Court Opinion

ID: 3789724
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:37:51.536947+00
Date Added: 2024-06-11T13:56:00.323939
License: Public Domain

COMMISSIONERS OF LAND OFFICE — PURCHASE OF BONDS Pursuant to Article XI, Section 6, of the Oklahoma Constitution, and 64 O.S. 51 [64-51] (1971), the Commissioners of the Land Office may invest in Merchant Marine Bonds, Small Business Administration Debentures, Government National Mortgage Association Participation Certificates, United States Postal Services Bonds, New Communities Debentures, General Services Administration Debentures, Washington Metropolitan Area Transit Authority Debentures, and World Bank Notes all of which are backed by the full faith and credit of the United States Government; and may not invest in Ballks for Cooperatives, the Tennessee Valley Authority, the Federal Home Loan Bank Notes, Federal Intermediate Credit Ballk Debentures, Federal Land Bank Bonds, Federal National Mortgage Association Debentures, and Federal National Mortgage Association Capital Debentures.  The Attorney General has considered your opinion request wherein you ask, in effect, the following question: May the Commissioners of the Land Office invest the permanent common school funds and other educational funds in the following securities: (1) Banks for Cooperatives; (2) Merchant Marine Bonds; (3) Small Business Administration Debentures; (4) Tennessee Valley Authority; (5) Federal Home Loan Bank Notes; (6) Federal Intermediate Credit Bank Debentures; (7) Federal Land Bank Bonds; (8) Federal National Mortgage Association Debentures; (9) Federal National Mortgage Association Capital Debentures; (10) Government National Mortgage Association Mortgage-Backed Bonds; (11) Government National Mortgage Association Participation Certificates; (12) United States Postal Service Bonds; (13) New Communities Debentures; (14) General Services Administration; (15) Washington Metropolitan Area Transit Authority Debentures; and (16) World Bank Notes? The Commissioners of the Land Office is a constitutional body established pursuant to Article VI, Section 32 of the Oklahoma Constitution.  Section Article VI, Section 32 provides: "The Governor, Secretary of State, State Auditor, Superintendent of Public Instruction, and the President of the Board of Agriculture, shall constitute the Commissioners of the Land Office, who shall have charge of the sale, rental, disposal, and managing of the school lands and other public lands of the state, and of funds and proceeds derived therefrom, and the rules and regulations prescribed by the Legislature." The Oklahoma Constitution further provides in Article XI, Section 6, for the "investment of permanent common school and other educational funds". That section provides for the investment of the funds administered by the Commissioners of the Land Office and provides in part: "The permanent common school and other educational funds shall be invested in first mortgages upon good and improved farm lands within the State and in no case shall more than fifty percentum (50%) of the reasonable valuation of the land without improvements be loaned on any tract in Oklahoma State bonds, county bonds of the counties of Oklahoma, school district bonds of the school districts of Oklahoma, promissory notes evidencing federal and state insured loans made to students under any federal or State of Oklahoma insured student loan program, and United States bonds, preference to be given to the securities in the order named. The said funds may also be invested in deposits and banks or trust companies in Oklahoma to the extent such deposit is insured by the Federal Deposit Insurance Corporation." (Emphasis added) Title 64 O.S. 51 [64-51] (1971), also specifies the above listed uses for the funds administered by the Commissioners of the Land Office and additionally requires that any proposed investment be approved by the Attorney General of the State of Oklahoma. The question you ask is similar to that question answered in Attorney General Opinion No. 73-277 to the Commissioners of the Land Office, wherein the Attorney General ruled that the Commissioners could trade U.S. Treasury Bonds for Farmers Home Administration Notes and Export-Import Bank Debentures with the same maturity value and a higher annual yield; and Attorney General Opinion No. 73-312, wherein the Attorney General ruled that the Commissioners of the Land Office could trade U.S. Treasury Bonds for Government National Mortgage Association Participation Certificates. These holdings were premised on the fact that the Farmers Home Administration Notes, Export-Import Bank Debentures, and the Government National Mortgage Association Participation Certificates were backed by the full faith and credit of the United States and, thus, constituted "United States bonds" under the provisions of Article XI, Section 6, of the Oklahoma Constitution, and 64 O.S. 51 [64-51] (1971).  You state in your request that Merchant Marine Bonds, Small Business Administration Debentures, Government National Mortgage Association Mortgage-backed Bonds, Government National Mortgage Association Participation Certificates, United States Postal Services Bonds, New Communities Debentures, General Services Administration Debentures, Washington Metropolitan Area Transit Authority Debentures, and World Bank Notes are backed by the full faith and credit of the United States Government (refer to Attorney General Opinion No. 73-312 for New Communities Debentures). Pursuant to the holding in Attorney General Opinion No.'s 73-277 and 73-312, which we have reviewed and hereby affirm, and from the facts you relate in your request, it is clear that the Commissioners of the Land Office are authorized to invest in the above specified securities (those that are backed by the full faith and credit of the United States Government). You relate that Banks for Cooperatives, the Tennessee Valley Authority, the Federal Home Loan Bank Notes, Federal Intermediate Credit Bank Debentures, Federal Land Bank Bonds, Federal National Mortgage Association Debentures, and Federal National Mortgage Association Capital Debentures are not backed by full faith and credit of the United States Government. They do not, therefore, constitute "United States bonds" within the meaning of Article XI, Section 6, of the Oklahoma Constitution, or 64 O.S. 51 [64-51] (1971).  It is, therefore, the opinion of the Attorney General that your question be answered as follows: Pursuant to ArticleXI, Section 6, of the Oklahoma Constitution, and 64 O.S. 51 [64-51] (1971), the Commissioners of the Land Office may invest in Merchant Marine Bonds, Small Business Administration Debentures, Government National Mortgage Association Participation Certificates, United States Postal Services Bonds, New Communities Debentures, General Services Administration Debentures, Washington Metropolitan Area Transit Authority Debentures, and World Bank Notes, all of which are backed by the full faith and credit of the United States Government; and may not invest in Banks for Cooperatives, the Tennessee Valley Authority, the Federal Home Loan Bank Notes, Federal Intermediate Credit Bank Debentures, Federal Land Bank Bonds, Federal National Mortgage Association Debentures, and Federal National Mortgage Association Capital Debentures.  (Mike D. Martin)