SCHOOL DISTRICTS ‑- AUTHORITY TO BORROW MONEY WITHOUT VOTE OF ELECTORS

SCHOOL DISTRICTS ‑- AUTHORITY TO BORROW MONEY WITHOUT VOTE OF ELECTORS

The board of directors of a first class school district has authority to borrow money for the purpose of constructing a school bus garage if this can be accomplished within the framework of debt limit, budget and expenditure limit statutes pertaining to such districts.

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                                                                   May 29, 1956

Honorable Tom A. Durham
Prosecuting Attorney
Whatcom County Court House
311 Grand Avenue
Bellingham, Washington                                                                                                              Cite as:  AGO 55-57 No. 278

Dear Sir:

            You have requested the opinion of this office on the following question:

            May the board of directors of a school district of the first class enter into an agreement with a private individual for a loan of $35,000 repayable within two years?  The proposed agreement contemplates repayment from three sources:  (1) from federal forest fund receipts; or (2) from a building fund created by transfer of approximately .6 of a mill of the annual regular school district levy from the general fund to the building fund; or (3) from funds accruing to the district from a further special building fund levy.  The purpose of the transaction is to finance construction of a bus garage.

            In our opinion this agreement will be valid, provided:  (1) That the money borrowed will not cause the district to exceed its constitutional debt limitation; (2) that the district complies with the requirements of the budget statutes; and (3) that the statutes limiting expenditures in any one fiscal year are complied with.

                                                                     ANALYSIS

             [[Orig. Op. Page 2]]                              

            RCW 39.36.020 (1953 Supp.) provides in part:

            "No taxing district shall for any purpose become indebted in any manner to an amount exceeding one and one‑half percent of the last assessed valuation of the taxable property in such taxing district, without the assent of three‑fifths of the voters therein voting at an election to be held for that purpose, nor in cases requiring such assent shall the total indebtedness at any time exceed five percent of the last assessed valuation of the taxable property in such taxing district.

            "No part of the indebtedness allowed in this chapter shall be incurred for any purpose other than strictly county, city, town, school district, township, port district, metropolitan park district, or other municipal purposes:  * * *Provided further, That any school district may become indebted to a larger amount but not exceeding five percent additional for capital outlays."

            RCW 28.59.130 provides that boards of directors of first class school districts shall make no expenditures nor incur any liability for any purpose not provided for in the budget.

            RCW 28.62.200 limits expenditures for the purchase of sites and the erection of buildings in first class school districts in cities under fifty thousand population to fifty thousand dollars.  Expenditures in excess of this amount require approval of the voters of the district.

            RCW 28.51.130 provides in part:

            "It shall be unlawful for any board of directors to contract indebtedness against its district in any one year in any sum in excess of the aggregate amount set forth and approved in its final budget * * *."

            RCW 28.51.010 (1953 Supp.) provides as follows:

            "The board of directors of any school district may borrow money and issue negotiable coupon bonds therefor for the purpose of:

             [[Orig. Op. Page 3]]

            "(1) Funding outstanding indebtedness or bonds theretofore issued; or

            "(2) For the purchase of schoolhouse sites for building or playgrounds authorized by law; or

            "(3) For erecting buildings authorized by law and providing the necessary furniture, apparatus, or equipment; or

            "(4) For any or all of these purposes.

            "Neither the amount of money borrowed nor bonds issued therefor shall exceed five percent of the assessed valuation of the taxable property in such district, as shown by the last assessment roll for county and state purposes previous to the incurring of such indebtedness, except that in cities incorporated under special charter the valuation shall be taken from the last assessment for city purposes:  Provided, That any school district may become indebted to a larger amount but not exceeding five percent additional for capital outlays.

            "Bonds may be issued only when authorized by vote of the district."

            Prior to the 1953 amendment, § 1, chapter 99, Laws of 1927, the session law from which the above section was derived, required a vote of the district for the borrowing of money and the issuance of bonds.  The 1953 enactment, in our judgment requires a vote of the electors only where a bond issue is contemplated.

            We conclude that the proposal to borrow money for construction of a school bus garage is valid if it can be accomplished within the framework of the debt limit, budget and expenditure limit statutes set forth above.

             [[Orig. Op. Page 4]]

            We hope the foregoing analysis will prove helpful.

Very truly yours,

DON EASTVOLD
Attorney General

ANDY G. ENGEBRETSEN
Assistant Attorney General