          THE     LYTTORNEY           GENERAL
                       OF   -XAS




Honorable J. W. Edgar                Opinion   NO.   ~-1152
Commissioner of Education
Texas Education Agency               Re: Application of Section
201 East 11th Street                     16.76(i), Texas Education
Austin, Texas 78701                      Code in light of Sub-Chapter
                                         C of the Texas Education Code.
Dear Dr. Edgar:

     Recently you have requested an opinion in regard to the
above and we quote from your request as follows:

           "Since the inception of the Foundation
     School Program in 1949, this Agency has made
     the budget charge required by Section 16.76(i),
     Texas Education Code. For example:    if for
     District A, the total cost of its Foundation
     School Program is $500,000 and the district has
     receipts totaling $550,000 to defray the cost
     of its Foundation School Program, the district's
     budgetary excess would be $50,000.

          "Assume District A has 1,000 scholastics,
     the budgetary excess per each scholastic would
     be $50.00. So if 60 pupils were transferred
     from District A to District B, this Agency as
     practiced would charge $3,000 (60 x $50) into
     the Foundation Program budget of the receiving
     District B; this in effect means that state
     foundation program payments to District B for
     the year would be reduced by that amount.




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Dr. J. W. Edgar, page 2       (M-1152)



         "District A then, as directed in Section
    16.76(i), would be expected to pay District B
    (the determined proportionate excess charged)
    $3,000 to compensate that district for the
    corresponding reduction in Foundation program
    payment, it suffers. Fruition of that expecta-
    tion in some situations never hvpens; this
    creates problems for transfer receiving districts.

         "In 1969, the pupil transfer statutes,
    then codified as Article 2696 and 2697, V.T.C.S.,
    were repealed, and a new transfer law enacted
    to provide for pupil-transfers strictly upon
    an agreement arrangement between the receiving
    district and the applicant parent, guardian or
    person having lawful control of the child.

         "In recent weeks, a non budget-excess
    school district (viz., a district eligible for
    Foundation Program payments) receiving pupil-
    transfers from a budget-excess district pro-
    tests and questions our (Agency) procedure of
    charging its Foundation Program budget with the
    proportionate share of the budgetary excess on
    the pupil-transfers received from the budget-
    excess district. Furthermore, a budget excess
    district (not eligible for Foundation payments)
    urges that the law now should not be construed
    as requiring it to reimburse the district
    realizing reduced Foundation payments, the
    amount charged to such pupil-transfer receiving
    district.

         "The argument is that since the pupil
    transfer law recently has so been altered that
    school districts now do not have that former
    existing right to protest transfers and thereby




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Dr. J. W. Edgar, page 3        (M-1152)



     to control somewhat transfers out of their
     district, and further, because budget-excess
     districts as such are ineligible to realize
     Foundation School fund benefits, it is more
     inequitable as well as burdensome--both to
     such districts from which transfers stem as well
     as to districts receiving such pupil transfers--
     for the Agency now to continue to construe and
     apply Code Section 16.76(i) as it has from its
     inception.

          "This Agency would appreciate the assistance of an
     opinion from your office on the following questions
     relative to our review of the protests at hand:

          "(1) Where in-grade students transfer from
    an accredited budget-excess district (their
    home district) to an accredited district
    realizing Foundation Program funds, is the
    Agency correct in charging into the Foundation
    Program budget of the pupil-transfer receiving
    district the proportionate amount of budget
    excess of the home district?   'In-grade" means
    the studentls grade is taught in his home district.

          "(2)1f (1) is answered in the affirmative:
     ISthe budget-excess district legally obligated
    to pay such transfer receiving district the Agency
    determined charge made to the recepving district's
    budget (ass,umeproperly proportionate)?

          "(3) If answers to (1) and (2) are affirmative:
     What authority, if any, rests in this Agency to re-
     quire the budget-excess district to make the
     appropriate payment to the transfer receiving dis-
     trict? Note: A budget-excess district realizes
     no State Foundation funds: State per capita on the
     transferred pupils   (Under Code Section 21.062)
     is transferred to the receiving district.



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Dr. J. W. Edgar, page 4         (M-1152)



         "(4) Assuming (a) this Agency must charge
    proportionate budget excess funds on trans-
    ferred pupils into the Foundation Program budget
    of the transfer receiving district, thereby
    reducing payment to it of Foundation funds in
    like amount, and (b) the budget-excess home dis-
    trict refuses to reimburse the receiving district:
    Legally may the transfer receiving district add
    the determined budget excess charge per student
    to the tuition fee payable for such transferred
    student."

      Your questions require an analysis of Section 16.76(i),
Texas Education Code, in light of the pupil transfer laws as
codified and now found in Sub-chapter C of the Texas Education
Code.

     One appellate court has observed:

          "In passing upon the question raised by
    this appeal, it becomes necessary for us to
    briefly review some of the enactments of our
    legislature found in that chaotic mass of legis-
    lation comprising the school law of the state
    Trustees of Cranfills Gap Consolidated School
    District No. 6 of Basque and Hamilton Counties
    vs. Board of County School Trustees of Basque
    County, 178 S.W.2d 537 (Tex.Civ.App. 1944
    ref.) U

     Section 16.76(i), Texas Education Code, is quoted as follows:

          "If any school district has a budgetary
     income, as provided above in Section 16.71(l) and
     (2) of this Code, in excess of the amount needed
     to operate a minimum Foundation School Program
     and transfers pupils to another district, it shall
     pay to the receiving district a proportionate




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Dr. J. W. Edgar, page 5          (M-1152)



     part of such excess, based upon the ratio of
     the number transferred to its enumerated scholastic
     population, and this excess portion shall be charged
     to such receiving district."

     This Section is clear the Legislature has provided that any
budget-excess district which transfers pupils to another school
district will pay an arbitrarily determined amount, regardless
of what it actually costs the receiving district to educate the
transfers, and that the receiving district will have this
arbitrarily determined amount deducted from the amount of State
funds that it will receive regardless of whether it actually
receives the pre-determined amount from the budget-excess dis-
trict or not.

     Sub-chapter C of Chapter 21 of the Texas Education Code
sets out the various types of inter-district transfer of students
permitted in Texas. Pertinent sections of Sub-chapter C are
quoted as follows:

          "21.061.   Transfer of Student

          "(a) Any child, other than a high school
     graduate, who is over 6 and under 21 years of
     age at the beginning of any scholastic year may
     annually transfer from his school district of
     residence to another Texas district, provided
     that both the receiving district and the appli-
     cant parent or guardian or person having lawful
     control of the child jointly approve and timely
     agree in writing to transfer,

         "(b) Such a transfer agreement shall locally
    be filed and preserved as a receiving district
    record for audit purposes of the Central Educa-,
    tion Agency.




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Dr. J. W. Edgar, page 6          (M-1152)



          "21.062. Transfer of State Funds

          "Upon the filing and certification of the
     transfer of any such child in the manner timely
     and in the form prescribed by regulations of the
     State Board of Education, the state per capita
     apportionment shall transfer with the child: and
     for purposes of computing state allotments to
     districts eligible under the Foundation School Pro-
     gram Act, the attendance of the child prior to the
     date of transfer shall be counted by the transfer
     sending district and the attendance of the child
     after the date of transfer shall be counted by
     the transfer receiving district.

          "21.063.   Tuition Fee for Transfer Students

          "The receiving district may charge a tuition
     fee to the extent that the district's actual ex-
     penditure per student in average daily attendance,
     determinable by its board of trustees, exceeds the
     sum the district benefits from state aid sources
     as provided in Section 21.062 of this code. How-
     ever, unless a tuition fee is prescribed and set out
     in transfer agreement prior to its execution by the
     parties, no increase in tuition charge shall be
     made for the year of that transfer that exceeds the
     tuition charge, if any, of the preceding school year.

          "21.079.   Transfers Between Districts or
     Counties

          "The boards of trustees of two or more
     adjoining districts or the boards of county
     school trustees of two or more adjoining counties
     may, by mutual agreement and under the same rules
     specified in Sections 21.075-21.078 of this code,




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Dr. J. W. Edgar. Page 7                (M-1152)



            arrange for the transfer and assignment of
            any pupil or pupils from the jurisdiction of
            one board to that of another, in which event
            the participating governing boards shall also
            agree to the transfer of school funds or other
            payments proportionate to the transfer of
            attendance."

     Two methods of inter-district transfer of students are pro-
vided in the above quoted Sections. The first method set forth
in Sections 21.061-21.063, permit the parents or guardian of the
student and the receiving district to decide if the student
transfers.  The home district has no control over these trans-
fers. See Attorney General's Opinion M-649 (1970) and M-854
(1971) for further discussion.

     The second method of transfer as set forth in Section 21.079,
provides for mutual agreement between the school districts before
transfers are authorized.  Provision is also made for parents to
appeal such decision.  See Section 21.077.

         As we understand the complaints of the unnamed districts,
    the home district is claiming two things.   (1) They have no con-
    trol over student transfers, and (2) They would be required to
    pay local funds to the receiving district without discretion.
    The receiving districts are complaining that they are being
    deprived of state foundation funds and forced to collect such
    loss from the home district which it may or may not voluntarily
    pay.

     These complaints would only relate to the student transfers
under the provisions of Sections 21.061-21.063, quoted above,
because Section 21.079 permits transfers only by mutual agreement
of the local boards.  Thus, a home district would have discretion
to decide whether the transfers are necessary and whether the
local funds should be used to pay for the transfers without detri-
ment to the children attending locally. Additionally, the receiving
district could weigh the equities and burdens before agreeing to
accept the transferring students.



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Dr. J. W. Edgar, page 8          (M-1152)



     As discussed above, the transfers authorized by Sections
21.061-21.063 take away any discretion of the home district as to
whether the student transfers, and then coupled with the require-
ments of Section 16.76(i) as interpreted by your office, take away
any discretion by the home district as to whether local funds will
be paid to the receiving district for the transfer, regardless of
whether the payment may jeopardize the school program at home.

     In Love v. City of Dallas, 120 Tex. 351, 40 S.W.2d 20 (1931)
the Texas Supreme Court held that the Legislature has broad power
in dealing with transfers of students between districts, but that
the use of local funds of school districts is subject to the dis-
cretion of local school boards and the Legislature cannot
arbitrarily require the use of local funds to pay for such student
transfers.  The constitutional basis of Love v. Citv of Dallas is
Section 3 of Article VII of the Texas Constitution which provides,
in part, as follows:

          IS. . . and the Legislature may authorize an
     additional ad valorem tax to be levied and col-
     lected with all school districts . _ . for the
     further maintenance of public free schools and
     for the erection and equipment of school buildings
     therein: . . .I'

     The rationale of the m    case is that local funds raised
by local taxes and subject to the provisions of Section 3 of Article
VII of the Texas Constitution cannot be arbitrarily dealt with by
the Legislature.

     The Legislature has by other provisions of law given local
school boards broad authority in dealing with local funds for
school purposes.   Section 20.48(c), Texas Education Code: 51 Tex.
Jur.2d 5202, pp, 530-531: City State Bank v. Wellinqton Ind.
School Dist., 142 Tex. 344, 178 S.W.Zd 114 (1944); Modelev v.
Trustees of Conroe Ind. School Dist., 130 S.W.2d 929 (Tex.Civ.
App. 1939, error dism., judgm. car.).




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Dr. J. W. Edgar, page 9            (M-1152)



     In enacting Section 16.76(i) it must be presumed the Legis-
lature was aware of the judicial interpretations of Section 3 of
Article VII of the Constitution.   53 Tex.Jur.2d .§182, pp. 271-274.
Therefore, in light of the language of Section 3 of Article VII
of the Constitution and the judicial interpretations concerning
the broad discretionary powers of the local school boards on
use of local funds and constitutional restraint on the legislative
interference with this discretion, it is the opinion of this office
that the Legislature did not intend that Section 16.76(i) be applied
to require a balance excess district to pay an adjoining receiving
district an arbitrarily determined amount of local funds for
teaching trans,ferring students, when the budget excess (home)
district has no discretion over whether the students transfer and
no discretion over the amount of payment to be made to the receiv-
ing district.

     The Legislature obviously intended that Section 16.76(i)
applies to situations involving student transfers such as that set
forth in Section 21.079. where the budget excess district agrees
to the transfer of students and agrees to pay a mutually agreeable
amount of money from local funds subject to its discretionary
control.

        The answer to your questions are as follows:

     (1) Yes, provided the balance excess district agrees to
pay the transfer fee.

        (2) Yes, with same answer as No. 1.

        (3) None.

      (4) In light of the above answers, it is not necessary to
answer this question.




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Dr. J. w. Edgar, Page 10         (M-1152)



                       SUMMARY

               Where in-grade students transfer from
          a budget-excess school district to a non-
          budget-excess district pursuant to Sections
          21.061-21.063, Texas Education Code, the
          Texas Education Agency is not authorized
          pursuant to Section 16.76(i), Texas Education
          Code, to require the budget-excess (home)
          district to pay a statutorily determined
          amount of local funds to the non-budget
          excess (receiving) district. Neither is the
          Education Agency authorized to deduct such
          statutorily determined amount of local fund
          payment for student transfer from the amount
          of state funds to be paid to the non-budget-
          excess (receiving) district.

               The Legislature intended that Section
          16.76(i), Texas Education Code, apply only to
          situations where students transfer from a
          budget-excess school district to a non-budget-
          excess district by mutual agreement of the
          two schools,

                                      truly yours,




                                 At   ney General of Texas

Prepared by James C. McCoy
Assistant Attorney General

APPROVED:
OPINION COMMITTEE




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Dr. J. W. Edgar, page 11             (M-1152)




Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
Linda Neeley
Bill Campbell
Houghton Brownles
James Maxwell

SAMUEL D. MCDANIEL
Staff Legal Assistant

ALFRED WALKER
Executive Assistant

NOLA WHITE
First Assistant




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