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