.4
Honorable Royal1 R. Watkins, President
State Board of Educ,ation
Austin, Texas
Dear Sir: Opinion No. O-6283
Re: Can local public boards
legally authorize the pay-
ment out of local school
moneys of insurance prem-
iums on policies payable
to the State.Board for vo-
cational Education and
covering the value of ed-
ucational equipment loaned
to them by the State Board
for Vocational Education?
And other questions.
We are in receipt of your opinion request reading
as follows:
"At the last meeting of the State Board for
Vocational Education the writer was directed and
authorized to submit to you for your considera-
tion and advice the matter of whether or not a
local school board could lawfully pay premiums on
insurance policies covering the loss of equipment,
etc. loaned to the respective school boards
throughout the State of Texas by the State Board
for Vocational Education.
"The State Board for Vocational Education
holds title to a large quantity of shop equipment
which can be used bg local public schools and which
it proposes to loan to local public schools for
use in their vocational shops to assist the local
school in training their students in various fields of
work. The value of the equipment loaned to in-
dividual schools will vary from two or three thous-
and dollars to as much as thirty thousand dollars.
The State Board for Vocational Education proposes
to loan this equipment tc the local public schools
using a contract, a copy of which is attached. In
order to protect the interest of the State Board
Honorable Royal1 R. Watkins, page 2 (O-6283)
for Vocational Education, the local public echools
have been requested to carry fire insurance cover-
ing the cost of the equipment in the name of the
State Board for Vocational Education. The ques-
tion has been raised by the local school board at-
torneys as to the legality of this requirement.
We respectfully request the opinion of the Attorney
General in regard to the following three questions:
“1 . Can local public school boards le-
gally authorize the payment out of local
school moneys of insurance premiums on pol-
icies payable to the State Board for Voca-
tional Education and covering the value of
education equipment loaned to them by the
State Board for Vocational Education?
“2. (a) Would it be permissible for the
local public schools to pay to the State
Board for Vocational Education a nominal
rent for the use of vocational shop equip-
ment loaned to them by the State Board for
use in educational programs for regular high
school ,students?
“(b) If the answer to 2 (a) - the first
part of this question - is ‘yes,’ can the
State Board for Vocational Education lawful-
ly apply the moneys received for the nominal
rent for the payment of premiums on lnsur-
ante policies covering the equipment loaned
to the public schools?
“3 . If a local school board by official
action makes itself responsible for the re-
placement of any equipment loaned to It by
the State Board for Vocational E,ducation
and loss by fire or theft, would it be legal
for the local school board to purchase equip-
ment to replace that destroyed or lost and
return it to the State Board for Vocational
Education?”
The only authority for a school district to pay in-
surance premiums is found in Article 2827, Vernon’s Texas Civil
Statutes, which reads as follows:
“The public free school funds shall not be ex-
pended except for the following purposes:
.,
,
Honorable Royal1 R. Wstklns, page 3 (o-15283)
“1 . The State and county available funds shall
be used exclusively for the payment of teachers'
and superintendents' salaries, fees for taking the
scholastic census, and Interest on money borrowed
on short time to pay salaries of teachers and au-
perintendents, when these salaries become due be-
fore the school funds for the current year become
available; provided that no loans for the purpose
of payment of teachers shall be paid out of funds
other than those for the then current year.
"2 . Local school funds from district taxes,
tuition fees of pupils not entitled to free tuition
and other local sources may be used for the purposes
enumerated for State and county funds and for pur-
chasing appliances and supplies, for the payment of
insurance premiums, janitors and other employees,
for buying school sites, buying, building and re-
pairing and renting school houses, and for other
purposes necessary in the conduct of the public
schools to be determined by the Board of Trustees,
the accounts and vouchers for county districts to
be approved by the county superintendent; provided,
that when the State available school fund in any
city or district is sufficient to maintain the school
thereof in any year for at least eight months, and
leave a surplus, such surplus may be expended for
the purposes mentioned herein.
“3 . All independent school districts having
within their limits a city with a population of
160,000 or more according to the last preceedlng Fed-
eral census shall, In addition to the powers now
possessed by them for the use and expenditure of
local school funds and for the issuance of school
bonds, be expressly authorized and empowered, at
the option of the governing body of any such school
district, In the buying of school sites and/or ad-
ditions to school sites and In the bulldlng of
school houses, to issue and deliver notes of the
school district, negotiable or non-negotiable in
form, representing all or a part of the purchase
price or cost to the school district of the land
and/or building so purchased or built, and to se-
cure such notes by a vendor's lien and/or deed of
trust lien against such land and/or building, and,
by resolution or order of the governing body of
the school district made at or before the delivery
of such notes, to set aside and appropriate as a
trust fund, and the sole and only fund, for the
Honorable Royal1 R. Watkins, Page 4 (o-6283)
payment of the principal of and interest on such
notes such part and portlon of the local school
funds, levied and collected by the school district
in that year, and/or subsequent years, as the gov-
erning body of the school di8triCt may determine,
provided that In no event shall the aggregate
amount of local school funds set aside in or for
any subsequent year for the retirement of such
notes exceed, in any one such subsequent year, ten
(16) per cent of the local school funds collected
during such year."
In our opinion all of the above questions should be
answered in the negative. The Legislature did not have in
mind the payment of Insurance premiums on borrowed property
when It passed Article 2827, Vernon's Texas Civil Statutes,
but only on such bulldings and contents as ares authorized by
law to be owned by school districts.
It is our opinion that insurance policies for which
premium8 are authorized to be paid by this article out of local
school funds are such policies as protect the district, itself,
from pecuniary liability or loss. Ordinarily, it is the pur-
pose of insurance policies to protect the insured from liabil-
ity or loss and not to provide the means of compensating a
third party for loss. We find no law, either State or Federal,
which has the effect of making the State Board for Vocational
Education liable for the loss by fire of any of the equipment
supplied by the Government, nor do we find any law requiring
either the State Board for Vocational Education or the schools
using such equipment to insure same.
Doubtless, the Legislature could authorize school
districts to insure the equipment, but, so far, it has not
done 80. The Legislature could authorize the State Board for
Vocational Education to charge nomlnal rent for the use of
the equipment and to apply the money received in payment of
premiums on insurance policies covering the equipment so
loaned to the school districts, but in the absence of any leg-
islation whatever with respect to these matters, we think the
State Board for Vocational Education is without authority to
require school districts to insure same and, the Board, like-
wise, is without authority to insure it.
We thank you for your courtesy in furnishing us with
additional documentary material and regret that we find nothing
Honorable Royal1 R. Watkins, Page 5 (O-6283)
therein which would juatifg us in holding otherwlse than a8
hereinabove stated.
Yours very truly
ATTORNEYGEENERAL
OF TEXAS
By /s/C. F. Gibson
C. F. Gibson
Asslstant
CFG:EP-ds
APPROVEDJAN 20, 194.5 APPROVED
OPINION
/s/ Carlo8 C. Ashley COMMITTEE
FIRST ASSISTANT ATTORNEYGENERAL