Request By:
Mr. Wayland Johnston
Superintendent
Cloverport Community Schools
P.O. Box 217
Cloverport, Kentucky 40111
Opinion
Opinion By: Steven L. Beshear, Attorney General; Carl Miller, Assistant Attorney General
You have requested an advisory opinion of the Attorney General on -
"The acceptability of a Board of Education depositing federal monies (Title I - Head Start) into the Board's General Fund; which in turn, is deposited in the name of the Board of Education into the new NOW (Negotiable Order of Withdrawal) accounts, which permits depositors to draw interest on their account balance."
It is our opinion that, as far as state law is concerned, a board of education may deposit its funds in a NOW account and receive the benefit of interest on its money. We find not applicable the provisions of Kentucky Constitution § 173 and KRS 61.190 which forbid any public officer from receiving directly or indirectly any interest, profits or perquisites from the use of public funds. As long as the funds are deposited in the name of the board of education and the board receives the interest on the money, there is no violation of Kentucky law.
In order to answer the part of your question pertaining to depositing Title I and Head Start funds in the general fund of a board of education, we have consulted with Mr. Donald Hart of the Department of Education and Mr. Jessie Amburgey, Kentucky Community Action, Department for Human Resources. They advise that it is a better practice to keep Title I and Head Start funds in separate accounts for bookkeeping and audit purposes, and that any interest derived from the monies deposited must be accounted for and returned to the Federal Government. It would therefore seem advisable that Title I and Head Start funds not be deposited in the general fund of the School Board in a NOW account since under federal regulations the Board cannot itself profit from the interest gained but will have to account and pay the interest to the Federal Government.