DISTRICTS ‑- SCHOOLS ‑- FUNDS ‑- INTERFUND TRANSFERS OF FEDERAL FOREST FUNDS BY SCHOOL DISTRICTS
The provisions of RCW 43.09.210 do not prohibit a school district from transferring to its general operating fund certain federal forest funds initially placed in the district's capital projects fund by the school board but not appropriated by the board for a capital projects purpose.
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July 31, 1985
Honorable Robert K. Leick
County of Skamania
Stevenson, Washington 98648
Cite as: AGO 1985 No. 12
By recent letter you advised that, at some time in the past, a certain school district in your county received federal forest funds in excess of the district's current needs. Therefore, by resolution, it placed a portion of those funds in the school district's capital projects (building) fund. Now, however, the district desires to transfer those moneys from the capital projects fund to its general operating fund. You thus asked whether the provisions of RCW 43.09.210 (quoted below) would prevent the district from doing so.
We answer in the negative for the reasons set forth below.
The full text of RCW 43.09.210 reads as follows:
"Separate accounts shall be kept for every appropriation or fund of a taxing or legislative body showing date and manner of each payment made therefrom, the name, address, and vocation of each person, organization, corporation, or association to whom paid, and for what purpose paid.
"Separate accounts shall be kept for each department, public improvement, undertaking, institution, and public [[Orig. Op. Page 2]] service industry under the jurisdiction of every taxing body.
"All service rendered by, or property transferred from, one department, public improvement, undertaking, institution, or public service industry to another, shall be paid for at its true and full value by the department, public improvement, undertaking, institution, or public service industry receiving the same, and no department, public improvement, undertaking, institution, or public service industry shall benefit in any financial manner whatever by an appropriation or fund made for the support of another.
"All unexpended balances of appropriations shall be transferred to the fund from which appropriated, whenever the account with an appropriation is closed."
This statute, originally enacted by § 3, chapter 76, Laws of 1909, has two apparent purposes which are, to some extent, related to each other. First, in those instances where a constitutional or statutory provision requires that particular funds be segregated for a particular use the legislature evidently intended to keep public officials from undercutting the constitutional or statutory scheme by gratuitously transferring money out of the dedicated fund (or account) or by manipulating interfund transactions (e.g., requiring the dedicated fund to pay inflated values to other funds for equipment or services) so as to accomplish the same result. And secondly, the statute also serves as a budget and accounting control. Thus, where a public agency has budgeted money into a particular fund the statute operates to prevent its unauthorized (i.e., without a budget amendment) transfer of that money to some other fund.
In the instant case, however, we are not dealing with constitutionally or statutorily earmarked funds. Instead, as we understand it, federal forest funds are legally available for use by a school district for either capital projects or current maintenance and operation at the discretion of the particular school board which receives them. In turn, the mere placement of the monies in the district's capital projects fund did not constitute an appropriation thereof for school district building projects. Rather, any such appropriation would have to appear in, and be made by, a school district budget resolution.
[[Orig. Op. Page 3]]
In reviewing your question we have also considered the possible applicability of two prior opinions of this office, AGO 61-62 No. 29 and an earlier letter opinion cited therein‑-written on November 29, 1916 to the (then) Bureau of Inspection and Supervision. AGO 61-62 No. 29, however, dealt with interfund loans and not, as here, with a permanent transfer of non-earmarked monies from one fund to another. Moreover, it only covered such funds as are not transferable without limitation.
And for the same reason, the above noted 1916 letter opinion is likewise inapplicable in the instant case. There, we concluded that a city could not require its municipal utility to provide service free or at low cost to another utility, fund, or municipal department, and that the legislative authority of the city could not use the utility's funds to support other city functions. That conclusion, however, depended for its force upon the fact that the statutes governing municipal utilities required utility funds to be separately accounted for and specifically provided that certain city receipts go into those utility funds. But that, once again, is not the situation here.
Therefore, in conclusion, we do not believe the provisions of RCW 43.09.210,supra, would prohibit the subject school district from transferring those federal forest funds earlier placed in its capital projects fund to the school district general operating fund at this time. We thus answer your question in the negative.
We trust that the foregoing will be of assistance to you.
Very truly yours,
KENNETH O. EIKENBERRY
PHILIP H. AUSTIN
Senior Deputy Attorney General