State Board of Eduoation Au&In, Texasl
Attention: Caynor Kendall,InvestmentCouneel
Dear Sir: opinionlo. O-4490 Re: Constructionof the 7s debt ratio limitationprovidedby Article 2671, R.c.s., for eligibilityof bonds which may be purchasedfor the Permanent Free SchoolFund as appliedto the total indebtcdneseof cities for municipaland school purposes.
We have your letterof March 6th requestingour opinionon the above question,which reads:
"By Article 2669, Revised Civil Statutesof 1925, as amended by Chapter278, A&s of the RegularSession of thb Fdrty-fititLsgis- lirkure, the State Board of Educationis au$horizedand empoweredto Investthe PermanentFree School Fund of the State in bonds of 'inde- pendentor ocmrmon sahool dietriots,+i* and the bonds of incorporated cities and towns -,' It is provided,however,by Article 2671 as slaended that 'no bonds, obligations,or pledges- shall be 80 purohasadwhen the indebtednessof the county,city, precinctor dietriotissuingfame, inclusiveof those offered,shall exceed aev~1 (746) per cent of the assessedvaluationof the real estate +hersln.' The State Board of Educationis desirousof obtain- a oonatrnotlon of the quoted limitationin connectionwith the followingquesttill:
1.
"Wherea oity has extendedits boundariesfor schoolpurposes only, is the lndebtedneasfor waterworksand other municipal purposesoutstandingagainst the city which is includedwithin, the boundarieeof the schooldistrictto be includedand combined with the debt againstthe school districtin detenuininfl whether the bonds of the school districtthus establishedare eligiblefor purohaeeunder the limitationabove quoted. In other words, Is the city as a municipalitya separateissuingagency from the -, .
State Board of Education,page 2 (o-4490)
school dletrictcreatedby the extensionof the boundaries of the city for echool purposesonly?
"(a) Does any dlatlnotlonobtain in this oonneotlon betweencities of 5,000 populationand less.,operatingunder generallaws, and home-n& citieswhich have assumedoontrol of their schools?
2.
"Wherea city has assumedcontrolof its schools,and the boundariesof the district80 createdand ,those of the city are cotenninousie the Indebtednessfor school bui-ldings to be includedand combinedwith the debt exietingagainst the city for municipalpurposesin determiningwhetherbonds sre eligiblefor purchaseunder the limitationabove quoted. In other words, le the city a separateissuingagency from the independentschool districtof which It has aesumedcontrol?
"(a) Does any distinctionobtain in this connection betweencities of 5,000 populationand less, operatingunder generallaws, and home-rulecitieswhich have assumedcontrol of their schools?"
The severalquestionssubmittedby you resolvethemaelveeto 8 constructionof the underlinedportionof Article 2671, R. C. S., 1925, ae amended,quotedbelow, as applied to a city or town which-has(under the au+&orityof Article 11, Section 10 of the Texas Constitution)acquired the status of "a separateand iudcpendentschool dfetrict"in additionto its ordinarymunicipalcharacter. Such a municipalitycontrolled"eepar- ate and independentschooldistrict"may be eithercoterminouswith tie municipalboundariesof such city (Article2768,R. C. S., 1925; Temple IndependentSchool Districtv. Procter,97 S.W.(2d)1047,writ of error refused)or it may extend over an area greaterthan that of the munici- pality proper (Article2803,R. C. S., 1325; Boesch v. Byrom, 83 S.W. 18; Snyder v. Baird IndependentSchool Dktrict, 102 Tex. 4, 111 S.W. 723).
Article 2671, as last emendedby Acts 1939, 46th Legislature, page 276, reads:
"The Comptrollerof State Board shall carefullyexamine the bonds, obligations,or pledges80 offeredand investigate the facts tendingto show the validitythereof;and such Board may declineto purchase~eme unless satisfiedthat-theyare a safe and proper investmentfor such fund. No bonds. obligations, or pledgesshall be 80 purchasedthat bear lees than two and one-half(2%) per cent interest. No