DAN MORALES 

ATTORNEY GENERAL 

QlWice of tfy IZMornep Qihneral 

&ate of Wxas 

Januaiy 13,199s 

Honorable Garry Mauro 

Commissioner 

General Land Office 

1700 North Congress Avenue 

Austin, Texas 78701-1495 

Opinion No. DM-3 16 

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 ask whether 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 of information about a possible claim that the state 

may be entitled to pursue for the recovery of revenue or other property. The 

consideration to be paid by the state must be contingent on recovery by the state and may 

not exceed five percent of the amount of revenue or the value of other property the state 

recovers as a result of pursuit of the 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 of the consideration. The 

,balance of the revenue or proceeds ~from the sale of property 

recovered shall be deposited to the credit of the genera) revenue l%nd 

or to any special fund as required by law. 

Section 2 of article VII of the Texas Constitution creates the “perpetual school 

fimd” consisting of “[a]11 funds, 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 of the same.” Section 5 of article VII describes 

and governs the “permanent school fimd” and the “available school fund.” Section 5 

provides in pertinent part as follows: 

(a) The principal of all bonds and other funds, and the principal 

arising from the sale of the 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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Honorable Garry Mauro - Page 2 (DM-316) 

be. the available school fund. The available school fund shall be 

applied annually to the support of the 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 such manner as may be provided 

by law. 

(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 of acquisition, construction, or improvement 

of instructional facilities . . 

(c) The legislature may appropriate part of the 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 of this state, shall consist of. .“); 2 GEOROE D. BRADEN, TBE 

CONSTKITION OF THE STATE OF TEXAS: AN ANNOTATED AND COMPARATIVE ANALYSIS 

5 10 (1977) (suggesting that the “perpetual school fund” and the “permanent school fund” 

are one and the same). 

Over the years, the legislature has enlarged the permanent school fund endowment 

in section 15.01 ofthe 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 in Texas, including all land recovered 

by the state by suit, all proceeds from the authorized sale of permanent school fund land 

and other property, all investments of properties 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 

Q 15.01(a). The available school fimd has also been expanded by section 15.01 to 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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Honorable Gany Mauro - Page 3 (DM-316) 

(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 of delinquencies and cost of collection; 

(5) one-fourth of all revenue derived t%om all state occupation 

taxes, exclusive of delinquencies and cost of collectiom 

(6) one-fourth of revenue derived from state gasoline and 

special fuels excise taxes as provided by law; and 

(7) all other appropriations to the available school hmd as made 

or may be made by the legislature for public tke 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 of the 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) of the 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 its use do not permit a percentage of the amount of the 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 of the Govemment Code. Section S(a) of article 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 set forth elsewhere in the section. The 

purpose eanb0die.d in section 403.0195 of the Government Code, i.e., payment of 

consideration for information leading to the recovery of permanent 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 of the available 

school fund to pay the consideration owed under a section 403.0195 contract. Section 

5(c) of article VII provides that the legislature may appropriate part of the 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 

p. 1680 
Honorable Garry Mauro - Page 4 (DM-316) 

for information leading to the recovery of permanent school fond property. But section 

403.0195 ofthe Government Code, which contemplates that the consideration will be- paid 

from revenue or the proceeds from the sate of recovered property, does not authorize the 

consideration to be paid from other sources, such as the available school fund, nor does 

any other statute of which 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 of the available school fund 

for administration of the pemanent school timd requires an express legislative 

appropriation. Section 403.0195 of the Government Code is not suflicient to authorize 

recovered available school tbnds to be used for this purpose. 

gnu M M A RY 

The state may not enter into contracts under section 403.0195 of 

the Government Code to pay consideration for information about 

property recoverable by the permnent school tknd. 

Yours very truly, f 

DAN. MORALES 

Attorney General of Texas 

JORGE VEGA 

Fist Assistant Attorney General 

SARAH J. SHIRLEY 

Chair, Opinion Committee 

Prepared by Mary R. Crouter 

Assistant Anomey General 

p. 1681