INVESTMENT OF SCHOOL DISTRICT FUNDS IN CREDIT UNION

DISTRICTS ‑- SCHOOLS ‑- FUNDS ‑- CREDIT UNIONS ‑- INVESTMENT OF SCHOOL DISTRICT FUNDS IN CREDIT UNION

School district funds, including associated student body funds, may not legally be deposited in a credit union.

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                                                               November 17, 1975

Honorable Joe Stortini
State Senator, 27th District
1623 Firlands Drive
Tacoma, Washington 98405                                                                                                               Cite as:  AGLO 1975 No. 89

Dear Senator Stortini:

            By recent letter you have asked for our opinion on the following two questions:

            (1) "May a school district deposit funds, which are not needed for immediate necessities, in a credit union?"

            (2) "May a school district deposit funds from Associated Student Body accounts in a credit union?"

            We answer question (1) in the negative and question (2) as set forth in our analysis.

                                                                     ANALYSIS

            Question (1):

            As you have noted in your letter, the governing statute with respect to the investment of surplus school district funds is RCW 28A.58.440.  The full text of this statute reads as follows:

            "The county treasurer, or the trustee, guardian, or any other custodian of any school funds, when authorized to do so by the board of directors of any school district, shall invest or reinvest any school funds of such district in savings or time accounts in banks, trust companies and mutual savings banks which are doing business in this state, up to the amount of insurance afforded such accounts by the Federal Deposit Insurance Corporation, or in accounts in savings and loan associations which are doing business in this state, up to the amount of insurance afforded such accounts by the Federal Savings  [[Orig. Op. Page 2]] and Loan Insurance Corporation, or any obligations, securities, certificates, notes, bonds, or short term securities or obligations, of the United States.  The county treasurer shall have the power to select the particular investment in which said funds may be invested.  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.  This section shall apply to all funds which may be lawfully so invested or reinvested which in the judgment of the school board are not required for the immediate necessities of the district.

            "Five percent of the interest or earnings, with an annual minimum of ten dollars or annual maximum of fifty dollars, on any transactions authorized by each resolution of the board of school directors shall be paid as an investment service fee to the office of county treasurer when the interest or earnings becomes available to the school district."

            Since credit unions are not among the types of financial institutions mentioned in this statute, it necessarily follows that the statute affords no authority to a county treasurer, in investing surplus school district funds, to invest those funds in such an institution.  Moreover, from our examination of the laws relating to credit unions in chapter 31.12 RCW, it would not appear to us that such institutions would be eligible to receive deposits from school districts, as such, in any event.  Under RCW 31.12.080 and 31.12.090, credit unions may only receive deposits from their own members.  Thus, for example, teachers employed by a school district could make deposits in a teachers' credit union to which they belong but the school district itself could not.

            Question (2):

            As far as associated student body funds are concerned,  [[Orig. Op. Page 3]] this office has previously taken the position that such funds must be viewed as school district funds in those cases where the student body organization has been created and exists as an agency of the district.  See, AGO 1974 No. 21 [[to Robert V. Graham, State Auditor on October 23, 1974]], copy enclosed, at pp. 4-5.  Moreover, this approach has since been formalized by legislative action through the passage, last spring, of chapter 284, Laws of 1975, 1st Ex. Sess. (Senate Bill No. 2210).

            Section 2 of this act, which will take effect on July 1, 1976, provides as follows:

            "There is hereby created a fund on deposit with each county treasurer for each school district of the county having an associated student body as defined in RCW 28A.58.115.  Such fund shall be known as the associated student body program fund.  Rules and regulations promulgated by the superintendent of public instruction under section 3 of this 1975 act shall require separate accounting for each associated student body's transactions in the school district's associated student body program fund.

            "All moneys generated through the programs and activities of any associated student body shall be deposited in the associated student body program fund.  Such funds may be invested for the sole benefit of the associated student body program fund in items enumerated in RCW 28A.58.440 and the county treasurer may assess a fee as provided therein.  Disbursements from such fund shall be under the control and supervision, and with the approval, of the board of directors of the school district, and shall be by warrant as provided in chapter 28A.66 RCW:  PROVIDED, That in no case shall such warrants be issued in an amount greater than the funds on deposit with the county treasurer in the associated student body program fund.  To facilitate the payment of minor or unexpected obligations, or obligations which require immediate payment, an imprest bank account or accounts may be created and replenished from the associated student body program fund.

            "The associated student body program fund  [[Orig. Op. Page 4]] shall be budgeted by the associated student body, subject to approval by the board of directors of the school district.  All disbursements from the associated student body program fund or any imprest bank account established thereunder shall have the prior approval of the appropriate governing body representing the associated student body.  Notwithstanding the provisions of RCW 43.09.210, it shall not be mandatory that expenditures from the district's general fund in support of associated student body programs and activities be reimbursed by payments from the associated student body program fund.

            "The effective date of this section shall be July 1, 1976."  (Emphasis supplied.)

            Thus clearly, once this statute takes effect there will be no legal basis for associated student body funds to be deposited in any different manner than are surplus school district funds under RCW 28A.58.440, supra.  In the meantime, to the extent that any such funds are now school district funds under the rationale of AGO 1974 No. 21, supra, this same answer must also presently be given as well.  And again, in any event, as far as credit unions are concerned there appears, even now, to be no legal basis for such institutions to receive deposits except from their own members.

            We trust that the foregoing will be of some assistance to you.

Very truly yours,

SLADE GORTON
Attorney General

PHILIP H. AUSTIN
Deputy Attorney General