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Honorable Royal1 R. Watkins, President

State Board of Educ,ation Austin, Texas

Dear Sir: Opinion No. O-6283 Re: Canlocal public boards legally authorize the payment out of local school moneys of insurance premiums onpolicies payable to the State.Board for vocational Education and covering the value of educational equipment loaned to thembythe State Board for Vocational Education? Andother questions.

Weare in receipt of your opinion request reading
as follows:

"At the last meeting of the State Board for Vocational Education the writer wasdirected and authorized to submit to you for your consideration andadvice the matter of whether or not a local school board could lawfully paypremiums on insurance policies covering the loss of equipment, etc. loaned to the respective school boards throughout the State ofTexas bythe State Board for Vocational Education.

"The State Board for Vocational Education holds title to alarge quantity of shop equipment which canbe used bg local public schools andwhich it proposes to loan to local public schools for
use in their vocational shops to assist the local school in training their students in various fields of work. The value of the equipment loaned to individual schools will vary from twoor three thousand dollars to as muchas thirty thousand dollars. TheState Board for Vocational Education proposes to loan this equipment tc the local public schools using acontract, acopy of which is attached. In order to protect the interest of the State BoardHonorable Royal1 R. Watkins, page 2 (O-6283)

for Vocational Education, the local public echools have been requested to carry fire insurance covering the cost of the equipment in the nameof the State Board for Vocational Education. Thequestion has been raised bythe local school board attorneys as to the legality of this requirement. Werespectfully request the opinion of the Attorney General in regard to the following three questions:

“1

. Canlocal public school boards legally authorize the payment out of local school moneys of insurance premiums onpolicies payable to the State Board for Vocational Education andcovering the value of education equipment loaned to themby the State Board for Vocational Education?

“2. (a) Would it be permissible for the local public schools to pay to the State Board for Vocational Education anominal rent for the use of vocational shop equipment loaned to thembythe State Board for
use in educational programs for regular high school ,students?

“(b) If the answer to 2 (a) - the first part of this question - is ‘yes,’ can the State Board for Vocational Education lawfully apply the moneys received for the nominal rent for the payment of premiums onlnsurante policies covering the equipment loaned to the public schools?

“3

. If alocal school board by official action makes itself responsible for the replacement of anyequipment loaned to It by the State Board for Vocational E,ducation and loss byfire or theft, would it be legal for the local school board to purchase equipment to replace that destroyed or lost and return it to the State Board for Vocational Education?”

The only authority for aschool district to pay insurance premiums is found in Article 2827, Vernon’s Texas Civil Statutes, which reads as follows:

“The public free school fundsshall not be expended except for the following purposes:.,

,

Honorable Royal1 R. Wstklns, page 3(o-15283)

“1

. TheState and county available funds shall be used exclusively for the payment of teachers' andsuperintendents' salaries, fees for taking the scholastic census, andInterest onmoneyborrowed
on short time to pay salaries of teachers and auperintendents, whenthese salaries become duebefore the school funds for the current year become available; provided that noloans for the purpose of payment of teachers shall be paid out of funds other than those for the then current year.
"2

. Local school funds from district taxes, tuition fees of pupils not entitled to free tuition andother local sources maybe used for the purposes enumerated for State andcounty funds andfor purchasing appliances and supplies, for the payment of insurance premiums, janitors andother employees, for buying school sites, buying, building andrepairing andrenting school houses, andfor other purposes necessary in the conduct of the public schools to be determined bythe Board of Trustees, the accounts andvouchers for county districts to be approved by the county superintendent; provided, that whenthe State available school fund in any city or district is sufficient to maintain the school thereof in anyyear for at least eight months, and leave asurplus, such surplus maybe expended for the purposes mentioned herein.

“3

. All independent school districts having within their limits acity with apopulation of 160,000 or more according to the last preceedlng Federal census shall, In addition to the powers now possessed bythemfor the use andexpenditure of local school funds andfor the issuance of school bonds, be expressly authorized andempowered, at the option of the governing body of anysuch school district, In the buying of school sites and/or additions to school sites andIn the bulldlng of school houses, to issue anddeliver notes of the school district, negotiable or non-negotiable in form, representing all or apart of the purchase price or cost to the school district of the land and/or building so purchased or built, andto secure such notes by avendor's lien and/or deed of trust lien against such land and/or building, and, byresolution or order of the governing body of the school district madeat or before the delivery of such notes, to set aside andappropriate as a trust fund, andthe sole andonly fund, for theHonorable Royal1 R. Watkins, 

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payment of the principal of andinterest onsuch notes such part andportlon of the local school funds, levied andcollected bythe school district in that 

### year, and/or subsequent years, as the governing body of the school di8triCt maydetermine, provided that In noevent shall the aggregate amount of local school funds set aside in or for any subsequent year for the retirement of such notes exceed, in any one such subsequent year, ten (16) per cent of the local school funds collected during such year."

In our opinion all of the above questions should be answered in the negative. TheLegislature did not have in mindthe payment of Insurance premiums onborrowed property whenIt passed Article 2827, Vernon's Texas Civil Statutes, but only on such bulldings andcontents as aresauthorized by lawto be ownedby school districts.

It is our opinion that insurance policies for which premium8 are authorized to be paid bythis article out of local school funds are such policies as protect the district, itself, from pecuniary liability or loss. Ordinarily, it is the purpose of insurance policies to protect the insured from liability or loss and not to provide the means of compensating a third party for loss. Wefind nolaw, either State or Federal, which has the effect of making the State Board for Vocational Education liable for the loss by fire of anyof the equipment supplied bythe Government, nor dowefind any law requiring either the State Board for Vocational Education or the schools using such equipment to insure same.

Doubtless, the Legislature could authorize school districts to insure the equipment, but, so far, it has not done 80. TheLegislature could authorize the State Board for Vocational Education to charge nomlnal rent for the use of the equipment andto apply the moneyreceived in payment of premiums oninsurance policies covering the equipment so loaned to the school districts, but in the absence of any legislation whatever with respect to these matters, wethink the State Board for Vocational Education is without authority to require school districts to insure sameand, the Board, likewise, is without authority to insure it.

Wethank you for your courtesy in furnishing uswith additional documentary material and regret that wefind nothingHonorable Royal1 R. Watkins, Page 5 (O-6283)

therein which would juatifg us in holding otherwlse than a8 hereinabove stated.

Yours very truly

ATTORNEYGEENERAL OFTEXAS

By /s/C. F. Gibson

C. F. Gibson Asslstant

CFG:EP-ds

APPROVED

JAN20, 194.5

/s/ Carlo8 C. Ashley

FIRSTASSISTANTATTORNEY GENERAL APPROVED

OPINION COMMITTEE