STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

July 23, 1970

Dr. Gordon A. Diedtrich
State Superintendent
Department of Public Instruction

Pierre, South Dakota 57501

OFFICIAL OPINION NO. 70-34

SDCL 13-16-18; interest on investment out of capital outlay funds credited to such funds.

Dear Dr. Diedtrich:

You have requested our official opinion on the following statement of facts:

A school district issues and sells bonds for capital outlay fund purposes. At or before the issuing of such bonds the school board, pursuant to SDCL 13-16-10, provides for the collection of an annual tax sufficient to pay the interest and principal thereof, when due, for the entire term of years for which the bonds are to run. The proceeds of the sale of the bonds are deposited in the capital outlay fund. See 13-16-8. Such proceeds are not immediately needed to pay the contractor for the authorized, capital outlay facility to be constructed, and therefore are invested as provided for in 13-16-18.

The question presented is:

To what fund should the interest received from such investment be credited?

SDCL 13-16-18 provides with respect to pertinent parts as follows:

All accumulations in all school district funds shall be deposited in lawful depositories in checking accounts, savings accounts, or time deposits, or invested, except as hereinafter limited, in bonds or registered warrants of the school district making such investment, or bonds issued by the United States Government. The interest accruing on such investment shall be credited to the respective fund. (Emphasis added)

I can give no other meaning to the words "respective fund" as used in the above statute except to mean capital outlay fund as applied to the above statement of facts.

It is argued that because the bonds have been sold and are bearing interest, that the interest accumulation from the investment out of the capital outlay fund should be used to retire the bonds. This is not what the statute says and might be a proper matter to take up with the Legislature.

It is my opinion that interest earned on capital outlay fund investments must be credited to the capital outlay fund under this statute.

Respectfully submitted,

Gordon Mydland
Attorney General