accounting. The monies are not derived from taxes but are generally obtained by an organization through solicitation of contributions, promotions and similar functions for the sole benefit of the organization, with such monies being theproperty of the organization andnot the school districts. Theschool district merely acts as custodian of themonies.
InAttorney General Opinion Mw-272 (19801, this office concluded that the School Depository Act, Education Codesections 23.71 et seq., to which independent school districts are subject, requires that a "school depository" shall be abank located in Texas. Sec. 23.74. Theopinion held that asavings andloan association does not qualify as a "bank" within the meaning of this provision. See 923.73 (definition of "bank"). In Attorney General Opinion MW-534 (1982). this office held that a credit union is not a "banking corporation, association or individual banker." It follows, in our opinion, that credit unions are not "banks" within the meaning of the School Depository Act, and therefore may not serve as school district depositories.
If anindependent school district maynot use acredit union as its depository, it necessarily follows that any funds that must be placed in the depository by the school district maynot be deposited

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in a credit union. Thus, the next step 1s our analysis is to determine whether anystatute requires anindependent school district todeposit in the school depository the “activity funds” that you have described. Although the School Depository Act contains elaborate procedures to be followed by school districts in selecting their depository, it offers no clue as to what school funds must be deposited therein. There are statutes requiring that certain funds be placed in the school depository, see, e.g., Educ. Code 6923.94(d); 23.95(f) (tax revenues); 16.254(c) (foundation school funds); 15.10(d) (state available school funds), but we have found no statute that touches upon the funds about which you are concerned, and our attention hasbeen directed tonosuch statute.
In a letter which was submitted to this office, the Texas Education Agency urges that “co-curricular activity” funds, as that termis defined inTexas Education Agency Bulletin 679, mustbeplaced in the school depository. Theagency asserts:

Briefly stated, it is the position of theTexas Education Agency that funds deriving from co-curricular, school-related activities andheld in trust by Texas public school districts for a dedicated purpose are under the control of each district’s Board of Trustees for the purpose of the trust. Accordingly, such co-curricular funds mustbeboth fully accounted for andaccorded the samemeasures of care, collateral protection and safekeeping asare public funds derived from state appropriations, local taxes andfederal grants.
Toassure this the State Board of,Education and the Commissioner of Education promulgated, effective April 9, 1982, significant changes in Texas Education Agency Bulletin 679. adopted by reference at 7Tex. Reg. 1300, March 26, 1982. These changes, effective September 1, 1982, require all school districts to treat andaccount for co-curricular funds as apart of the General Fund under the direct control of each school district’s Board ofTrustees.

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. . . . Because co-curricular funds have been, since September 1, 1982, unarguably under the control of the Board of Trustees of each Texas public school district, it is our opinion that these funds must be deposited by each public school district only as prescribed by the School Depository Act.

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and may not be separately deposited with any financial entity other than the district's school depository bankorbanks.
Weunderstand that "co-curricular activity" funds are funds deriving from "school sponsored events or activities that are financed or subsidized from public school funds." TEABulletin 679, Procedure CDE-402. It is true that Bulletin 679 places these funds in the category of "general funds" which are under the control of the boards of trustees in the school districts. It is, also true that school districts are required to account for general funds. See, e.g., TEA Bulletin 679, Procedures CDE-402; CDE-406; APP-B-2; see also Educ. Code §21.256 (annual audit of school district fiscal accounts). It does not follow, however, that these funds "may not be separately deposited with any financial entity other than the district's school depository bankorbanks." Aswehave noted, wehave found nostatute that requires that these funds be deposited in the school depository. Wehave not, moreover, found any provision in Bulletin 679 that imposes such a requirement. Torequire districts to account for a certain class of funds is not, in our opinion, to require them to deposit those funds in aparticular place. It maybe (although wedo not decide this issue) that the Texas Education Agency possesses the requisite statutory authority to promulgate an administrative regulation requiring independent school districts to deposit "co-curricular activity" funds in their depository. It has not done so, however.
Because no statute or administrative regulation to which our attention has been directed requires independent school districts to deposit in their depositories the "activity funds" that you have described, weconclude that districts mayplace these funds in credit unions.
SUMMARY

Independent school districts may deposit "activity funds," as herein defined, in credit

JIM MATTOX Attorney General of Texas
TOMGREEN First Assistant Attorney General

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Mr.JohnP. Parsons - Page4 (JM-42)

DAVIDR.RICHARDS Executive Assistant Attorney General Prepared byJonBible Assistant Attorney General
APPROVED: OPINIONCOMMITTEE
SusanL. Garrison, Chairman JonBible Rick Gilpin Yolanda McKeeman JimMoellinger NancySutton

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