Can a Texas community college borrow money against its delinquent maintenance taxes to fix up an old building on campus?

Plain-English summary

St. Philip's College, part of the Alamo Community College District in San Antonio, wanted to fix up some historic buildings on its campus. The Commissioner of the Texas Higher Education Coordinating Board asked the Attorney General whether the college could pay for that by borrowing money under section 20.45 of the Education Code, a statute that lets a school district pledge its unpaid (delinquent) local maintenance taxes as collateral for a loan.

The opinion split the question in two. The first issue was whether a junior college district could use section 20.45 at all, since the statute by its words speaks only of "the board of trustees of any school district of Texas," not community colleges. The Attorney General said yes. A separate provision, section 130.084, says junior college trustees are governed by the general law that applies to independent school districts, to the extent that law fits. The Texas Supreme Court had treated junior college districts as "school districts" for purposes of ad valorem taxation (Shepherd v. San Jacinto Junior College District), and earlier AG opinions had extended several school-district financing powers to junior colleges through section 130.084. So the borrowing authority in section 20.45 reached the Alamo Community College District.

The second issue was what the borrowed money could pay for. Section 20.45 says the funds may be used "for any legal maintenance expenditure or purpose of the district." The Commissioner argued that should be read as "any legal maintenance expenditure or [any legal] purpose," which would free the money for capital work like building rehabilitation. The Attorney General disagreed. Texas courts had long held that "maintenance" of schools means current operating expenses, not capital expenditures such as constructing or rehabilitating buildings (Madeley v. Conroe Independent School District; Love v. Rockwall Independent School District). The statute's 1953 emergency clause confirmed the point: the legislature passed it to keep schools running day-to-day when delinquent taxes threatened to force them to close mid-year, not to fund long-term building projects. The conclusion: a section 20.45 loan could be used only for maintenance purposes, so the district could not borrow under it to rehabilitate the historic buildings at St. Philip's College.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Education Code provisions cited here (former sections 20.45, 130.084, 20.43, and related sections) were recodified and renumbered when the Education Code was later rewritten, so the section numbers in this opinion no longer match current law; confirm the current provisions before relying on anything described here.

Background and statutory framework

Section 20.45 of the Education Code authorized the board of trustees of any school district to pledge its delinquent school taxes levied for local maintenance purposes for specific school years as security for a loan, with the pledged delinquent taxes applied against the loan's principal and interest as collected. The statute barred pledging delinquent taxes levied for school bonds, allowed the loan funds to be employed "for any legal maintenance expenditure or purpose of the school district," and capped the interest rate by reference to section 2(a) of article 717k-2, V.T.C.S. The opinion noted in a footnote that no judicial decision had addressed the constitutionality of section 20.45, but that Allen v. Channelview Independent School District, 347 S.W.2d 27 (Tex. Civ. App.—Waco 1961, writ ref'd), had upheld a similar statute (former V.T.C.S. article 2790, then section 20.43, authorizing time warrants), observing that the Texas Constitution limits deficit financing by cities and counties but not by school districts.

On the first question, the opinion started from the text: section 20.45 applies expressly only to the "board of trustees of any school district of Texas" and does not mention community college districts. But section 130.084 provided that junior college trustees "shall be governed in the establishment, management and control of the junior college by the general law governing the establishment, management and control of independent school districts insofar as the general law is applicable." In San Antonio Union Junior College District v. Daniel, 206 S.W.2d 995 (Tex. 1947), the Supreme Court had read the predecessor of section 130.084 narrowly, holding it did not give junior college districts the independent school districts' authority to issue refunding bonds, because that power had to be expressly conferred by statute and the predecessor statute spoke to the trustees' authority over the college rather than the district. The opinion treated those limits as narrow. In Shepherd v. San Jacinto Junior College District, 363 S.W.2d 742 (Tex. 1962), the Supreme Court had held that junior college districts are "school districts" within the ad valorem taxation provision of article VII, section 3 of the Texas Constitution, which supported applying school-district taxation provisions to junior colleges through section 130.084. Several attorney general opinions had likewise extended school-district financing authority to junior colleges under section 130.084: the authority to spend local maintenance funds under section 28.48 (Attorney General Opinion WW-892 (1960)), the right of eminent domain under section 23.31 (Attorney General Opinion M-700 (1970)), and the authority of section 20.43 to issue time warrants to repair, renovate, and equip school buildings (Attorney General Opinion M-878 (1971)). The opinion concluded the Alamo Community College District could borrow money secured by delinquent maintenance tax revenues under section 20.45.

On the second question, the opinion construed the phrase "for any legal maintenance expenditure or purpose of the district." Under article VII, section 3 of the Texas Constitution, the legislature may authorize school districts to levy an ad valorem tax both for maintenance of public free schools and for the erection and equipment of school buildings, but the legislature has traditionally treated maintenance taxes and building taxes as separate taxes, each requiring separate voter approval and each usable only for its own purpose (citing, among others, Madeley v. Trustees of Conroe Independent School District, 130 S.W.2d 929 (Tex. Civ. App.—Beaumont 1939, writ dism'd, judgm't cor.); Attorney General Opinion H-339 (1974)). Madeley held that "maintenance" of schools did not include the construction of school houses, and Love v. Rockwall Independent School District, 194 S.W. 659 (Tex. Civ. App.—Dallas 1917, writ ref'd), and other authority confirmed that "maintenance" means current operating expenses and does not include capital expenditures. Reading section 20.45 as a whole, including its emergency clause (which the opinion could consider as an aid to legislative intent under Government Code § 311.023(7)), the opinion found the legislature meant to provide a funding source for day-to-day school operations, not long-term capital projects. The 1953 emergency clause described school districts with delinquent taxes large enough to threaten closing the schools after seven or eight months unless their boards could pledge those taxes to complete a nine-month term. Because the problem arose from delinquent taxes "levied for local maintenance purposes," the legislature would require the loan funds to be used for that same purpose. The opinion concluded that the proceeds of a section 20.45 loan may be used only for the maintenance purposes of a school or junior college district, so if rehabilitating the historic buildings fell outside the traditional limits on maintenance funds (as the Commissioner's brief suggested), the district could not use a section 20.45 loan for that work.

Common questions

Can a Texas community college borrow against its unpaid maintenance taxes?
The opinion concluded that a junior college district had the same authority as an independent school district, under section 20.45 of the Education Code, to pledge its delinquent local-maintenance taxes as security for a loan. That authority reached junior colleges through section 130.084, which governs junior college trustees by the general law applicable to independent school districts.

Could the college use that loan to renovate historic buildings?
No. The opinion concluded that loan proceeds under section 20.45 could be used only for the maintenance purposes of the district, which Texas courts had defined as current operating expenses rather than capital expenditures. Rehabilitating buildings is a capital project, so a section 20.45 loan could not pay for it.

Why does the difference between "maintenance" and "construction" matter here?
Because section 20.45 ties the loan to delinquent taxes "levied for local maintenance purposes" and limits the proceeds to maintenance expenditures. Texas case law (Madeley, Love) treated maintenance and building taxes as separate funds, each usable only for its own purpose, so maintenance-tax-backed money could not be redirected to a building project.

What did the opinion rely on to read the statute that narrowly?
The opinion read section 20.45 as a whole, including its 1953 emergency clause. That clause explained the law was passed to keep schools operating day-to-day when delinquent taxes threatened a mid-year closure, which signaled the legislature was funding operations, not long-term capital work.

Citations

• Education Code § 20.45 (delinquent maintenance tax pledge); § 20.43 (time warrants)
• Education Code § 130.084 (junior college trustees governed by general school-district law); § 130.122(a) (ad valorem taxes for junior college maintenance)
• Education Code § 28.48; § 23.31; §§ 20.02, 20.04
• Tex. Const. art. VII, § 3 (school-district ad valorem taxation)
• Government Code § 311.023(7) (emergency clause as aid to legislative intent)
• Article 717k-2, V.T.C.S., § 2(a) (maximum interest rate)
• Allen v. Channelview Independent School District, 347 S.W.2d 27 (Tex. Civ. App.—Waco 1961, writ ref'd)
• Texas Antiquities Committee v. Dallas County Community College District, 554 S.W.2d 924 (Tex. 1977)
• San Antonio Union Junior College District v. Daniel, 206 S.W.2d 995 (Tex. 1947)
• Shepherd v. San Jacinto Junior College District, 363 S.W.2d 742 (Tex. 1962)
• Madeley v. Trustees of Conroe Independent School District, 130 S.W.2d 929 (Tex. Civ. App.—Beaumont 1939, writ dism'd, judgm't cor.)
• Love v. Rockwall Independent School District, 194 S.W. 659 (Tex. Civ. App.—Dallas 1917, writ ref'd)
• Stanford v. State Department of Highways & Public Transportation, 635 S.W.2d 581 (Tex. App.—Dallas 1982, writ ref'd n.r.e.)
• People ex rel. Rogers v. Chicago, 107 N.E. 222 (Ill. 1914)
• Attorney General Opinions WW-892 (1960), M-700 (1970), M-878 (1971), H-339 (1974)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0178
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1992/dm0178.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; garbled case names were verified against the official reporters. The linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

November 10, 1992

Mr. Kenneth H. Ashworth
Commissioner
Texas Higher Education Coordinating Board
P. O. Box 12788
Austin, Texas 78711

Opinion No. DM-178

Re: Whether a junior college may borrow money to rehabilitate a historic building under section 20.45 of the Education Code (RQ-79)

Dear Commissioner Ashworth:

You ask whether St. Philip's College, a branch of the Alamo Community College District, has authority under section 20.45 of the Education Code to borrow money to rehabilitate historic buildings. This provision states as follows:

The board of trustees of any school district of Texas is hereby authorized to pledge its delinquent school taxes levied for local maintenance purposes for specific school years as security for a loan, and such delinquent taxes pledged shall be applied against the principal and interest of the loan as they are collected. Provided, there shall be no pledging of delinquent taxes levied for school bonds for purposes herein set out. Funds secured through such loans may be employed for any legal maintenance expenditure or purpose of the school district. Provided further, that such loans may bear interest at a rate not to exceed the maximum rate provided by . . . [section 2(a) of article 717k-2, V.T.C.S.].

Educ. Code § 20.45.[1]

[1] There is no judicial decision addressing the constitutionality of section 20.45 of the Education Code, but the court in Allen v. Channelview Indep. Sch. Dist., 347 S.W.2d 27 (Tex. Civ. App.—Waco 1961, writ ref'd) addressed a similar statute, formerly V.T.C.S. article 2790, now section 20.43 of the Education Code. Section 20.43 authorizes school districts to issue time warrants for specified purposes, payable out of any funds available at maturity, and "in effect, pledges delinquent taxes (except bond taxes), penalties and interest to payment of outstanding warrants." 347 S.W.2d at 28. The Texas Constitution places limits on deficit financing by cities and counties, see Tex. Const. art. XI, §§ 5, 7, but does not place such limits on school districts. 347 S.W.2d at 29 n.1. The Allen court found that former article 2790 did not violate article VII, section 3 of the Texas Constitution, the constitutional provision relating to school financing.

Your specific question is as follows:

Does Tex. Educ. Code § 20.45 apply to St. Philip's College, permitting it to pledge delinquent school taxes levied for local maintenance purposes as security for a loan, the proceeds of which will be used to rehabilitate historic buildings on the college campus?

We assume for purposes of this opinion that rehabilitating the buildings will serve the educational purposes of the junior college district. See Texas Antiquities Committee v. Dallas County Community College Dist., 554 S.W.2d 924, 930-31 (Tex. 1977).

We first must decide whether the board of trustees of a junior college district may borrow money under the authority of section 20.45 of the Education Code. Section 20.45 expressly applies only to the "board of trustees of any school district of Texas," and does not refer to the board of trustees of a community college district. Educ. Code § 20.45 (emphasis added). However, section 130.084 of the Education Code provides as follows:

The board of trustees of junior college districts shall be governed in the establishment, management and control of the junior college by the general law governing the establishment, management and control of independent school districts insofar as the general law is applicable.

We must ascertain whether section 20.45 of the Education Code is a law "governing the establishment, management and control of independent school districts." In San Antonio Union Junior College Dist. v. Daniel, 206 S.W.2d 995 (Tex. 1947), the Texas Supreme Court considered whether section 5 of former article 2815h, V.T.C.S., the predecessor of section 130.084, authorized a junior college district to issue refunding bonds under a statute applicable to independent school districts. Junior college districts had express authority to issue bonds, but the statute was silent as to refunding bonds. The court concluded that V.T.C.S. article 2815h section 5 did not confer upon junior college districts the independent school districts' statutory authority to refund bonds. The provision, which consisted of the same wording as section 130.084 of the Education Code, was described as follows:

[T]he language is clearly limited to the authority of the trustees to direct the college and . . . it has no reference to their authority with respect to the district, which alone can issue bonds.

206 S.W.2d at 998 (emphasis in original).

The above description of the predecessor of section 130.084 is difficult to apply to other questions under that provision, because the board of trustees' authority with respect to the district often cannot be distinguished from its authority with respect to the colleges of the district. For example, ad valorem taxes are levied by the governing board of a junior college district for the purpose of maintaining the colleges. Educ. Code § 130.122(a). However, other reasoning in the San Antonio Union Junior College District opinion illuminates its remarks about the predecessor of section 130.084. The court cited both the long-standing opinion of the attorney general that junior college districts had no power to issue refunding bonds and the legislature's practice of expressly granting political subdivisions authority to issue refunding bonds. 206 S.W.2d at 998-1000. Since the power to issue refunding bonds had to be expressly conferred by statute on a governing body, that power could not be conferred on a junior college district by section 130.084, which does not expressly refer to refunding bonds.

The San Antonio Union Junior College District opinion indicates that there are limits to the school district powers that section 130.084 confers on junior college districts, but these appear to be narrow limits. Moreover, in Shepherd v. San Jacinto Junior College Dist., 363 S.W.2d 742 (Tex. 1962), the supreme court decided that junior college districts are "school districts" within the constitutional authorization for ad valorem taxation found in article VII, section 3 of the Texas Constitution. By finding that junior college districts are school districts for purposes of the constitutional provision on ad valorem taxation, the Shepherd case supports the conclusion that provisions on ad valorem taxation relating to independent school districts may apply to junior colleges through section 130.084 of the Education Code.

Although we have found no judicial decisions on section 130.084 subsequent to San Antonio Union Junior College District, several attorney general opinions have addressed this provision. This office has found that section 130.084 confers upon the governing board of a junior college district the authority of a school district to spend local maintenance funds pursuant to section 28.48 of the Education Code, Attorney General Opinion WW-892 (1960), and to exercise the right of eminent domain under section 23.31 of the Education Code, Attorney General Opinion M-700 (1970). Attorney General Opinion M-878 (1971) determined that section 20.43 of the Education Code, authorizing school districts to issue time warrants to repair, renovate, and equip school buildings, applied to a junior college district under a predecessor of section 130.084. Accordingly, we conclude that the board of trustees of the Alamo Community College District may borrow money secured by delinquent maintenance tax revenues pursuant to section 20.45 of the Education Code.

We finally consider whether the purposes for which a loan secured under section 20.45 may be used include the rehabilitation of a historic building. Section 20.45 allows the district to pledge taxes levied for local maintenance purposes and to use funds secured through the pledge "for any legal maintenance expenditure or purpose of the district." This language appears to restrict the loan funds to expenditures for maintenance purposes, but you argue that section 20.45 should be read to say that funds secured thereunder may be used "for any legal maintenance expenditure or [legal] purpose of the district." According to your construction, funds secured under section 20.45 may be used for any legal purpose of the junior college district, and are not subject to the statutory limits applicable to revenue collected for maintenance purposes.

Pursuant to constitutional authorization, the legislature may authorize school districts to levy and collect an ad valorem tax "for the further maintenance of public free schools, and for the erection and equipment of school buildings . . . ." Tex. Const. art. VII, § 3; see Shepherd, 363 S.W.2d 742. Although the constitution appears to refer to a single tax to be voted for maintenance and school building purposes, the legislature has traditionally treated taxes for maintenance and taxes for school building purposes as separate taxes, each requiring separate voter approval, and each to be used only for the purpose for which it was collected. Educ. Code §§ 20.02, 20.04, 130.122; Madeley v. Trustees of Conroe Indep. Sch. Dist., 130 S.W.2d 929 (Tex. Civ. App.—Beaumont 1939, writ dism'd, judgm't cor.); Attorney General Opinion H-339 (1974); 2 G. BRADEN, THE CONSTITUTION OF THE STATE OF TEXAS: AN ANNOTATED AND COMPARATIVE ANALYSIS 518 (1977). In Madeley, 130 S.W.2d 929, the court construed two statutes that respectively authorized school districts to levy and collect taxes and described the purposes for which the taxes could be spent. The court stated as follows:

The trustees of an independent school district by these two articles are given the power (a) to levy and collect a local tax for the maintenance of the district public free school, and (b) to levy and collect a tax "for the purchase, construction, repair or equipment of public free school buildings within the limits of such district."

130 S.W.2d at 933 (emphasis added).

Madeley concluded that the term "maintenance" of schools did not include the construction of school houses. Madeley, 130 S.W.2d at 934; see also Love v. Rockwall Indep. Sch. Dist., 194 S.W. 659 (Tex. Civ. App.—Dallas 1917, writ ref'd). "[M]aintenance" means current operating expenses and does not include capital expenditures." G. BRADEN, id. (citing Madeley, 130 S.W.2d at 929 and Love, 194 S.W. 659); see Stanford v. State Dep't of Highways & Pub. Transp., 635 S.W.2d 581 (Tex. App.—Dallas 1982, writ ref'd n.r.e.) (maintenance of highways as that which is required to preserve highway as originally constructed); People ex rel. Rogers v. Chicago, 107 N.E. 222 (Ill. 1914) ("maintenance" may include ordinary repairs).

On reading article 20.45 as a whole, including its emergency clause, we conclude that a loan secured under its provisions may be used only for maintenance purposes of the district. See Gov't Code § 311.023(7) (a court may consider the emergency clause of a statute as an aid to ascertaining legislative intent). Article 20.45 of the Education Code was adopted with the following emergency clause:

The fact that there are school districts with outstanding delinquent taxes sufficient to impair the operation of their current school program and that some of these districts will be forced to close after seven or eight months of school unless their boards of trustees can pledge delinquent taxes for loans to permit the completion of a nine months school term, creates an emergency. . . .

Acts 1953, 53d Leg., ch. 132, § 2, at 446 (emphasis added).

The emergency clause indicates that the legislature wished to provide a funding source for the day-to-day operation of schools and not for long-term capital projects such as constructing or rehabilitating buildings. Moreover, since the problem addressed by the legislature in article 20.45 resulted from outstanding delinquent taxes "levied for local maintenance purposes," it reasonably follows that the legislature would require loan funds secured under the statute to be used for the same purpose as the missing taxes. We conclude that the proceeds of a loan secured under article 20.45 of the Education Code may be used only for maintenance purposes of a school district.

We have no information about the extent of the repairs necessary to rehabilitate the historic buildings on the campus of St. Philip's College; however, your brief suggests that funds subject to the traditional limits on maintenance funds could not be used for the proposed project. If the implication of your brief is correct, then the proceeds of a loan secured under article 20.45 of the Education Code may not be used to rehabilitate historic buildings on the campus of St. Philip's College.

SUMMARY

The governing body of a junior college has the authority of an independent school district under section 20.45 of the Education Code to pledge its delinquent local maintenance taxes as security for a loan. Loan proceeds secured under section 20.45 may be used only for maintenance purposes of a school district or junior college district. Accordingly, the Alamo Community College District may use funds secured through a loan under section 20.45 of the Education Code only for maintenance purposes of the junior college district.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General