Court Opinion

ID: 3258840
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:31:13.817584+00
Date Added: 2024-06-11T13:59:37.487177
License: Public Domain

The Honorable David M. Haak State Representative 9 Wood Place Texarkana, AR 71854-3333
Dear Representative Haak:
This is in response to your request for an opinion on the following question:
  Can school districts hold their money in financial institutions such as investment brokerage firms, credit unions or savings and loans?
RESPONSE
It appears that the answer to this question is "no" under current law.1
Arkansas Code Annotated § 19-8-104 (Repl. 1998) states that "[e]xcept as provided in subsections (b) and (c) of this section, all public funds asdefined in § 19-8-101 shall be deposited in banks located in the State ofArkansas." (Emphasis added).2 Additionally, A.C.A. § 19-8-105
requires the State Bank Commissioner to furnish a list of "banks or banking institutions" insured by the Federal Deposit Insurance Corporation, and provides that "[n]one of these public funds shall be deposited in any bank other than those contained in the list. Id. at subsection (a). Section 19-8-101 defines "public funds" as "any and all kinds of funds handled by treasurers, collectors, commissioners, sheriffs, and clerks." This clearly encompasses school district funds, which are held either by the district treasurer or the county treasurer.See A.C.A. § 19-8-106 (d).
The Arkansas Supreme Court has held that pursuant to the plain meaning of these provisions, savings and loans are not included as public funds depositories. Arkansas State Bank Dep't v. Ark. League of Sav.,307 Ark. 474, 821 S.W.2d 472 (1991). The Court noted that the General Assembly has either failed or refused to amend the original legislation so as to include savings and loans as banking institutions for the purpose of deposits of public funds. 307 Ark. at 477.
In response to your question, therefore, current law requires that school district funds must be deposited in banks located in Arkansas. This does not include savings and loans, nor in my view does it include investment brokerage firms or credit unions, as these institutions clearly do not constitute "banks or banking institutions." A.C.A. § 19-8-105(a), supra.
Assistant Attorney General Elisabeth A. Walker prepared the foregoing opinion, which I hereby approve.
Sincerely,
MARK PRYOR Attorney General
MP/EAW:cyh
1 Reference should be made, however, to House Bill 1772 which, if signed into law, will impact this question. As engrossed on March 20, 2001, HB 1772 would amend A.C.A. § 19-8-101 to define "bank" or "banking institution" to mean "any state bank, national bank, savings bank, savings association, thrift, or other financial institution authorized to do business and having a main office or branch office in this state which is insured by the Federal Deposit Insurance Corporation." The bill has been approved by both Houses of the General Assembly and was transmitted to the Governor's office on April 4, 2001.
2 Subsection (b) provides an exception for a school district's deposit of funds in an out-of-state bank under certain stated conditions. Subsection (c) addresses private donations to cities or towns.