FUNDS, CURRENT STATE SCHOOL, STATE GENERAL.

FUNDS, CURRENT STATE SCHOOL, STATE GENERAL.

 Abolition of the current state school fund and merger thereof with the state general fund would be unconstitutional.
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                                                                    May 1, 1956

Honorable Paul W. Ellis
Legislative Auditor
Legislative Budget Committee
Legislative Building
Olympia, Washington                                                                                                              Cite as:  AGO 55-57 No. 255

 Dear Sir:

             You have requested our opinion on the following question:

             Is there any constitutional or other legal objection to the enactment of a statute abolishing the current state school fund in the same manner as the University of Washington fund was abolished by chapter 332 of the Laws of 1955?

             We have concluded that a statute abolishing the current state school fund in this manner would probably be unconstitutional.

                                                                      ANALYSIS

             Chapter 332, Laws of 1955, provides in part:

             "Section 1. All moneys in the state treasury to the credit of the University of Washington fund on the first day of May, 1955, and all moneys thereafter paid into the state treasury for or to  [[Orig. Op. Page 2]] the credit of the University of Washington fund, shall be and are hereby transferred to and placed in the general fund.

             "Sec. 2. From and after the first day of April, 1955, all appropriations made by the thirty-fourth legislature from the University of Washington fund shall be paid out of moneys in the general fund.

             "Sec. 3. From and after the first day of May, 1955, the University of Washington fund is abolished.

             "Sec. 4. From and after the first day of May, 1955, all warrants drawn on the University of Washington fund and not presented for payment shall be paid from the general fund, and it shall be the duty of the state treasurer and he is hereby directed to pay such warrants when presented from the general fund.

             "Sec. 5. No revenue from any source other than the general fund, which, except for the provisions hereof, would have been paid into the University of Washington fund, shall be used for any purpose except the support of the University of Washington.

             "Sec. 6. . . ."

             This legislation effected a merger of the University of Washington fund with the general fund.  The University fund, once a special fund maintained in the treasury separate and apart from the general moneys of the state, thereby lost its identity as a separate fund in the treasury, and moneys formerly charged to this fund are by the terms of the act added to the moneys in the general fund.  By § 5 of this act, the legislature has apparently sought to insure that revenue which, except for the abolition of the University fund and the merger thereof with the general fund, would have been identified by charging the special University fund, shall nevertheless be expended only in support of the  [[Orig. Op. Page 3]] University of Washington.  It is to be noted, however, that the legislature has given no indication as to the method whereby the revenues formerly charged to the University fund are to be ascertained, nor is any automatic procedure prescribed to replace the function of the abolished special fund in insuring that the revenues in question are used only in support of the University.

             Having reviewed the effect of chapter 332, Laws of 1955, we may now assess the legality of applying this procedure to the current state school fund.

             The current state school fund was created by the legislature in § 3, p. 321, Laws of 1909.  The fund was to be comprised in part of the interest income from the permanent common school fund, which is a constitutional trust fund the corpus of principal of which is to "remain permanent and irreducible,"  Article IX, § 3, Washington Constitution.  By § 1, chapter 141, Laws of 1945, the language of the earlier current state school fund act was revised as to matters unimportant to our present question.  RCW 28.41.020, which codifies the 1945 legislation, provides in part as follows:

             "The interest accruing on the permanent common school fund together with all rentals and other revenues from lands and other property devoted to the current use of the common schools, and revenues from other sources allotted thereto, shall be deposited in a fund to be known as the current state school fund and shall be exclusively applied to the current use of the common schools. . . ."

             Therefore, the current state school fund, although of legislative creation, is directly related to the constitutionally created permanent common school fund inasmuch as the former primarily represents the interest income from the latter.

             Moreover, it is apparent that the current state school fund as described in RCW 28.41.020 was created to implement the mandate of the constitution found in Article IX, § 2 thereof which provides in part:

              [[Orig. Op. Page 4]]

            ". . .  But the entire revenue derived from the common school fund and the state tax for common schools shall be exclusively applied to the support of the common schools."

             In addition, with respect to the interest earned from the permanent state school fund, Article IX, § 3, of the constitution repeats:

             ". . .  The interest accruing on said fund together with all rentals and other revenues derived therefrom and from lands and other property devoted to the common school fund shall be exclusively applied to the current use of the common schools."

             It is worthy of recognition that the current state school fund, inasmuch as it functions to segregate and to identify the earnings derived from the constitutionally created trust fund, insures that these revenues will be clearly and unmistakably earmarked for the purpose of being "exclusively applied to the current use of the common schools."

             Because the permanent common school fund exists as an irreducible trust corpus solely for the purpose of earning revenue for the current use of the common schools, the following language from the court's opinion inSchool District No. 20, Spokane County v. Bryan, 51 Wash. 498, 505, 99 Pac. 28, is of importance:

             ". . .  Courts have been zealous in protecting the money set apart for the maintenance of the free schools of the county.  They have turned a deaf ear to every enticement and frowned upon every attempt, however subtle, to evade the constitution.  Promised benefit and greater gain have been alike urged as reasons, but without avail.  They have endeavored to say in unmistakable terms that the common school fund is just what it purports to be, a fund to be used for the sole purpose of supporting the graded schools of the commonwealth under the sanction of fixed and uniform laws. . . ."

              [[Orig. Op. Page 5]]

            If the preservation of the trust corpus is a subject of such strong judicial concern, it would seem to be a matter of equal importance to the courts that earnings derived from the trust fund also be "set apart for the maintenance of the free schools of the country."  The current state school fund presently exists to perform this function.

             Because the importance of preserving the integrity of the irreducible common school fund is grounded in the fundamental law of our state as expressed in the constitution, a statute abolishing the current state school fund as a separate fund in the treasury in the manner illustrated by chapter 332, Laws of 1955, would in our opinion be of doubtful constitutional validity.  It seems of little avail to speak of the integrity of the trust corpus as a constitutional requirement if it is also to be said that the income from the corpus, its raison d'etre, may constitutionally be merged with the general moneys of the state in the general fund.

             Even if it be assumed that, through an implementation of the language employed in § 5, chapter 332, Laws of 1955, no diversion of the trust income would result from the abolition of the present current state school fund as a separate fund, the question remains as to the disposition of the short term interest earned by any current amount of trust revenue.  Such revenue may now be identified as a balance in the separately maintained current state school fund.  If this balance is merged in the general fund, it will presumably earn interest for the general fund.  Such interest, although derived from the income from the permanent state school fund, would apparently be available for expenditure for any valid general fund purpose.  Thus, an abolition of the current state school fund would destroy the basis for an identification of the interest income to be earned from any balance in that fund.  In so doing it would open the door for a possible diversion of such earnings to purposes other than the support of the common schools.  We are doubtful that a court would be disposed to tolerate a possible diversion of interest earnings which are ultimately derived from the constitutional permanent state school fund.

             There is good reason for believing that our constitution implies that income from the common school trust fund be held separate and apart from the general moneys of the state.  Moreover, in so far as an abolition of the current state school fund would make it difficult,  [[Orig. Op. Page 6]] if not impossible, to identify the short term interest earned from the trust income; and in so far as such an abolition would thereby engender a possibility that such interest would benefit the general fund rather than exclusively benefiting the common schools, a possible violation of the constitution is in prospect.

            We advise, therefore, that the constitutionality of a statute abolishing the current state school fund in the same manner as the University of Washington fund was abolished by chapter 332, Laws of 1955, would be subject to grave doubt.

             We hope the foregoing analysis may prove helpful.

 Very truly yours,
DON EASTVOLD
Attorney General 

J. CALVIN SIMPSON
Assistant Attorney General