Honorable Joe Lucas Opinion No. JM-773
El Paso County Attorney
Room 201, City-County Building Re: Whether an independent
El Paso, Texas 79901 school district is authorized
to use an electronic funds
transfer system for direct
deposit of employee paychecks
Dear Mr. Lucas:
You ask whether an independent school district may use an
electronic funds transfer system to deposit an employee's paycheck
directly into an account chosen by the employee.
In Attorney General Opinion MW-213 (1980). this office considered
whether the state comptroller could tissue a single pay warrant on
magnetic tape covering all employees who designated a particular bank
as their depository. Such a practice, the opinion stated, "would
thwart the Comptroller's ability to comply with various statutes" such
as article 4358, V.T.C.S.. which required that different classes of
pay warrants be printed on specific colors of paper and that the
warrants be numbered serially. Furthermore, such requirements
indicated that a "warrant" could not be Issued solely by transfer of
information on magnetic tape.
In 1981 the legislature amended article 4344b, V.T.C.S.. to add
section 3, which provides:
Notwithstanding the provisions of any other
statute, the Comptroller of Public Accounts may
establish and operate an electronic funds transfer
system to transfer directly Into their accounts in
financial institutions only: (i)employees' gross
state salaries hSS deductions specifically
authorized by state or federal law or
reimbursement for travel and subsistence of
employees, (ii) payments to annuitants by the
Employees Retirement System of Texas or the
Teacher Retirement System of Texas under either
system's administrative jurisdiction, (iii)
recurring payments to governmental entities, and
p. 3637
Honorable Joe Lucas - Page 2 (m-773)
(iv) payments to vendors designated by the
Comptroller. An authorized payee must request in
writing to participate in any electronic funds
transfer system established and operated by the
Comptroller of Public Accounts. A single transfer
may contain payments to multiple payee8 without
the necessity of issuing individual warrants for
each payee. The Comptroller shall establish
procedures for administering the system and may
use the services of financial institutions,
automated clearinghouses, and the federal
government. The use of electronic funds transfer
or any other payment means does not create any
rights that would not have been created had an
individual state warrant been used as the payment
medium. . . .
A bill analysis for that bill that contained that provision states
that the bill addresses the problem that the comptroller's "statutory
duties impose many archaic procedures. hindering modern techniques for
processing and handling funds, such as electronic fund transfers."
Bill Analysis to S.B. 233, as amended, 67th Leg. Also, in 1985 the
legislature enacted a statute to allow counties to use an electronic
funds transfer system fork payment of county officers and employees.
V.T.C.S. art. 3912n (to be recodified after September 1, 1987, in the
Local Government Code, Acts 1987, 70th Leg., ch. 149). See V.T.C.S.
art. 1709a. 54 (requiring that counties expend money "bycheck or
warrant") (to be recodified after September 1, 1987, in the Local
Government Code, Acts 1987, 70th Leg., ch. 149).
You ask whether an independent school district may use an
electronic funds transfer system absent specific statutory authority
to do so. We think that it is within the discretion of the trustees
to adopt such a system if it is reasonably necessary to the operation
of the school district.
Section 23.26 of the Education Code sets out the powers of the
trustees of an independent school district:
(a) The trustees shall constitute a body
corporate and in the name of the school district
may a;Fdirteand hold real and personal property,
sue sued, and receive bequests and
donations or other moneys or funds coming legally
into their hands.
(b) The trustees shall have the exclusive power
to manage and govern .the public free schools in
the district.
p. 3638
Honorable Joe Lucas - Page 3 (JM-773)
(c) All rights and titles to the school
property of the district, whether real or
personal, shall be vested in the trustees and
their successors in office.
(d) The trustees may adopt such rules,
regulations, and by-laws as they may deem proper.
(Emphasis added.)
The delegation of power to school trustees has been liberally
construed. Attornev General Oainion E-398 (1974). The court in
Wilson v. Abilene independent School District; 196 ~S.W.2d 406 (Tex.
Civ. App. - Eastland 1945, writ ref. w.o.m.1 held that it was within
the authority of a school board to adopt a regulation prohibiting
students from belonging to fraternities and sororities, saying,
[School boards] may make all such rules and
regulations as in their judgment are necessary to
maintain an ‘efficient’ system of schools, subject
to the limitation that there be no abuse of
discretion, and that such regulations be not
arbitrary, unreasonable or in violation of law.
190 S.W.2d at 412.
Section 20.48 of the Education Code provides that school funds
may be used to pay the salaries of teachers and other school
employees. Nothing in the statutes applicable to independent school
districts, however, details how an independent school district is to
make such payments or other authorized expenditures. cr. Educ. Code
§22.08(h)(providing that employees of common school districts are to
be paid “on a check drawn on the county depository for the district”).
See generally Educ. Code 9923.25 through 23.50 (provisions governing
the budget and fiscal accounting system for independent school
districts); Educ. Code §§23.71 through 23.80(provisions governing
school depositories). We think that by failing to specify how
employees are to be paid, the legislature left it to the discretion of
school boards to determine how to make such payments. Payment in the
form of a traditional check or warrant is not inherently more
reasonable than payment by more modern means. Indeed, the legislative
history of article 4344b. section 3, which states that existing
statutes governing the state comptroller were “archaic” and “hindered”
use of .modern payment mechanisms, suggests that the legislature
considers electronic funds transfer systems to be a quite reasonable
system of payment. See Attorney General Opinion JM-66 (1983)(absent
specific requirements%verning transfer of funds within the treasury,
state treasurer may use wire transfer system, instead of the
historically used draft system, for the movement of funds within the
C
treasury).
p. 3639
Honorable Joe Lucas - Page 4 (JM-773)
Furthermore, we do not interpret the enactment of article 4344b,
section 3. or article 3912n--statutes that specifically authorize
certain governmental bodies to use electronic funds transfer
systems--to mean that a political subdivision may not use an
electronic funds transfer system unless it is specifically authorized
to do so. As indicated, legislation was necessary to allow the
comptroller to use such a system because existing statutes required
payment in the form of traditional warrants. Section 3912n may have
been necessary to enable counties to use electronic funds transfer
systems since the requirement in article 1709a. section 4. that
counties expend money “by check or warrant” might otherwise prevent
the use of such a system by a county. See also Canales v. Laughlin,
214 S.W.Zd 451 (Tex. 1948) (county has only those powers conferred
upon it specifically or by necessary implication). Statutes governing
independent school districts, in contrast, simply authorize payment to
employees; the exercise of discretion in doing so is not limited by
statutes that govern how they are to pay employees. Thus, unless use
of such a system is prohibited by a valid regulation of the Central
Education Aeencv. an indeuendent school district mav use an electronic
funds transfer system to pay its employees.
SUMMARY
An independent school district may use an
electronic funds transfer system to pay its
employees.
LJ b
Very truly your
A;,
JIM MATTOX
Attorney General of Texas
MARY KELLER
Executive Assistant Attorney General
JUDGE ZOLLIE STRAXLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Sarah Woelk
Assistant Attorney General
p. 3640
Untitled Texas Attorney General Opinion
Combined Opinion