DAN MORALES

ATTORNEY GENERAL 

## QlWice of tfy IZMornep Qihneral &ate of 

## Wxas Januaiy 13,199s

Honorable Garry Mauro Commissioner General Land Office 1700North Congress Avenue Austin, Texas 78701-1495 Opinion No. DM-316
Re: whether the state may enter into contracts to pay consideration for information about property recoverable by the permanent school iimd under section 403.0195 of the Government Code (RQ-714)
Dear Commissioner Mauro:
You askwhether the comptroller may enter into contracts to pay consideration for information about property recoverable by the “public free school Smd” under section 403.0195 of the Government Code. Section 403.0195 authorizes the comptroller to contract with a person for the receipt ofinformation about apossible claim that the state may be entitled to pursue for the recovery of revenue or other property. The consideration to bepaidbythe state mustbe contingent on recovery bythe state and may not exceed five percent ofthe amount ofrevenue or the value of other property the state recovers asaresult ofpursuit ofthe claim. Subsection (e)provides that

[i]f the state recovers property in connection with a contract executed under this section. ,an amount not to exceed five percent of the amount of revenue or proceeds from the sale of property recovered shall be deposited to the credit of the comptroller’s operating fund for payment ofthe consideration. The ,balance of the revenue or proceeds ~from the sale of property recovered shallbe deposited to the credit ofthe genera) revenue l%nd or to any special fund asrequired bylaw. Section 2 of article VII of the Texas Constitution creates the “perpetual school fimd” consisting of “[a]11funds, lands and other property heretofore set apart and appropriated for the support of public schools. and all sums of money that may come to the State from the sale of any portion ofthe same.” Section 5of article VII describes and governs the “permanent school fimd” and the “available school fund.” Section 5 provides inpertinent part asfollows:

(a) The principal ofallbonds and other funds, and the principal arising from the sale ofthe lands hereinbefore set apart to said school timd, shah be the permanent school lund, and all the interest derivable therefrom and the taxes herein authorized and levied shall

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be.the available school fund. The available school fund shall be applied annually to the support ofthe public free schools. Except as provided by this section, no law shall ever be enacted appropriating any part of the permanent or available school fund to any other purpose whatever; and the available school fund herein provided shah be distributed to the several counties according to their scholastic population and applied in suchmanner as maybe provided bylaw. (b) The Jegislature by law may provide for using the permanent school tbnd and the income from the permanent school fhnd to guarantee bonds issued by school districts or by the state for the purpose of making loans to or purchasing the bonds of school districts for the purpose ofacquisition, construction, or improvement ofinstructional facilities

.. (c) The legislature may appropriate part ofthe available school fond for administration of the permanent school tImd or of a bond guarantee program established under this section. We refer to both the “perpetual school tbnd” referred to in section 2 and the “permanent school ibnd” referred to in section 5 as the “permanent school fund.” See Educ. Code, $15.01(a) (“The permanent school fund, which shall constitute a perpetual endowment for the public free schools ofthis state, shall consist of.

.“);2 GEOROE D. BRADEN,

TBE CONSTKITION

OF THE STATE OFTEXAS:AN **ANNOTATED** ANDCOMPARATIVE ANALYSIS 510(1977)(suggesting that the “perpetual school fund” and the “permanent school fund” are one andthe same).
Over the years, the legislature has enlarged the permanent school fund endowment in section 15.01ofthe Education Code. Pursuant to this provision, the permanent school fond consists not only of all land appropriated for public schools by the constitution, but also ah the unappropriated public domain remaining inTexas, including allland recovered by the state by suit, all proceeds from the authorized sale of permanent school fund land and other property, allinvestments ofproperties belonging to the permanent school Rmd, and all income t?om the mineral development of the permanent school fund, including income from mineral development of river beds and other submerged land. Educ. Code Q15.01(a). The available school fimd has alsobeen expanded by section 15.01to consist **Of** (1) the interest and dividends arising from any securities or

funds belonging to the permanent school fund; (2) all interest derivable from the proceeds of the sale of land set apart for the permanent school fund;

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(3) all money derived from the lease of land belonging to the permanent school fund; (4)all revenue collected by the state from an annual state ad valorem tax of an amount not to exceed 35 cents on the $100 vahtation, exclusive ofdelinquencies andcost ofcollection; (5)one-fourth of all revenue derived t%omall state occupation taxes, exclusive ofdelinquencies and cost ofcollectiom (6) one-fourth of revenue derived from state gasoline and special fuelsexcisetaxes asprovided bylaw;and (7) allother appropriations to the available school hmd as made or maybemadebythe legislature for publictke school purposes.
Id. 8 15.01(b).
You aah whether consideration otherwise payable pursuant to a contract under section 403.0195 of the Government Code may be paid from revenue or sale proceeds resulting from the recovery of permanent school kmd property. You suggest that such monk do not become part ofthe pernUentschooltimduntilafterthepropertyhasbeen recovered. We disagree. It is clear from section 2 and section 5 of article VII of the Texas Constitution and section 15.01(a) ofthe Education Code that the permanent school fimd is a permanent endowment and that recoverable permanent school timd lands and other property are part of the corpus of that endowment, and must be treated as such, even before they are actudy recovered. Therefore, m the event that the state recovers permanent school timd property, the revenues or proceeds from the sale of such property must be deposited in the Smd. The constitutionsl provisions establishing the permanent school fund and limiting itsuse do not permit a percentage ofthe amount ofthe revenue or proceeds from the sale of property recovered to be deposited to the credit of the comptroller’s operating tknd for payment of the consideration as provided in section 403.0195 ofthe Govemment Code. Section S(a)ofarticle VII provides that %o law shall ever be enacted appropriating any part of the permanent school fimd

..to any other purpose whatever,” with certain limited exceptions setforth elsewhere inthe section. The purpose eanb0die.d in section 403.0195 of the Government Code, i.e., payment of consideration for information leading to the recovery ofpermanent school hmd property, is not permitted by any of the exceptions in section 5 or by any other constitutional provision.
You suggest that the constitutional provisions may permit the use ofthe available school fund to pay the consideration owed under a section 403.0195 contract. Section 5(c) ofarticle VII provides that the legislature mayappropriate part ofthe available school tbnd “for administration of the permanent school Iimd.” We believe that this provision permits the legislature to appropriate available school fimd monies to pay consideration

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for information leading to the recovery of permanent school fond property. But section 403.0195 ofthe Government Code, which contemplates that the consideration willbe-paid from revenue or the proceeds from the sate ofrecovered property, does not authorize the consideration to be paid from other sources, such as the available school fund, nor does any other statute ofwhich we are aware. You specifically suggest that in cases where the recovery of property includes accrued interest that would be allocated to the available school fbnd, the accrued interest could be used to pay the consideration. We believe that the language in section 5(c) of article W providiig that the legislature may appropriate part ofthe available school fund for administration of the pemanent school timd requires an express legislative appropriation. Section 403.0195 ofthe Government Code is not suflicient to authorize recovered available school tbnds to beused forthis purpose. gnu M M A RY The state maynot enter into contracts under section 403.0195 of the Government Code to pay consideration for information about property recoverable bythe permnent school tknd.
Yours very truly, f

DAN. MORALES Attorney General ofTexas
JORGE VEGA Fist Assistant Attorney General
SARAH J. SHIRLEY Chair, Opinion Committee Prepared byMary R. Crouter Assistant Anomey General

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