April 15, 1977

Mr. Michael B. Crew, Counsel 
Board of Education of Vermillion
  Independent School District No. 5 
Vermillion, South Dakota 57069

Official Opinion No. 77-30

Whether the school district's capital outlay fund may be used to make “Sublease Agreement” payments

Dear Mr. Crew:

On behalf of the Board of Education, you have requested our opinion on the following question:

QUESTION: 

Is the Vermillion School District permitted to make the $30,000 annual payments which are provided for in the attached draft of a “Sublease Agreement,” out of the School District's capital outlay fund?

SDCL 13-16-6 provides: 
    
The capital outlay fund of the school district is a fund provided by law to meet expenditures which result in the acquisition of or additions to real property, plant, or equipment.  Such an expenditure shall be for land, existing facilities, improvement of grounds, construction of facilities, additions to facilities, remodeling of facilities, or for the purchase of equipment.  It may also be used for installment payments for the purchase of real property, plant or equipment, which have a contracted terminal date not exceeding ten years from the date of the contract agreement and the total accumulated unpaid principal balances of such contracts shall not exceed three per cent of the assessed valuation.  The school district shall provide a sufficient levy each year under the provisions of § 13-16-7 to meet the annual installment payments, including interest, of such contract agreements.

SDCL 13-16-9 provides:
    
Money can be expended from the capital outlay fund only for the purposes defined in § 13-16-6 and for the redemption of outstanding warrants against this fund.

In my opinion the answer to the question you asked is no.  The provisions of the above-cited statutes appear to me to require capital outlay funds to be used for only those purposes as specified in § 13-16-6.  Nowhere in the purpose there enumerated do I find any authority to use capital outlay funds for leasing a portion of a facility such as the Dakota Dome.

Respectfully submitted,

William J. Janklow
Attorney General

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