OFFICES AND OFFICERS ‑- COUNTY ‑- TREASURER ‑- SCHOOL DISTRICT OR OTHER MUNICIPAL FUNDS ‑- REFUNDING BOND ISSUE ‑- PROCEEDS IN CUSTODY OF TREASURER ‑- INVESTMENT FEE.
Where a school district or other municipal corporation issues and sells refunding bonds pursuant to chapter 138, Laws of 1965, Ex. Sess., and places the proceeds in the custody of its county treasurer for investment pending ultimate application to the purpose for which the bonds have been issued, the investment service fee provided by RCW 28.58.440 or RCW 39.29.020 is to be charged.
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January 17, 1966
Honorable C. W. "Red" Beck
State Representative, 23rd District
Route 5, Box 15
Port Orchard, Washington 98366
Cite as: AGO 65-66 No. 68
By letter previously acknowledged you have requested an opinion of this office on a question which we paraphrase as follows:
Where a school district or other municipal corporation issues and sells refunding bonds pursuant to chapter 138, Laws of 1965, Ex. Sess., and places the proceeds derived therefrom in the custody of its county treasurer for investment pending ultimate application to the purposes for which the bonds have been issued, is the investment service fee provided for by RCW 28.58.440 or RCW 36.29.020 applicable?
We answer your question in the affirmative for the reasons set forth in our analysis.
RCW 28.58.440 was originally enacted by § 1, chapter 123, Laws of 1961. As amended by § 1, chapter 111, Laws of 1965, it provides:
"The county treasurer, or the trustee, guardian, or any other custodian of any school fund shall, when authorized to do so by the board of directors of any school district, invest or reinvest any school funds of such district in savings or time [[Orig. Op. Page 2]] 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 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." (Emphasis supplied)
RCW 36.29.020, enacted by chapter 254, Laws of 1961 and amended by § 2, chapter 111, Laws of 1965,supra, contains an identical investment service fee provision covering the funds of other municipal corporations when invested by a county or other municipal corporation treasurer. In AGO 61-62 No. 69 [[to Cliff Yelle, State Auditor on October 3, 1961]], copy enclosed, we were asked whether this statutory investment service fee is now to be charged in the case of investments which a county or other municipal treasurer makes under authority of some statute other than either of these 1961 enactments.1/
[[Orig. Op. Page 3]]
We concluded the investment service fee is payable without regard to whether the particular investment was in fact made under authority of these 1961 acts ‑ so long as the particular statutory authority under which the investment was actually made does not contain a provision inconsistent with application of this statutory investment service fee.
This conclusion was, in essence, based upon a characterization of RCW 28.58.440 and RCW 36.29.020,supra, as general statutes which, according to a well-established rule of statutory construction, are to be subordinated to aspecial statute on the same subject only to the extent that the general statute and the special statute are inconsistent. See,State v. Houck, 32 Wn.2d 681, 203 P.2d 693 (1949); andLindsey v. Superior Court, 33 Wn.2d 94, 204 P.2d 482 (1949). In the latter case our court observed (33 Wn.2d at 102) that:
"It is universally accepted that inconsistency between statutes upon a given subject is never presumed, but such interpretation or construction should be adopted as will harmonize all acts upon the subject, if reasonably possible. Kruesel v. Collin, 171 Wash. 200, 17 P.2d 854; 1 Sutherland, Statutory Construction (3d ed.), 470, § 2015; 50 Am.Jur. 367, Statutes, § 363."
Against this background let us now proceed to examine the pertinent provisions of chapter 138, Laws of 1965, Ex. Sess. In brief, this act, known as the "Refunding Bond Act" (§ 1) was designed to permit the state, its agencies, institutions, political subdivisions, and municipal and quasimunicipal [[quasi-municipal]]corporations having an outstanding bonded indebtedness to take advantage of more favorable government bond interest rates that may have come into being since the time of issuance of certain of their bonds (see § 2). Authority is granted by § 3 of the act for the governing body of the public body in question to provide for issuance of refunding bonds under the following circumstances only:
". . . (1) in order to pay or discharge all or any part of such outstanding series or issue of bonds, including any interest thereon, in arrears or about to become due and for which sufficient funds are not available, or (2) in order to effect a saving to the public body. . . ."
Proceeds derived from sale of the refunding bonds are ultimately to be used to redeem the particular outstanding bond issue which the governing body of the issuing public body has determined to refund. However, the legislature recognized that in certain [[Orig. Op. Page 4]] cases, because of the intricacies of prevailing government bond interest rates, the requisite savings (§ 3,supra) to the public body might actually be effected through issuance of refunding bonds at a time somewhat prior to the date upon which the bonds to be refunded can legally be called and redeemed.
Therefore, the legislature made the following provision (§ 7, chapter 138, Laws of 1965, Ex. Sess.) for use of the proceeds derived from the sale of advance refunding bonds prior to their actual application for redemption purposes:
"Prior to the application of the proceeds derived from the sale of advance refunding bonds to the purposes for which such bonds shall have been issued, such proceeds, together with any other funds the governing body may set aside for the payment of the bonds to be refunded, may be invested and reinvested only in direct obligations of the United States of America maturing or having guaranteed redemption prices at the option of the holder at such time or times as may be required to provide funds sufficient to pay principal, interest and redemption premiums, if any, in accordance with the advance refunding plan. To the extent incidental expenses have been capitalized, such bond proceeds may be used to defray such expenses."
Your question relates to the investment of refunding bond proceeds when such have been placed in the custody of a county treasurer. Repeated for ease of reference your inquiry, as paraphrased, is as follows:
Where a school district or other municipal corporation issues and sells refunding bonds pursuant to chapter 138, Laws of 1965, Ex. Sess., and places the proceeds derived therefrom in the custody of its county treasurer for investment pending ultimate application to the purposes for which the bonds have been issued is the investment service fee provided for by RCW 28.58.440 or RCW 36.29.020 applicable?
On the basis of the analytical approach which we have summarily outlined above, and in more detail in AGO 61-62 No. 69, supra, we answer your question in the affirmative. We conclude that where the investment of refunding bond proceeds, as authorized by § 7, chapter 138, Laws of 1965, Ex. Sess., supra, is made by a county or other municipal corporation treasurer the investment service fee provided for by RCW 28.58.440 and RCW 36.29.020, supra, is to be [[Orig. Op. Page 5]] charged.2/ This is simply because nothing contained in § 7, supra, of the Refunding Bond Act is inconsistent with these earlier general provisions. Accord, AGO 61-62 No. 69,supra.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
PHILIP H. AUSTIN
Assistant Attorney General
*** FOOTNOTES ***
1/Specifically, we were considering school district building fund investments made under authority of § 1, chapter 29, Laws of 1945 (cf., RCW 28.51.120); however, our reasoning and conclusion would be equally applicable to other school district or municipal funds invested by a county or other municipal treasurer under authority of some "special" statute.
2/Notably we do not at this time pass upon whether the investment service fee is to be charged where refunding bond proceeds are placed with a custodian other than the county or other municipal treasurer by contract as permitted by § 8 of the Refunding Bond Act. This issue is beyond the scope of your question.