Honorable J. W. Edgar

Comlealoner of Education Texas EducationAgency Au&in, Texas No. C-537
Re: May interest earned on Investmentof bond proceeds, not Immediately needed for the voted purpose, be placed in the proper Interestand slnkDearDr.Edgar: lng fund?
Your oplnlon.requeat state8 that an Independentschool dietrlctpresentlyhaa,authorlzed, but unlasued, bonds which .are ~notiimrmedlately

needed~for

~thepurpose8$or which they wereavoted. !&e Board~of.Trueteee of the district states that.a substantialsavings will result to the district If they~aell :such-bonds now and place the proceeds derived therefrow:eon

intereat Waring time deposit. lben, a8 funds are needed to~accompllahthe purpose8 f'or which the bonds were voted; the board ~111 redeem the time deposits, placing the prinalpal~lnthe bulldlng~fund and the lntereet earned thereon lmthe Interest and slnklng fund created for the retlrembnt .&f

mach.debt. You.atate that you have been~ynableto find a prlor'ridmlnlstrative ruling or judicialdecision concernlng such dMpcsltlon of Interest earned on such time deporrlte,

and therefore request our opinion on this question.

~~Artiole 27866, Vernon’d Civil Statutes,e&rawly authorlzee any..aohool

dietrlot:toplace bond proceeda,whiah are not.-immadiately..needed for the voted purpose, 

### on Interest bearing time deposits. Attorney CknerallBOpMon NW-1083 

### (1961). By enacting thla atatute the Legislatureclearly evidenced it8 intent, 'inSection 4 thereof, to remedy a condition that "may result In flnanolal loseee to the school dlstrlote of thle state" by naking available to,the Board of Trueteee an additionalmeans 

### for eoonomiaalmanagement of the school dlatrlot?a flhanoialafralra, Ihem a statute 16 de8lgned to af'ford

a remedy for exietlng evils, It should be given suohh~slgnifioatlon a8 will afford a reasonable remedy. 53, Tex.Jur.26,

up. 240, Sec. 163.

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While the law Is well settled that the voted bond proceeds remain Inviolate (Attorney Ceneral'aOpinion WW-1082 (1961)),Article 2786d, supra, does not specifywhatITzhuiy be made OS the Interestearned on such Investment. absence of epeclSlc statutorydirection, "the law authorizes the trustee6 to exercleea .ludicloua discretionSor the successfuland economicalmanaieknt OS the ichoola." Texas Co. v. Panhandle ndent ~Tex.Clv.APP. School District, 72 S.W.2d %mg

, error ref.). IS the Board of Trustees determinea-that

it~ls necessary to place the Interest earned on such time deposits In the proper Interestand slnklng fund ln order to successSully manage the financialaffairs of the district,It is within their discretion to do so. We feel that this result Is consistentwith Attorney General'sOpinion O-6973 (19&g),which held that moneys not needed to accomplish the purpose for which bonds were sold can only be used to retire those obligationsand should be placed ix'the proper Interestand sinking Sund. Thus, while It might be urged that the Interest earned should be placed in the building fund, the Board Is aware of the cost of accomplishing

the purposes for which the debt was created,and IS the interestwould ultimatelybe in excess of such amount and nould then have to be Glaced ln the proper interestand sinking fund, we cannot conceive that It la improper for the Board of Trustees to do so now. It Is well settled that moneys In a s3.nklna ~3'und may be used for no other puruose than-the one for wfilch lt'wk created. Bexar Co&y tiospltal Districtv. Crosby, 327 S.W.2d hh5 (Tex.%p. 1959). Thus, the interest earned will: be used speclSlcally~to retire the debt created by the school district ln the lasuante of their bonds, and In our opinion such action at this time Se olearlywithin the discretionOS the eleoted Board of Trustee8upon whom rests the duty of economically managing the Slnanclai~SSalra,oSthe dlatrlot.

SUMMARY ----w-w Interest earned on investmentof bond proceeds, not Immediatelyneeded Sor the voted purpose,

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may, at the discretionOS the Board of Trusteea of the school dietriot, be placed ix3 the proper Interestand sinking fund. Your8 very truly, WAOOONER CARR Attornew General o? Tex88

Ae8lrtant Attorney General RBJ:ced APPROVED: ~ OPINION CoI@aTmi

w. v. GEPPERT, Chairman
PAUL PRY JAMFiSSiiFKICK PAT BAILEY MALCOIit

QUICK APPROVEDFORTSEATTOFWEYOEHERAL BY: T. B. WRIGRT

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