Opinion No.

The Honorable Jim Holland State Representative Route 1 Knobel, AR 72435

Dear Representative Holland:

This is in response to your request for an opinion on the following questions:

1. Can a Regional Water Distribution District deposit funds in a state chartered or federally charted savings and loan?

2. If so, are these funds insured by Federal Savings and Loan Insurance Corporation?

The Water Improvement District Accounting Law of 1973, which is codified at Arkansas Code of 1987 Annotated 14-119-101, et seq., must be reviewed in response to these questions. A.C.A.14-119-102 states as follows under subsection (a):

All water improvement districts of this state shall establish and maintain commercial bank accounts for the deposit of all funds received.

It may be concluded from the foregoing that provision has not been made for the deposit of Regional Water Distribution District funds in a savings and loan association. This conclusion is also indicated by Act 21 of 1935, codified at A.C.A. 19-8-101 —19-8-107, which governs the deposit of "public funds." "Public funds" is defined under 19-8-101 as "any and all kinds of funds handled by treasurers, collectors, commissioners, sheriffs, and clerks." A review of 19-8-106 indicates that these provisions apply to improvement district funds. 19-8-106(c) states:

The commissioners of road, drainage, levee and other improvement districts shall designate depositories and supervise the depositing of funds for their respective districts.

A.C.A. 19-8-104 states that "(a)ll public funds as defined in19-8-101 shall be deposited in banks located in the State of Arkansas." The Bank Commissioner must "furnish to . . . any officer of any improvement district . . . a list of all the banks or banking institutions doing business in this state which are members of the Federal Deposit Insurance Corporation." 19-8-105 then states that "(n)one of these public funds shall be deposited in any bank other than those contained in the list."

It is significant to note, finally, that savings and loan associations were specifically declared eligible to receive the deposit of State Treasury funds under Act 121 of 1973. See A.C.A.19-3-301, et seq. The clear limitation on applicability of this Act to "State Treasury funds" further compels the conclusion that the relevant legislative enactments have not been so modified as to permit savings and loan associations to serve, generally, as depositories of Regional Water Improvement District funds.

It is therefore my opinion, based upon the foregoing, that the answer to your first question is "no." Your second question is rendered moot by this response.

The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elisabeth A. Walker.