TEEATTORNEYGENERAL
OF TEXAS

November 21, 1963

Honorable R. L. Coffman Opinion No. C- 181 Administrator Texas Employment Commission Re: An interpretationof the Austin 1, Texas provisions authorizing merit increases to employees of the Texas Dear Mr. Coffman: Employment Commission.

You have requested our opinion as to whether the provisions of House Bill 

### 86,Acts of the 

### 58thLegislature,Regular Session, 1963, found in Article V, Section 1, B L, or provisions found within the appropriation for the Texas Employment Commission in Article III are controllingwith regard to the granting of merit increases to employees of the Texas Employment Commission.

Section 1, S L, ArticleV, General Provisions, of House Bill 

### 86, sets forth specificprovisions governingMerit Salary Increases in recognition of oontinuing outstandingper; formance of State employees "unlessotherwiseprovlded.

. .'

The specificprovision within the Commission's appropriation Is found,atpage III-59 and provides as follows:

"Salaryadjustments and Merit Increases within designated salaryranges shall be governed by agreementswith the -Government pursuant to Federal standards $or a Merit System of PersonnelAdministration. added). (Rnphasls

As a guide to a proper understanding of the question presented, it is deemed helpful to first review the Texas mployment Commission. It is a State agency and.lts employeesare State employees. It was oontemplatedunder this coordinated Federal and StateUnemployment Compensation System that the administration thereofwould be handled through designated State agencies. The administration of the program is wholly financed

-8811Hon. R. L. Ccffman,page 2 (c-181 )

by grants from the Federal Governmentand the Commission is acting as the disbursing agency for the Federal Government. The Commissionwas establishedIn 1936 by Article 522lb-8, Vernon'sCivil Statutes. Article 5221b-8 throughArticle 5221b-10 sets forth the responsibllitlesand powers of the Commission. Section (a) of Article 5221b-9, for example, prescribes certain duties and powers of the Commission,and in Section (5.)

of Article 5221b-9, the Commission is directed to cooperate to the fullest extent with the Social Security Board, Under this coordinatedFederal and State system, the Federal Governmentuses the taxes which it collects to pay the cost of administration of both the Federal and State plans. This money used to defray administrative costs is sent to the statesby the Secretary of the Treasuryupon certlflcation from the Social SecurityBoard In compliancewith 42 U.S.C.A., Section 502a upon proper compliancewith Section 503 of Title 42, U.S.C.A. which provides as follows:

"(a) The Board shallmake no certification for payment to any stateunless It finds that the law of such State, approved by the Board under Sections 1600-1611 of Title 26, includesprovision for-- "(1) Suchmethods of administration (Includingafter January 1, 1940;methods relating to the establishmentand maintenance of personnel'standards on a merit basis, except that the Board shall exercise no authoritywith respect to the.selection, tenure of office, and compensationof any individual employed in accordancewith such methods) as are found by the Board to be reasonably calculated to insure full payment ofunemployment compensationwhen due;

. . .' (Emphasisadded).
In Attorney General's Opinionv-427 (1947), this Departmentheld that with respect to Federal funds expended, the Commission is primarily governedby the standardsprescribed by the Social SecurityAdministrator and theU.S. Employment Service of the Department of Labor and the rules and regulations adopted by the Commission to meet such standards. In Attorney General's OpinionWW-1242 (1962), the authority of the Commission to administer the employmentprogram in the most efficientmanner

-882-..

Hon. R. L. Coffman,page 3 (c-181 )

was held to be within the discretion of the Commissionnotwithstanding specialprovisions within the General Appropriation Act of the 57th Legislature to the contrary. Thus, we recognize the ~somewhatdifferent statuswith regard to the Commission in comparisonwith other State agencies whose funds are not derived from Federal grants. In fact, suchmethods were recognized In House Bill 86 at page 111-56,which provides as follows:

"In order to comply and conformwith the terms of Federal laws and regulations and standardsunder which such moneys are.:gl"anted for administration shallbe expended in accordance with the terms of the Texas Unemployment CompensationAct, the standards of the Bureau of Employment Security and/orUnited States Etnployment Service or successors,and the rules or regulations adopted by the Texas Employment

In view of the fact that it has been long recognized that agreements in compliancewith applicable Federal social security regulations are necessary to qualify for Federal grants, it is concluded that the establishment of the recent Texas Employees ClassificationAct should be construed in harmony wlth these recognized and prior conditions. Therefore, so long as salary adjustments and increasesdo not increase the employee's salary to an amount outside of the salary ranges designatedby House Bill 86, they are valid as a part of an agreementwith the Federal Government in the establishingand maintaining of a merit system,
In reaching this result, we are particularlypersuaded by the mandatory language found in the provisions of Article III of House Bill 86, as quoted above, by the historical recognition of such agreements between the Commission and the Federal Government and by the fact that the Legislature has limited such

-883-Hon. R. L. Coffman,page 4 (C- 181 )

agreements only to the extent that the resulting employees' salary not exceed the designated salary ranges of House Bill 

### 86. It is further observed that the Legislaturehas recognized the situation of a State-administeredFederal grant program in an area of suchmutual importance,and it is concluded that If the Legislature had intended to abolish such a system It could have and would have done so In a clear-and convincingmanner. This it did not do, and therefore, It is concluded that the granting of Merit Increases to employees of the Texas Eknployment Commission is governed by agreementswith the Federal Governmentpursuant to Federal standards for a Merit System of PersonnelAdministration.
SUMMARY Merit Increaseswithin the designated salary ranges for employees of the Texas EknploymentCommission are governed by the provisions found at page III-59 of House Bill 

### 86,Acts of the 

### 58th Legislature, Regular Session, 

### 1963,which provides that Merit Increaseswithin the designated salary ranges are governed by agreementswith the Federal Governmentpursuant to Federal standards for a Merit System of PersonnelAdministration.
Yours very truly,
WAGGONER CARR Attorney General

PP:mk2l
APPROVED: OPINION COMMITTEE George Gray, Acting Chairman Pat Bailey Paul Robertson Nicholas Irsfeld W. V. Geppert By:

APPROVED FOR THE ATTORNHY GENERAL BY: Stanton Stone

-884-