The Honorable L; J. Lacina, Jr.    Opinion No. H-878
County Attorney
Washington County                  Re: Whether an MH/MR
P. 0. BOX 557                      state school is entitled
Brenham, Texas  77833              to a distribution of the
                                   available school fund or
                                   the county permanent.school
                                   fund.

Dear Mr. Lacina:

     You have asked for our opinion on four questions involving
the available and permanent school funds for Washington County.
Your first two questions concern whether the Brenham State
School Independent School District is entitled to a distribution
of the state available school fund or the county available
or permanent school fund.' The district was established by
Acts 1973, 63rd Leg., ch. 200 at ~450, and is part of a
statewide entity, i.e. the Department of Mental Health and
Mental Retardation,7th   the Texas Board of Mental Health
and Mental Retardation acting as "ex officio trustees."

     You ask:

          1. Is the Brenham State School entitled to
          a share and distribution of the available
          school fund?

          2.. Upon
               __ distribution
                     _          of the permanent
          school fund pursuant to Section 6, Article
          7, of the Constitution of the State of
          Texas, is the Brenham State School, a
          facility of the Texas Department of Mental
          Health and Mental Retardation, entitled to
          a share in the distribution?




                               p. 3697
The Honorable   L. J. Lacina, Jr. - page two   E-878):



In answer to your first question, article 7, section 5 of
the Texas Constitution, which establishes the state available
school fund, provides in pertinent part:

          The available school fund shall be applied
          annually to the support of the public free
          schools. And no law shall ever be enacted
          appropriating any part of the permanent or
          available school fund to any other purpose.     . . .
          (Emphasis added).

We also note that the Constitution "provideCs1 a permanent
fund for the support, maintenance and improvement" of facilities
for the mentally retarded on a statewide basis, rather than
for each individual county.  Tex. Const. art.~ 7, § 9.~ Further,
the Education Code, which is applicable to and generally governs
Texas schools, does not provide for the school districts of
the Department of Mental Health and Mental Retardation.   Section
1.04 of the Code provides:

              (a) This code shall apply to all educa-
          tional institutions supported either wholly
          or in part by state tax funds unless specifi-
          cally excluded.

              (b) This code shall not apply to those
          eleemosynary institutiozunder    tE   control
          and direction ----+-
                         of the De artment XMental
          Health and Mental Retar ation or tothe
          institu=ns    and activities of the Texas
          Youth Council.   (Emphasis added).

In our opinion, the Brenham State School is not a "free public
school" in the constitutional sense and is therefore not
entitled to a share and distribution of the state available
school fund.

     Your second question involves use and distribution of the
county available and county permanent school funds.   Since
the county available fund was created "for the benefit of
public schools" within each individual county, the Brenham
State School is not entitled to a share or distribution of
this fund because the school does not qualify as a "public
school" in the constitutional sense, and the students of the
school are not necessarily residents of Washington County.
                  (’                         !
_.


     The Honorable L. J. Lacina, Jr. - page three   ("-87S):



     Tex. Const. art. 7, §S 5 and 6. See Education Code, fj1.04.
     With regard to the possible sale ofcounty   permanent school
     fund land. under article 7, section 6b of the Constitution,
     the use of the funds are limited to "reducing bonded indebted-
     ness of those districts or for making permanent improvements."
     We note that the Brenham State School, as part of the Department
     of Mental Health and Mental Retardation, is state funded and
     has no bonded indebtedness and that permanent improvements
     are awarded through the Department; therefore, article 7,
     section 6b has no application to the Brenham State School.
     Thus, we also answer your second question in the negative.

          Your last two questions involve distribution of the
     county permanent school fund under article 7, section 6b.
     You ask:

                3. Upon distribution of the permanent school'
                fund to the respective school districts entitled
                thereto, may the school district invest,its
                share in these funds pending application of
                the funds toward payment of bonded indebtedness
                or construction of improvements?

                4. If a school district may invest its funds,
                peAding use for the constitutionally permitted
                purpose, is the interest earned on such funds
                available for use by the district for purposes
                other than retirement bonds or construction of
                improvements?

     Article   7, section 6b, which was adopted in 1972, provides
     that

                any county, acting through the commissioners
                court, may reduce the permanent school fund
                of that county and may distribute the amount
                of reduction to the independent and common
                school districts of the county on a per
                scholastic basis to be used solely --
                                                   for the
                purpose of reducing bonded indebtedness of
                those districts or for making  ermanent -
                improvements.   (zphasisd       .
The Honorable   L. J. Lacina, Jr. - page four    (E-878)



 In your brief, you stated that, logically, the distributed
 funds could not be immediately applied towards reduction of
bonded indebtedness or construction of permanent improvements
 and that investing the funds in the interim period would
insure that no earnings would be lost to the school children
of the county. You have informed us that the deposit of the
funds in an interest bearing account will be a temporary
measure until currently obligated payments to bondholders
or contractors become due, and our decision is based on this
premise.   The language of article 7, section 6b is of recent
origin and has not been interpreted by the courts; however,
we believe that the investment you suggest is permissible as
 long as the resulting income (interest) and the principal
are not expended except as directed by the constitutional
amendment.   As trustee of the fund, the Commissioners Court
may have a continuing obligation to insure that the fund is
~spent~for the constitutional purpose.   See Attorney General
Opinion M-1104 (1972);   We  therefore an=r   your third
question in the affirmative; however, we must answer your
fourth and ~final question in the negative.   The interest
earned on the funds pending their use for the constitutionally
permitted purpose is part of the "fund" and may not be used
except for the sole "purpose of reducing bonded indebtedness
       or making permanent improvements."   Tex . Const. art. 7,
 i 6b: -See Attorney General Opinion H-391 (1974).

                       SUMMARY

          The Brenham State School is not a public
          free school in the constitutional sense and
          is therefore not entitled to a share and
          distribution of the state available, county
          available or county permanent school funds.
          The district may temporarily invest the
          distribution of the county permanent school
          fund pending its use for the constitutionally
          permitted purpose; however, the interest
          earned must also be used only for the reduction
          of bonded indebtedness or construction of
          permanent improvements under article 7,
          section 6b of the Texas Constitution.




                                  Attorney General   of Texas



                                 p. 3700
            /                         ,




The Honorable L. J. Lacina, Jr. - page five   (E-878):




APPROVED:




DAVID M,+ENDALL,




jwb




                        p.,   3701
