Honorable Bevington Reed 

Commissioner, Coordinating Board 

Texas College & University System 

P. 0. Box 12788, Capitol Station 

Austin, Texas 78711 

Dear Commissioner Reed: 

Opinion No. M-878 

Re: Authority of Southwest 

Texas Junior College 

to issue promissory 

note, secured by pledge 

of bank stock, to build 

faculty housing. 

In your recent letter you have set out the following 

facts and requested the opinion of this department on the indicated question. 

"Southwest Texas Junior College proposes to 

borrow $100.000.00 from First State Bank of Uvalde 

for the purpose of constructing on-campus faculty 

housing, the debt to be evidenced by promissory 

note with payment secured by pledge of bank stocks 

owned by the College which were donated to the 

College by Honorable John N. Garner. There were 

no restrictions with the gift of such stocks. In 

view of the smallness of the loan, the procedure for 

issuance of Revenue Bonds authorized in Sec. 51.103 

of the Texas Education Code is not practicable. 

"Question: Does the Board of Trustees of Southwest 

Texas Junior College have the authority to execute 

such a promissory note payable over term of fifteen 

(15) years and secured by the collateral mentioned?" 

We are of the opinion that the Board does not have the 

authority to issue the described note. 

Section 51.102 of the Texas Education Code authorizes 

a junior college district to issue coupon bonds for certain construction purposes, the bonds to be backed by the levy and pledge 

-4285 - 
Hon. Bevington Reed, page 2 (M-878) 

of annual ad valorem taxes. Section 51.103 of the Code authorizes 

a junior college district to issue revenue bonds for certain construction purposes, the bonds to be secured by liens on and 

pledges of certain rentals, rates, charges, fees, and other resources of the board. 

Clearly the promissory note described in your inquiry 

does not fall within the form of the bonds authorized under the 

sections mentioned above. 

Section 51.073, Texas Education Code, provides as 

follows: 

"The board of trustees of junior college 

districts shall be governed in the establishment, 

management and control of the junior college by 

the general law governing the establishment, 

management and control of independent school 

districts insofar as the general law is applicable." 

We do not find any general law, applicable to a junior 

college district under Article 51.073, which authorizes the district to issue the described note. Section 20.43 of the Texas 

Education Code authorizes "any school district in the State of 

Texas" to issue time warrants to repair, renovate, purchase, 

equip, etc. school buildings. This statute applies to a junior 

college district under Article 51.073 quoted above, but it 

would .not authorize the board to issue the proposed note for 

the following reasons: 

1. The language of the statute does not 

encompass new or original construction of a 

building. (Section (a)): 

2. The notes (warrants are defined to include promissory notes under Section (h)) must 

mature serially over not more than five years 

(Section (a)); and 

(3) The outstanding notes may not aggregate 

in excess of $25,000 at any one time (Section (c)). 

-4286- 
. 

Hon. Bevington Reed, page 3 (M-878) 

The requirements for issuing interest bearing time 

warrants, or notes, under this article must be strictly followed. 

Attorney General's Opinion No. C-197 (1963). 

Article 20.48(d) of the Texas Education Code authorizes 

all independent school districts having within their limits a 

city with a population of 160,000 or more to issue,notes for the 

construction of school buildings, but includes prwisions for 

vendor's lien or deed of trust and a trust fund set aside out 

of certain revenues. This would not cover the transaction inquired about, even if the district included a city of the required size. 

Article 20.49 is not applicable because it provides 

for borrowing money for current maintenance expense only. 

Finding no statute authorizing the board of the Southwest Texas Junior College district to execute the proposed note, 

and no general law under which authority might be found, we are 

of the opinion that the board is without authority to execute 

the note as described in your inquiry. 

"In general, a school board has no power to contract 

an obligation against the district until funds are available." 

51 Tex.Jur.2d, Schools, Section 204, page 532. 

SUMMARY 

Neither statutory authority nor any general 

law authorizes the board of the Southwest Texas 

Junior College to issue the note of the district 

in the amount of $100,000, payable over a term of 

15 years and secured by the pledge of bank stock 

belonging to the district. 

General of Texas 

-4287 - 
, 

Hon. Bevington Reed, page 4 

Prepared by James S. Swearingen 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

Mel Corley 

Ben Harrison 

Richard Chote 

Wardlow Lane 

Hal Sharpley 

ME%DE F. GRIFFIN 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NO-WHITE 

First Assistant 

-4288- 

(M-878)