Court Opinion

ID: 4134924
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:56:21.53958+00
Date Added: 2024-06-11T14:36:39.205898
License: Public Domain

Honorable J. W. Edgar          No. C-537
Comlealoner of Education
Texas Education Agency         Re: May interest earned on
Au&in, Texas                       Investment of bond pro-
                                   ceeds, not Immediately
                                   needed for the voted pur-
                                   pose, be placed in the
                                   proper Interest and slnk-
DearDr.Edgar:                      lng fund?
     Your oplnlon.requeatstate8 that an Independent school
dietrlct presently haa,authorlzed,but unlasued, bonds which
.are~notiimrmedlately
                    needed~for~the purpose8$or which they
wereavoted. !&e Board~of.Trueteeeof the district states
that.a substantial savings will result to the district If
they~aell:such-bondsnow and place the proceeds derived there-
frow:eonintereat Waring time deposit. lben, a8 funds are
needed to~accompllahthe purpose8 f'orwhich the bonds were
voted; the board ~111 redeem the time deposits, placing the
prinalpal~lnthe bulldlng~fundand the lntereet earned there-
on lmthe Interest and slnklng fund created for the retlre-
mbnt .&fmach.debt. You.atate that you have been~ynableto
find a prlor'ridmlnlstrativeruling or judicial decision con-
cernlng such dMpcsltlon of Interest  earned on such time de-
porrlte,and therefore request our opinion on this question.
   ~~ Artiole 27866, Vernon’d Civil Statutes, e&rawly author-
lzee any..aohooldietrlot:to place bond proceeda, whiah are
not.-immadiately..needed for the voted purpose, on Interest
bearing time deposits. Attorney CknerallB OpMon NW-1083
(1961). By enacting thla atatute the Legislature clearly
evidenced it8 intent, 'in Section 4 thereof, to remedy a con-
dition that "may result In flnanolal loseee to the school
dlstrlote of thle state" by naking available to,the Board of
Trueteee an additional means for eoonomiaalmanagement of the
school dlatrlot?a flhanoial afralra, Ihem a statute     16 de-
8lgned to af'forda remedy for exietlng evils, It should be
given suohh~slgnifioatlon  a8 will afford a reasonable remedy.
53,Tex.Jur.26,up. 240, Sec. 163.

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Honorable J. W. Edgar, Page 2 (C-537)

     While the law Is well settled that the voted bond pro-
ceeds remain Inviolate (Attorney Ceneral'a Opinion WW-1082
(1961)),Article 2786d, supra, does not specify whatITzhuiy
be made OS the Interest earned on such Investment.
absence of epeclSlc statutory direction, "the law authorizes
the trustee6 to exerclee a .ludiclouadiscretion Sor the suc-
cessful and economicalmanaieknt OS the ichoola." Texas Co.
v. Panhandle       ndent School District, 72 S.W.2d %mg
~Tex.Clv.APP.     , error ref.).  IS the Board of Trustees
determinea-thatit~ls necessary to place the Interest earned
on such time deposits In the proper Interest and slnklng fund
ln order to successSullymanage the financial affairs of the
district, It is within their discretion to do so.
     We feel that this result Is consistent with Attorney
General'sOpinion O-6973 (19&g), which held that moneys not
needed to accomplish the purpose for which bonds were sold
can only be used to retire those obligationsand should be
placed ix'the proper Interest and sinking Sund. Thus, while
It might be urged that the Interest earned should be placed
in the building fund, the Board Is aware of the cost of ac-
complishingthe purposes for which the debt was created, and
IS the interest would ultimately be in excess of such amount
and nould then have to be Glaced ln the proper interest and
sinking fund, we cannot conceive that It la improper for the
Board of Trustees to do so now. It Is well settled that
moneys In a s3.nklna~3'und
                         may be used for no other puruose
than-the one for wfilchlt'wk created. Bexar Co&y tiospltal
District v. Crosby, 327 S.W.2d hh5 (Tex.%p. 1959).
     Thus, the interest earned will:be used speclSlcally~to
retire the debt created by the school district ln the lasu-
ante of their bonds, and In our opinion such action at this
time Se olearly within the discretion OS the eleoted Board
of Trustee8 upon whom rests the duty of economicallymanaging
the Slnanclai ~SSalra,oS the dlatrlot.

                         SUMMARY
                         ----w-w
          Interest earned on investment of bond pro-
     ceeds, not Immediatelyneeded Sor the voted purpose,

                                -25X-
Honorable J. W. Edgar, Page 3 (C-537)

     may, at the discretion OS the Board of Trusteea
     of the school dietriot, be placed ix3the proper
     Interest and sinking fund.
                                Your8 very truly,
                                WAOOONER CARR
                                Attornew General o? Tex88

                                Ae8lrtant   Attorney   General
RBJ:ced
APPROVED:      ~
OPINION CoI@aTmi
w. v. GEPPERT, Chairman
PAUL PRY
JAMFiSSiiFKICK
PAT BAILEY
MALCOIitQUICK
APPROVEDFORTSEATTOFWEYOEHERAL
BY: T. B. WRIGRT

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