Texas Attorney General Opinion: JM-1082 Page: 3 of 4
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Honorable Carl Parker - Page 3 (JM-1082)
School board members are "local public officials"
subject to chapter 171 of the Local Government Code. Local
Gov't Code 171.001(1); Attorney General Opinion JM-379
(1985). Banks and other lending institutions are "business
entities" within chapter 171. Attorney General Opinions
JM-379 (1985); JM-178 (1984). In our opinion, chapter 171
of the Local Government Code applies to loan transactions
between a school board and its depository bank. Thus, a
school board is not barred by common law conflict of
interest rules from entering into a loan contract with
its depository bank when a board member is pecuniarily
interested in the contract. A school board member with a
"substantial interest" in the depository bank, Local Gov't
Code 171.002, must file an affidavit stating his interest
and must abstain from participating in decisions on loan
contracts with the depository if "action on the matter will
have a special economic effect on the [bank] . . . that is
distinguishable from the effect on the public." Acts 1987,
70th Leg., ch. 362, 4, at 1799 (amending V.T.C.S. art.
988b, 4, now codified as Local Gov't Code 171.004).
Attorney General Opinion JM-583 (1986) is modified in
accordance with this opinion.
Chapter 171 of the Local Government Code
applies to loan contracts between a school
board and its depository bank if a school
board member has a substantial interest in
the bank. Section 23.75 of the Education
Code applies to a depository contract between
a school board and its depository bank in
cases where a school board member is a stock-
holder, officer, director, or employee of the
bank. Attorney General Opinion JM-583 (1986)
is modified in accordance with this opinion.
Very/ truly ,
Attorney General of Texas
First Assistant Attorney General
Executive Assistant Attorney General
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Texas. Attorney-General's Office. Texas Attorney General Opinion: JM-1082, text, 1989; (texashistory.unt.edu/ark:/67531/metapth273520/m1/3/: accessed June 25, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.