                               Q,P    TEXAS

PRICE  DANIEL
ATTORNEYGENERAL




        Dr. J. W. Rdgm, Cossxissioaer
        Texas Education Agency
        Austin, ,Texas
        Altteation:     Bon. L. A, Woods
                                         Opinion ma. v\r-zogo.
                                         Re:     Authority of Independ-
                                                 ent School District
                                                 Board tbroqh    Its Treas-
                                                 ups&’to plaae bond pro-
        Des3 Sir:                                tree&a 011 time deposit.
                  You have requested an opinion on the author-
        ity of the CarrIea Spirings, Independent School District
        ME”, to plaoc on time deposit money secured from bond
             .
                      Information    eontained    In your request      reflects
        thati
                     The Union State Bank, Carrlza Springs, is the
        tily qualified    treasurer of the Independent School Dis-
        trict.    The dir&riot has properly voted, issued, and
        so.ld bon& to obtain funds with whi,ah to purchase land
        Andyconstruct    school buildings,    About $2OO,OOO.OCfrom
        this bond sale will not be needed for an estimated pe-
        riod +of six months due to title     defects  that must be
        cured in some land nhieh the Board proposes to purchase,
        This 1$200,000.00 1,s now on deposit with the Union State
        Bamk which is the tre s rer for the Independent School
        Dls~lct   9 The S&&m             has requested the Bank in
        it;s.%apacity   as reasurer of school funds, to acce&
        bhlij bond money *       eposit in interest-bearing,   non-
        ehepklmg time deposit ;(reaoupts by virtue si* the Rank’s
        bid to act, as treasurer.      I%%18the Bank refused to do,
                      &%iele   2832, VeC..S.,     p%oovldes in part;
                      “fn any independent district   of more
                than v q 6 (150) scholastics,  whether it be
                in a city which has aS6UBIed  oontrol of the
         rchools    wIthIn i&s lialt~,    06 a oorporation~
         for mohool puppoles     only, and whet;be# organ-
         ized under general law OF cmated $P speoial
         act, the treasurer of the school fuad ahall
         be that pemon or corpopatlon who offer8 aa%-
         Isfactory bond aod the bert bid oi ia&peLt~
         on the avefage dal1.y baloaoer fop #e prlvi--
         lege 0r acting ata 6uoB ~ea~wec~          2he %mae-
         urea wheu %&INselected       shall sepve fop a
         term 0S two year8 an8 until Ma 8p19oe~~or
         ehall have been duly relearted and guallfled
         and he shall be Peguired to IPre botul in an
         maount equal %o %he cstlmat et amount or the
         drotal %ecelptr ~osalng annual1 IsLo Ma handr,
         when rueh bond is a personal $ and; provided,
         that when a bond la execut@tQby a rupety oom-
         pan OF is a bond other than a peP&oaal bond,
         au@ii bond shall be in ap.,amoun%spur1 to the
         highest eatlmated daily balomr ior the our-
         rent biennium to be detemlned @ ,the govern-
         iw body Of SU& school dirtrictj          0 0 o
                 1,   O Said bond ahall be payable to the
         pmuldtkk of %he IboW aod~bis aucoeaaora 10
         offloe,    aonditloned Pop %he talebid. discharge
         of %he %reawper’a dutlee and the payment of
         the buodr pee&iweQ by hi* opom tie drsndt ,of
         the preridea% of the mhool board dpav$ up@
         oavler, duly entered     of &he board of trustecr,
         Said bond &all be &Jieb          @oadltfonsd that
         We tFearpl%ep 6hall aaiely keep and faithfully
         diMxwre     all Btmdmooalng Into his hands a8
         Weaawe8, a@d ahall faithfully         pay oveP to
         hfa auocesaoy al; balamer remaining in hla
         handa, 0 0”
                Wnder timis A&icle the School Board hae author-
    It to oelect a tpeaauper, and we find oo obgection to
    UQs on State Bank ao&iug aa treasurer alnce $6~ request
    states that the Bank haa aatiabled the Fequirements 0%
    the Art;icsleO
              The rule that prpoaeede oi bond sales must be
                    to tie puppose for wh.fgh the bondr weFe
i                   es$ab.blfshedO The Attorney Qene$al’a Of-
    rice has written mmerous opinloams holding %ha%ie t&e
    absence of express sta%u%oaFg  authority bond proceed6 may
    not be ueed for any pu??pose othef than that $0~ whulbich
    the bonds wem iasuedd A “tfnae deposit” alglal%ier %&e
              t’
        ,!:
        i      DrO J. W. Edgar, Page 3,,~ (V-lO!#O),


               placing of money In an account      from uhieh It can only be
               withdrawn at the expiration   of    a apeclfled  and deflalte~
               period set out in %he deposld;     agreement.   The usual min-
               imum period of a time deposit      1s thirty (30) days, and
               the maximum period may be any      agreed to by deposltor    and
               depository,   so long as it j.s allowed by banking laws,
               Thus i% differs   from   an open account which may be wlth-
               drawn a% any time on demand of the depositor,        We find
               no statutory   authority for bond proceeds of an lndepend-
               ent school district     to be placed In time deposits.
    f
                          Hei%her do we flnd authority in the statutes
               to allow %he school boaad OF Its treasurer to rellnqulsh
               control of such bond proceeds at any time or for any pe-
               riod 0 If the treasurep,    at %he direction of the School
               Board or for any other reason, submitted money from bond
i              proceeds to a time deposit,    such action would constitute
               %he treasurer’s   loss of control of such fmds, and a dl-
               version of the bond pkoceedm by the treasurer from a
               simple safekeepjng    to a use o%her than that for which
               the bonds were voted,
                          Although placing the funds In question In a
               time deposit would no% constitute     a “loan,” the Supreme
               ~~5”~,~~,~3%~,~~9~~~~,rnhv” Taylor, 81 Tex. 59, I6 SaWa
                                       t e generra’f rule  on use and con-
               trol of proceeds   from bond sales in the following    lan-
               guag e :
                          ,z0 0 0 The oitg   had power %o raise a
                     fund fop the constauctlon      of water-works
                     under the limitations      l.mposed by law, but
                     when such a fund was Pal.sed it could only
                     be used fop %he specific      puppose, and be-
                     came j wfthlm the meaning of the law 9 a’ spe-
                     cial fund-     If it could be loaned for a day
                     i% oouPd be loaned fop much longer period
                     as the cl%y au%hoz4%lee might see proper to
                     Ioan It, and %hus a special fund be raised
                     for a lawful p~pose,      ,and used fop a pup-
                     pose essentlallg    unlawful o It may be Fe-
                     plied that in %his case %he city, under %he
                     a.grPeement with the Pannln Goumty Bank, would
                     mot have 0eem bound %o leave the fund with
                     that  batik fos any deflnl%e     perlod If it need-
                     ed the money to une for Mae puPpose for which
                     i% was raised,    bu% this does no% affect    %he
                     law of %he case0 0 D The %peasuper might have
                     selec%ed the borrowing bank as a depositaxy
          of the fund, but if, in p~suanos of an U.D-
          lawful order, he had dellveP%d the fund to
          that bank as a bora?ower, he and the sureties
          on hls bond would have been liablh bar a mia-
          app~op~iatlon of the fund, 0 D 0”
                We believe the prfnelples    expressed as to use
     of funds dedicated to a speclflc     purpose and 1086 of aon-
     trol of such funds, apply to the raltuation presented Q
     the desired action of the CarPplzo SprW$s School Boatid




                Proceeds of the sale of bonds by an in-
          dependent school distriot  maa DONbe pl&Oed
          on time deposit by the Wea~ura~   of the dlt+
          trlot in the absence Of BpeOibiO @ta%utOF$
          authoHtgV

     APPROVEDS                        Youm osrp tml~
     George We Spadct3                     PRIQC DAlmL
     Cb~%f, Bond DQvlslon             Attornep     tksleral
     Everett Xut@hiaesoK~
     Execu$fve Assistant
     QRa~las I)* Mathews
     Flrat Assslstam%                  r     -   Asslatant
I.
     JSBlswbr;$B~e




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