### THE LYTTORNEY GENERAL OF -XAS

Honorable J.W. Edgar Commissioner of Education Texas Education Agency 201 East 11th Street Austin, Texas 78701 Opinion NO. ~-1152
Re:Application of Section 16.76(i), Texas Education Code in light of Sub-Chapter C of the Texas Education Code. Dear Dr. Edgar: Recently you have requested an opinion in regard to the above andwe quote fromyour request as follows:

"Since the inception of the Foundation School Program in 1949, thisAgency has made thebudget charge required by Section 16.76(i), Texas Education Code. For example: if for District A, the total cost of its Foundation School Program is $500,000 and the district has receipts totaling $550,000 to defray the cost of its Foundation School Program, the district's budgetary excesswould be $50,000.
"Assume District A has 1,000 scholastics, thebudgetary excess per each scholastic would be $50.00. So if 60pupils were transferred from District A toDistrict B, thisAgency as practiced would charge $3,000 (60x $50) into the Foundation Program budget of the receiving District B; this in effect means that state foundation program payments to District B for the year would be reduced by that amount.

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"District A then, as directed in Section 16.76(i), would be expected topay District B (thedetermined proportionate excess charged) $3,000 to compensate that district for the corresponding reduction inFoundation program payment, it suffers. Fruition of that expectation in some situations never hvpens; this creates problems for transfer receiving districts.
"In 1969, the pupil transfer statutes, then codified asArticle 2696 and 2697,V.T.C.S., were repealed, and a new transfer law enacted toprovide forpupil-transfers strictly upon an agreement arrangement between the receiving district and the applicant parent, guardian or person having lawful control of the child.
"In recentweeks, anonbudget-excess school district (viz.,a district eligible for Foundation Program payments) receiving pupiltransfers from abudget-excess district protests and questions our (Agency)procedure of charging its Foundation Program budget with the proportionate share of thebudgetary excess on thepupil-transfers received from thebudgetexcess district. Furthermore, abudget excess district (noteligible for Foundation payments) urges that the law now should notbe construed as requiring it to reimburse the district realizing reduced Foundation payments, the amount charged to suchpupil-transfer receiving district. "The argument is that since the pupil transfer law recently has sobeen altered that school districts now do not have that former existing right toprotest transfers and thereby

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to control somewhat transfers out of their district, and further, because budget-excess districts as such are ineligible to realize Foundation School fundbenefits, it ismore inequitable aswell asburdensome--both to such districts fromwhich transfers stem aswell as to districts receiving suchpupil transfers-- for theAgency now to continue to construe and apply Code Section 16.76(i) as ithas from its inception. "ThisAgency would appreciate the assistance of an opinion fromyour office on the following questions relative to our review of theprotests athand: "(1)Where in-grade students transfer from an accredited budget-excess district (their home district) to an accredited district realizing Foundation Program funds, is the Agency correct in charging into the Foundation Program budget of the pupil-transfer receiving district theproportionate amount ofbudget excess of thehome district? 'In-grade"means the studentls grade is taught inhis home district. "(2)1f (1)is answered in the affirmative: IS thebudget-excess district legally obligated topay such transfer receiving district theAgency determined charge made to the recepving district's budget (ass,ume

properly proportionate)? "(3) If answers to (1)and (2)are affirmative: What authority, ifany, rests in thisAgency to require thebudget-excess district tomake the appropriate payment to the transfer receiving district? Note: Abudget-excess district realizes no State Foundation funds: State per capita on the transferred pupils (UnderCode Section 21.062) is transferred to the receiving district.

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"(4)Assuming (a)thisAgency must charge proportionate budget excess funds on transferred pupils into the Foundation Program budget of the transfer receiving district, thereby reducing payment to itof Foundation funds in like amount, and (b)thebudget-excess home district refuses to reimburse the receiving district: Legally may the transfer receiving district add the determined budget excess charge per student to the tuition feepayable for such transferred student."
Your questions require an analysis of Section 16.76(i), Texas Education Code, in light of the pupil transfer laws as codified and now found in Sub-chapter C of the Texas Education Code.
One appellate court has observed:

"Inpassing upon the question raised by this appeal, itbecomes necessary forus to briefly review some of the enactments of our legislature found inthat chaotic mass of legislation comprising the school law of the state Trustees of Cranfills Gap Consolidated School District No. 6 of Basque and Hamilton Counties vs. Board of County School Trustees of Basque County, 178 S.W.2d 537 (Tex.Civ.App. 1944 ref.)U Section 16.76(i), Texas Education Code, isquoted as follows: "If any school district has abudgetary income, as provided above in Section 16.71(l) and (2)of this Code, in excess of the amount needed to operate aminimum Foundation School Program and transfers pupils to another district, it shall pay to the receiving district aproportionate

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part of such excess, based upon the ratio of the number transferred to its enumerated scholastic population, and this excess portion shallbe charged to such receiving district." This Section is clear the Legislature has provided that any budget-excess district which transfers pupils to another school district will pay an arbitrarily determined amount, regardless ofwhat itactually costs the receiving district to educate the transfers, and that the receiving district will have this arbitrarily determined amount deducted from the amount of State funds that itwill receive regardless ofwhether itactually receives the pre-determined amount from thebudget-excess district or not. Sub-chapter C of Chapter 21 of the Texas Education Code sets out thevarious types of inter-district transfer of students permitted inTexas. Pertinent sections of Sub-chapter C are quoted as follows:

"21.061. Transfer of Student "(a)Any child, other than ahigh school graduate, who isover 6 and under 21years of age at thebeginning of any scholastic year may annually transfer fromhis school district of residence to another Texas district, provided thatboth the receiving district and the applicant parent or guardian or person having lawful control of the child jointly approve and timely agree inwriting to transfer, "(b) Such a transfer agreement shall locally be filed and preserved as a receiving district record for audit purposes of the Central Educa-, tionAgency.

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"21.062. Transfer of State Funds "Upon the filing and certification of the transfer of any such child in themanner timely and in the formprescribed by regulations of the State Board of Education, the state per capita apportionment shall transfer with the child: and forpurposes of computing state allotments to districts eligible under the Foundation School ProgramAct, the attendance of the child prior to the date of transfer shallbe counted by the transfer sending district and the attendance of the child after the date of transfer shallbe counted by the transfer receiving district. "21.063. Tuition Fee forTransfer Students "The receiving district may charge a tuition fee to the extent that the district's actual expenditure per student in average daily attendance, determinable by itsboard of trustees, exceeds the sum the district benefits from state aid sources as provided in Section 21.062 of this code. However, unless a tuition fee isprescribed and set out in transfer agreement prior to its execution by the parties, no increase in tuition charge shallbe made for the year of that transfer that exceeds the tuition charge, if any, of the preceding school year. "21.079. Transfers Between Districts or Counties "Theboards of trustees of two ormore adjoining districts or theboards of county school trustees of two ormore adjoining counties may, by mutual agreement and under the same rules specified in Sections 21.075-21.078 of this code,

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arrange for the transfer and assignment of any pupil orpupils from the jurisdiction of oneboard to that of another, inwhich event theparticipating governing boards shall also agree to the transfer of school funds or other payments proportionate to the transfer of attendance."
Twomethods of inter-district transfer of students are provided in the above quoted Sections. The firstmethod set forth in Sections 21.061-21.063, permit the parents or guardian of the student and the receiving district to decide if the student transfers. The home district has no control over these transfers. SeeAttorney General's Opinion M-649 (1970)andM-854 (1971) for further discussion. The second method of transfer as set forth in Section 21.079, provides formutual agreement between the school districts before transfers are authorized. Provision isalsomade forparents to appeal such decision. See Section 21.077.
As we understand the complaints of the unnamed districts, thehome district is claiming two things. (1)They have no control over student transfers, and (2)They would be required to pay local funds to the receiving district without discretion. The receiving districts are complaining that they arebeing deprived of state foundation funds and forced to collect such loss from the home district which itmay ormay not voluntarily pay. These complaints would only relate to the student transfers under the provisions of Sections 21.061-21.063, quoted above, because Section 21.079 permits transfers onlyby mutual agreement of the localboards. Thus, ahome district would have discretion to decide whether the transfers are necessary andwhether the local funds shouldbe used topay for the transfers without detriment to the children attending locally. Additionally, the receiving district could weigh the equities andburdens before agreeing to accept the transferring students.

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As discussed above, the transfers authorized by Sections 21.061-21.063 take away any discretion of thehome district as to whether the student transfers, and then coupled with the requirements of Section 16.76(i) as interpreted by your office, take away any discretion by thehome district as towhether local fundswill be paid to the receiving district for the transfer, regardless of whether the payment may jeopardize the school program athome.
InLove v. City of Dallas, 120 Tex. 351, 40 S.W.2d 20 (1931) the Texas Supreme Court held that the Legislature has broad power indealing with transfers of students between districts, but that the use of local funds of school districts is subject to the discretion of local schoolboards and the Legislature cannot arbitrarily require the use of local funds topay for such student transfers. The constitutional basis of Love v. Citv of Dallas is Section 3ofArticle VII of the Texas Constitution which provides, inpart, as follows:

IS

. . .and the Legislature may authorize an additional ad valorem tax tobe levied and collected with all school districts
._ .for the further maintenance ofpublic free schools and for the erection and equipment of schoolbuildings therein:
. . .I' The rationale of them case isthat local funds raised by local taxes and subject to the provisions of Section 3ofArticle VII of the Texas Constitution cannot be arbitrarily dealt with by the Legislature. The Legislature hasby other provisions of law given local schoolboards broad authority indealing with local funds for school purposes. Section 20.48(c), Texas Education Code: 51 Tex. Jur.2d 5202, pp, 530-531: City State Bank v.Wellinqton Ind. School Dist., 142 Tex. 344, 178 S.W.Zd 114 (1944);Modelev v. Trustees of Conroe Ind. School Dist., 130 S.W.2d 929 (Tex.Civ. App. 1939, error dism., judgm. car.).

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In enacting Section 16.76(i) itmust be presumed the Legislature was aware of the judicial interpretations of Section 3of Article VII of the Constitution. 53Tex.Jur.2d .§182,pp. 271-274. Therefore, in light of the language of Section 3ofArticle VII of the Constitution and the judicial interpretations concerning thebroad discretionary powers of the local schoolboards on use of local funds and constitutional restraint on the legislative interference with this discretion, it is the opinion of this office that the Legislature did not intend that Section 16.76(i) be applied to require abalance excess district topay an adjoining receiving district an arbitrarily determined amount of local funds for teaching trans,ferringstudents, when thebudget excess (home) district has no discretion over whether the students transfer and no discretion over the amount ofpayment tobe made to the receivingdistrict. The Legislature obviously intended that Section 16.76(i) applies to situations involving student transfers such as that set forth in Section 21.079. where thebudget excess district agrees to the transfer of students and agrees topay amutually agreeable amount ofmoney from local funds subject to itsdiscretionary control. The answer toyour questions are as follows: (1) Yes, provided thebalance excess district agrees to pay the transfer fee. (2)Yes, with same answer asNo. 1. (3)None. (4)In light of the above answers, it isnot necessary to answer this question.

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SUMMARY Where in-grade students transfer from abudget-excess school district to a nonbudget-excess district pursuant to Sections 21.061-21.063, Texas Education Code, the Texas Education Agency isnot authorized pursuant to Section 16.76(i), Texas Education Code, to require thebudget-excess (home) district topay a statutorily determined amount of local funds to the non-budget excess (receiving) district. Neither is the Education Agency authorized to deduct such statutorily determined amount of local fund payment for student transfer from the amount of state funds tobe paid to the non-budgetexcess (receiving) district. The Legislature intended that Section 16.76(i), Texas Education Code, apply only to situations where students transfer from a budget-excess school district to a non-budgetexcess district by mutual agreement of the two schools, truly yours,

At ney General of Texas Prepared by James C.McCoy Assistant Attorney General
APPROVED: OPINION COMMITTEE

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Kerns Taylor, Chairman W. E.Allen, Co-Chairman Linda Neeley Bill Campbell Houghton Brownles James Maxwell
SAMUEL D.MCDANIEL Staff Legal Assistant
ALFRED WALKER Executive Assistant
NOLA WHITE First Assistant (M-1152)

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