Judges: WINSTON BRYANT, Attorney General
Filed Date: 10/23/1991
Status: Precedential
Modified Date: 7/5/2016
The Honorable Mike Beebe State Senator 211 W. Arch Searcy, Arkansas 72143
Dear Senator Beebe:
This is in response to your request for an opinion on whether interest monies on accumulated certificates of deposits of a public school district (which deposits may be net current revenues) may be used to provide scholarships to graduating valedictorians and salutatorians. You state that it is your understanding that interest funds on these deposits are not considered "net current revenue," and you inquire as to whether they could be used for scholarship purposes.
For the reasons that follow, it is my opinion that the granting of scholarships from "net current revenue" interest funds would, in all likelihood, be found lawful, as long as certain conditions are met.
Although the issue is not perfectly clear, interest funds are not necessarily "net current revenue." There may be an argument to the contrary based upon the rule enunciated in Miles v. Gordon,
It must be noted, however, that "net current revenue" is not, in most instances, a tangible separate sum sitting in an account to which interest accrues. Public school funds are maintained in various accounts to which interest accrues. "Net current revenue" is merely a calculation used to determine what percent of certain public school funds are used to compensate certified personnel. It does not exist as a separate fund. The interest accruing is on public school funds in general, and as such may be used for any purpose to which public school monies may be put.
It is clear, moreover, in my opinion, that the rule of Miles v.Gordon was not intended to mandate a proration of interest monies collected on funds which are designated for specific purposes. The rule in Miles is of constitutional proportions and ensures that monies "arising" from a tax levied for one purpose are not expended for another. Arkansas Constitution, art.
It is my opinion, therefore, that interest monies accruing on funds which may be included in the calculation of "net current revenues" may be used for scholarships as long as this is a lawful expenditure of public school funds. Our inquiry thus becomes whether the awarding of scholarships from these funds is a constitutional and lawful expenditure of public school funds.
There is currently no specific statute on the books which allows school districts to grant scholarships to graduating students. We must therefore look to the Arkansas Constitution, and the general statutes governing the broad powers of school districts, to determine if such authority exists and could be exercised lawfully and constitutionally. The Arkansas Constitution provides at Art. 14, § 1 as follows:
Intelligence and virtue being the safeguard of liberty and the bulwark of a free and good government, the State shall ever maintain a general, suitable and efficient system of free public schools and shall adopt all suitable means to secure to the people the advantages and opportunities of education. The specific intention of this amendment is to authorize that in addition to existing constitutional or statutory provisions the General Assembly and/or public school districts may spend public funds for the education of persons over twenty-one (21) years of age and under six (6) years of age, as may be provided by law, and no other interpretation shall be given to it.
Arkansas Constitution, art.
This article also provides that "No money or property belonging to the pubic school fund, or to this State for the benefit of schools or universities, shall ever be used for any other than for the respective purposes to which it belongs." Arkansas Constitution, art.
In my opinion, two conclusions of law must be reached to determine whether scholarships may be awarded from public school funds by local school districts. First, the school district must have been granted the authority to award such scholarships by the General Assembly, and second, the use of public funds for these scholarships must represent a purpose to which public school funds may be put under our constitution.
School districts are granted broad authority by the General Assembly to "[d]o all . . . things necessary and lawful for the conduct of efficient free public schools in the district." A.C.A. §
[It is suggested] that an expenditure for scholarship purposes would not appear `necessary' to conduct a public school. Certainly such an expenditure is not `necessary' if necessary is taken to mean `indispensable.' However, the word necessary as used in [Texas statutes], has been construed as permitting such expenditures as medical inspection, cafeterias, crossing guards, and the reimbursement of certain expenses incurred by school board members. [Citations omitted.] Other examples could be cited. None of the expenditures in these examples is, strictly speaking, indispensable to the conduct of a public school. In the context of [the Texas statute] `necessary' appears to mean appropriate or conducive to the conduct of a public school rather than indispensable thereto.
Determining whether an expenditure is necessary is a matter for a school board in its sound discretion. Moreover, any expenditure of public funds must serve a true public purpose and not merely private ends. [Citations omitted.]
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 the public schools.
It is my opinion, although the question is a novel one in our state, that our statute would be similarly construed. It was stated in Rainwater v. Hayes,
It is thus my opinion that a local school district has been granted the requisite authority to expend school district funds in this manner, so long as for a constitutional purpose.
As stated previously, our constitution requires that public school funds only be used for the respective purposes to which they belong. These funds cannot be appropriated for any other purpose than those for which levied. Arkansas Constitution, art.
Amendment 53, as incorporated in Article 14, § 1. This provision would appear to sanction the use of public school funds for scholarships to graduating seniors, as long as provided for by law. As stated above, it is my opinion that the General Assembly has given broad authority to school districts in this regard. As such, any "necessary and lawful" expense would be "as provided by law."
It is therefore my opinion, although the Arkansas Supreme Court has never been faced with the question, that a public school district could lawfully and constitutionally expend interest funds on "net current revenue" for providing scholarships to graduating valedictorians and salutatorians.1 Compliance with the statutorily mandated percentages for teacher salaries, however, must be had.
The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elana L. Cunningham.
Sincerely,
WINSTON BRYANT Attorney General
WB:cyh