SCHOOLS - DISTRICT - BOARD OF DIRECTORS - INVESTMENT OF FUNDS FROM THE GENERAL FUND OF THE SCHOOL DISTRICT

SCHOOLS - DISTRICT - BOARD OF DIRECTORS - INVESTMENT OF FUNDS FROM THE GENERAL FUND OF THE SCHOOL DISTRICT.

The board of directors of a school district does not have the authority to authorize the investment of funds from the general fund of the school district which are not required for immediate expenditure.

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                                                                     July 1, 1960

Honorable John Panesko
Prosecuting Attorney
Lewis County
Chehalis, Washington                                                                                                Cite as:  AGO 59-60 No. 129

Dear Sir:

            By letter previously acknowledged you requested an opinion of this office on a question which we paraphrase as follows:

            Does the board of directors of a school district have the power to authorize the investment, in short term or other securities, of money in the general fund of the district which is not required for immediate expenditure?

            We answer your question in the negative.

                                                                     ANALYSIS

            A school district is a municipal corporation and as such has only those powers expressly granted by the legislature, those necessarily or fairly implied in or incident to the powers granted, and those essential to the declared objects and purposes of the municipal corporation.  Seattle High School Ch. No. 200 v. Sharples, 159 Wash. 424, 293 Pac. 994 (1930); Juntila v. Everett School District No. 24, 178 Wash. 637, 35 P. (2d) 78 (1934).  The governing body of the district empowered to exercise the foregoing powers is, of course, the elected board of directors.  (RCW 28.58.080) State ex rel. Griffiths v. Superior Court, 177 Wash. 619, 33 P. (2d) 94 (1934).

             [[Orig. Op. Page 2]]

            See also AGO 59-60 No. 121 [[to Prosecuting Attorney, Klickitat County on June 2, 1960]], AGO 59-60 No. 116 [[to Prosecuting Attorney, Klickitat County on May 6, 1960]], AGO 59-60 No. 113 [[to Damon R. Canfield, State Representative on April 19, 1960]], AGO 59-60 No. 105 [[to Pat Nicholson, State Representative on March 10, 1960]].

            The ex officio treasurer of the school districts in his county is the county treasurer.  Among his duties he is required to "receive and hold all moneys belonging to such school districts and pay them out only on warrants legally issued."  (RCW 28.48.100 (1)) He is likewise required to deposit all public funds in his hands or under his control in designated depositories.  See chapter 36.48 of the Revised Code of Washington [[chapter 36.48 RCW]].  See also State ex rel. Port of Seattle v. Gaines, 109 Wash. 196, 186 Pac. 257 (1919) construing this chapter.  From this case it would clearly appear that school district funds in the hands of the county treasurer are subject to the provisions of chapter 36.48 RCW.

            In an opinion to the Honorable W. A. Gissberg, dated August 21, 1958, (AGO 57-58 No. 216) this office said:

            "Municipal funds may only be deposited or invested pursuant to express statutory authority.  See Aberdeen v. National Surety Co., 151 Wash. 55, and our opinions to the State Finance Committee and to the prosecuting attorney of Clark County, dated January 14, 1943, and May 29, 1929 (Opinion No. 2449) respectively.

            "Therefore, before depositing or investing municipal funds, those entrusted with the care of such funds must find specific statutory authority to do so."

            In our examination of the school code, Title 28 of the Revised Code of Washington [[Title 28 RCW]], we find the following pertinent statutes relating to the investment of school district funds:

            (1) Idle Building Funds -RCW 28.51.120 provides:

            "The board of directors of any school district which, having funds in the building fund of the district which in the judgment of said board are not required for the immediate necessities of the district, may invest and reinvest all, or any part of the funds in any interest bearing obligations of the United States of America.  The board must adopt a resolution authorizing and directing the county treasurer, as ex officio treasurer of the district, to invest or reinvest them or any designated part thereof in United  [[Orig. Op. Page 3]] States securities specifying the type of securities.  No such investment or reinvestment shall be permitted to have the effect of delaying any program of building for which the funds were authorized.

            "The funds, the securities, and the proceeds and income therefrom shall be held by the county treasurer in trust for the building fund of the district.  If in the judgment of the board is [sic] becomes necessary to redeem or to sell any of the purchased securities before their ultimate maturity date, the board may, by resolution, direct the county treasurer to cause redemption to be had of the redemption value of the securities or to sell the bonds and securities at not less than their market value and accrued interest."  (Emphasis supplied.)

            (2) Accumulated Insurance Funds in First Class School Districts - RCW 28.59.030 reads as follows:

            "The county treasurer, when authorized to do so by the board of directors of any school district, may invest any accumulated permanent insurance fund of the district in school, county, or state warrants or in bonds or other obligations issued or guaranteed by the government of the United States.  All earnings accruing from such investment, and the funds so invested, shall inure to the permanent insurance fund of the district.  The county treasurer shall be the custodian of all warrants, bonds or other obligations purchased by and with the permanent insurance fund until they are redeemed, and shall submit a statement of the fund and warrants, bonds or other obligations as a part of his monthly report to each district."  (Emphasis supplied.)

            We find no other statute which expressly or by necessary implication authorizes a school district to use money in its general fund for investment purposes.  Furthermore, our court has said that if there is any doubt as to whether a certain power has been granted by the legislature to a municipal corporation the power must be denied.  See,McGilvra v. Seattle School Dist. No. 1, 113 Wash. 619, 194 Pac. 817 (1921); Pacific Etc. Ass'n. v. Pierce County, 27 Wn. (2d) 347, 178 P. (2d) 351; AGO 59-60 No. 62 [[to State Superintendent of Public Instruction on August 24, 1959]].

             [[Orig. Op. Page 4]]

            Therefore, it is our opinion that the board of directors may not authorize the investment of any excess funds in its general fund.

            This conclusion is strengthened by the application of the rule of statutory construction that the expression of one thing excludes all other things not expressed, expressio unius est exclusio alterius.  See, Bradley v. Dept. of Labor and Industries, 52 Wn. (2d) 780, 329 P. (2d) 196 (1958); State v. Thompson, 38 Wn. (2d) 774, 232 P. (2d) 87 (1951); See also, DeGrief v. Seattle, 50 Wn. (2d) 1, 297 P. (2d) 940 (1956).

            In an opinion written to the Honorable George E. Clark, Prosecuting Attorney, Yakima County, dated May 29, 1929 [[1929-30 OAG 251]], this office said:

            ". . . it seems to us that the fact that the legislature has deemed it necessary by express enactment to authorize the investment of certain funds in securities must be accepted as persuasive of an intent to prohibit the similar investment of any funds other than those expressly included in such legislation."

            The views expressed above are consistent with those found in a long line of opinions issued by this office: Letter written to Mr. T. M. Donahoe, Vice President, Coffman-Dobson Bank & Trust Co., Chehalis, Washington, dated November 25, 1919; AGO written to the State Finance Committee, dated August 9, 1937; AGO written to the Honorable Lloyd L. Wiehl, Prosecuting Attorney, Yakima County, dated January 30, 1939; AGO written to the Honorable Saul Haas, State Administrator, Treasury Department, War Savings Staff, Federal Office Building, Seattle, Washington, dated May 25, 1942; AGO written to the State Finance Committee, dated January 14, 1943; AGO written to the Honorable Charles T. Wright, Acting Prosecuting Attorney, Mason County, dated September 13, 1943; AGO written to the Honorable John T. Welsh, Prosecuting Attorney, Pacific County, dated July 17, 1945 [[1945-46 OAG 269]]; AGO written to the Honorable Reuben C. Youngquist, Prosecuting Attorney, Skagit County, dated April 28, 1948 [[1947-48 OAG 97c]]; [the last two opinions, written after the enactment of § 1, chapter 29, Laws of 1945 (RCW 28.51.120, supra,) recognize that idle building funds of a school district may be invested as directed by the legislative act]; AGO written to the Honorable W. A. Gissberg, State Senator, 39th District, dated August 21, 1958 (AGO 57-58 No. 216).

            In passing, it should be mentioned that we have not overlooked the possible application of § 1, chapter 32, Laws of 1939 (RCW  [[Orig. Op. Page 5]] 39.60.010) which reads as follows:

            "Notwithstanding the provisions of any other statute of the State of Washington to the contrary, it shall be lawful for the State of Washington and any of its departments, institutions and agencies, municipalities, districts, and any other political subdivision of the state, or any political or public corporation of the state, or for any insurance company, savings and loan association, or for any bank, trust company or other financial institution, operating under the laws of the State of Washington, or for any executor, administrator, guardian or conservator, trustee or other fiduciary to invest its funds or the moneys in its custody or possession, eligible for investment, in notes or bonds secured by mortgage which the Federal Housing Administrator has insured or has made a commitment to insure in obligations of national mortgage associations, in debentures issued by the Federal Housing Administrator, and in the bonds of the Home Owner's Loan Corporation, a corporation organized under and by virtue of the authority granted in H.R. 5240, designated as the Home Owner's Loan Act of 1933, passed by the Congress of the United States and approved June 13, 1933, and in bonds of any other corporation which is or hereafter may be created by the United States, as a governmental agency or instrumentality."  (Emphasis supplied.)

            We have never construed this statute as a general grant of power to public agencies to invest any and all of its funds not necessary for immediate expenditure in the securities listed.  See AGO 55-57 No. 107 [[to Prosecuting Attorney, Snohomish County on June 28, 1955]]construing RCW 33.04.100.  It is our opinion that the legislature, 107 construing RCW 33.04.100.  It is our opinion that the legislature, by the passage of the act, merely intended to increase the number and types of securities in which public funds, otherwise made eligible for investment by other statutes, could be invested.

            Accordingly, we do not feel that RCW 39.60.010 provides the required statutory authority for the investing of general fund money of a school district.  If such authority is desired, enabling legislation should be submitted to the 1961 session of our legislature for consideration.

            It should also be noted that, in our consideration of your question, we reviewed our letter to the State Auditor, dated July 5, 1955, which some may contend expresses views contrary to the conclusions  [[Orig. Op. Page 6]] stated above.  Suffice it to say, in that opinion we did not specifically pass upon the question of whether general fund money of a school district could be invested in proper securities under existing law.  And, as stated herein, we specifically now hold that such funds may not be so invested.

            In closing, we should like to call your attention to the following statement found in the opinion of this office written to the Honorable Lloyd J. Wiehl, Prosecuting Attorney, Yakima County, dated January 30, 1939:

            "Considering the absence of any authorization in the statute for investment by the county treasurer and considering all his duties relative to the handling of public funds, it is our opinion that any investment he might make of public funds would be at his own personal risk and a risk which would make his sureties decidedly uncomfortable and result in a withdrawal from his bond."

            We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

ROBERT J. DORAN
Assistant Attorney General