Opinion 94 - 15
opinion represents the views of the Office of the State
Comptroller at the time it was rendered. The opinion may no
longer represent those views if, among other things, there have
been subsequent court cases or statutory amendments that bear on
the issues discussed in the opinion.
MUNICIPAL FUNDS -- Deposits and Investments (by school district of extraclassroom and
SCHOOL DISTRICTS -- Deposits and Investments (of extraclassroom and endowment moneys)
GENERAL MUNICIPAL LAW, §§11, 39; ESTATES, POWERS AND TRUSTS LAW,
§11-2.2; EDUCATION LAW, §1709(12), (12-a): Extraclassroom activity funds and endowment
funds, including donations made to a school district from private sources in the form of gift,
grant or bequest, the investment of which is not otherwise provided for by law, must be invested
by the school district in accordance with General Municipal Law, §11. Endowment moneys in
the form of a true trust are governed by the provisions of Estates, Powers and Trusts Law, §11-2.2. Whether particular provisions in the school district's investment policies, enacted pursuant
to General Municipal Law, §39, relate to endowment or extraclassroom funds must be
determined by local officials.
You ask whether extraclassroom activity funds and "endowment" moneys held by a
central school district are subject to the provisions of General Municipal Law, §11 pertaining to
the investment of funds by a local government. You also ask whether these moneys constitute
"district funds" as that term is used in the school district's investment policy. For purposes of
this opinion, we assume that your inquiry regarding "endowment" funds concerns donations
made to the school district from private sources for proper school district purposes (see
Education Law, §§1709,[12-a]; 3701).
General Municipal Law, §11, as amended by L 1992, ch 708, authorizes local
governments, including school districts, to invest "moneys" held in the custody of the chief fiscal
officer or other officer of the local government, and not required for immediate expenditure, in
special time deposit accounts in, or certificates of deposit issued by, a bank or trust company
located and authorized to do business in this State (see also Education Law, §§1604-a, 1723-a,
authorizing the district treasurer, or other officer having custody of district moneys, to invest
"moneys of the district" in the manner provided by section 11 of the General Municipal Law).
Such a time deposit account or certificate of deposit must be secured in the same manner as
provided for securing deposits of public funds in General Municipal Law, §10
(General Municipal Law, §11; see also Banking Law, §107-a). Section 11 also authorizes investments
in obligations of the United States of America, obligations guaranteed by agencies of the United
States of America where principal and interest are guaranteed by the United States of America,
obligations of the State of New York and, in certain circumstances, obligations of New York
State local governments. Section 11 does not apply, however, to moneys, the investment of
which is otherwise provided for by law (General Municipal Law, §11).
General Municipal Law, §11 does not prescribe a separate standard for the investment of
moneys which are initially obtained as donations from private sources by gift, grant or bequest.
Therefore, it is our opinion that such moneys generally are subject to General Municipal Law,
§11 (1967 Opns St Comp No. 67-217, unreported). However, since section 11 applies only to
moneys, the investment of which is not otherwise provided for by law, a gift, grant or bequest in
the form of a true trust would be governed by the investment provisions of the Estates, Powers
and Trust Law, §11-2.2, pertaining to the investment of trust funds (see 1986 Opns St Comp No.
86-49, p 80; 1981 Opns St Comp No. 81-393, p 431; Education Law, §3701). Section 11-2.2
generally prescribes a "prudent person" standard for investing trust funds.(1)
Pursuant to the authority of Education Law, §207, the Commissioner of Education has
enacted regulations which define extraclassroom activity funds as moneys received by an
organization within a school district whose activities are conducted by students and whose
financial support is raised other than by taxation or through charges of the board of education (8
NYCRR 172.1). The board of education is required to "direct that the moneys received from the
conduct, operation or maintenance of any extraclassroom activity be deposited with an official
designated by the board of education, who in such event shall be the treasurer of such
extraclassroom activity fund" (8 NYCRR 172.4). The board of education of each school district
having a population of less than one million and an educational program beyond the 6th grade is
required to make rules and regulations for the safekeeping, accounting and audit of all moneys
received (8 NYCRR 172.2). Based on these provisions, we have previously expressed the
opinion that extraclassroom activity funds are not "moneys of a school district" for purposes of
the investment provisions of the Education Law (23 Opns St Comp, 1967, p 716; 1967 Opns St
Comp No. 67-339, unreported; 1955 Opns St Comp No. 7812, unreported). General Municipal
Law, §11, as amended by L 1992, ch 708, however, is not limited to investments of "moneys of"
the local government, but rather generally authorizes local governments to invest "moneys not
required for immediate expenditure" held in the custody of the chief fiscal officer or other officer
of the local government (compare General Municipal Law, §11 prior to L 1992, ch 708, which
referred to the officer having custody of moneys "of such municipal corporation"). Accordingly,
in the absence of any other statute to the contrary, it is our opinion that extraclassroom activity
funds held in the custody of a school district treasurer must be invested in accordance with
General Municipal Law, §11.
We note that this conclusion is consistent with the primary purpose of the 1992
amendments to General Municipal Law, §11, which was to provide a uniform statute governing
the investment moneys held by local governments (see Office of the State Comptroller,
Memorandum to the Governor for chapter 708 of the Laws of 1992, July 30, 1992). Further, our
conclusion is consistent with the provisions of General Municipal Law, §39, also enacted by
chapter 708 of the Laws of 1992, which requires local governments to adopt comprehensive
investment policies regarding investing, monitoring and reports of "funds of the local
government". For purposes of section 39, "funds of the local government" includes "all moneys
and other financial resources available for investment by the local government on its own behalf
or on behalf of any other entity or individual" (emphasis added).
Finally, whether any particular provision in the school district's investment policy which
relates, by its terms, to "district funds", applies to endowment or extraclassroom activity funds,
depends on the meaning and intent of the provision. We believe that determination must be
made by the local officials responsible for the enactment and administration of the local policy.
Opn No. 67-339, 23 Opns St Comp, 1967, p 716 and Opn No. 7812 and other prior
opinions are hereby superseded to the extent inconsistent.
October 31, 1994
Beverly L. Ouderkirk, Superintendent of Schools
Valley Central School District
1. Note that Laws of 1994, Chapter 609, effective January 1, 1995, amended the Estates,
Powers and Trusts Law to add a new section 11-2.3 entitled "Prudent investor act" and amended