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 and we quote from your request as follows: 

"Since the inception of the Foundation 

School Program in 1949, this Agency has made 

the budget 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 excess would be $50,000. 

"Assume District A has 1,000 scholastics, 

the budgetary excess per each scholastic would 

be $50.00. So if 60 pupils were transferred 

from District A to District B, this Agency as 

practiced would charge $3,000 (60 x $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. 

-5614- 
. . 

Dr. J. W. Edgar, page 2 (M-1152) 

"District A then, as directed in Section 

16.76(i), would be expected to pay District B 

(the determined proportionate excess charged) 

$3,000 to compensate that district for the 

corresponding reduction in Foundation 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 as Article 2696 and 2697, V.T.C.S., 

were repealed, and a new transfer law enacted 

to provide for pupil-transfers strictly upon 

an agreement arrangement between the receiving 

district and the applicant parent, guardian or 

person having lawful control of the child. 

"In recent weeks, a non budget-excess 

school district (viz., a district eligible for 

Foundation Program payments) receiving pupiltransfers from a budget-excess district protests and questions our (Agency) procedure of 

charging its Foundation Program budget with the 

proportionate share of the budgetary excess on 

the pupil-transfers received from the budgetexcess district. Furthermore, a budget excess 

district (not eligible for Foundation payments) 

urges that the law now should not be construed 

as requiring it to reimburse the district 

realizing reduced Foundation payments, the 

amount charged to such pupil-transfer receiving 

district. 

"The argument is that since the pupil 

transfer law recently has so been altered that 

school districts now do not have that former 

existing right to protest transfers and thereby 

-5615- 
Dr. J. W. Edgar, page 3 (M-1152) 

to control somewhat transfers out of their 

district, and further, because budget-excess 

districts as such are ineligible to realize 

Foundation School fund benefits, it is more 

inequitable as well as burdensome--both to 

such districts from which transfers stem as well 

as to districts receiving such pupil transfers-- 

for the Agency now to continue to construe and 

apply Code Section 16.76(i) as it has from its 

inception. 

"This Agency would appreciate the assistance of an 

opinion from your office on the following questions 

relative to our review of the protests at hand: 

"(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 the proportionate amount of budget 

excess of the home district? 'In-grade" means 

the studentls grade is taught in his home district. 

"(2)1f (1) is answered in the affirmative: 

IS the budget-excess district legally obligated 

to pay such transfer receiving district the Agency 

determined charge made to the recepving district's 

budget (ass,ume properly proportionate)? 

"(3) If answers to (1) and (2) are affirmative: 

What authority, if any, rests in this Agency to require the budget-excess district to make the 

appropriate payment to the transfer receiving district? Note: A budget-excess district realizes 

no State Foundation funds: State per capita on the 

transferred pupils (Under Code Section 21.062) 

is transferred to the receiving district. 

-5616.. 
Dr. J. W. Edgar, page 4 (M-1152) 

"(4) Assuming (a) this Agency must charge 

proportionate budget excess funds on transferred pupils into the Foundation Program budget 

of the transfer receiving district, thereby 

reducing payment to it of Foundation funds in 

like amount, and (b) the budget-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 fee payable 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: 

"In passing upon the question raised by 

this appeal, it becomes necessary for us to 

briefly review some of the enactments of our 

legislature found in that 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, is quoted as follows: 

"If any school district has a budgetary 

income, as provided above in Section 16.71(l) and 

(2) of this Code, in excess of the amount needed 

to operate a minimum Foundation School Program 

and transfers pupils to another district, it shall 

pay to the receiving district a proportionate 

-5617- 
, . 

Dr. J. W. Edgar, page 5 (M-1152) 

part of such excess, based upon the ratio of 

the number transferred to its enumerated scholastic 

population, and this excess portion shall be 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 

of what it actually 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 it will receive regardless of whether it actually 

receives the pre-determined amount from the budget-excess district or not. 

Sub-chapter C of Chapter 21 of the Texas Education Code 

sets out the various types of inter-district transfer of students 

permitted in Texas. Pertinent sections of Sub-chapter C are 

quoted as follows: 

"21.061. Transfer of Student 

"(a) Any child, other than a high school 

graduate, who is over 6 and under 21 years of 

age at the beginning of any scholastic year may 

annually transfer from his school district of 

residence to another Texas district, provided 

that both the receiving district and the applicant parent or guardian or person having lawful 

control of the child jointly approve and timely 

agree in writing 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-, 

tion Agency. 

-~5618- 
Dr. J. W. Edgar, page 6 (M-1152) 

"21.062. Transfer of State Funds 

"Upon the filing and certification of the 

transfer of any such child in the manner timely 

and in the form prescribed by regulations of the 

State Board of Education, the state per capita 

apportionment shall transfer with the child: and 

for purposes of computing state allotments to 

districts eligible under the Foundation School Program Act, the attendance of the child prior to the 

date of transfer shall be counted by the transfer 

sending district and the attendance of the child 

after the date of transfer shall be counted by 

the transfer receiving district. 

"21.063. Tuition Fee for Transfer 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 its board 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 is prescribed and set out 

in transfer agreement prior to its execution by the 

parties, no increase in tuition charge shall be 

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 

"The boards of trustees of two or more 

adjoining districts or the boards of county 

school trustees of two or more adjoining counties 

may, by mutual agreement and under the same rules 

specified in Sections 21.075-21.078 of this code, 

-5619- 
. . 

Dr. J. W. Edgar. Page 7 (M-1152) 

arrange for the transfer and assignment of 

any pupil or pupils from the jurisdiction of 

one board to that of another, in which event 

the participating governing boards shall also 

agree to the transfer of school funds or other 

payments proportionate to the transfer of 

attendance." 

Two methods of inter-district transfer of students are provided in the above quoted Sections. The first method 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. See Attorney General's Opinion M-649 (1970) and M-854 

(1971) for further discussion. 

The second method of transfer as set forth in Section 21.079, 

provides for mutual agreement between the school districts before 

transfers are authorized. Provision is also made for parents to 

appeal such decision. See Section 21.077. 

As we understand the complaints of the unnamed districts, 

the home 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 are being 

deprived of state foundation funds and forced to collect such 

loss from the home district which it may or may 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 only by mutual agreement 

of the local boards. Thus, a home district would have discretion 

to decide whether the transfers are necessary and whether the 

local funds should be used to pay for the transfers without detriment to the children attending locally. Additionally, the receiving 

district could weigh the equities and burdens before agreeing to 

accept the transferring students. 

-5620- 
. . 

Dr. J. W. Edgar, page 8 (M-1152) 

As discussed above, the transfers authorized by Sections 

21.061-21.063 take away any discretion of the home 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 the home district as to whether local funds will 

be paid to the receiving district for the transfer, regardless of 

whether the payment may jeopardize the school program at home. 

In Love v. City of Dallas, 120 Tex. 351, 40 S.W.2d 20 (1931) 

the Texas Supreme Court held that the Legislature has broad power 

in dealing with transfers of students between districts, but that 

the use of local funds of school districts is subject to the discretion of local school boards and the Legislature cannot 

arbitrarily require the use of local funds to pay for such student 

transfers. The constitutional basis of Love v. Citv of Dallas is 

Section 3 of Article VII of the Texas Constitution which provides, 

in part, as follows: 

IS . . . and the Legislature may authorize an 

additional ad valorem tax to be levied and collected with all school districts . _ . for the 

further maintenance of public free schools and 

for the erection and equipment of school buildings 

therein: . . .I' 

The rationale of the m case is that local funds raised 

by local taxes and subject to the provisions of Section 3 of Article 

VII of the Texas Constitution cannot be arbitrarily dealt with by 

the Legislature. 

The Legislature has by other provisions of law given local 

school boards broad authority in dealing 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.). 

-5621- 
. . 

Dr. J. W. Edgar, page 9 (M-1152) 

In enacting Section 16.76(i) it must be presumed the Legislature was aware of the judicial interpretations of Section 3 of 

Article VII of the Constitution. 53 Tex.Jur.2d .§182, pp. 271-274. 

Therefore, in light of the language of Section 3 of Article VII 

of the Constitution and the judicial interpretations concerning 

the broad discretionary powers of the local school boards 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 a balance excess district to pay an adjoining receiving 

district an arbitrarily determined amount of local funds for 

teaching trans,ferring students, when the budget excess (home) 

district has no discretion over whether the students transfer and 

no discretion over the amount of payment to be made to the receiving district. 

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 the budget excess district agrees 

to the transfer of students and agrees to pay a mutually agreeable 

amount of money from local funds subject to its discretionary 

control. 

The answer to your questions are as follows: 

(1) Yes, provided the balance excess district agrees to 

pay the transfer fee. 

(2) Yes, with same answer as No. 1. 

(3) None. 

(4) In light of the above answers, it is not necessary to 

answer this question. 

-5622- 
. . 

Dr. J. w. Edgar, Page 10 (M-1152) 

SUMMARY 

Where in-grade students transfer from 

a budget-excess school district to a nonbudget-excess district pursuant to Sections 

21.061-21.063, Texas Education Code, the 

Texas Education Agency is not authorized 

pursuant to Section 16.76(i), Texas Education 

Code, to require the budget-excess (home) 

district to pay 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 to be 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 

-5623- 
. , 

Dr. J. W. Edgar, page 11 

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) 

- 5624-