RE: DEPOSIT OF SCHOOL DISTRICT FUNDS IN OUT OF STATE FINANCIAL INSTITUTIONS.
THE ATTORNEY GENERAL HAS ASKED THAT I RESPOND TO YOUR REQUEST FOR AN INFORMAL OPINION CONCERNING WHETHER A SCHOOL DISTRICT MAY DEPOSIT DISTRICT FUNDS IN AN OUT OF STATE FINANCIAL INSTITUTION. TO PROVIDE A COMPLETE ANSWER YOUR QUESTION, IT IS NECESSARY TO EXAMINE OF A PATCHWORK OF OVERLAPPING STATUTES.
THE PRIMARY AUTHORITY REGARDING THE DEPOSIT OF SCHOOL DISTRICT FUNDS IS 70 O.S. 5-115 (1990). 70 O.S. 5-115 PROVIDES, IN PERTINENT PART, AS FOLLOWS:
(T)HE TREASURER OF SUCH DISTRICT SHALL REQUIRE THE DEPOSITORY TO WHEREIN SCHOOL DISTRICT FUNDS ARE DEPOSITED TO INSURE OR GUARANTEE THE DEPOSIT BY PROPER SECURITIES, WHICH SHALL BE OF THE SAME CLASS OF SECURITIES AS ARE REQUIRED TO INSURE DEPOSITS OF COUNTY TREASURERS OF THE VARIOUS COUNTIES, AND SAID SECURITIES SHALL BE PLEDGED, TAKEN AND KEPT IN THE MANNER PROVIDED BY 62 O.S. 516.1 THROUGH 62 O.S. 516.10 OF TITLE 62 OF THE OKLAHOMA STATUTES."
CLEARLY, 70 O.S. 5-115 DOES NOT PROVIDE A DIRECT ANSWER TO THE QUESTION OF WHETHER SCHOOL DISTRICTS MAY UTILIZE OUT OF STATE FINANCIAL INSTITUTIONS AS DEPOSITORIES. THE STATUTE DOES, HOWEVER, LINK A DISTRICT TREASURERS' DEPOSIT OF DISTRICT FUNDS TO COMPLIANCE WITH THE PROCEDURE SET FORTH IN A RELATED ACT, OKLAHOMA'S UNIT COLLATERAL SYSTEM ACT, 62 O.S. 516.1 (1981) ET SEQ (AS AMENDED).
THE UNIT COLLATERAL SYSTEM ACT PROVIDES THAT DISTRICT TREASURERS SHALL DEPOSIT DISTRICT FUNDS IN BANKS, TRUST COMPANIES, CREDIT UNIONS OR SAVINGS AND LOAN ASSOCIATIONS WHICH HAVE BEEN DESIGNATED AS STATE OR COUNTY DEPOSITORIES. 62 O.S. 516.5 (1990). ONE WOULD ORDINARILY CONCLUDE THAT THIS WOULD ALLOW A DISTRICT TREASURER TO DEPOSIT FUNDS IN AN OUT OF STATE FINANCIAL INSTITUTION WHICH HAD BEEN SELECTED AS AN OFFICIAL DEPOSITORY BY THE STATE TREASURER AND WHICH SATISFIED THE REQUIREMENTS OF THE SECURITY FOR PUBLIC DEPOSITS ACT. SEE 62 O.S. 71(B) (1990); 62 O.S. 72.1 (1990) ET SEQ. HOWEVER, 516.5 OF THE UNIT COLLATERAL SYSTEM ACT NEGATES THIS POSSIBILITY BY SPECIFICALLY PROVIDING THAT "THE TREASURER MAY ESTABLISH A DEPOSITORY OR DEPOSI TORIES IN BANKS, TRUST COMPANIES, CREDIT UNIONS OR SAVINGS AND LOAN ASSOCIATIONS OUTSIDE THE GOVERNMENTAL OR MUNICIPAL AREA OF THE TREASURER BUT WITHIN THE STATE." (EMPHASIS SUPPLIED).
THUS, AN APPLICATION OF 70 O.S. 5-115, TOGETHER WITH A CONJOINT APPLICATION OF THE UNIT COLLATERAL SYSTEM ACT, WOULD APPEAR TO INDICATE THAT SCHOOL DISTRICTS MAY DEPOSIT FUNDS ONLY IN FINANCIAL INSTITUTIONS WHICH ARE LOCATED WITHIN THE STATE.
HOWEVER, I OBSERVE THAT ANOTHER EARLIER STATUTE, WHICH IS SPECIFICALLY APPLICABLE TO SCHOOL DISTRICT TREASURERS, PERMITS THE DEPOSIT OF DISTRICT FUNDS IN CERTAIN FINANCIAL INSTITUTIONS, REGARDLESS OF WHETHER THEY ARE LOCATED WITHIN THE STATE. 62 O.S. 513 OF TITLE 62 PROVIDES:
"THE STATE TREASURER, AND THE TREASURERS OF COUNTIES, SCHOOL DISTRICTS . . . ARE HEREBY SPECIFICALLY AUTHORIZED TO DEPOSIT SAID FUND OR FUNDS IN ANY FEDERALLY-INSURED BUILDING AND LOAN ASSOCIATION WHEREVER LOCATED, WHETHER FEDERALLY OF STATE CHARTERED, IN AN AMOUNT AND TO THE EXTENT THAT SUCH DEPOSIT IS FULLY INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION OR ANY OTHER INSTRUMENTALITY OF THE UNITED STATES GOVERNMENT."
THUS, SCHOOL DISTRICTS MAY DEPOSIT DISTRICT FUNDS IN BUILDING AND LOAN ASSOCIATIONS, I.E., SAVINGS AND LOAN ASSOCIATIONS, LOCATED OUTSIDE OF OKLAHOMA, SO LONG AS, AND TO THE EXTENT THAT, DEPOSITS WITH SUCH FINANCIAL INSTITUTIONS ARE FEDERALLY INSURED. BECAUSE THE FEDERAL DEPOSIT INSURANCE CORPORATION IS AN "INSTRUMENTALITY OF THE UNITED STATES GOVERNMENT," IT IS IMMATERIAL THAT IT, AND NOT THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, IS THE ENTITY WHICH CURRENTLY PROVIDES DEPOSIT INSURANCE TO SUCH INSTITUTIONS.
TO THE EXTENT THAT 513 MAY APPEAR TO BE IN CONFLICT WITH THE RESTRICTIONS OF THE UNIT COLLATERAL SYSTEM ACT, THE 513 DEPOSIT AUTHORIZATION WILL PREVAIL. THIS IS BECAUSE 516.1 OF THE UNIT COLLATERAL SYSTEM ACT PROVIDES THAT THE ACT IS "CUMULATIVE WITH ALL EXISTING LAWS GOVERNING THE DEPOSIT OF PUBLIC FUNDS" BY SCHOOL DISTRICTS AND "SHALL NOT BE CONSTRUED TO SUPERSEDE OR REPEAL ANY OF THEM." CONSEQUENTLY, THE RESTRICTIVE PROVISIONS OF THE UNIT COLLATERAL SYSTEM ACT YIELD TO THE PERMISSIVE PROVISION OF 62 O.S. 513 (1981).
IN SUM, SCHOOL DISTRICTS MAY NOT, AS A GENERAL RULE, DEPOSIT FUNDS IN FINANCIAL INSTITUTIONS WHICH ARE LOCATED OUTSIDE THE STATE; HOWEVER, SCHOOL DISTRICTS MAY DEPOSIT DISTRICT FUNDS IN BUILDING AND LOAN ASSOCIATIONS, I.E., SAVINGS AND LOANS, LOCATED OUTSIDE OF OKLAHOMA, SO LONG AS, AND TO THE EXTENT THAT, SUCH DEPOSITS ARE FEDERALLY INSURED.
(K. W. JOHNSON)