Untitled Texas Attorney General Opinion ( 2018 )

KEN PAXTON
ATTORNEY GENERAL OF TEXAS
May 16, 2018
The Honorable Scott Brumley Opinion No. KP-0204
Potter County Attorney
500 South Fillmore, Room301 Re: Whether an independent school district
Amarillo, Texas 79101 may contribute funds to a scholarship program
for graduates of the district to attend a
community college (RQ-0202-KP)
Dear Mr. Brumley:
You ask whether the Amarillo Independent School District ("District") "can lawfully
participate in a scholarship program." 1 You describe the proposed scholarship program as a
partnership between multiple financial partners: the District, Amarillo College, the Amarillo
Economic Development Corporation, and the Amarillo Area Foundation. Brief at 2. You explain
that the scholarship program would be offered to all eligible District students and "will cover
tuition, fees, and book expenses for up to sixty (60) credit hours at Amarillo College, following
graduation from any District high school campus." Id. You also tell us that "eligible students
must earn a final grade point average of 80 or higher on a 100-point scale, or meet Texas Success
faitiative ... college readiness as set by the Texas Higher Education Coordinating Board." Id.
You state that eligible students must meet compulsory attendance requirements, avoid any major
behavior infractions, and "must apply for and complete admission, financial aid, and scholarship
assistance at Amarillo College." Id. at 3. Lastly, you state that the scholarship program "includes
a family income restriction for the student to be eligible." Id.
We first consider the authority of the District's board of trustees. The Education Code
gives the trustees of an independent school district the "exclusive power and duty to govern and
oversee the management of the public schools of the district." TEX. EDUC. CODE § 11.151 (b). A
district's board of trustees approves the district's budget and can spend the district's funds only in
accordance with provisions in the Ed11cation Code. See id. §§ 44.004(a) (providing that the board
must approve the district's budget), 45.105(a) (providing that "public school funds may not be
spent except as provided by this section"). Education Code subsection 45 .105(c) provides that the
expenditure of
[l]ocal school funds from district taxes, tuition fees of students not
entitled to free education, other local sources, and state funds not
1
See Letter and Brief from Honorable Scott Brumley, Potter Cty. Att'y, to Honorable Ken Paxton, Tex.
Att'y Gen. at I (Dec. 11, 2017), https://texasattomeygeneral.gov/opinion/requests-for-opinion-rqs ("Request Letter"
and "Brief," respectively).
The Honorable Scott Brumley - Page 2 (KP-0204)
designated for a specific purpose may be used for the purposes listed
for state and county available funds and for . . . other purposes
necessary in the conduct of the public schools determined by the
board of trustees.
Id § 45. I 05(c). The term "necessary" in this provision means "appropriate or conducive to the
conduct of a public school rather than indispensable thereto." Tex. Att'y Gen. Op. No. JM-1265
(1990) at 3 (citing Moseley v. City ofDallas, 17 S.W.2d 36, 41 (Tex. Comm'n App. 1929,judgm't
adopted) and Bozeman v. Morrow, 34 S.W.2d 654, 656-57 (Tex. Civ. App.-EI Paso 1931, no
writ)). With respect to scholarships, Opinion JM-1265 specifically stated:
The encouragement and motivation of students in academic
achievement would seem to be an appropriate function of the public
free schools. Accordingly, it is not possible to say, as a matter of
law, that a scholarship could not be structured to further the
achievement of a legitimate public purpose of a school district in its
conduct of public schools [provided certain constitutional
restrictions on public expenditures are met].
Tex. Att'y Gen. Op. No. JM-1265 (1990) at 4. The District's trustees must determine in the first
instance whether the proposed scholarship program is appropriate or conducive to the conduct of
its public schools. See id.; see also TEX. Eouc. CODE§ 45.105.
We next consider the constitutionality of the expenditure. Texas Constitution article III,
section 52(a) prohibits the expenditure of public funds for private purposes. See TEX. CONST. art.
III, § 52(a); see also id. §§ 50, 51; Tex. Att'y Gen. Op. No. H-1010 (1977) at 2 (observing that
language applicable to political subdivisions in article III, section 52 is the same as in article III,
sections 50 and 51 ). Its purpose is to prevent the gratuitous grant of public funds for private
purposes. See Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 740 (Tex. 1995). The Texas
Supreme Court recognizes an expenditure of public funds for a public purpose that provides a clear
public benefit in return is not an unconstitutional grant of public funds. See Tex. Mun. League
Intergov 'tl Risk Pool v. Tex. Workers' Comp. Comm 'n, 74 S.W.3d. 377, 383 (Tex. 2002).'
Furthermore, an expenditure to directly accomplish a legitimate public purpose is constitutional
even though it incidentally benefits a private interest. See Barrington v. Cokinos, 338 S.W.2d 133,
140 (Tex. 1960). The Texas Supreme Court provides a three-part test to determine whether an
expenditure of public funds accomplishes a public purpose as contemplated by article III, section
52(a). Tex. Mun. League Intergov 'tl Risk Pool, 74 S.W.3d at 384. A public expenditure satisfies
article III, section 52(a) if: (1) the expenditure's predominant purpose is to accomplish a public
purpose of the public entity, not to benefit _private parties; (2) the public entity retains sufficient
control over the expenditure to ensure that the public purpose is accomplished; and (3) the public
entity receives a return benefit. See id.; see also Tex. Att'y Gen. Op. No. GA-0076 (2003) at 6-7.
The District's board of trustees must decide in the first instance, and subject to judicial
review for abuse of discretion, whether the expenditure for the scholarship sati~fies the three-part
Texas Municipal League test. Tex. Att'y Gen. Op. Nos. KP-0099 (2016) at 4, GA-0850 (2011) at
3-4, JM-1265 (1990) at 4; see also Moseley, 17 S.W.2d at 41 (acknowledging that courts will not
The Honorable Scott Brumley - Page 3 (KP-0204)
interfere unless there is a clear abuse of discretion). Regarding the first prong concerning a public
purpose, we emphasize that the public purpose to be served is not the general good of the public,
, but a specific purpose of the District. See Tex. Att'y Gen. Op. No. GA-0743 (2009) at 2 ("The
public purpose served by the expenditure must be an authorized public purpose of the political
subdivision."). You tell us the District's participation in the scholarship serves to encourage and
motivate its students to attain high academic achievement within the District's schools, as well as
improve their college readiness, school attendance, and appropriate student behavior. See Brief at
11 (stating that these are appropriate functions of the District); see also Tex. Att'y Gen. Op. No.
JM-1265 (1990) at 4 (recognizing that the "encouragement and motivation of students in academic
achievement would seem to be an appropriate function of the public free schools"), Tex. Att'y
Gen. LO-93-093 (1993) at 5 (same). Further, you aver that the scholarship supports the District's
mission "to graduate every student prepared for success beyond high school." Brief at 11. Thus,
to meet the first prong, the District must reasonably find that the scholarship will indeed incentivize
the aims that you claim and that those aims serve the purposes of the District.
Regarding the second and third prongs, you tell us the agreement between the financial
partners will include sufficient controls to ensure accomplishment of the public purpose. See id.
You note that the District will control the scholarship by awarding it to only those students who
meet the criteria. And you state that the District will receive a return benefit in the form of students
succeeding in, as well as avoiding trouble in, high school. See id. at 11-12. You further state that
students who live in the District but who do not attend a District school may be induced by the
scholarship to return to a District school, enabling the District to "recapture funding and add[]
much-needed funds to its budget." Id. at 12. To meet the second and third prongs, the District
must reasonably find that it will receive a return benefit, and it must exercise control over the funds
to ensure the public purpose is accomplished.
The Honorable Scott Brumley - Page 4 (KP-0204)
SUMMARY
Section 45.105 of the Education Code authorizes an
expenditure of an independent school district's funds for "other
purposes necessary in the conduct of the public schools determined
by the board of trustees." Accordingly, the Amarillo Independent
School District's trustees must determine whether the proposed
scholarship program is appropriate or conducive to the conduct of
its public schools.
Article III, section 52(a) of the Texas Constitution prohibits
the expenditure of public funds for private purposes. A school
district's expenditure for a scholarship program does not violate
article III, section 52(a) provided that the school district: (1) ensures
the expenditure is to accomplish a public purpose of the school
district, not to benefit private parties; (2) retains sufficient control
over the public funds to ensure the public purpose is accomplished;
and (3) ensures the school district receives a return benefit. Whether
a particular expenditure satisfies this three-part test is a
determination for the school district in the first instance, subject to
judicial review.
Very truly yours,
KEN PAXTON
Attorney General of Texas
JEFFREY C. MATEER
First Assistant Attorney General
BRANTLEY STARR
Deputy First Assistant Attorney General
VIRGINIA K. HOELSCHER
Chair, Opinion Committee
CHARLOTTE M. HARPER
Assistant Attorney General, Opinion Committee