4 .
THIEA?L~TT~RNEY GENERAL
OFTEXAS
Honorable J. W. Edgar Opinion No. WW-147.
Commissioner of Education
Texas Education Agency Re: Authority of Vidor Independ-
Austin, Texas ent School District to enter
into a rental-purchase con-
tract for acquisition of
Dear Dr. Edgar: additional school facilities.
We quote from your request for an opinion, dated May
1, 1957, as follows:
“The Vidor Independent School District,
Orange County, is in need of additional school
facilities. & reliable firm, Structo School
Corporation, Boston, Massachusetts, has indi-
cated an interest in designing, constructing
and equipping the needed ‘modular plan’ school
building on a suitable site to be designated
by the Board of Education. It is contemplated
after construction is complete to lease the
building to the Board of Education for a length
of time not exceeding 40 years. Upon payment
of the agreed upon rentals and expiration of the
agreed time, title to the building and site
would rest in the Board of Education. . . .
“In view of the ever increasing need for
additional school buildings and facilities in
this State, the possibilities for the acquisi-
tion of same under a contemplated modular plan
construction-leasing plan wherein private com-
panies or corporations would construct or have
constructed the same under lease plan agreements
entered into between local school districts and
corporations or companies, and the importance
that the question herein submitted be thoroughly
considered and firm conclusions reached, we
would appreciate an opinion from your office
therein.”
Following receipt of your request and as a result of
a conference between a representative of this office and Mr.
Honorable J. W. Edgar, page 2 (W-147)
Chester Ollison of the Texas Education Agency it was mutually
agreed that your request could be satisfactor i ly handled by
our consideration of the following questions:
lo Is an independent school district authorized
to contract with reference to the rental of
school buildings?
2. What, if any, are the limitations with respect
to the term or duration of such a contract?
3. May an independent school district by such a
contract pledge the available school funds of
the district thereby guaranteeing the annual
payment of rentals?
In consideration of your first question, we refer to
Section 2 of Article 2827 of Vernon’s Civil Statutes, which
reads in part as follows:
“Local school funds from district taxes, tui-
tion fees of pupils not entitled to free tuition
and other local sources may be used for . . . buy-
ing, building and repairing and renting school
houses. . . .I’
The authorization to expend local funds for “buying, building,
repairing, and renting school houses” necessarily bestows upon
local school boards the right to contract with reference thereto.
To hold otherwise would be contrary to the evident purposes of
Article 2827 and so restrict said boards in the execution of
their official duties as to be detrimental to the proper admin-
istration of our public school system. The provision of the
proposed contract which provides that after the payment of stfp-
ulated rentals for a period of forty years, the building shall
become the property of the school district, does not materially
alter the nature of the contract.
Your second question involves the authority of the
school board to so contract as will be binding on succeeding
school boards. The statutes contain no express limitation upon
the :duration or term of the type of contract here involved, and
Texas Case Law upon the precise point is surprisingly limited.
It has been held that the contracts of a Commissioners’ Court
may not ordinarily be repudiated merely because the personnel of
the body has subsequently changed. It is only where the employ-
ment by a Commissionerss Court is personal and confidential, as
in the case of ,an attorney, that it is held that one Commission-
ers’ Court has no power to bind its successors. For example,
. _
Honorable J. W. Edgar, page 3 (W-147)
the rule is not applicable to contracts essential to the per-
formance of public works. Gulf Bitulithic Co. v. Nueces County,
(Comm.App.~, 11 S.W.2d 305, 34 Tex.Jur., 45 The case of
(Civ.App.) 65 S.W.2d 417,3ie1d that a change
in the membershi; of a school board, prior to approval by the
county superintendent of valid teachers’ contracts previously
made, did not authorize the new board and the superintendent
arbitrarily to revoke such contracts, without any charge of fraud,
imposition or mistake.
We see no reason why the foregoing general rules would
not have application to the proposed contract here under consid-
eration. We do not say, however, and neither do the foregoing
authorities, that a school board may arbitrarily and designedly
unde,rtake to tie the hands of future boards in the orderly and
economical administration of the school by entering into con-
tracts of long duration contrary to the public interest. In the
exercise of discretion conferred upon them in such matters, school
boards must be guided in their decisions only by matters affect-
ing the public interest and act in reasonable accordance with the
necessities of the circumstances confronting them. The case of
Board of Com’rs of Edwards Countv Simmor~ 151 P.2d 960, sets
forth the general rule in the following term;:
“The test generally applied is whether the
contract is an attempt to bind successors in
matters incidental to such successor’s adminis-
tration and responsibility, or whether it is a
commitment of a sort reasonably necessary for
protection of public property, interest, or af-
fairs being administered, and in the former case
the contract is generally held to be invalid and
in the latter case valid.”
The term or duration of the contract in question is un-
usually long. It goes without saying that the organization and
needs of our school districts are undergoing constant change. To
reasonably project the needs of a particular school district for
some forty years, and to commit it to a definite course of action
in light of such projection, would require considerable vision
and foresignt. In view of these considerations, we have no doubt
that the courts would subject such a contract to the closest scru-
tiny. As to whether the courts would uphold it must depend in
each instance upon the existence of such facts and circumstances
as to render same amenable to the peculiar needs of the school
district e Only the Board of Trustees, in the exercise of sound
and reasonable discretion, can initially determine the existence
or non-existence of such supporting factors. In any event, the
authority of a school board to so contract is necessarily limited
. _
Honorable J. W, Edgar, page 4 (WW-147)
by our answer to your third question which follows0 ’
The school district cannot, however, by means of such
a contract, pledge the future revenues of the school district
for the payment of rentals as same accrue. School trustees have
no legal authority to create any indebtedness which cannot be
liquidated by application of available school funds of the dis-
trict for the scholastic year in which the debt arises. 37 Tex.
Jur. 972. Article 2749 of Vernon’s Civil Statutes prohibits a
common school district from creating a deficiency debt in making
contracts with teachers. The courts have expanded the rule to
include debts generally. Teag,ue Independent School District et
al. v. Mason. t al 233 B.W 2d l’/b C lli er v. YeacockgmeWWe
1025 j First Nationa;‘Bank of ithens 5. iur chison Independent
School District, 114 S.W.2d 382; Trustees of Crosbv Indenesdent
School District v. West Disinfecting CQ., 121 S.W.2d 661.
Section 3 of Article VII, Constitution of Texas, pro-
vides in part that the “Legislature may authorize an additional
ad valorem tax to be levied and collected within all school dis-
tricts. a *for the further maintenance of public free schools,
and for the erection and equipment of school buildings therein.”
Articles 2784e, 2785, 2786 and 2?87 are the enabling bond and
tax statutes pursuant to the Constitutional provision. Article
2784e authorizes the voting of bonds and the levy of a bond tax
“for the purchase. construction. eo. ir auioment of public
free school buildings within the &tts Es zuch district and
the purchase of the necessa.ry sites therefor. . *‘I &nphasis
added) . Article 2787 requires that the proceeds of such bonds
issued and sold “shall be disbursed only for the purpose for
which the said bonds were issued.” It is noted that ,there is
no statutory or constitutional provision authorizing the voting
or issuance of bonds for leasing or renting of school buildings.
The conventional method for financing long-term obli-
gations in connection with school construction projects is
through the issuance of bonds and the levy of a tax for the re-
tirement of same as provided by Articles 27&e, 2785, 2786 and
2787. This method offers reasonable guarantees of protection
to all parties which the proposed lease-purchase method does
not and cannot fully offer e
In view of the foregoing and with respect to the third
quest ion propounded, we conclude:
1. Annual rentals accruing under the proposed
lease-purchase contract could be paid solely from
local surplus maintenance funds of the district*
Honorable J. W. Edgar, page 5’ tww-147)
2. Bonds cannot be voted for the purpose of
renting or leasing a school building and
It necessarily follows that bond proceeds
could not ordinarily be used for paying
such rentals.
3. The ability of the school district to pay
the required rentals would be contingent
upon the availability of surplus mainten-
ance funds which could be used for such
purposes for the particular year in which
the rental became due. The rental accru-
ing in one year but not paid, due to a lack
of available funds, could not become a con-
tractual liability against the funds of a
subsequent year even though there should be
surplus funds available for such purposes
in said year.
Your third question is accordingly answered in the
negative.
SUMMARY
The Vidor Independent School District is
authorized by law to contract with reference to
the rental of school buildings. The term or
duration of such a contract rests within the
sound discretion of the Board of Trustees in
light of the needs and circumstances of the dis-
trict. The school cannot, however, by means of
such a contract pledge the future revenues of the
school district thereby guaranteeing to the
builder-owner the payment of rentals as same ac-
true , since school trustees have no legal author-
ity to create any indebtedness or obligation which
cannot be liquidated by application of available
school funds of the district for the scholastic
year in which the debt arises.
Yours very truly,
WILL WILSON
Attorney General of Texas
Leonard Passmore
LP:wam:wb Assistant
--
Honorable J. W. Edgar, page 6 (Wd-147)
APPROVED:
OPINION COMMITTEE
H. Grady Chandler, Chairman
Wallace Finfrock
Lonny Zwiener
Houghton Brownlee, Jr.
REVIEWEDFOR THE ATTORNEYGENERAL
BY: George P. Blackburn