Bonorable Stewart 

Criminal Matrict 

Fort Worth, Texas 

Dear Sirr 

LiUSTIN. TEXAS 

Hovember 21, 1949 

Y. Rollman 

Attorney 

opinion Ho. Y-949. 

Re: Reduotion In valuation of 

property ae aifecting eliglbllity of sahool distrlots 

for Foundation School Fumd 

grants, and requirement of 

county-wide %q~llGatiOn 

mzhool dietritts to report 

funds derived from school 

maintenance tex aa county 

amilable funds. 

Your request for an opinizm relates to ellglbility of school districts Sor Foundation School Fund 

grmt8 where the value of property baa decreased and the 

valuation is reduced. It also relates to the accouutabllity of county-vide equalization school districts for 

funds derived from school aaintenance tax in report+g 

county available funds under S.3. 116, Aata 51st Leg., 

B.S., 1949. The questions submitted are: 

'1. There being no express provision 

In the Act, and there certainly being none 

in the paragraphs referred to, to prohibit 

can a school district reduce the valuire; oa amy property or propertlea In said 

district and still be eligible for aid under 

said Act? 

‘2. Are these fund8 (oounty-wide equalixatloa funds) to be reported to the State 

Auditor under said Act, particularly uuder 

SubdivisIon (b), Paragraph 13, State Auditor's Form Ro. BA-2-6495" 

With respect to your first questian: 

State and county assessed valuation of the 

taxable property of districts Is used in the formula 
Hon. Stewart Y. Hellmen, page 2 (W4S) 

designed for Celculeting the amount of' local fuuda to be 

oharged mbool dLatrZat8. 

116, Aeta 51st Leg., R.S., 

Sectifm 5 of Article VI, S.B. 

gram Act) reads In part% 

1949 (Found&ion Sahool Pro- 

“Mvide the state and county aaaes8sd Valuaitiori of all property In thQ county subject to 

school district taxation for the next preceding 

school year Into the State and county assessed 

ValPatlafi of the district for the aext p-codlng school year, finding the dlatrlct*a percentage of the county valuation. Multiply the 

district’s percentage of the county valuation 

by the amount of funds assigned to all of’ the 

dlatriata in the county. The product shall be 

the emount of looal funds that the district 

shell be assigned to raise toward the fineming 

of its Foundation Sohool Prograa~.~ 

Said section further provideat 

"The County Tax Aaaeaaor-Collector in each 

county, . . . shell oertify to the State Gem- 

~&x~?.I~~of Bdua&tlou e . . the followlag la- 

"(1) The assessed valuation, on a State 

and oounty valuation basis, of all property 

aubjeot to school district taxation in eaoh 

school diatr.ict or portion of aohool diatriot 

in such county, and the total aaaeaaed Valuetlon of all property aubjeot to school dlatrict taxatlan in the county; w o -” 

Section 1, Artfele VIII of'the Conatltuticm of 

Texas, reeds lp pert% 

" all property in this State abell 

be taxei in.proportloa to its velue, which 

hhll be ascertained as my be provided by 

. . e l 

Seation 14, Article VIII of the Conatltutlon 

of Texas, provides that8 

“There shell be eleoted by the quellfled 

electors of aech county + e D an Assessor and 

Colleotor of Taxes, . . . end auoh Assessor 

and Collector of Tax88 shall perform all the 
Hon. Stewart W. Bellman, page 3 (V-949) 

duties with respect to assessing property for 

the purpose o? taxation.. . . .” 

Article 7174, V.C.S., reads in part: 

“Each separate parcel of real property 

shall be valued at its true and full value 

in money, excluding the value of crops 

ing or ungathered thereon. . . .” 

grovArticle 7206, V.C.S., reads in part: 

“Each ccaamlsaloners court shall convene 

and sit as a board of equalization on the second l4ondag in May of each year, OF as soon 

thereafter a8 practicable before the first day 

of June, to receive all the assessment lists 

or books of the assessors of their aountles 

for inspection, correction or equalization and 

approval. ’ 

Uhen property Is rendered for taxation the 

assessor-collector places the property on the tax rolls 

if he la satisfied the property is pende~ed at the reasonable cash market value. I? he is not so satisfied 

he enters the reasonable cash market value on the rendltion and the party rendering the property may have the 

true value dete&ed by the county conrmissloners court, 

if dissatls?led vlth the value fixed by the assesaorcollector. Art. 7211, V.C.S. 

Article 7212, V.C.S., provides thatr 

mThe boards of equalization shall have 

power, and It is made their official duty, to 

supervise the assessment of their respective 

counties, and, if satisfied that the valuation 

of any property Is not in accordance with the 

laws of this State, to increase or diminish 

the same and to affix a proper valuation thereto, as provided for in the preceding article; 

and, vhen any assessor In this State shall 

have furnished said court vith the rendition 

as provided for In the preceding article, it 

shall be the duty of such court to call before 

It such persons as in Its judgment may knov 

the market value or true value of such property, as the case may be, by proper process, who 
Hon. Stewartu. hellman, page 4 (v-949) 

shall testify under oath the character, quality and quantity of such property, as vell as 

the value thereof. Said court, after hearing 

the evidence, shall fix the value of such 

property In accordance with the evidence so 

introduced and as provided for in the preceding article; and their action in such case or 

cases shall be final." 

Section 5 of Article VI, S.B. 116, supra, further provides: 

"I? there has been a marked increase 

or decrease in the assessed valuation of a 

school district within a county, and if the 

County School Board certifies that the use 

of the county and school district valuations 

for the PreCeding year in determinIng local 

fund assignments to the school districts in 

the county would be Inequitable, and recommends a different distribution of the county 

total than that made by the State Consnissioner of Education, such recommendations, subject to the approval of said Commissioner, 

shall become and be the lawful local fund assignments to such districts." 

hanifestly, the quoted provisions of Senate 

hill 116 pertaining to valuation of property are in harmony with general law and the Constitution. Senate Bill 

116 does not, in our opinion, seek nor operate to alter, 

change, or disturb the valuation procedure long established and in use for purposes of taxation in this State. 

Clearly, the language, "I? there has been a marked increase OP decrease in the assessed valuation of a school 

district . . .v recognlses that there will be fluctuations in the value of property in school districts. Under the organic and StatUtWy law, Change in value must 

be taken into account. Increase OP decrease in assessed 

valuation may be recognized without affecting eligibility for Foundation School Fund grads by giving effect, 

in proper oases, to recommendations of the County School 

Board. 

The Foundation School Program Act contemplates 

limitations upon districts with respect to reduction of 

tax rate: 
Hon. Stewapt W. Hellman, page 5 (V-949) 

%o school district shall be eligible to 

receive foundation school funds authorized 

herein vhich lovers its total school tax pate 

within tvo (2) years of the effective date of 

this Act, I? the reduction of such tax rate 

would reduce thz local maintanauce tax receipts . . . . Sec. 5, Art. VI, S. B. 116 

Acts 51St Leg., B.S., 1949. (emphasis added) 

However, we do not construe this language as 

in anyvise applicable to the power to ascertain value 

for tax purposes as required by the Constitution and 

laws of this State, since the subject of this provision 

is rate of tax as distinguished from value of property 

to which the rate is applied. The Ae%T$%aina no provision of similar import relating to valuation. Increase OP decvease in valuation would operate to vary 

the amount of local funds charged to conmcu school diatrlcts and independent districts using State and county 

valuations as indicated by the formula quoted above, but 

eligibility for grants would not be disturbed. 

It Is apparent, therefore, that valuation of 

property in school districts may be reduced, when circumstances and evidence determinative of value require, 

without affecting eligibility of such districts for 

foundation school fund grants for which they are otherVise eligible. 

Uith respect to your second questlont 

Section 3 of Article VII of the Constitution 

of Texas provides In part: 

” 

e And the Legislature may authoriee 

au addl&al ad valorem tax to be levied and 

collected within all school districts heretofore fomned or hereafter formed, for the further mainteuauce of public free schools, and 

for the erection and equipment of school buildings therein; provided that a majority of the 

qualified property tax-paging voters of the 

district voting at an electlou to be held for 

that purpose, shall vote such tax not to exceed in any one year one ($1.00) dollar on the 

one huudved dollars valuation of the property 

subject to taxation In such district, . . .* 
Lou. Stewart W. Bellman, page 6 (V-949) 

Pursuant to authority of this provision of the 

Couatitutlou, the Legislature has created a number of 

counties as county-wide equallaation school districts 

having the Cotmty Unit System of Mucation. These diatricts exeraiae the taxing power conierred upon school 

districts by suoh provision with. limitations prescribed 

in the several Aots when voted by a majoflty of the 

qualified property tax-payi 

3 

voters of the district. 

Acts 44th Leg., R.S., 1935, h. 

V.C.S. ; 

103, p. 284, Art. 27408, 

Acts 45th Leg., B.S., 1937, Ch. 231, p. 454, 

Art. 2744e, V.C.S.; Acts 45th Leg., R.S., 1937, Ch. 163, 

p. 315, Art. 27401-2, V.C .S . ; Acta 46th Leteg., R.S., 

19391 ;pS Lava, p. 677, Art. 2744e-1, V.C.S.; Acts 46th’ 

1939, Sp. Lava, p. 673, Art. 2744e-2, V.C.S.; 

;:$$&h’ieg., R.S., 1941, Ch. 95, p. 121, Art. 27401-3, 

. . .; 

2740?-4, 

Acta 47th Leg. R.S., 1941, Ch. 

V.C.S. i Acts 47th Leg., R.S., 

2 3, 

;: 

p. 400, Art. 

19 1, Ch. 150, p. 

218, as aabanded, Acts 50th Leg., R.S., 1947, Ch. 85 p. 

145, Art. 2744e3, V.C.S.; Aota 50th Lag., R.S., 1947, 

Ch. 331, p. 617, Art. 2702-A, V.C.S.; Acts 50th Lag.,, R. 

S -9 1947, Ch. 399, p. 800, Art. 2740?-5, V.C.S. 

Sectiou 6 of Article VII of the Constitution 

of Texas creates the cow&j available fund: 

" 

thereof; 

Said lends, and the proceeds 

ihen sold, shall be held by said 

couuties alone as a truat for the benefit 

of public schools therein; said proceeds to 

be Invested . . . and the counties shall be 

responsible for all investments; the interest thereon, and other revenue, except the 

princlipsl shall be available fuud.” 

Interest derived from investment of the pePmanent land or trust fund and other Pevenue from such fund, 

except the p~lnolpal thereof, constitute the couuty 

available fund; and only the interest thereon leap be uned and expended annually. Art. 2824, V.C.S. Section 5 

of Article VII of the Constitution of Texas creates the 

state available school fund and enumeratea certain sources of Income and revenue for the fund. The Legislature 

la specifically authoriced to supplement the fund by 

adding not to exceed l$ annually of the total value of 

the pePamnent school fuud. Section 6, supra, of this APtlcle, contains no provision for adding to or SuppleaIentlng the county available fuud. 
Hon. Stewart W. Hellman, page 7 (V-949) 

Article 2692, V.C .S., provides that the county 

superintendent shall make pro rata distribution of the 

state available school fund based on the scholastic census, and: 

I( 

. . . shall at the same time apportion the income arising from the county 

school fund to all the districts, lncluding the independent school districts of the 

county, making a pro rata distribution as 

per scholastic census.* 

Thus, income arising from the county available 

fund _ _ Is distributed in the same manner and upon the same 

oasis (scholastic census) as the state available funds 

apportioned to counties. 

The only source of income to the county avallable fund provided In the Constitution is interest and 

other revenue derived from the county permanent fund. 

The Legislature has in effect defined other revenue to 

Include leasing or renting of lands, while proceeds from 

the sale of timber Is required to be invested as proceeds from the sale of land. Art. 2825, V.C:S. In 

Simona v. Jackson County 63 Tex. 428 (1885), it Is said 

hat interest on notes egeouted in part payment of the 

purchase price of land becomes part of the available 

fund. But, proceeds from a lease conveying land for mining and operating for oil and gas may be said to be permanent funds as the transaction represents a sale of the 

minerals in place. 

S.W.2d 666 (1928). 

Ehlineer v. Clark, 117 Tex. 547, 8 

Article 2827, v.C .S . , enumerates the purposes 

for which the public free school funds may be expended: 

(I 

. . . State and county available funds 

shall be used exclusively for the payment of 

teachers’ and superintendentat salaries, fees 

for taking the scholastic census, and interest 

on money borrowed on short time to pay salt- 

&es of teachers and superintendents. . . 

This article also describes the purposes for 

vhich local funds may be expended: 

l local school funds from district 

taxes, iAt.& fees of pupils not entitled to 

free tuition, and other local sources may be 
Hon. Stewart W. Hellman, page 8 (V-549) 

used for the purposes enumerated for State and 

county funds and for purchasing appliances and 

supplies, for the payment of insurance premiums, janitors and other employees, for buying 

school sites, buying, building and repairing 

and renting school houses, and for other purposes necessary in the conduct of the public 

schools to be determined by the Board of Trustees. . . ." 

Sound reason supports the view that the available fund created by Section 6 of Article VII, supra, is 

a fund separate and distinct from other funds made available by law under any other provision of the Constitution 

for the operation, maintenance, and support of the public 

free schools. Likewise, the available school fund provided in Section 5 of Article VII, supra, is a fund separate and distinct from other funds made available by law 

under any other provision of the Constitution. Both are 

constitutional funds. The sources of income or revenue 

to each ape particularly described by the Constitution 

and laws of this State, and the use of each is defined 

and restricted by legislative declaration. 

Section 1 of Article VI, S.B. 116; Acts 51st 

Leg., R.S., 1949, provides that the Foundation School Program shall be financed by: 

"a. An equalized local school district 

effort to the extent hereinafter provided toward the support of this program; 

"b. Mstrlbution of the State and County Available School Funds on the basis of the 

number of scholastics; and 

'C. Allooation to each local district a 

sum of State money appropriated for the purposes of this Act sufflclent to finance the 

remaining costs of the Foundation School PPOgram in that district computed and determined 

in accordanoe with the provisions of this Act.' 

“It is abundantly clear, we think, that the 

county available fund referred to in the Act and intended by the Legislature is ~the available fund provided in 

Section 6 of Article VII, supra, end that equalieation 

funds made available in county-vlde equalization school 
Hon. Stewart W. Hellman, page 9 (V-949) 

districts by the levy of a school maintenance tax constitute local funds as distinguished from constitutional 

available funds and may not be included therein. I? the 

Legislature had intended othervise, it could have easily 

so declared. 

County-wide equalization funds are derived from 

a tax levied by districts exercising the taxing power 

conferred by the Legislature uuder Section 3 of Article 

VII, supra, vhile the available fund Is derived from lnterest and other revenue from public lands OF county permanent fund. In general, county-wide equalization funds 

are by law distributed to districts on a per capita basis according to the scholastic census for the maintenance 

and support of the schools of the district. Hove;er, APtlcle 27&O?-5, V.C.S., provides for distribution . . . 

according to the financial needs of said school districts 

. . . so as to provide a salary of not less than two 

thousand ($2,000.00) dollars per year to any teacher employed. . . .” With this one exception, use of countywide equalicatlon funds is unrestricted as to purpose, 

vhile use of the available fund, as has already been 

pointed out, Is limited by general statute to particular 

purposes. 

The Foundation School Fond created by the Oilmer-Alkin lava, is an w fund, grants frcnn which 

are intended to pay professional salaries, transportation and current operating costs other than professional 

salaries and transportation. It supplements State and 

county available funds which are also o eratl 

as seen from Article 2827, V.C.S., supra. v ocal fonds~J funds 

from district taxes may be used for the erection of 

mane& qfr imorovements and certain other purposes, in ad 

tion to those enumerated for State and county funds. 

Surely, it vas not the intention of the Legislature to supplement building funds of dlstriets vlth 

grants from the Foundation School Fund. As observed, 

Foundation School Fund grants supplementtheoperating 

funds. Mstricts that have levied the county-wide equalization tax, by vote, would be penalized if Gilmerdikin 

gPadS were reduced by the amount raised locally by such 

levies. We see no objection to school districts levying 

county-wide equalieatlon or other local taxes in addition to taxes levied to raise local funds Charged to such 

districts by Senate Bill 116 to supplement either operating funds or permsnent improvement funds. 
Hon. Stewart W. Hellman, page 10 (V-949) 

$Hrdb:bh 

- l3veFett Hutchlnson 

Assistant 

APPROVED