DISTRICTS ‑- SCHOOLS ‑- FUNDS ‑- GENERAL ‑- BUILDING ‑- DISPOSITION OF PROCEEDS OF PRIVILEGE TAX COLLECTED BY PUBLIC UTILITY DISTRICT WHICH ARE DISTRIBUTED TO SCHOOL DISTRICTS ‑- COMPUTATION OF EQUALIZATION STATUS.
(1) The sums deposited to the credit of a school district under the authority of RCW 54.28.090 may become a part of the school district's general fund, building fund, or both.
(2) Payments received by school districts under RCW 54.28.090 may only be considered receipts for the purpose of RCW 28.41.080 if they are in fact deposited in the school district's general fund.
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January 22, 1964
Honorable Louis Bruno
State Superintendent of
Old Capitol Building
Cite as: AGO 63-64 No. 79
By letter previously acknowledged, you have requested an opinion of this office on the following questions:
(1) Under chapter 54.28 RCW, should that portion of the proceeds of theprivilege tax collected from public utility districts, which is distributed to school districts under the provisions of RCW 54.28.090, be placed in a district's general fund, building fund, or either fund?
(2) May the state superintendent of public instruction consider such funds as assets in computing the equalization status of a school district pursuant to the provisions of RCW 28.41.080?
We answer your questions as explained in the analysis.
Question No. 1
This office has recently had occasion to discuss at length the same questions in relation to themandatory payment required by RCW 54.28.080.1/ See, AGO 63-64 No. 48 [[to Superintendent of Public Instruction on August 13, 1963]]. In that opinion we concluded that [[Orig. Op. Page 2]] the payments required of a public utility district under RCW 54.28.080 were (1) for the purpose of making the payments on bonded indebtedness incurred for the construction of school plant projects, and (2) that these payments could not be considered receipts for the purpose of determining equalization under RCW 28.41.080. The opinion stressed the fact that everything which is used in the statutory formula for determining equalization payments under RCW 28.41.080 relates to maintenance and operation, and that the equalization payments themselves were to be used for maintenance and operation only. It was pointed out that equalization payments for school plant projects are provided for under a totally different statutory arrangement; chapter 28.47 RCW.
It follows from this reasoning that the uses to which the privilege tax, collected from the public utility district under the authority of chapter 54.28 RCW, may be put will determine the fund into which the payments may go, which in turn will determine whether or not the payments can be considered receipts for the purposes of RCW 28.41.080.
The legislative history of chapter 54.28 RCW sheds light on the uses to which the privilege tax collected under this chapter may be put. Chapter 1, Laws of 1931, authorized the establishment of public utility districts. Chapter 245, Laws of 1941, was the predecessor of several laws requiring the state tax commission to collect payments from public utility districts and to return the funds collected to county treasurers. The county treasurers, in turn, were to apportion funds to certain taxing districts, including school districts. The 1941 law went on to say:
". . . all money received by a school district shall be expended exclusively for maintenance and operation of the public schools . . ." (Section 2 (d), chapter 245, Laws of 1941.)
This limitation was repeated when the statute was first amended. Section 2 (d), chapter 259, Laws of 1947. But two years later this language was modified to read as follows:
". . . all money received by a school district shall be expended exclusively for the public schools . . ." (Section 2 (d), chapter 227, Laws of 1949.)
A major amendment was made in 1957. The legislature made it the duty of the tax commission to instruct the state treasurer to return [[Orig. Op. Page 3]] funds to certain counties and then went on to enact these new provisions:
"The county commissioners of each county shall direct the county treasurer to deposit funds to the credit of each taxing district in the county according to the manner they deem most equitable; except not less than thirty-five percent of all moneys so received shall be apportioned to the school districts . . .
"All moneys received by any taxing district shall be used for the purposes for which state taxes may be used under the provisions of the state constitution." (Emphasis supplied.) (Sections 10, 11, chapter 278, Laws of 1957; RCW 54.28.090 and RCW 54.28.100.)
Amendment 14 of the Washington Constitution reads in part as follows:
". . . All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collectedfor public purposes only. . . ." (Emphasis supplied.)
This sequence of legislation reflects a continuing solicitude for the needs of school districts, coupled with a decreasing desire to specify how this particular type of funds must be spent. At first, the funds received by schools could only be spent for maintenance and operation. Now they can be used for any proper school purpose. Consequently, we conclude that the sums deposited to the credit of a school district under the authority of RCW 54.28.090 may become part of the school district's general fund, building fund, or both.
Question No. 2
In answer to your second question, we again refer you to AGO 63-64 No. 48, wherein we outlined at great length the state superintendent's duties relative to apportionment of state funds for equalization purposes. In part we said:
"Generally speaking, RCW 28.41.080 provides that the county superintendent shall compute the amount needed in each district in his county to [[Orig. Op. Page 4]] have a minimum revenue available in order to maintain the ordinary standards ofmaintenance and operation for that year. In so doing, the county superintendent uses the factors set out in subdivisions (1) and (2) of RCW 28.41.080,supra. He then also computes how much money (under our present law) an 8.6 mill levy will bring in each district. To this he adds any nonhigh payments due from the county high school fund to each district and 'such other receipts as the superintendent of public instruction shall determine in conformity with the intent of this section.' Then if the amount derived from subdivisions (1) and (2) is greater than the amount derived from the money to be received from the 8.6 mill levy, the nonhigh payments and the other receipts which may be included, the county superintendent certifies this deficit to the state superintendent and this deficit becomes the equalization payment for the district.
"It should be noted that we are dealing with 'equalization' in terms of state aid for 'maintenance and operation' and not 'equalization' for school plant projects, which is provided for in chapter 28.47 RCW. . . ."
As was previously noted above, we concluded that the payments received by a school district under RCW 54.28.080 were not to be included as receipts under the RCW 28.41.080 formula, since these payments could not legally be used for current maintenance and operation expenditures. However, the sums a school district receives from the privilege taxes paid under chapter 54.28 RCW may be used for any proper school purpose as was pointed out in answer to question No. 1 above. Since they may be used for either current operations or capital outlay, they may or may not be considered as receipts for the purposes of RCW 28.41.080, depending upon the fund in which these moneys are deposited.
In summary, it is our conclusion that the payments received by a school district under RCW 54.28.090 may go into the district's general fund, building fund, or both, but may only be considered receipts for the purposes of RCW 28.41.080, if they are deposited in the school district's general fund.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
BRUCE W. COHOE
Assistant Attorney General
*** FOOTNOTES ***
1/This is a payment separate and distinct from the privilege tax which is the subject of our present opinion.