The opinion
THEATTORNEYGENERAL
OF TEXAS
AUSTIN. TNXAS 78711
January 31, 1975
The Honorable Senfronia Thompson Opinion No. H- 512
State of Texas House of Representatives
Committee on State Scholarship Re: Administration of scholar-
Programs ship fund created by article
Austin, Taxas 78767 54.051m, Education Code.
Dear Representative Thompson:
You have asked seven questions concerning the administration of
the scholarship fund authorized under article 54.051(m), Education Code,
which provides that:
(m) Twenty-five cents out of each hourly charge
in Subsection (b) and $1. 50 out of each hourly charge
in Subsection (c) of this section shall be placed in a
scholarship fund at each institution to be administered
by that institution to award scholarships to needy
students. Standards for determining need shall be
formulated by each institution. No more than 10
percent of said scholarship funds may be allocated
to out-of-etate students.
You ask:
I., Mny individual schools require a student to meet
any standard other than demonstrating sufficient financial
need in order to qualify for a ,acholarship under section
54.0 51 (m) 7
2. If the answer to question #l is in the affirmative,
may individual schools enact any academic or “character”
guidelinea to determine eligibility for such scholarships
above and beyond requiring a student to be acceptable for
admission, in the case of new students, or to maintain suf-
ficient scholastic and disciplinary records to keep them in
good standing and not classified in any generally applied
probationary status?
p. 2306
.
The Honorable Senfronia Thompson page 2 (H-512)
3. If the answer to question #2 is in the affirmative,
may schools enact guidelines that award such scholar-
ships on a competitive basis in which a student with
greater financial need is less likely to receive a scholar-
ship than another student with lesser financial need, but
who might rank higher in a competition on the basis of
academic or other criteria?
4. In awarding scholarships under 54.051(m), may
schools treat students differently on the basis of classi-
fication (i. e. freshman-sophomore or graduate- under-
graduate) by reserving all or a percentage of funds for
use by one class of students only?
5. If the answer to question #4 is affirmative, may
the percentage of funds set aside for a class of students
be determined without regard to whether that percentage
is in proportion to the percentage of all students’ financial
need represented by that class of students?
6.If a school fails to reserve the proper amount of
funds for scholarships from tuition revenue pursuant to
54.051(m) during a semester or fiscal year, must the
school compensate for this by designating extra funds
for scholarships from tuition revenues in subsequent
semesters or years?
7. The University of Texas Board of Regents has
adopted rules stating “There shall be established, in
accordance with Article 2654c, Section l(a)12, such a
scholarship fund at each component institution where
and when such a fund is deemed appropriate by the chief
administrative officer”. May the governing boards of
state institutions of higher education grant the authority
to administrative officials to determine not to set up
the fund required by law?
p. 2307
The Honorable Senfronia Thompson page 3 (H-512)
While the language of section 54.051(m) clearly states that the
scholarship fund created by that section is for “needy” students, the
institutions are charged with formulating standards for determining
need. See Attorney General Opinion M-1129 (1972).
We understand that the amount of available monies in the fund is
limited and, in all likelihood, will never be suffient to award every student
all the scholarship aid for which he or she may show financial need.
Accordingly, it would seem reasonable that an institution may use additiona
standards or criteria other than comparative financial need in determining
the distribution of the echolarship monies so-long as the standards or
criteria are reasonable and are designed to effectuate the intent of the
statute to provide scholarships for needy students. We therefore answer
your first question affirmatively.
Questions 2,3,4 and 5 concern examples of such additional criteria.
We note initially that a determination of whether each additional
criterion is a reasonable one under the guidelines set out above, is dependent
on the facts of the particular situation. For example, an additional standard
may be reasonable on its face, but be unreasonable as administered. Thus,
we can only advise you on whether in ,our opinion the general classes of
criteria you mention could be reasonable.
In our opinion, the additional standards of academic standing and
“character” could be reasonable standards a school may use in determining
.
which needy students receive scholarships. We therefore answer your
second question affirmatively.
Question 3 concerns the situation in which a student with lesser
financial need is awarded a scholarship rather than a, student with greater
financial need because of the use of criteria other than need. In our opinion,
such a method of awarding scholarships would be acceptable so long as
all recipients of the scholarships did in fact require financial aid and the
additional criteria were reasonable. Indeed, such a result would be in-
evitable given our opinion that criteria other than financial need may be
used in the determination of scholarship awards. We therefore answer
question three affirmatively.
p. 2308
The Honorable Senfronia Thompson page 4 ,(ti-512,)
Questions four and five concern the practice of a school of reserv-
ing all or a portion of the scholarship funds for us~e by one class of students,
e.g., freshmen, sophomore, graduate, without regard to the percentage
of all students’ financial need represented by the class of students. This
practice in effect imposes an additional criteria on the scholarehip applicant,
that he,or ehe be.within a specified class.
”
It is not with&the purview of this office to suggest the best method
of administering the scholarship funds. There may be valid reasons fora
school to reserve a portion of its scholarship funds for each class: for
example, a school may wish to reserve enough funds to provide eontinui.ng
financial aid to deserving students as they progress from freshman’ to
‘.
Senior status. Thus, it is our opinion that nothing in article 54.051(m)
precludes a school from administering scholarehip funds as described in
questions four and five. Of course, as we have stated, any such alloca-
tions of funds among the claseee must be baaed on reasonable clasaifica-
tions and be designed to effectuate the intent of article 54.051(m).
Your sixth.queetion concerns the failure of a school to reserve the
proper amount of funds for scholarships from tuition revenue pursuant to
article 54.051(m). We construe the “shall” language used by the Legisla-
ture in article 54.051(m) as mandatory; thus, the schools are required to’
set aside the amount called for. Yet, no penalties for failure to comply
with the statute are provided. To our knowledge there is no authority in
the general law which requires a school to compensate for the failure to
reserve the proper amount of funds for scholarships by designating extra
funds for scholarships,from subsequent tuition revenues. In addition, the
scholarship fund established by section 54.051(m) is appropriated to the
various schools by Acts 1973, 63rd Leg., chapter 659, section 17, p. 2149,
which provides:
Sec. 17. INSTITUTIONAL FUNDS REAPPROPRIATED.
All balancee in the institutional funds of the several state
institutions of higher education named in this Article, at
the close of the fiecal year ending August 31, 1973, includ-
ing balances in their revolving funds at that time, and the
income to aaid funds during the fiscal years beginning
September 1, 1973 and 1974, are hereby reappropriated for
the operation, maintenance, and improvement of the res-
pective atate institutions.
p. 2309
The Honorable Senfrhia Thompson page 5 (H-512)
This is a general appropriation rather than a line item; consequentlythe
Legislature has provided no practical check on how the money is spent.
Thus, although the schools are required by section 54.051(m) to set aside
there specific amounts for scholarships, we find no law which provides,a
penalty or specific remedy for past failures. to do so. Absent such law.,
we therefore must answer your sixth question negatively.’
With reference to your seventh question, article 2654c, V. T. C. S.,
was repealed by the enactment of the Education Code (Acts 1971, 62nd Leg.,
ch. 1024, p. 3319) and is now substantively article ~54.051,: Education Code.
Governing Boards of institutions of higher education may grant the authority
to administer scholarship funds to administrative officia’lr,, butt such .’
officials may not ignore the mandate of article 54.051(m), which provides
that a certain portion of tuition charges shall be placed in a scholarship
fund for needy 6tUd8nt#.
SUMMARY
An institution may use additional standards other than
financial need in distributing the scholarship fund established
by article 54.051(m), Education Code, so long as the
standards are reasonable and designed to effectuate the
intent of the statute to provide scholarships for needy
students. The Legielature has not provided a mechanism
to require schools to designate extra funds from sub-
sequent tuition revenues when the school fails to reserve
the proper amount of money for scholarships. Governing
Boards of state iastitutions of higher education may not
grant to administrative officials the authority to determine
not to set up the scholarship fund established by article
54.051(m).
Very truly yours,
u Attorney General of Texas
p. 2310
. ., .
The Honorable Senfronis Thompson page 6 (H-512)
APPROVED:
Opinion Committee
p. 2311