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Honorable Royal1 R. Watkins, President 

State Board of Educ,ation 

Austin, Texas 

Dear Sir: Opinion No. O-6283 

Re: Can local public boards 

legally authorize the payment out of local school 

moneys of insurance premiums on policies payable 

to the State.Board for vocational Education and 

covering the value of educational equipment loaned 

to them by the State Board 

for Vocational Education? 

And other questions. 

We are in receipt of your opinion request reading 

as follows: 

"At the last meeting of the State Board for 

Vocational Education the writer was directed and 

authorized to submit to you for your consideration and advice the matter of whether or not a 

local school board could lawfully pay premiums on 

insurance policies covering the loss of equipment, 

etc. loaned to the respective school boards 

throughout the State of Texas by the State Board 

for Vocational Education. 

"The State Board for Vocational Education 

holds title to a large quantity of shop equipment 

which can be used bg local public schools and which 

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 two or three thousand dollars to as much as thirty thousand dollars. 

The State Board for Vocational Education proposes 

to loan this equipment tc the local public schools 

using a contract, a copy of which is attached. In 

order to protect the interest of the State Board 
Honorable 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 name of the 

State Board for Vocational Education. The question has been raised by the local school board attorneys as to the legality of this requirement. 

We respectfully request the opinion of the Attorney 

General in regard to the following three questions: 

“1 . Can local public school boards legally authorize the payment out of local 

school moneys of insurance premiums on policies payable to the State Board for Vocational Education and covering the value of 

education equipment loaned to them by 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 a nominal 

rent for the use of vocational shop equipment loaned to them by the 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 on lnsurante policies covering the equipment loaned 

to the public schools? 

“3 . If a local school board by official 

action makes itself responsible for the replacement of any equipment loaned to It by 

the State Board for Vocational E,ducation 

and loss by fire 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 a school district to pay insurance premiums is found in Article 2827, Vernon’s Texas Civil 

Statutes, which reads as follows: 

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

, 

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

“1 . The State and county available funds shall 

be used exclusively for the payment of teachers' 

and superintendents' salaries, fees for taking the 

scholastic census, and Interest on money borrowed 

on short time to pay salaries of teachers and auperintendents, when these salaries become due before the school funds for the current year become 

available; provided that no loans 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 

and other local sources may be used for the purposes 

enumerated for State and county funds and for purchasing appliances and supplies, for the payment of 

insurance premiums, janitors and other employees, 

for buying school sites, buying, building and repairing and renting school houses, and for other 

purposes necessary in the conduct of the public 

schools to be determined by the Board of Trustees, 

the accounts and vouchers for county districts to 

be approved by the county superintendent; provided, 

that when the State available school fund in any 

city or district is sufficient to maintain the school 

thereof in any year for at least eight months, and 

leave a surplus, such surplus may be expended for 

the purposes mentioned herein. 

“3 . All independent school districts having 

within their limits a city with a population of 

160,000 or more according to the last preceedlng Federal census shall, In addition to the powers now 

possessed by them for the use and expenditure of 

local school funds and for the issuance of school 

bonds, be expressly authorized and empowered, at 

the option of the governing body of any such school 

district, In the buying of school sites and/or additions to school sites and In the bulldlng of 

school houses, to issue and deliver notes of the 

school district, negotiable or non-negotiable in 

form, representing all or a part of the purchase 

price or cost to the school district of the land 

and/or building so purchased or built, and to secure such notes by a vendor's lien and/or deed of 

trust lien against such land and/or building, and, 

by resolution or order of the governing body of 

the school district made at or before the delivery 

of such notes, to set aside and appropriate as a 

trust fund, and the sole and only fund, for the 
Honorable Royal1 R. Watkins, Page 4 (o-6283) 

payment of the principal of and interest on such 

notes such part and portlon of the local school 

funds, levied and collected by the school district 

in that year, and/or subsequent years, as the governing body of the school di8triCt may determine, 

provided that In no event 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. The Legislature did not have in 

mind the payment of Insurance premiums on borrowed property 

when It passed Article 2827, Vernon's Texas Civil Statutes, 

but only on such bulldings and contents as ares authorized by 

law to be owned by school districts. 

It is our opinion that insurance policies for which 

premium8 are authorized to be paid by this 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. We find no law, either State or Federal, 

which has the effect of making the State Board for Vocational 

Education liable for the loss by fire of any of the equipment 

supplied by the Government, nor do we find 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. The Legislature could authorize the State Board for 

Vocational Education to charge nomlnal rent for the use of 

the equipment and to apply the money received in payment of 

premiums on insurance policies covering the equipment so 

loaned to the school districts, but in the absence of any legislation whatever with respect to these matters, we think the 

State Board for Vocational Education is without authority to 

require school districts to insure same and, the Board, likewise, is without authority to insure it. 

We thank you for your courtesy in furnishing us with 

additional documentary material and regret that we find nothing 
Honorable Royal1 R. Watkins, Page 5 (O-6283) 

therein which would juatifg us in holding otherwlse than a8 

hereinabove stated. 

Yours very truly 

ATTORNEYGEENERAL OF TEXAS 

By /s/C. F. Gibson 

C. F. Gibson 

Asslstant 

CFG:EP-ds 

APPROVED JAN 20, 194.5 

/s/ Carlo8 C. Ashley 

FIRST ASSISTANT ATTORNEY GENERAL 

APPROVED 

OPINION 

COMMITTEE