Honorable J. W. Edgar 

Comlealoner of Education 

Texas Education Agency 

Au&in, Texas 

No. C-537 

Re: May interest earned on 

Investment of bond proceeds, not Immediately 

needed for the voted purpose, be placed in the 

proper Interest and slnkDearDr.Edgar: lng fund? 

Your oplnlon.requeat state8 that an Independent school 

dietrlct presently haa,authorlzed, but unlasued, bonds which 

.are ~notiimrmedlately needed~for ~the purpose8 $or which they 

wereavoted. !&e Board~of.Trueteee of the district states 

that.a substantial savings 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~accompllah the purpose8 f'or which the bonds were 

voted; the board ~111 redeem the time deposits, placing the 

prinalpal~ln the 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~ynable to 

find a prlor'ridmlnlstrative ruling or judicial decision 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:to place bond proceeda, whiah are 

not.-immadiately..needed for the voted purpose, on Interest 

bearing time deposits. Attorney CknerallB OpMon NW-1083 

(1961). By enacting thla atatute the Legislature clearly 

evidenced it8 intent, 'in Section 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 additional means for eoonomiaal management of the 

school dlatrlot?a flhanoial afralra, 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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Honorable J. W. Edgar, Page 2 (C-537) 

While the law Is well settled that the voted bond proceeds remain Inviolate (Attorney Ceneral'a Opinion WW-1082 

(1961)), Article 2786d, supra, does not specify whatITzhuiy 

be made OS the Interest earned on such Investment. 

absence of epeclSlc statutory direction, "the law authorizes 

the trustee6 to exerclee a .ludicloua discretion Sor the successful and economical manaieknt 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 Interest and slnklng fund 

ln order to successSully manage the financial affairs of the 

district, It is within their discretion to do so. 

We feel that this result Is consistent with Attorney 

General's Opinion 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 obligations and should be 

placed ix'the proper Interest and 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 interest would ultimately be in excess of such amount 

and nould then have to be Glaced ln the proper interest and 

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 

District v. 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 olearly within the discretion OS the eleoted Board 

of Trustee8 upon whom rests the duty of economically managing 

the Slnanclai ~SSalra,oS the dlatrlot. 

SUMMARY ----w-w 

Interest earned on investment of bond proceeds, not Immediately needed Sor the voted purpose, 

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Honorable J. W. Edgar, Page 3 (C-537) 

may, at the discretion OS the Board of Trusteea 

of the school dietriot, be placed ix3 the proper 

Interest and sinking fund. 

Your8 very truly, 

WAOOONER CARR 

Attornew General o? Tex88 

Ae8lrtant Attorney General 

RBJ:ced 

APPROVED: ~ 

OPINION C oI@aTmi 

w. v. GEPPERT, Chairman 

PAUL PRY 

JAMFiSSiiFKICK 

PAT BAILEY 

MALCOIit QUICK 

APPROVEDFORTSEATTOFWEYOEHERAL 

BY: T. B. WRIGRT 

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