INTEREST EARININGS FROM SCHOOL DISTRICT BUILDING RESERVE FUND

DISTRICTS ‑-  SCHOOLS ‑-  FUNDS ‑-  INVESTMENT INCOME ‑-  INTEREST EARININGS FROM SCHOOL DISTRICT BUILDING RESERVE FUND 

RCW 28A.58.440 allows the transfer of interest earnings from a school district building reserve fund or building and capital projects fund to another school district fund so long as expenditures from such transferred interest earnings are restricted to instructional supplies, equipment or capital outlay purposes.

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                                                                   May 31, 1983

 Honorable George W. Clarke
State Senator, 41st District
3835 West Mercer Way
Mercer Island, Washington 98040

Cite as:  AGO 1983 No. 10                                                                                                                

Dear Sir:

             By recent letter you requested our opinion on a question which we paraphrase as follows:

             Does RCW 28A.58.440 allow the transfer of interest earnings from a school district building reserve fund or building and capital projects fund to another school district fund so long as expenditures from such transferred interest earnings are restricted to instructional supplies, equipment or capital outlay purposes?

             We answer this question in the affirmative.

                                                                      ANALYSIS                                                                          

             In posing the above question you also noted, interalia, our letter opinion of February 15, 1983 to State Representative Emilio Cantu regarding this same general matter.  There, after reviewing the provisions of RCW 28A.58.441(2) relating to the establishment and maintenance of school district building reserve funds, we said:

             ". . .

             "An examination of the subject statute reveals that it is silent on the question of how investment income arising from this particular fund‑-the building reserve fund‑-is  [[Orig. Op. Page 2]] to be utilized.  Therefore, in our opinion, the applicable principle of law is as stated in a prior opinion of this office, AGLO 1981 No. 3, a copy of which is enclosed for your immediate reference, at page 3.  In essence, what that principle of law says is that in the absence of any provision to the contrary, all interest earned through the investment of given public funds is to be credited to the fund (in this case, the school district building reserve fund) from which the monies being invested came."

             Notwithstanding the foregoing, however, you have now directed our attention to another statute, RCW 28A.58.440, which relates to the investment of school district funds by the various county treasurers and provides, in part, that:

             ". . . All earnings and income from such investments shall inure to the benefit of any school fund designated by the board of directors of the school district which such board may lawfully designate:  Provided,  That any interest or earnings being credited to a fund different from that which earned the interest or earnings shall only be expended for instructional supplies, equipment or capital outlay purposes.  . . ."

             The issue which is thus raised, in turn, is whether that language of RCW 28A.58.440,supra, itself authorizes a school board to direct investment earnings to be credited to a fund other than the one from which the particular investments were made.  Or, instead, does that provision merely assume the existence of such authority based upon some other, separate, statutory provision?

             The above‑quoted language of RCW 28A.58.440 is, in our judgment, ambiguous on that count.  Accordingly, it is appropriate to refer to, and consider, long-standing administrative construction in determining its proper meaning.  Cf.,State v. Houck, 32 Wn.2d 681, 203 P.2d 693 (1949).  And see, also,Morin v. Johnson, 49 Wn.2d 275, 300 P.2d 569 (1956) and cases cited therein.  In this instance we note both from your letter and from our own independent research that RCW 28A.58.440,supra, has long been administratively construed‑-by both this office in informal opinions and by the Division of Municipal Corporations of the State Auditor's Office‑-to be itself an authorization.  Thus, in an official bulletin issued on July 19, 1972, the Auditor's Office advised, generally, as follows:

              [[Orig. Op. Page 3]]

            "Whenever monies in any school district fund, except the Building Fund, are invested, the earnings and income from such investments shall be placed in the investing fund except when the board of directors of the school district has directed that such earnings and income be placed in a different fund, as authorized by RCW 28A.58.440.  When the interest or earnings are placed in a fund different from that which earned the interest or earnings, such income shall only be expended for instructional supplies, equipment or capital outlay purposes."

             Likewise, in a memorandum opinion dated May 1, 1978 to Educational Service District No. 101‑-based upon an earlier memorandum opinion dated September 28, 1972 to the State Auditor's Office‑-we similarly said that: