Untitled Texas Attorney General Opinion ( 1968 )

- , February 19, 1968 Honorable C. H. Cavness Opinion No. M- 203 State Auditor Sam Houston State Office Re: Whether authority exists to Building permit those current local Austin, Texas funds of higher educational Institutionsin the State Treasury (a8 specified In Article 2543c, V.A.C.S.) which are reasonably es- timated not to be needed in any given period of time, to be placed on a time depO8it basis, and Dear Mr. Cavness: related que8tlon.s. In reference to your recent request for our opinion, you ask the following questions of this office: "1. Does sufficient authority now exist to permit the current local funds of.hlgher educa- tional institutionsIn the State Treasury specified in Article 2543c, Vernon's Texas Civil Statutes, which are reasonably estimated not to be needed in any given period of time, to be placed on a tlme deposit basis? "2. If sufficientauthority does exist: "a. Does the duty for putting these State funds to work and for ne- gotiating with the depositories on such matters as the rate of return lie with the State Depos- itory Board or with the governing boards of the colleges and unlver- sltles Involved? "b. Does the responsibility for deter- mining the amount of such funds -974- :,:i#( Hon. c. H. Cavness, page 2 (n-203) available for placement on a time deposit basi8 lie with the State DepositoryBoard or with the goxern- lng boards of the Institutions? Act8 1951, 52nd Legislature,R.S., chapter 474, codified as Article 2543c, Vernon's Civil Statutes, specificallyrepealed In Section 5 thereof, Article 2654d, Vernon's Civil Statutes. The pertinent provisions of Article 2543~~ are set out as follows: 'Section 1. The Governing Board8 of the State Institutionsof higher education of this State are directed to designate special depositorybanks, sub- ject to the approval of the State Treasurer, for the purpose of receiving and keeping certain receipt8 of the lnstltutlonsof higher education of this State separate and apart fron.'fundsnow deposited in the Treasury. The receipts here referred to are de8- crlbed In Section 3 of thle Act. . , . "Sec. 2. Nothing In this Act shall Invalidate, repeal, or in anywise affect the provisions of Title , as amended, o e evlse V tatutes of 1925, usually referred to as the~state Depository Law; providing, however, the llmltatlonof deposits contained In Article 2532 of Vernon's Texas Civil Statute8 shall not apply Insofar as the specific funds enumerated In this Act are concerned. (mphasls added.) It Is noted that Section 2 of Article 2543c, Vernon'8 Civil Statutes, expressly retained and Implementedthe provlslons of the State depository law, with one exception. Consequently, the provlelons of Article 2525, Vernon'8 Civil Statutee, et 8eq., are applicable to the handling of fund8 under Article 2543~. Article 2525 reads, In part, a8 follows: -975- Hon. C. H. Cavness, page 3 (M-203) "The State Treasurer, a8 secretary,together with one (1) citizen of the state, appointedby the Governor . . .and the Banking Comml8sloner, shall conatltute the State DepositoryBoard. Said Board shall have the right and the power to make and enforce such rules and regulationsgoverning the eStabli8hmentand conduct of State Depositories and the handling of funds therein as the public lnter- est may require, not lnconsletentwith the provisions of the laws governing euch depO8itOrie8,which rules and renulatlons shall be In writing and entered unon the ml&tes of the Board. Said Board shall have the The list of receipts which may be controlledby Govern- ing Beards of Institutionsof Higher Learning are found In Article 2654d, Vernon's Civil Statutes, which reads, In part, a8 follows: 'Section 1. The governing boards of . . ., may retain control respectively of the following sums of money collected at each of said several InstitutionsIn carrying out the functionsof an educational Institution. such as funds collected from student fees of ali klnds;~chsrgesfor use -of room8 and dormitories; receipts from meala., cafes and cafeterias; fees on deposit refundable to students under certain conditiona: receiata From school athletic activities; Income from student publicationsor other student activities; receipts from sale of publication products and miscellaneous supplies and equipment; students' voluntary deposits of money with said schools for safe keeping; all other fee8 and local in- stitutionalIncome of a strictly local nature ax-isinn _--_--. out --. of -- and _.-- bv -virtue of the educational activities, or research or demOn8tratlOn carried on by each and all of said several schools: IEmphasIs added.) For purposes of discussion of this question It.Is assumed that the excluded funds set out In Article 2543c, Sec- tion 3, Vernon's Civil Statutes, Includes the llat of funds In control of the GoverningBoards of InstitutionsIn Article 2654d, -976- . . Hon. C. H. Cavness, page 4 (M-203) Section 1, Vernon's Civil Statutes~,which are required to be deposited In the depository bank or banks at an agreed rate of interest, as provided In Section 2 of 8UCh Article. Under such assumption, no conflict Is found between the two provisions. If a conflict were to be found, then Article 2543~ would con- trol because of the express repealer contained In Section 5 thereof. From a plain reading of the statutes, therefore, It Is apparent that sufficient authority now exists to permit the funds specified In Article 2543~ to be placed on a time deposit basis. In answer to your question No. 2, (a) and (b), Article 2543~ expressly provides that the State Depository Law Is ap- plicable under Section 2 thereof. Therefore, pursuant to Article 2525, the State Depository Board would have the duty of determining both the amount of such funds available for placement on a time deposit basis and for negotiating a contract for the rate of return for such funds, whether on demand or time deposit, with the local depository banks. The chronological passa e of these laws, the State Depository Law In 1931, Article 2g54d In 1941, and Article 2543~ In 1951, with the progresslve.requlrementsfor placing state money on earnings, Indicates the continuing concern of the Legislature by specific designation of duties and methods. Only those receipts specificallymentioned In Section 1 of Article 2654d are under the control of the Governing Boards of Institutions for these purposes, and such boards~are specl- flcally directed by the provisions thereof to deposit such funds In the depository bank or banks at an agreed rate of Interest as provided In Section 2 of said Article. SUMMARY Sufficient authority now exists to permit the current local fund8 of higher educational InstitutionsIn the State Treasury, as specified In Article 2543c, V.C.S., to be placed on a time deposit basis with local depository banks. The. State Depository Board under provisions of Article 2525, V.C.S., ha8 the duty~of negotiating the con- tract for the rate of return (interest)with the local depository banks and also has the respon- sibility for determining the amount of such fund8 available for placement on "demand deposits" and on "time deposits." -977- Hon. C. H. Cavness, page 5 (M-203) truly youre, Prepared by Pat Cain Assistant Attorney General APPROVED: OPINION COMMITTEE Hawthorne Phillips, Chairman Xerns Taylor, Co-Chairman W. V. Geppert Scott Garrison Bill Allen Bill Craig A. J. CARUBBI, JR. Executive Assistant -978-