.
Honorable John M. Turner
County Attorney
Bee County
Beeville, Texas
Dear Sir: Opinion No. O-3025
Re: Authority to transfer surplus
In bond fund of school district
to another fund.
We received your letter dated December 21, 1940,
requesting our opinion on the following questions whioh we
quote as follows:
"1. Whether or not the money now in the de-
pository credited to the sinking fund of former
Common School District MO. 5 can be transferred
by the depositary to the maintenance fund of Rural
High School District No. 33, as all of the bonds
of Common School District No. 5 have been fully
paid, or
"2~ Whether or not the amount of money now
In the depository to the credit of the sinking
fund of former Common School District No. 5 (which
ceased to exist on December 14, 1937) can be trans-
ferred by the school distriot or depository to the
sinking fund of the bonded indebtedness of Rural
Rlgh School District No. 33."
We quote the following facts from your letter as
follows:
"1 . On Deoember 14, 1937, Rural High School
District No. 33 was established, as is shown by
a certified copy of the order of the County Board
of School Trustees of Bee Count Texas, entered
Nunc Pro Tune, as of December 11', 1937, herewith
enclosed and marked 'Exhibit A'.
Honorable John M. Turner, Page 2, O-3025
"2. At the time of the establishment of
this district there was an outstanding bonded
Indebtedness owing by Pettus Common School Dis-
trict No. 5, which Common School Distriot No. 5
is now a part of Rural High School District No.
33. At the time of the establishment of Rural
High School Distriot No. 33 there had been levied
and was being collected a tax of $1.00 upon the
one hundred dollar valuation of all taxable pro-
perty within said Common School District No. 33,
a portion of which to be applied to create a slnk-
ing fund to pay the Interest and principal as the
same became due, and while said bonds or any of
them were outstanding a tax for each year at a
rate from year to year as will be ample and suffl-
cient to provide funds to pay the current Interest
on said bonds and to provide the necessary sink-
ing fund. A certified copy of the order of the
commlssioners~ court of Bee County authorlzlng
the issuance of these bonds is hereto attached
marked 'Exhibit B'.
“3 . Since the incorporation of Rural High
School District No. 33, which included Pettus
Common School DistrFct No. 5, the school trustees
of Rural High School District No. 33 have annually
levied a tax of $1.00 upon the one hundred dollar
valuation of all taxable property within said
district for the maintenance of schools therein
and the payment of interest and principal of
bonded indebtedness.
“4 . January 1, 1939, there was levied by
the sohool trustees,of the Rural High School Dis-
trict a tax of $1.00 upon the $100.00 valuation
of all taxable property within said district, as
is shown by the order of the school trustees, a
certified copy of which is hereto attached and
marked 'Exhibit Cl.
“5. March 14, 1939, there being a sufficient
amount of money in the sinking fund from taxes
previously collected to retire and pay off the en-
tire prinoipal and interest of the bonds that were
issued for Common School District No. 5, hereln-
above mentioned.
Honorable John M. Turner, Page 3, O-3025
“6. The taxes for the year 1939 had,
priorto the date of the payment of these
bonds, been levied by the school trustees of
Rural High School District No. 33, and for the
year 1939 the taxes so levied and assessed by
Rural Elgh School District 33 were collected
by the tax collector of Bee County and approxl-
mately $6,500.00 thereof was placed In a sink-
ing fund known as Common School District No. 5
Sinking Fund with the depository, and this amount
of money now remains with the depository and the
entire bond issue of Common School District No.
5 has been paid off, whFoh was paFd March 1939."
"RxhFblt C", referred to in paragraph No. 4 of your
letter reads, in Part, as follows:
"On this the 14 day of October, 1940, there
was convened a meeting of the Sohool Trustees
of Pettus, Tuleta, Normanna Rural High Sohool
District MO. 33, located In Bee County, with the
following members present:
"R. 3. Bill - President
L. W. D1rk.s
Bob Walton
Guy Palmer
H. A. Rabe
E. E. Green
"when among other proceedings had the matters
hereinafter set out came on to be considered by
the trustees.
"On this day came on to be heard and conslder-
ed by the Trustees of Rural High School District
MO. 33, Bee County, the order of this Board here-
tofore entered Fn 1939, levying the taxes for all
purposes upon all taxable property within Rural
High School District No. 33; and I,tappearing to
the Trustees that the order levying taxes upon all
taxable property wlthin Rural High School District
No. 33 does not appear upon the minutes of the
Board of Trustees, though said taxes were 1evFed
by this district and assessed and have been collec-
ted in part by the Tax Collector of Bee County,
Texas.
Honorable John M. Turner, Page 4, O-3025
"And It further appearing to the Board of
Trustees that said order levying taxes, as afore-
said, is not,properly entered upon the minutes of
the Board of Trustees, Rural High School District
No. 33, Bee County, for the year 1939, and it hav-
Fng been conclusively shown to the Board of School
Trustees, Rural High School District MO. 33, and
the Board so finds that a proper levy was made on
the 1st day of January, 1939, ordering the proper
officials of Bee County, Texas, to assess and col-
lect the same ordering that saFd taxes be a legal
charge on the property and the owners thereof
tithin the Rural High School District No. 33, In
accordance with the following rates:
'$1.00 upon the $100.00 valuation of all
taxable property of the said DlstrFct for the
maintenance of schools therein and such amount
as may be necessary to retire and pay the unpaid
balanoe of any bonded indebtedness then existing
or unpaid for which bonds have been Fssued by any
former Common School District within said Rural
High School District No, 33, and a balance re-
maining out of said $1.00 upon theT 100.00 valua-
tion not used and necessary to pay the bonded ln-
debtedness of any former existing bonds shall be
placed in the maintenance fund of said Rural High
School District No. 33.
"IT IS THRREPORE ORDRRED by the Trustees of
Rural HFgh School District MO. 33, all members of
the board.belmigp&zeenkand:;alP votiag,:;thatbald
taxes of $1.00 upon the $100.00 valuation of all
taxable property in said Rural High School District
No. 33 for the year 1939 be, and the same is now,
levied against the property tithln said Rural High
School District No. 33 and the owners thereof, as
are.subject to taxation, and that the same be, and
is hereby, just and proper rate to be levied to
raise the revenue sufficient to satisfy the obll-
gations of said Rural High Sohool District No. 33
and for the maintenance of schools therein, and
that said taxes are made a legal charge on said pro-
perty and against the owners of same; that the
assessor of Bee County, Texas, is hereby ordered
to extend the same on the tax rolls and the tax
collector is ordered to collect said taxes, and
. .. .
Honorable John M. Turner, Page 5, O-3025
the secretary of this board is ordered to pre-
pare and file with the tax assessor-collector
a certified copy of this order to be entered Nuno
Pro Tune as of the 1st day of January 1939."
Authority of the school board to .levyand collect
the tax is provided for in ArtFcle 2922-1, Vernon's Annotated
CLvil Statutes, whhiohreads, In part, as follows:
"The board of a rural high school district
provided for in this Act shall have the power to
levy and collect an annual ad valorem tax not to
exceed One Dollar ($1) on the one hundred dollars
valuation of taxable property of the district for
the maintenance of schools therein, and a tax not
to exceed Fifty (50) Cents on the one hundred dol-
lars valuation of taxable property of the district
for the purpose of purchasing, constructing, re-
pairing, or equipping public free school buildings
within the limits of such district, and the pur-
chase of necessary sites therefor; providing that
the amount of maintenance tax, together with the
amount of bond tax of the district shall never
exceed One Dollar ($1) on the one hundred dollars
valuation of taxable property; . . ."
From the above quoted facts, it appears that Rural
High School District No. 33 collected taxes from the rural dis-
trict for the year 1939. A portion of said taxes were alloted
to a sinking fund to retire the bonded indebtedness of Common
School District No. 5. It appears further that the entire
bonded indebtedness, for which the particular sinking fund in-
volved was created, was paid off Fn March, 1939, leaving a
balance in said fund of approximately $6,500. We assume that
this surplus was caused by alloting more money, collected by
the rural distrFct from the 1939 taxes, to the sinking fund
than was necessary to pay off the bonds.
The rule seems to be that money belonging to a bond
fund cannot be used for maintenance. See McPhail et al v. Tax
Collector of Van Zandt County et al., 280 S.W. 260 (writ re-
fused.) This rule undoubtedly contemplates a situation where
there exists outstanding bonds. However, where there are no
outstanding bonds Fn existence, there is no need or purpose for
an interest and sinking fund. In this connection, we quote
from the case of Madeley et al v. Trustees of Conroe Indepen-
dent School DFstrlct, et al., 130 S.W. (2d) 929 (writ dismissed
as follows:
Honorable John M. Turner, Page 6, O-3025
"The following illustration Is in point
on our holding: Where a district has Issued
bonds and voted a tax to retire them, what be-
comes of the surplus of the tax when the bonds
are retired? Sinoe it Is not reasonable that
the exact amount of the bonds will be collected,
on every bond issued the trustees will have In
their hands a surplus. Again, a tax payer per-
mlts his tax to beoome delinquent until after the
bonds are retired; when sued, can he defend on
the ground that the bands for which the tax against
his property was levied have been paid off? When
the delinquent tax is collected, how shall it be
expended? These questions find their answer in
Sec. 3 of Art. 7 of the Constitution; where the
bonds have been paid off the statutes regulating
the expenditure of the funds for their payment
cease to oontrol the power of the trustees in
the expenditure of the surplus, and its expendi-
ture rests in the discretion of the trustees,
under Sec. 3 of Art. 7 of the Constitution."
It Is our opinion that the money in question now
deposited In the sinking fund of former Common School District
No. 5, all bonded indebtedness having been paid, can be pro-
perly transferred to the maintenance fund of Rural High Scho~ol
District No. 33 upon proper order executed by officers charged
with receiving and disbursing funds for said Rural High School
District.
We trust that our answer to your first question will
satisfactorily answer your inquiry.
Yours very truly
ATTORNRYGRNRRALOFTRXA3
APPROVRD JAN 22, 1941 By /s/ Glenn R. Lewis
$/S~;;;;3;;~eps Glenn R. Lewis
Assistant
ATTORNRYGRNRRAL
By /s/ Lee Shoptaw
Lee Shoptaw
LS:db:mjs
APPROVRD OPINION COMMITTEE
BY fs/ BWB CHAlRMAN