.

Honorable John M. Turner

CountyAttorney Bee County Beeville, Texas

Dear Sir: OpinionNo. O-3025 Re: Authority to transfer surplus In bond fund of school district to another fund.

We received your letter datedDecember 21, 1940, requesting our opinion on the followingquestions whioh we quote as follows:

"1. Whether or not the money now in the depository credited to the sinking fund of former Common SchoolDistrict MO. 5 can be transferred by the depositary to the maintenance fund ofRural High School District No. 33, as all of the bonds of Common School DistrictNo. 5 have been fully paid, or "2~ Whether or not the amount ofmoney now In the depository to the credit of the sinking fund of former Common School DistrictNo. 5 (which ceased to exist onDecember 14, 1937) can be transferredby the school distriot or depository to the sinking fund of the bonded indebtedness ofRural Rlgh School District No. 33."

We quote the following facts from your letter as follows:

"1

. On Deoember 14, 1937,Rural High School District No. 33 was established,as is shown by
a certified copy of the order of the CountyBoard of School Trustees of Bee Count 1' Texas, entered Nunc ProTune, as ofDecember 1 , 1937,herewith enclosed and marked 'ExhibitA'.Honorable John M. Turner, Page 2, O-3025

"2

. At the time of the establishment of this district there was an outstandingbonded Indebtedness owingby Pettus Common School DistrictNo. 5, which Common School DistriotNo. 5 is now a part ofRural High School DistrictNo. 33. At the time of the establishment ofRural High School Distriot No. 33 there had been levied and was being collecteda tax of $1.00 upon the
one hundred dollar valuation of all taxable property within said Common SchoolDistrict No. 33,
a portion of which to be applied to create a slnking fund to pay the Interestand principal as the
same became due, and while said bonds or any of them were outstandinga tax for each year at a rate fromyear to year as will be ample and sufflcient to provide funds to pay the current Interest
on said bonds and to provide the necessary sinking fund. A certified copy of the order of the commlssioners~court ofBee County authorlzlng the issuance of these bonds is hereto attached marked 'ExhibitB'.

“3

. Since the incorporation ofRural High School DistrictNo. 33, which includedPettus Common School DistrFctNo. 5, the school trustees ofRural High School DistrictNo. 33 have annually levied a tax of $1.00 upon the onehundred dollar valuation of all taxable property within said district for the maintenance of schools therein and the payment of interestand principal of bonded indebtedness.

“4

. January 1, 1939, there was leviedby the sohool trustees,of the Rural High School District a tax of $1.00 upon the $100.00 valuation of all taxable propertywithin said district,as is shown by the order of the school trustees, a certified copy of which is hereto attached and marked 'ExhibitCl.

“5. March 14, 1939, there being a sufficient amount ofmoney in the sinking fund from taxes previously collected to retire and pay off the entire prinoipaland interest of the bonds that were issued for Common School DistrictNo. 5, herelnabovementioned.Honorable John M. Turner, Page 3, O-3025

“6. The taxes for the year 1939 had, prior to the date of the payment of these bonds, been leviedby the school trustees of Rural High School DistrictNo. 33, and for the year 1939 the taxes so leviedand assessed by Rural Elgh School District 33 were collected by the tax collector of Bee County and approxlmately $6,500.00 thereof was placed In a sinking fund known as Common SchoolDistrict No. 5 SinkingFund with the depository,and this amount ofmoney now remains with the depositoryand the entire bond issue of Common SchoolDistrict No. 5 has been paid off, whFoh was paFd March 1939."

"RxhFbltC", referred to in paragraphNo. 4 letterreads, in Part, as follows:

"On this the 14 day of October, 1940, there
was convened a meeting of the Sohool Trustees of Pettus,Tuleta,NormannaRural High Sohool District MO. 33, located In Bee County, with the followingmembers present:

"R. 3. Bill - President L. W. D1rk.s Bob Walton Guy Palmer H. A. Rabe E. E. Green

"when among otherproceedingshad the matters hereinafter set out came on to be consideredby the trustees. of your

"On this day came on to be heard and consldered by the Trustees ofRural High School District MO. 33, Bee County, the order of this Board heretofore entered Fn 1939, levying the taxes for all purposes upon all taxableproperty withinRural High School District No. 33; and I,t appearing to the Trustees that the order levying taxes upon all taxable propertywlthinRural High School District No. 33 does not appear upon the minutes of the Board ofTrustees, though said taxes were 1evFed by this district and assessed and have been collected in part by the Tax Collector ofBee County, Texas.Honorable John M. Turner, Page 4, O-3025

"And It further appearing to the Board of Trustees that said order levying taxes, as aforesaid, is not,

properly entered upon the minutes of the Board ofTrustees,Rural High School District No. 33, Bee County, for the year 1939, and it havFng been conclusively shown to the Board of School Trustees,Rural High School DistrictMO. 33, and the Board so finds that a proper levy was made on the 1st day of January, 1939, orderingthe proper officials ofBee County,Texas, to assess and collect the same orderingthat saFd taxes be a legal charge on the property and the owners thereof tithin the Rural High School DistrictNo. 33, In accordance with the followingrates: '$1.00upon the $100.00 valuation of all taxable property of the saidDlstrFct for the maintenance of schools therein and such amount
as may be necessary to retire and pay the unpaid balanoe of any bonded indebtedness then existing
or unpaid for whichbonds have been Fssuedby any former Common School District within saidRural High School District No, 33, and a balance remaining out of said $1.00 upon theT 100.00 valuation not used and necessary to pay the bonded lndebtedness of any former existing bonds shallbe placed in the maintenance fund of saidRural High School District No. 33.

"IT IS THRREPORE ORDRRED by the Trustees of Rural HFgh School District MO. 33, all members of the board.belmig

p&zeenkand:;alPvotiag,:;that bald taxes of $1.00 upon the $100.00 valuation of all taxable property in saidRural High School District No. 33 for the year 1939be, and the same is now, levied against the property tithln saidRural High SchoolDistrict No. 33 and the owners thereof, as are.subject to taxation,and that the same be, and is hereby, justand proper rate to be levied to raise the revenue sufficient to satisfy the obllgations of saidRural High Sohool DistrictNo. 33 and for the maintenance of schools therein, and that said taxes are made a legal charge on said property and against the owners of same; that the
assessor ofBee County,Texas, is hereby ordered to extend the same on the tax rolls and the tax collector is ordered to collect said taxes, and. .. .

Honorable JohnM. Turner, Page 5, O-3025

the secretary of this board is ordered to prepare and file with the tax assessor-collector
a certified copy of this order to be enteredNuno Pro Tune as of the 1st day of January 1939." Authority of the schoolboard to .levyand collect the tax is provided for inArtFcle 2922-1,Vernon's Annotated CLvil Statutes, whhioh reads, In part, as follows:

"Theboard of a rural high school district provided for in thisAct shallhave the power to levy and collect an annual ad valorem tax not to exceed One Dollar ($1) on the onehundred dollars valuation of taxable property of the district for the maintenance of schools therein, and a tax not to exceedFifty (50) Cents on the one hundred dollars valuation of taxable property of the district for the purpose of purchasing, constructing,repairing, or equippingpublic free school buildings within the limits of such district,and the purchase of necessary sites therefor;providing that the amount ofmaintenance tax, together with the amount of bond tax of the district shallnever exceed OneDollar ($1) on the onehundred dollars valuation of taxable property;

. . ."

From the above quoted facts, it appears thatRural High SchoolDistrict No. 33 collected taxes from the rural district for the year 1939. A portion of said taxes were alloted to a sinking fund to retire the bonded indebtedness of Common SchoolDistrict No. 5. It appears further that the entire bonded indebtedness, for which the particular sinking fund involved was created,was paid off FnMarch, 1939, leaving a balance in said fund of approximately$6,500. We assume that this surpluswas causedby allotingmore money, collectedby the rural distrFct from the 1939 taxes, to the sinking fund than was necessary to pay off the bonds.

The rule seems to be that money belonging to a bond fund cannotbe used formaintenance. See McPhail et al v. Tax Collector ofVan Zandt County et al., 280 S.W. 260 (writrefused.) This rule undoubtedly contemplatesa situationwhere there exists outstandingbonds. However, where there are no outstandingbonds Fn existence, there is no need or purpose for
an interest and sinking fund. In this connection,we quote from the case ofMadeley et al v. Trustees of Conroe Independent School DFstrlct, et al., 130 S.W. (2d) 929 (writdismissed
as follows:Honorable John M. Turner, Page 6, O-3025

"The following illustration Is in point
on our holding: Where a districthas Issued bonds and voted a tax to retire them, what becomes of the surplus of the tax when the bonds
are retired? Sinoe it Is not reasonable that the exact amount of the bonds will be collected,
on every bond issued the trustees will have In their hands a surplus. Again, a tax payer permlts his tax to beoome delinquentuntil after the bonds are retired; when sued, can he defend on the ground that the bands for which the tax against his property was leviedhave been paid off? When the delinquent tax is collected,how shall it be expended? These questions find their answer in Sec. 3 ofArt. 7 of the Constitution;where the bonds have been paid off the statutesregulating the expenditure of the funds for their payment cease to oontrol the power of the trustees in the expenditure of the surplus,and its expenditure rests in the discretion of the trustees, under Sec. 3 of Art. 7 of the Constitution."

It Is our opinion that the money in question now deposited In the sinking fund of formerCommon School District No. 5, all bonded indebtednesshaving been paid, can be properly transferred to themaintenance fund ofRural High Scho~ol DistrictNo. 33 upon proper orderexecuted by officers charged with receiving and disbursing funds for saidRural High School District.

We trust that our answer to your first question will satisfactorilyansweryour inquiry.

Yours very truly

ATTORNRYGRNRRALOFTRXA3

APPROVRD JAN 22, 1941 $/S~;;;;3;;~eps

ATTORNRYGRNRRAL

LS:db:mjs By /s/GlennR. Lewis GlennR. Lewis Assistant

By /s/ Lee Shoptaw

Lee Shoptaw

APPROVRD OPINION COMMITTEE BY fs/ BWB CHAlRMAN