LiUSTIN. TEXAS
Hovember 21, 1949
Bonorable Stewart Y. Rollman
Criminal Matrict Attorney
Fort Worth, Texas
opinion Ho. Y-949.
Re: Reduotion In valuation of
property ae aifecting eligl-
bllity of sahool distrlots
for Foundation School Fumd
grants, and requirementof
county-wide%q~llGatiOn
mzhool dietritts to report
funds derived from school
maintenance tex aa county
Dear Sirr amilable funds.
Your request for an opinizm relates to ellgl-
bility of school districts Sor FoundationSchool Fund
grmt8 where the value of property baa decreased and the
valuation is reduced. It also relates to the accouuta-
bllity of county-videequalizationschool districts for
funds derived from school aaintenancetax in report+g
county available funds under S.3. 116, Aata 51st Leg.,
B.S., 1949. The questions submittedare:
'1. There being no express provision
In the Act, and there certainlybeing none
in the paragraphsreferred to, to prohibit
can a school district reduce the valu-
ire; oa amy property or propertlea In said
district and still be eligible for aid under
said Act?
‘2. Are these fund8 (oounty-wideequal-
ixatloa funds) to be reported to the State
Auditor under said Act, particularlyuuder
SubdivisIon (b), Paragraph 13, State Audit-
or's Form Ro. BA-2-6495"
With respect to your first questian:
State and county assessed valuation of the
taxable property of districts Is used in the formula
Hon. Stewart Y. Hellmen, page 2 (W4S)
designed for Celculetingthe amount of'local fuuda to be
oharged mbool dLatrZat8. Sectifm 5 of Article VI, S.B.
116, Aeta 51st Leg., R.S., 1949 (Found&ion Sahool Pro-
gram Act) reads In part%
“Mvide the state and county aaaes8sd Val-
uaitiori of all property In thQ county subject to
school district taxation for the next preceding
school year Into the State and county assessed
ValPatlafiof the district for the aext p-cod-
lng school year, finding the dlatrlct*aper-
centage of the county valuation. Multiply the
district’spercentage of the county valuation
by the amount of funds assigned to all of’the
dlatriata in the county. The product shall be
the emount of looal funds that the district
shell be assigned to raise toward the fineming
of its Foundation Sohool Prograa~.~
Said section further provideat
"The County Tax Aaaeaaor-Collectorin each
county, . . . shell oertify to the State Gem-
~&x~?.I~~of Bdua&tlou e . . the followlag la-
"(1) The assessed valuation, on a State
and oounty valuation basis, of all property
aubjeot to school district taxation in eaoh
school diatr.ictor portion of aohool diatriot
in such county, and the total aaaeaaed Value-
tlon of all property aubjeot to school dla-
trict taxatlan in the county; w o -”
Section 1, Artfele VIII of'the Conatltuticmof
Texas, reeds lp pert%
" all property in this State abell
be taxei in.proportloato its velue, which
hhll be ascertainedas my be provided by
. . e l
Seation 14, Article VIII of the Conatltutlon
of Texas, provides that8
“There shell be eleoted by the quellfled
electors of aech county + e D an Assessor and
Colleotor of Taxes, . . . end auoh Assessor
and Collector of Tax88 shall perform all the
Hon. Stewart W. Bellman, page 3 (V-949)
duties with respect to assessing property for
the purpose o? taxation.. . . .”
Article 7174, V.C.S., reads in part:
“Each separate parcel of real property
shall be valued at its true and full value
in money, excluding the value of crops grov-
ing or ungathered thereon. . . .”
Article 7206, V.C.S., reads in part:
“Each ccaamlsaloners court shall convene
and sit as a board of equalization on the sec-
ond l4ondag in May of each year, OF as soon
thereafter a8 practicable before the first day
of June, to receive all the assessment lists
or books of the assessors of their aountles
for inspection, correction or equalization and
approval. ’
Uhen property Is rendered for taxation the
assessor-collector places the property on the tax rolls
if he la satisfied the property is pende~ed at the rea-
sonable cash market value. I? he is not so satisfied
he enters the reasonable cash market value on the rendl-
tion and the party rendering the property may have the
true value dete&ed by the county conrmissloners court,
if dissatls?led vlth the value fixed by the assesaor-
collector. Art. 7211, V.C.S.
Article 7212, V.C.S., provides thatr
mThe boards of equalization shall have
power, and It is made their official duty, to
supervise the assessment of their respective
counties, and, if satisfied that the valuation
of any property Is not in accordance with the
laws of this State, to increase or diminish
the same and to affix a proper valuation there-
to, as provided for in the preceding article;
and, vhen any assessor In this State shall
have furnished said court vith the rendition
as provided for In the preceding article, it
shall be the duty of such court to call before
It such persons as in Its judgment may knov
the market value or true value of such proper-
ty, as the case may be, by proper process, who
Hon. Stewartu. hellman, page 4 (v-949)
shall testify under oath the character, quali-
ty and quantity of such property, as vell as
the value thereof. Said court, after hearing
the evidence, shall fix the value of such
property In accordance with the evidence so
introduced and as provided for in the preced-
ing article; and their action in such case or
cases shall be final."
Section 5 of Article VI, S.B. 116, supra, fur-
ther provides:
"I? there has been a marked increase
or decrease in the assessed valuation of a
school district within a county, and if the
County School Board certifies that the use
of the county and school district valuations
for the PreCeding year in determinIng local
fund assignments to the school districts in
the county would be Inequitable, and recom-
mends a different distribution of the county
total than that made by the State Consnission-
er of Education, such recommendations, sub-
ject to the approval of said Commissioner,
shall become and be the lawful local fund as-
signments to such districts."
hanifestly, the quoted provisions of Senate
hill 116 pertaining to valuation of property are in har-
mony with general law and the Constitution. Senate Bill
116 does not, in our opinion, seek nor operate to alter,
change, or disturb the valuation procedure long estab-
lished and in use for purposes of taxation in this State.
Clearly, the language, "I? there has been a marked in-
crease OP decrease in the assessed valuation of a school
district . . .v recognlses that there will be fluctua-
tions in the value of property in school districts. Un-
der the organic and StatUtWy law, Change in value must
be taken into account. Increase OP decrease in assessed
valuation may be recognized without affecting eligibili-
ty for Foundation School Fund grads by giving effect,
in proper oases, to recommendations of the County School
Board.
The Foundation School Program Act contemplates
limitations upon districts with respect to reduction of
tax rate:
Hon. Stewapt W. Hellman, page 5 (V-949)
%o school district shall be eligible to
receive foundation school funds authorized
herein vhich lovers its total school tax pate
within tvo (2) years of the effective date of
this Act, I? the reduction of such tax rate
would reduce thz local maintanauce tax re-
ceipts . . . . Sec. 5, Art. VI, S. B. 116
Acts 51St Leg., B.S., 1949. (emphasis added)
However, we do not construe this language as
in anyvise applicable to the power to ascertain value
for tax purposes as required by the Constitution and
laws of this State, since the subject of this provision
is rate of tax as distinguished from value of property
to which the rate is applied. The Ae%T$%aina no pro-
vision of similar import relating to valuation. In-
crease OP decvease in valuation would operate to vary
the amount of local funds charged to conmcu school dia-
trlcts and independent districts using State and county
valuations as indicated by the formula quoted above, but
eligibility for grants would not be disturbed.
It Is apparent, therefore, that valuation of
property in school districts may be reduced, when cir-
cumstances and evidence determinative of value require,
without affecting eligibility of such districts for
foundation school fund grants for which they are other-
Vise eligible.
Uith respect to your second questlont
Section 3 of Article VII of the Constitution
of Texas provides In part:
”
e And the Legislature may authoriee
au addl&al ad valorem tax to be levied and
collected within all school districts hereto-
fore fomned or hereafter formed, for the fur-
ther mainteuauce of public free schools, and
for the erection and equipment of school build-
ings therein; provided that a majority of the
qualified property tax-paging voters of the
district voting at an electlou to be held for
that purpose, shall vote such tax not to ex-
ceed in any one year one ($1.00) dollar on the
one huudved dollars valuation of the property
subject to taxation In such district, . . .*
Lou. Stewart W. Bellman, page 6 (V-949)
Pursuant to authority of this provision of the
Couatitutlou, the Legislature has created a number of
counties as county-wide equallaation school districts
having the Cotmty Unit System of Mucation. These dia-
tricts exeraiae the taxing power conierred upon school
districts by suoh provision with. limitations prescribed
in the several Aots when voted by a majoflty of the
qualified property tax-payi voters of the district.
Acts 44th Leg., R.S., 1935, 3 h. 103, p. 284, Art. 27408,
V.C.S. ; Acts 45th Leg., B.S., 1937, Ch. 231, p. 454,
Art. 2744e, V.C.S.; Acts 45th Leg., R.S., 1937, Ch. 163,
p. 315, Art. 27401-2, V.C .S . ; Acta 46th Leteg., R.S.,
19391 ;pS Lava, p. 677, Art. 2744e-1, V.C.S.; Acts 46th’
1939, Sp. Lava, p. 673, Art. 2744e-2, V.C.S.;
;:$$&h’ieg., R.S., 1941, Ch. 95, p. 121, Art. 27401-3,
. . .; Acta 47th Leg. R.S., 1941, Ch. 2 3, p. 400, Art.
2740?-4, V.C.S. i Acts 47th Leg., R.S., 19 ;: 1, Ch. 150, p.
218, as aabanded, Acts 50th Leg., R.S., 1947, Ch. 85 p.
145, Art. 2744e3, V.C.S.; Aota 50th Lag., R.S., 1947,
Ch. 331, p. 617, Art. 2702-A, V.C.S.; Acts 50th Lag.,, R.
S -9 1947, Ch. 399, p. 800, Art. 2740?-5, V.C.S.
Sectiou 6 of Article VII of the Constitution
of Texas creates the cow&j available fund:
" Said lends, and the proceeds
thereof; ihen sold, shall be held by said
couuties alone as a truat for the benefit
of public schools therein; said proceeds to
be Invested . . . and the counties shall be
responsible for all investments; the inter-
est thereon, and other revenue, except the
princlipsl shall be available fuud.”
Interest derived from investment of the pePma-
nent land or trust fund and other Pevenue from such fund,
except the p~lnolpal thereof, constitute the couuty
available fund; and only the interest thereon leapbe un-
ed and expended annually. Art. 2824, V.C.S. Section 5
of Article VII of the Constitution of Texas creates the
state available school fund and enumeratea certain sour-
ces of Income and revenue for the fund. The Legislature
la specifically authoriced to supplement the fund by
adding not to exceed l$ annually of the total value of
the pePamnent school fuud. Section 6, supra, of this AP-
tlcle, contains no provision for adding to or SuppleaIent-
lng the county available fuud.
Hon. Stewart W. Hellman, page 7 (V-949)
Article 2692, V.C .S., provides that the county
superintendent shall make pro rata distribution of the
state available school fund based on the scholastic cen-
sus, and:
I( . . . shall at the same time appor-
tion the income arising from the county
school fund to all the districts, lnclud-
ing the independent school districts of the
county, making a pro rata distribution as
per scholastic census.*
Thus, income arising from the county available
fund
_ _ Is distributed in the same manner and upon the same
oasis (scholastic census) as the state available funds
apportioned to counties.
The only source of income to the county avall-
able fund provided In the Constitution is interest and
other revenue derived from the county permanent fund.
The Legislature has in effect defined other revenue to
Include leasing or renting of lands, while proceeds from
the sale of timber Is required to be invested as pro-
ceeds from the sale of land. Art. 2825, V.C:S. In
Simona v. Jackson County 63 Tex. 428 (1885), it Is said
hat interest on notes egeouted in part payment of the
purchase price of land becomes part of the available
fund. But, proceeds from a lease conveying land for min-
ing and operating for oil and gas may be said to be per-
manent funds as the transaction represents a sale of the
minerals in place. Ehlineer v. Clark, 117 Tex. 547, 8
S.W.2d 666 (1928).
Article 2827, v.C .S . , enumerates the purposes
for which the public free school funds may be expended:
(I . . . State and county available funds
shall be used exclusively for the payment of
teachers’ and superintendentat salaries, fees
for taking the scholastic census, and interest
on money borrowed on short time to pay salt-
&es of teachers and superintendents. . .
This article also describes the purposes for
vhich local funds may be expended:
l
local school funds from district
taxes, iAt.& fees of pupils not entitled to
free tuition, and other local sources may be
Hon. Stewart W. Hellman, page 8 (V-549)
used for the purposes enumerated for State and
county funds and for purchasing appliances and
supplies, for the payment of insurance premi-
ums, janitors and other employees, for buying
school sites, buying, building and repairing
and renting school houses, and for other pur-
poses necessary in the conduct of the public
schools to be determined by the Board of Trus-
tees. . . ."
Sound reason supports the view that the avail-
able fund created by Section 6 of Article VII, supra, is
a fund separate and distinct from other funds made avail-
able by law under any other provision of the Constitution
for the operation, maintenance, and support of the public
free schools. Likewise, the available school fund pro-
vided in Section 5 of Article VII, supra, is a fund sepa-
rate and distinct from other funds made available by law
under any other provision of the Constitution. Both are
constitutional funds. The sources of income or revenue
to each ape particularly described by the Constitution
and laws of this State, and the use of each is defined
and restricted by legislative declaration.
Section 1 of Article VI, S.B. 116; Acts 51st
Leg., R.S., 1949, provides that the Foundation School Pro-
gram shall be financed by:
"a. An equalized local school district
effort to the extent hereinafter provided to-
ward the support of this program;
"b. Mstrlbution of the State and Coun-
ty Available School Funds on the basis of the
number of scholastics; and
'C. Allooation to each local district a
sum of State money appropriated for the pur-
poses of this Act sufflclent to finance the
remaining costs of the Foundation School PPO-
gram in that district computed and determined
in accordanoe with the provisions of this Act.'
“It is abundantly clear, we think, that the
county available fund referred to in the Act and intend-
ed by the Legislature is ~the available fund provided in
Section 6 of Article VII, supra, end that equalieation
funds made available in county-vlde equalization school
Hon. Stewart W. Hellman, page 9 (V-949)
districts by the levy of a school maintenance tax con-
stitute local funds as distinguished from constitutional
available funds and may not be included therein. I? the
Legislature had intended othervise, it could have easily
so declared.
County-wide equalization funds are derived from
a tax levied by districts exercising the taxing power
conferred by the Legislature uuder Section 3 of Article
VII, supra, vhile the available fund Is derived from ln-
terest and other revenue from public lands OF county per-
manent fund. In general, county-wide equalization funds
are by law distributed to districts on a per capita bas-
is according to the scholastic census for the maintenance
and support of the schools of the district. Hove;er, AP-
tlcle 27&O?-5, V.C.S., provides for distribution . . .
according to the financial needs of said school districts
. . . so as to provide a salary of not less than two
thousand ($2,000.00) dollars per year to any teacher em-
ployed. . . .” With this one exception, use of county-
wide equalicatlon funds is unrestricted as to purpose,
vhile use of the available fund, as has already been
pointed out, Is limited by general statute to particular
purposes.
The Foundation School Fond created by the Oil-
mer-Alkin lava, is an w fund, grants frcnn which
are intended to pay professional salaries, transporta-
tion and current operating costs other than professional
salaries and transportation. It supplements State and
county available funds which are also o eratl
as seen from Article 2827, V.C.S., v
supra. ocal fonds~J
funds
from district taxes may be used for the erection of
mane& imorovements and certain other purposes, in ad qfr
tion to those enumerated for State and county funds.
Surely, it vas not the intention of the Legis-
lature to supplement building funds of dlstriets vlth
grants from the Foundation School Fund. As observed,
Foundation School Fund grants supplementtheoperating
funds. Mstricts that have levied the county-wide equal-
ization tax, by vote, would be penalized if Gilmerdikin
gPadS were reduced by the amount raised locally by such
levies. We see no objection to school districts levying
county-wide equalieatlon or other local taxes in addi-
tion to taxes levied to raise local funds Charged to such
districts by Senate Bill 116 to supplement either operat-
ing funds or permsnent improvement funds.
Hon. Stewart W. Hellman, page 10 (V-949)
- l3veFett Hutchlnson
$Hrdb:bh Assistant
APPROVED