No. 92-06 AG Alpha No. TR TR AGASI - July 8, 1992

Topic
Insuring the Public School Permanent Fund

Summary
The Public School Permanent Fund does not qualify for separate federal insurance as the result of the Treasury being trustee of the Fund.


FORMAL
OPINION

of

GALE A. NORTON
Attorney General

No. 92-6

AG Alpha No. TR TR AGASI

July 8, 1992

Honorable Gail Schoettler
Colorado State Treasurer
State of Colorado
Department of the Treasury
Room 104, State Capitol Building
Denver, Colorado 80203

 

RE: Insuring the Public School Permanent Fund

Dear Ms. Schoettler:

This opinion letter responds to your inquiry about the extent to which Public School Permanent Fund moneys qualify for separate insurance by the federal government.

 

QUESTION PRESENTED AND CONCLUSION

Does the Treasurer's status as trustee of the Public School Permanent Fund qualify it for separate federal insurance under 12 C.F.R. Section 330.6(1)?

 

No.

 

ANALYSIS

Colo. Const. art. IX, Section 3 requires the Treasurer, as custodian of the Public School Permanent Fund (Fund), to keep the Fund forever "inviolate and intact," with the interest, only, expended in the maintenance of state schools. The money in the Fund is held in trust. People ex rel. Dunbar v. City of Littleton, 183 Colo. 195, 515 P.2d 1121, 1122 (1973).

This office has concluded in prior opinions that the Fund does not qualify for separate insurance because it is not a "public unit" under 12 U.S.C. Section 1813(m) (1991) and 12 C.F.R. Section 330.8 (1990).FN1 Your current inquiry is, however, triggered by the recently enacted Federal Deposit Insurance Corporation ("FDIC") Rules and Regulations, 12 C.F.R. 330.6(a) (4/30/90), which states that:

 

Funds owned by a principal ... and deposited into one or more deposit accounts in the name of a custodian ... shall be insured to the same extent as if deposited in the name of the principal.

This provision does not alter the law. As we concluded previously in our 1978 opinion, the State Fund, not qualifying as a public unit, is aggregated with other State funds deposited by the Treasurer, with total coverage of all such aggregated funds being $100,000.

There is specific statutory guidance on the question. 12 C.F.R. 330.6(a) addresses FDIC coverage of trust funds generally, but 12 U.S.C. Section 1817(i) (1991) provides for specific treatment of trust funds owned by public units referred to in 12 U.S.C. Section 1821(a)(2) (1991).FN2 12 U.S.C. Section 1817(i) (1991) sets forth the general rule for determining the amount of insurance for trust funds "[e]xcept with respect to trust funds which are owned by a depositor referred to in ... [12 U.S.C. Section 1821(a)(2)]." Section Section 1821(a) is concerned with and is headed, inter alia, "... insurance of public funds; aggregate amount of public funds...." Subsection (a)(2)(A) then sets forth the various public entities which are entitled to insurance in the amount of $100,000 per account. As expressed in the April 1978 opinion, the Public School Permanent Fund does not fit into any of these categories of public funds, but rather is aggregated with all other public funds where there is no custodial control over expenditures.

Moreover, the fund is not a "public unit" pursuant to Section 1821(a)(2)(A). There is nothing in the statutory scheme which permits an account not qualifying as a public unit to separate insurance through an alternative classification as a trust fund. Accordingly, the statutory scheme does not permit the public unit trust funds to receive more than the coverage extended to any other public unit accounts.

 

SUMMARY

The Public School Permanent Fund does not qualify for separate federal insurance as the result of the Treasurer being trustee of the Fund.

Sincerely,

GALE A. NORTON
Attorney General

GAN:16532;tm

AG Alpha No. TR TR AGASI
AG File No. OLS9201779.ASI
PUBLIC FUNDS
INSURANCE
BANKS AND BANKING

Colo. Const. art. IX, Section 3

12 C.F.R. Section 330.8 (1/1/90)

12 U.S.C. Section 1813(m) (1991)

12 U.S.C. Section 1817(i) (1991)

12 U.S.C. Section 1821(a)(2) (1991)

FDIC Rules and Regulations 330.6(a) (4/30/90)

Treasury, Dept. of

Public School Permanent Fund does not qualify for separate insurance as the result of the Treasurer being trustee of the Fund.

 



FOOTNOTES

FN1 See attached Informal Attorney General's Opinion, dated April 10, 1978.

FN2 A specific statute controls over a general statute, and if they are capable of co-existence it is the duty of the courts to regard each as effective. Pitzak v. Office of Personnel Management, 710 F.2d 1476 (10th Cir. 1983). See also United States. v. Prescon Corp., 695 F.2d 1236 (10th Cir. 1983) (a specific provision will govern notwithstanding the fact that a general provision, standing alone, may include the same subject matter).

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