                                                The Attorney                   General of Texas
                                                                        June 28,       1983
    JIM MATTOX
    Attorney General


                                             Mr. John P. Parsons                                     Opinion     No.   JM-42
    Supreme      Court Building
    P. 0. Box 12548
                                             commissioner
    Austin, TX. 76711. 2548                  Credit Union Department                                 Re:       Whether certain     school
    5121475~2501                             914 East Anderson Lane                                  funds      may be   deposited      in
    Telex    9101674.1367                    Austin,  Texas   78752                                  credit     unions
    Telecopier     5121475.0266

                                             Dear Mr.    Parsons:
    1607 Main St., Suite        1400
    Dallas. TX. 752014709                            You have asked whether an independent    school               district  may deposit
    2141742-6944                             "activity     funds"  in a credit    union in Texas.                 In a letter    to this
                                             office,    you characterized  "activity   funds" as:
    4624 Alberta       Ave., Suite     160
    El Paso. TX.       79905-2793                          [Tlhose    monies belonging      to various     organizations
    9151533-3464                                           such as the PTA (Parent-Teachers               Association),
                                                           school     bands,    drill   team clubs,        and athletic
r                                                          booster    clubs which are held by a school            district
     220 Dallas Ave., Suite          202
    Houston,     TX. 770026966
                                                           for   safekeeping     and accounting.       The monies are
    7131650-0666                                           not derived     from taxes but are generally           obtained
                                                           by    an    organization      through     solicitation          of
                                                           contributions,      promotions     and similar       functions
    606 Broadway.        Suite 312
                                                           for   the sole     benefit   of the organization,            with
    Lubbock,     TX.    79401-3479
    6061747.5236
                                                           such monies being the property         of the organization
                                                           and not the school districts.          The school      district
                                                           merely acts as custodian        of the monies.
    4309 N. Tenth, Suite S
    McAllen,     TX. 76501-1685
                                                    In Attorney      General Opinion Mw-272 (19801,              this office       concluded
    5121662-4547
                                             that the School Depository           Act, Education       Code sections        23.71 et seq.,
                                             to which independent          school     districts     are subject,         requires      that a
    200 Main Plaza. Suite 400                "school     depository"     shall    be a bank located            in Texas.        Sec.    23.74.
    San Antonio,  TX. 782052797              The opinion     held that a savings          and loan association           does not qualify
    5121225-4191
                                             as a "bank"         within    the    meaning       of   this     provision.         See 923.73
                                             (definition      of "bank").       In Attorney        General     Opinion     MW-534 (1982).
    An Equal      Opportunity/               this office      held that a credit          union is not a "banking              corporation,
    Affirmative     Action     Employer      association     or individual       banker."        It follows,      in our opinion,          that
                                             credit     unions    are not      "banks"      within     the meaning         of    the School
                                             Depository      Act,    and therefore         may not        serve    as school         district
                                             depositories.

                                                    If an independent    school  district           may not use a credit union as
                                             its   depository,   it necessarily     follows          that any funds that must be
                                             placed    in the depository    by the school           district may not be deposited




                                                                                  p.    181
                                                                                                        -,
Mr.   John P. Parsons              - Page 2   (JM-42)


                                                                                                         T,


in a credit           union.      Thus,     the next       step     1s our analysis          is    to
determine      whether any statute            requires    an independent        school   district
to deposit      in the school        depository       the “activity      funds” that you have
described.        Although       the School        Depository       Act contains        elaborate
procedures       to be followed            by school      districts        in selecting       their
depository,        it    offers     no clue       as to what school              funds    must be
deposited      therein.       There are statutes         requiring      that certain      funds be
placed     in the school          depository,       see,   e.g.,     Educ. Code 6923.94(d);
23.95(f)     (tax revenues);         16.254(c)      (foundation      school    funds);    15.10(d)
(state     available       school     funds),     but we have found no statute                  that
touches      upon      the    funds     about    which     you are        concerned,      and our
attention     has been directed           to no such statute.

      In a letter    which   was submitted     to this     office,      the Texas
Education  Agency urges    that “co-curricular    activity”      funds,    as that
term is defined   in Texas Education Agency Bulletin       679, must be placed
in the school depository.     The agency asserts:

                  Briefly     stated,    it is the position          of the Texas
              Education        Agency       that      funds      deriving        from
              co-curricular,        school-related        activities       and held
              in trust      by Texas public          school    districts      for a
              dedicated      purpose     are under the control              of each
              district’s      Board of Trustees            for the purpose          of
              the trust.        Accordingly,       such co-curricular          funds
              must be both fully           accounted     for and accorded          the
              same measures of care,             collateral       protection       and
              safekeeping      as are public        funds derived       from state
              appropriations,        local    taxes and federal         grants.

                  To assure this the State Board of,Education                  and
              the      Commissioner        of      Education       promulgated,
              effective      April   9, 1982,       significant      changes    in
              Texas Education        Agency Bulletin          679.   adopted    by
              reference      at 7 Tex.       Reg.    1300, March 26,        1982.
              These      changes,     effective        September       1,   1982,
              require     all school     districts      to treat    and account
              for co-curricular        funds as a part of the General
              Fund under        the direct        control     of   each    school
              district’s      Board of Trustees.         . .

                   .   .   .   .

                  Because   co-curricular     funds have been,         since
              September 1, 1982, unarguably        under the control       of
              the Board of Trustees       of each Texas public       school
              district,   it is our opinion      that these funds must
              be deposited     by each public     school   district     only
              as prescribed      by the School     Depository      Act. . .                                  ?




                                                p.   182
Mr. John P. Parsons            - Page 3          (JM-42)




               and may        not be separately                deposited       with    any
               financial      entity  other than             the district's        school
               depository      bank or banks.

       We understand           that     "co-curricular           activity"         funds      are      funds
deriving     from "school        sponsored      events or activities              that are financed
or subsidized        from public        school     funds."       TEA Bulletin          679, Procedure
CDE-402.       It is true          that Bulletin           679 places         these      funds      in the
category     of "general        funds" which are under the control                      of the boards
of trustees        in the school           districts.          It is, also         true that school
districts      are required         to account        for general        funds.        See, e.g.,        TEA
Bulletin      679,    Procedures        CDE-402;        CDE-406; APP-B-2;             see also         Educ.
Code §21.256        (annual      audit    of school         district       fiscal      accounts).          It
does not follow,            however,      that     these     funds "may not be separately
deposited      with any financial            entity      other    than the district's                school
depository      bank or banks."           As we have noted, we have found no statute
that requires        that these funds be deposited                   in the school          depository.
We have not,          moreover,        found     any provision            in Bulletin          679 that
imposes     such a requirement.               To require         districts        to account          for a
certain     class     of funds is not,             in our opinion,             to require         them to
deposit    those funds in a particular                  place.       It may be (although              we do
not decide       this issue)        that the Texas Education                 Agency possesses             the
requisite        statutory        authority         to      promulgate          an     administrative
regulation         requiring         independent           school       districts          to      deposit
"co-curricular         activity"      funds in their           depository.           It has not done
so, however.

       Because  no statute      or administrative     regulation      to which   our
attention    has been directed      requires  independent    school    districts  to
deposit    in their    depositories     the "activity     funds"    that    you have
described,    we conclude   that districts    may place these funds in credit
unions.

                                             SUMMARY

                   Independent      school            districts        may    deposit
               "activity    funds,"    as          herein     defined,     in credit




                                                             JIM      MATTOX
                                                             Attorney  General        of   Texas

TOM GREEN
First Assistant         Attorney      General




                                                  P.   183
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Mr. John P. Parsons     - Page 4      (JM-42)




DAVID R. RICHARDS
Executive Assistant     Attorney   General

Prepared    by Jon Bible
Assistant    Attorney  General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison,     Chairman
Jon Bible
Rick Gilpin
Yolanda McKeeman
Jim Moellinger
Nancy Sutton




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