Court Opinion

ID: 4129865
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:57:23.584136+00
Date Added: 2024-06-11T14:34:14.595869
License: Public Domain

QlWice of tfy IZMornep Qihneral
                                    &ate of Wxas
DAN MORALES
 ATTORNEY
       GENERAL                            Januaiy 13,199s

     Honorable Garry Mauro                        Opinion No. DM-3 16
     Commissioner
     General Land Office                          Re: whether the state may enter into
     1700 North Congress Avenue                   contracts to pay consideration for information
     Austin, Texas 78701-1495                     about property recoverable by the permanent
                                                  school iimd under section 403.0195 of the
                                                  Government Code (RQ-714)

     Dear Commissioner Mauro:

             You ask whether the comptroller may enter into contracts to pay consideration for
     information about property recoverable by the “public free school Smd” under section
     403.0195 of the Government Code. Section 403.0195 authorizes the comptroller to
     contract with a person for the receipt of information about a possible claim that the state
     may be entitled to pursue for the recovery of revenue or other property.               The
     consideration to be paid by the state must be contingent on recovery by the state and may
     not exceed five percent of the amount of revenue or the value of other property the state
     recovers as a result of pursuit of the claim. Subsection (e) provides that

                     [i]f the state recovers property in connection with a contract
                executed under this section.        , an amount not to exceed five
                percent of the amount of revenue or proceeds from the sale of
                property recovered shall be deposited to the credit of the
                comptroller’s operating fund for payment of the consideration. The
               ,balance of the revenue or proceeds ~from the sale of property
                recovered shall be deposited to the credit of the genera) revenue l%nd
                or to any special fund as required by law.

             Section 2 of article VII of the Texas Constitution creates the “perpetual school
     fimd” consisting of “[a]11 funds, lands and other property heretofore set apart and
     appropriated for the support of public schools.     and all sums of money that may come
     to the State from the sale of any portion of the same.” Section 5 of article VII describes
     and governs the “permanent school fimd” and the “available school fund.” Section 5
     provides in pertinent part as follows:
                     (a) The principal of all bonds and other funds, and the principal
               arising from the sale of the lands hereinbefore set apart to said school
               timd, shah be the permanent school lund, and all the interest
               derivable therefrom and the taxes herein authorized and levied shall

                                               p. 1678
Honorable Garry Mauro - Page 2          (DM-316)

          be. the available school fund. The available school fund shall be
          applied annually to the support of the public free schools. Except as
          provided by this section, no law shall ever be enacted appropriating
          any part of the permanent or available school fund to any other
          purpose whatever;       and the available school fund herein provided
          shah be distributed to the several counties according to their
          scholastic population and applied in such manner as may be provided
          by law.
               (b) The Jegislature by law may provide for using the permanent
          school tbnd and the income from the permanent school fhnd to
          guarantee bonds issued by school districts or by the state for the
          purpose of making loans to or purchasing the bonds of school
          districts for the purpose of acquisition, construction, or improvement
          of instructional facilities . .

              (c) The legislature may appropriate part of the available school
          fond for administration of the permanent school tImd or of a bond
          guarantee program established under this section.

We refer to both the “perpetual school tbnd” referred to in section 2 and the “permanent
school ibnd” referred to in section 5 as the “permanent school fund.” See Educ. Code,
$15.01(a) (“The permanent school fund, which shall constitute a perpetual endowment
for the public free schools of this state, shall consist of. .“); 2 GEOROED. BRADEN,TBE
CONSTKITIONOFTHESTATEOFTEXAS: AN ANNOTATED AND COMPARATIVE                    ANALYSIS
510 (1977) (suggesting that the “perpetual school fund” and the “permanent school fund”
are one and the same).

         Over the years, the legislature has enlarged the permanent school fund endowment
in section 15.01 ofthe Education Code. Pursuant to this provision, the permanent school
fond consists not only of all land appropriated for public schools by the constitution, but
also ah the unappropriated public domain remaining in Texas, including all land recovered
by the state by suit, all proceeds from the authorized sale of permanent school fund land
and other property, all investments of properties belonging to the permanent school Rmd,
and all income t?om the mineral development of the permanent school fund, including
income from mineral development of river beds and other submerged land. Educ. Code
Q 15.01(a). The available school fimd has also been expanded by section 15.01 to consist
Of

              (1) the interest and dividends arising from any securities or
          funds belonging to the permanent school fund;

               (2) all interest derivable from the proceeds of the sale of land
          set apart for the permanent school fund;

                                        p. 1679
Honorable Gany Mauro - Page 3             (DM-316)

              (3) all money derived from the lease of land belonging to the
          permanent school fund;

               (4)all revenue collected by the state from an annual state ad
          valorem tax of an amount not to exceed 35 cents on the $100
          vahtation, exclusive of delinquencies and cost of collection;

               (5)one-fourth of all revenue derived t%omall state occupation
          taxes, exclusive of delinquencies and cost of collectiom
               (6)one-fourth of revenue derived from state gasoline and
          special fuels excise taxes as provided by law; and

              (7) all other appropriations to the available school hmd as made
          or may be made by the legislature for public tke school purposes.

Id.8 15.01(b).

         You aah whether consideration otherwise payable pursuant to a contract under
section 403.0195 of the Government Code may be paid from revenue or sale proceeds
resulting from the recovery of permanent school kmd property. You suggest that such
monk do not become part of the pernUentschooltimduntilafterthepropertyhasbeen
recovered. We disagree. It is clear from section 2 and section 5 of article VII of the
Texas Constitution and section 15.01(a) of the Education Code that the permanent school
fimd is a permanent endowment and that recoverable permanent school timd lands and
other property are part of the corpus of that endowment, and must be treated as such,
even before they are actudy recovered. Therefore, m the event that the state recovers
permanent school timd property, the revenues or proceeds from the sale of such property
must be deposited in the Smd. The constitutionsl provisions establishing the permanent
school fund and limiting its use do not permit a percentage of the amount of the revenue
or proceeds from the sale of property recovered to be deposited to the credit of the
comptroller’s operating tknd for payment of the consideration as provided in section
403.0195 of the Govemment Code. Section S(a) of article VII provides that %o law shall
ever be enacted appropriating any part of the permanent school fimd . . to any other
purpose whatever,” with certain limited exceptions set forth elsewhere in the section. The
purpose eanb0die.d in section 403.0195 of the Government Code, i.e., payment of
consideration for information leading to the recovery of permanent school hmd property,
is not permitted by any of the exceptions in section 5 or by any other constitutional
provision.

        You suggest that the constitutional provisions may permit the use of the available
school fund to pay the consideration owed under a section 403.0195 contract. Section
5(c) of article VII provides that the legislature may appropriate part of the available school
tbnd “for administration of the permanent school Iimd.” We believe that this provision
permits the legislature to appropriate available school fimd monies to pay consideration

                                          p. 1680
Honorable Garry Mauro - Page 4           (DM-316)

for information leading to the recovery of permanent school fond property. But section
403.0195 ofthe Government Code, which contemplates that the consideration will be-paid
from revenue or the proceeds from the sate of recovered property, does not authorize the
consideration to be paid from other sources, such as the available school fund, nor does
any other statute of which we are aware.

        You specifically suggest that in cases where the recovery of property includes
accrued interest that would be allocated to the available school fbnd, the accrued interest
could be used to pay the consideration. We believe that the language in section 5(c) of
article W providiig that the legislature may appropriate part of the available school fund
for administration of the pemanent school timd requires an express legislative
appropriation. Section 403.0195 of the Government Code is not suflicient to authorize
recovered available school tbnds to be used for this purpose.

                                  gnu M M A RY

              The state may not enter into contracts under section 403.0195 of
          the Government Code to pay consideration for information about
          property recoverable by the permnent school tknd.

                                                     Yours very truly,              f

                                                     DAN. MORALES
                                                     Attorney General of Texas

JORGE VEGA
Fist Assistant Attorney General

SARAH J. SHIRLEY
Chair, Opinion Committee

Prepared by Mary R. Crouter
Assistant Anomey General

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