### BonorableStewart

CriminalMatrict FortWorth,Texas

Dear Sirr LiUSTIN. TEXAS



### Hovember21, 1949

Y. Rollman Attorney 

### opinionHo. Y-949. **Re:** 

### ReduotionIn valuationof propertyae aifectingeliglbllity of sahooldistrlots for FoundationSchoolFumd grants,and requirementof county-wide%q~llGatiOn mzhooldietrittsto report fundsderivedfrom 

### school maintenancetex aa county amilable funds.
Your requestfor 

### an opinizmrelatesto ellglbilityof schooldistrictsSor FoundationSchoolFund grmt8 where 

### the value ofpropertybaa decreasedand the valuationis reduced. It alsorelatesto theaccouutabllity of county-videequalizationschooldistrictsfor fundsderivedfrom 

### schoolaaintenancetax in report+g 

### countyavailablefundsunderS.3. 116,Aata 51stLeg., B.S., 1949. The questionssubmittedare:

'1. There being no 

### expressprovision In theAct, and there certainlybeingnone in theparagraphsreferredto, to prohibit cana schooldistrictreducethe valuire; oa amy propertyorpropertleaIn said district**and** 

### stillbe eligiblefor aid under saidAct?

‘2. **Are** 

### thesefund8 (oounty-wideequalixatloafunds)to be reportedto the State Auditorunder saidAct, particularlyuuder SubdivisIon(b),Paragraph13, StateAuditor'sForm 

### Ro. BA-2-6495" With respectto your first questian:
Stateand countyassessedvaluationof the taxablepropertyof districtsIs used in the formula

### Hon. StewartY. Hellmen,page 2 (W4S)

designedfor Celculetingtheamountof' localfuuda to be **oharged** 

### mbool dLatrZat8. 116,Aeta 51stLeg.,R.S.,Sectifm5 ofArticleVI, S.B.
gram Act) reads In part% 

### 1949 (Found&ion SahoolPro-

“Mvide the stateand countyaaaes8sdValuaitiori of allpropertyIn thQ countysubjectto schooldistricttaxationfor thenextpreceding schoolyear 

### Into the Stateand countyassessed ValPatlafi

of the district**for** 

### the aextp-codlng schoolyear, findingthe dlatrlct*a**per** 

### centageof the countyvaluation. Multiplythe district’spercentageof the countyvaluation by theamountof fundsassignedto all of’ the dlatriata 

### in the county. The productshallbe the emountof looalfundsthat the district shell**be** 

### assignedto raise towardthe fineming of itsFoundationSohoolPrograa~.~ Said sectionfurtherprovideat "TheCountyTax Aaaeaaor-Collector in each county,

. . . shelloertifyto the StateGem- ~&x~?.I~~of Bdua&tloue . . the followlagla-

"(1) The assessedvaluation,on a State **and** 

### oountyvaluationbasis,ofall property aubjeotto schooldistricttaxationin eaoh schooldiatr.ict

or **portion** 

### of aohooldiatriot in such county,and the totalaaaeaaedValuetlon of all propertyaubjeotto schooldlatrict 

### taxatlanin the county; wo -” 

### Section1,ArtfeleVIII of'theConatltuticmof Texas,reeds lp pert%

" all **property** in this State 

### abell be taxeiin.proportloa to **its** 

### velue,which hhll be ascertainedas my be provided 

### by

. . e l 

### Seation14,ArticleVIII of the Conatltutlon of Texas, 

### providesthat8

“There 

### shellbe eleotedby the quellfled electorsof aechcounty + e D anAssessorand ColleotorofTaxes,



### . . .end auohAssessor 

### and Collectorof Tax88 shallperformall theHon. 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, OFas 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 

### renderingthe property mayhave the true value dete&ed by the county conrmissloners court, if dissatls?led vlth the value 

### fixedby the assesaorcollector. Art. 7211, V.C.S.

Article 7212, V.C.S., provides thatr mTheboards 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 mayknov the market value or true value of such property, as the case maybe, by proper process, whoHon. 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 **recom** mends 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 harmonywith 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 OPdecrease 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 OPdecrease in assessed valuation maybe 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 OPdecvease 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 other**Vise** eligible.

Uith respect to your second questlont Section 3 of Article VII of the Constitution of Texas provides In part:

” e And the Legislature mayauthoriee 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 dia

### trictsexeraiaethe 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 

### 50thLeg.,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 createsthe cow&j availablefund:

" 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 

### thereonleap 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 maybe 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 maybe 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 maybe expended:

l local school funds from district taxes, iAt.& fees of pupils not entitled to free tuition, and other local sources maybeHon. 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 ~theavailable fund provided in Section 6 of Article VII, supra, end that equalieation funds made available in county-vlde equalization schoolHon. 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 maynot 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 

### uuderSection 3 of Article VII, supra, vhile the available fund Is derived from lnterest and other revenue from public lands 

### OFcounty 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, 

### grantsfrcnnwhich 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 v fonds~J as seen from Article 2827, V.C.S., supra. ocal funds from district taxes maybe used for the erection of qfr mane& 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. StewartW. Hellman,page 10 (V-949)



### $Hrdb:bh 

### - l3veFett Hutchlnson Assistant

APPROVED