STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

June 24, 1973
Senator Rodney Hall
Fulton, South Dakota 57340

OFFICIAL OPINION NO. 73-22

Capitol outlay expenditures for fixed assets and equipment.

Dear Senator Hall:

You have stated that Chapter 91, Session Laws 1973 (House Bill 846) amended SDCL 13-16-6, effective July 1, 1973 to read as follows:

The capital outlay fund of the school district is a fund provided by law to meet expenditures which result in the acquisition of fixed assets or additions to fixed assets. Such an expenditure shall be for land, existing buildings, improvement of grounds, construction of buildings, additions to buildings, remodeling of buildings, or for the purchase of equipment. It may also be used for installment: payments for the purchase of fixed assets, 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.

Prior to this amendment this specific statute provided that the capital outlay fund must be used for all expenditures which resulted in the acquisitions of fixed assets and initial or additional equipment.

Your specific request for an opinion relates to the change of the wording for the purchasing of equipment in that prior to the amendment the statute provides for "…initial or additional equipment… " to read after the amendment "…for the purchase of equipment…"

You have requested an opinion on the following specific question:

After July 1, 1973 what equipment may be purchased from the capital outlay funds that was previously ineligible?

This specific statute prior to the amendment and subsequent to the amendment authorizes the purchase of fixed assets. The South Dakota Dictionary of Educational Terms for Elementary and Secondary Education, Bulletin 10-4 (1970) approved by the State Board of Education defines fixed assets as follows:

Land, buildings, machinery, furniture and other equipment which the school district intends to hold or continue to use over a long period of time. "Fixed" denotes probability or intent to continue use or possession, and does not indicate immobility of an asset.

This dictionary also defines equipment as follows:

A material item of a nonexpendable nature, such as built-in facility, a moveable or fixed unit of furniture or furnishings, an instrument or apparatus, a machine (including attachments), an instructional skill-training device, or a set of small articles, whose parts are replaceable or repairable, the whole retaining its identity and utility over a period of time which is characteristic of, and definable for, items of its class.

It is my opinion that any expenditure which meets the above definition of fixed assets and equipment constitutes a valid expenditure from the capital outlay fund and that the statute is no longer limited to the initial or additional purchase of equipment. There are some statutory limitations, in that SDCL 13-16-7 sets an annual levy limitation of 5 mills and Section 2 of Chapter 91, Session Laws 1973 (House Bill 846) added additional limitations On the amount of installment contracts that may be entered into.

Respectfully submitted,

Kermit A. Sande
Attorney General