Untitled Texas Attorney General Opinion

Honorable Caynor Kendall ~Investment Counsel State Board of Education Austin, Texas Dear Sir: Opinion Number O-5217 Re; Whether taxes collected from levies made for llocal maintenance may be used to pay before maturity bonds held by the Permanent School Fund. We have your request for an opinion, which request is as fol- lows: "I sm directed by the State Board of Education to re- quest your opinion whether under Article 2787a, Revised Civil Statutes of 1925, tames collected from levies made for local maintenance may be used to pay before maturity bonds held by the Permanent School Fund." Article 27878 is as follows: 1The State Board of Education may authorize the trus- tees of any common school district or of any independent school district of this State to pay off and diecharge, at any interest paying date whether the bonds are matured or not, all or any part of any bonded indebtednersnow owned or hereafter to be owned by the State Permanent School Fund, outstanding against any common school district, or any independent school district in this State. "It shall be the duty of the school trustees of any common school district, or any independent school district of this State desiring to pay off and discharge any bonded ,indebtednessnow owned or hereafter to be owned by the Per- manent School Fund of this State, outstanding against such district or districts, before maturity thereof, to make di- rect application in writing to the State Board of Education at least thirty days before any interest paying date on said bonds, making known to said State Board of Education the desire of said trustees to pay off and discharge said Honorable Gay-norKendall, page 2 (O-5217) bonded indebtedness, or any part thereof, describing said bonds or the part thereof that the trustees desire to pay off and discharge; and it shall be the duty of the State Board of Education upon receipt of such application to act thereon in such manner as they deem best and notify the applicant or applicants whether the application is'refused or granted in whole or in part; provided, that only such tax money as has been collected by virtue of tax levies made for the specific purpose of providing a sinking fund and paying interest on the particular bonds to be redeemed shall be expended in the redemption, taking up, or paying off of such bonds as provided in this Act; unless said bonds are being redeemed for the purpose of being refunded; and the application of the board of trustees of any common or independent school district desiring to retire bonds as herein provided shall include an affidavit to that effect in their application; and provided further, that it shall be unlawful for any person upon whom any duty rests In car- rying out the provisions of this law to give or receive any commission, premium, or any compensation whatever for the perfo-ce of such duty or duties. "The provisions of this Act shall apply also to the governing boards of all cities, counties and political subdivisions in this State whose bonds are owned or may hereafter be owned by the Permanent School Fund of the State." It will be noted that the above article contains the following proviso: "provided, that only such tax money a6 has been collected by virtue of tax levies made for the specific purpose of providing a sinking fund and paying Interest on the particular bonds to be redeemed shall be ex- pended in the redemption, taking up, or paying off of such bonds as pro- vided in this Act; unless said bonds are being redeemed for the purpose of being refunded; and the application of the board of trustee6 of any common or independent school district desiring to retire bonds as here- in provided shall include an affidavit to that effect in their appllca- -Lion." It is apparent from the foregoing quotation from Article 2787a that taxes collected from levies made for local maintenance may not be used to pay before maturity bonds held by the Permanent School Fund, nor could taxes levied for interest and sinking fund of any other bond issue of the district be so used, but "only such tax money as has been collected by virtue of levies made for the specific purpose of providing a sinking fund and paying interest on the particular bonds to be redeemed." In the case of State vs. Hatcher, 52 S. W. (2d) 794 the Austin Court of Civil Appeals held that the State Treasurer could not accept * .-- R- Honorable Gaynor Kendall, page 3 (O-5217) payment on unmatured bonds belonging to the permanent school fund except under conditions Imposed by the Board of Education. Very truly yours APPROVED APR 22, 1943 ATTORNEYGENERALOFTEKAS /s/ Grover Sellers FIRST ASSISIXNT By /a/ C. F. Gibson ATTORNM GENERAL C. F. Gibson Assistant CFG-s-lm C.C.R. APPROVED OPINION COMMITTEE BY /s/ BUB CHAIRMAN