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     Honorable   Royal1 R. Watkins,        President
     State Board of Educ,ation
     Austin,   Texas

     Dear Sir:                                Opinion No. O-6283
                                              Re:   Can local public     boards
                                                     legally   authorize  the pay-
                                                     ment out of local    school
                                                     moneys of insurance      prem-
                                                     iums on policies    payable
                                                     to the State.Board     for vo-
                                                     cational  Education    and
                                                     covering   the value of ed-
                                                     ucational   equipment loaned
                                                     to them by the State Board
                                                     for Vocational    Education?
                                                     And other questions.

                   We are   in receipt   of   your   opinion   request     reading
     as follows:

                  "At the last meeting of the State Board for
           Vocational      Education    the writer    was directed and
           authorized      to submit to you for your considera-
           tion and advice        the matter of whether or not a
           local    school   board could lawfully       pay premiums on
           insurance     policies    covering   the loss of equipment,
           etc.   loaned to the respective         school  boards
           throughout      the State of Texas by the State Board
           for Vocational       Education.

                  "The State Board for Vocational          Education
           holds title     to a large quantity       of shop equipment
           which can be used bg local         public   schools    and which
           it proposes     to loan to local     public    schools    for
           use in their     vocational    shops to assist      the local
           school   in training     their  students    in various      fields    of
           work.    The value of the equipment loaned to in-
           dividual    schools   will vary from two or three thous-
           and dollars     to as much as thirty       thousand dollars.
           The State Board for Vocational          Education     proposes
           to loan this equipment tc the local            public    schools
           using a contract,       a copy of which is attached.             In
           order to protect      the interest     of the State Board
Honorable    Royal1   R. Watkins,     page 2 (O-6283)



       for Vocational   Education,     the local    public   echools
       have been requested     to carry fire     insurance     cover-
       ing the cost of the equipment in the name of the
       State Board for Vocational       Education.      The ques-
       tion has been raised by the local         school    board at-
       torneys   as to the legality     of this requirement.
       We respectfully    request   the opinion     of the Attorney
       General in regard to the following          three questions:

                     “1 . Can local   public   school   boards le-
              gally   authorize   the payment out of local
              school   moneys of insurance     premiums on pol-
              icies   payable to the State Board for Voca-
              tional   Education   and covering    the value of
              education    equipment loaned to them by the
              State Board for Vocational       Education?

                   “2.    (a) Would it be permissible      for the
             local  public    schools   to pay to the State
             Board for Vocational       Education a nominal
             rent for the use of vocational        shop equip-
             ment loaned to them by the State Board for
             use in educational       programs for regular    high
             school ,students?

                    “(b)    If the answer to 2 (a) - the first
              part of this question     - is ‘yes,’   can the
              State Board for Vocational     Education   lawful-
              ly apply the moneys received      for the nominal
              rent for the payment of premiums on lnsur-
              ante policies    covering  the equipment loaned
              to the public    schools?

                    “3 . If a local     school   board by official
             action   makes itself    responsible     for the re-
             placement   of any equipment loaned to It by
             the State Board for Vocational         E,ducation
             and loss by fire      or theft,   would it be legal
             for the local    school   board to purchase equip-
             ment to replace     that destroyed      or lost and
             return   it to the State Board for Vocational
             Education?”

              The only authority   for a school  district        to pay in-
surance     premiums is found in Article   2827, Vernon’s         Texas Civil
Statutes,     which reads as follows:

             “The public   free     school    funds shall  not be ex-
       pended except   for the      following    purposes:
    .,
,



         Honorable   Royal1     R. Wstklns,      page 3 (o-15283)



                      “1 . The State and county available           funds shall
               be used exclusively       for the payment of teachers'
               and superintendents'        salaries,   fees for taking the
               scholastic     census,   and Interest     on money borrowed
               on short time to pay salaries         of teachers      and au-
               perintendents,      when these salaries      become due be-
               fore the school      funds for the current       year become
               available;     provided   that no loans for the purpose
               of payment of teachers         shall be paid out of funds
               other than those for the then current            year.
                       "2 . Local school        funds from district      taxes,
               tuition     fees of pupils       not entitled     to free tuition
               and other local        sources    may be used for the purposes
               enumerated for State and county funds and for pur-
               chasing     appliances     and supplies,      for the payment of
               insurance      premiums, janitors        and other employees,
               for buying school         sites,    buying,   building   and re-
               pairing     and renting      school   houses,    and for other
               purposes      necessary    in the conduct of the public
               schools     to be determined        by the Board of Trustees,
               the accounts       and vouchers      for county districts      to
               be approved by the county superintendent;                provided,
               that when the State available             school    fund in any
               city or district        is sufficient       to maintain the school
               thereof     in any year for at least eight months, and
               leave a surplus,        such surplus may be expended for
               the purposes       mentioned herein.

                       “3 . All independent            school    districts     having
               within their          limits    a city with a population           of
               160,000 or more according               to the last preceedlng          Fed-
               eral census shall,             In addition      to the powers now
               possessed       by them for the use and expenditure                  of
               local     school      funds and for the issuance             of school
               bonds, be expressly             authorized      and empowered, at
               the option of the governing                body of any such school
               district,       In the buying of school             sites    and/or ad-
               ditions      to school       sites   and In the bulldlng          of
               school      houses,      to issue and deliver          notes of the
               school      district,       negotiable     or non-negotiable         in
               form, representing            all or a part of the purchase
               price     or cost to the school            district     of the land
               and/or building            so purchased     or built,       and to se-
               cure such notes by a vendor's                 lien and/or deed of
               trust     lien against         such land and/or building,            and,
               by resolution           or order of the governing            body of
               the school        district      made at or before         the delivery
               of such notes,           to set aside and appropriate             as a
               trust     fund, and the sole and only fund, for the
Honorable    Royal1   R. Watkins,     Page 4 (o-6283)

      payment of the principal        of and interest       on such
      notes such part and portlon         of the local     school
      funds,   levied  and collected      by the school      district
      in that year,    and/or subsequent        years,   as the gov-
      erning body of the school        di8triCt     may determine,
      provided    that In no event shall        the aggregate
      amount of local    school    funds set aside in or for
      any subsequent    year for the retirement          of such
      notes exceed,    in any one such subsequent          year,     ten
      (16)    per cent of the local       school    funds collected
      during such year."

          In our opinion    all of the above questions        should be
answered in the negative.      The Legislature    did not have in
mind the payment of Insurance      premiums on borrowed property
when It passed Article    2827, Vernon's    Texas Civil    Statutes,
but only on such bulldings     and contents    as ares authorized    by
law to be owned by school    districts.

            It is our opinion         that insurance      policies     for which
premium8 are authorized          to be paid by this article           out of local
school   funds are such policies          as protect    the district,      itself,
from pecuniary      liability     or loss.     Ordinarily,      it is the pur-
pose of insurance       policies     to protect    the insured      from liabil-
ity or loss and not to provide            the means of compensating          a
third party for loss.           We find no law, either        State or Federal,
which has the effect          of making the State Board for Vocational
Education    liable    for the loss by fire        of any of the equipment
supplied   by the Government,          nor do we find any law requiring
either   the State Board for Vocational           Education       or the schools
using such equipment to insure            same.

              Doubtless,     the Legislature        could authorize   school
districts     to insure the equipment,           but, so far,    it has not
done 80.      The Legislature        could authorize      the State Board for
Vocational     Education     to charge nomlnal rent for the use of
the equipment and to apply the money received                 in payment of
premiums on insurance          policies     covering    the equipment so
loaned to the school          districts,     but in the absence of any leg-
islation     whatever with respect          to these matters, we think the
State Board for Vocational             Education    is without authority     to
require     school  districts       to insure    same and, the Board,     like-
wise,     is without authority         to insure    it.

       We thank you for your courtesy   in furnishing  us with
additional    documentary material  and regret  that we find nothing
Honorable      Royal1   R. Watkins,    Page 5 (O-6283)



therein   which would       juatifg   us in holding        otherwlse   than a8
hereinabove    stated.

                                          Yours     very    truly

                                       ATTORNEYGEENERAL
                                                      OF TEXAS



                                       By /s/C.      F. Gibson
                                                  C. F. Gibson
                                                     Asslstant

CFG:EP-ds

APPROVEDJAN 20,         194.5                         APPROVED
                                                      OPINION
/s/   Carlo8    C. Ashley                             COMMITTEE

FIRST ASSISTANT ATTORNEYGENERAL
