TEEATTORNEYGENERAL 

OF TEXAS 

November 21, 1963 

Honorable R. L. Coffman Opinion No. C- 181 

Administrator 

Texas Employment Commission Re: An interpretation of 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 58th Legislature, 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 controlling with regard to the granting 

of merit increases to employees of the Texas Employment Commission. 

Section 1, S L, Article V, General Provisions, of 

House Bill 86, sets forth specific provisions governing Merit 

Salary Increases in recognition of oontinuing outstanding per; 

formance of State employees "unless otherwise provlded. . .' 

The specific provision within the Commission's 

appropriation Is found,at page III-59 and provides as follows: 

"Salary adjustments and Merit Increases 

within designated salary ranges shall be 

governed by agreements with the -Government pursuant to Federal standards $or a Merit 

System of Personnel Administration. 

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 employees are 

State employees. It was oontemplated under this coordinated 

Federal and State Unemployment Compensation System that the administration thereof would be handled through designated State 

agencies. The administration of the program is wholly financed 

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

by grants from the Federal Government and the Commission is 

acting as the disbursing agency for the Federal Government. 

The Commission was established In 1936 by Article 522lb-8, 

Vernon'sCivil Statutes. Article 5221b-8 through Article 

5221b-10 sets forth the responsibllitles and 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 coordinated Federal and State system, 

the Federal Government uses 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 states by the Secretary of the Treasury upon certlflcation from the Social Security Board In compliance with 42 U.S.C.A., 

Section 502a upon proper compliance with Section 503 of Title 

42, U.S.C.A. which provides as follows: 

"(a) The Board shall make no certification for payment to any state unless It finds 

that the law of such State, approved by the 

Board under Sections 1600-1611 of Title 26, 

includes provision for-- 

"(1) Such methods of administration 

(Including after January 1, 1940; methods 

relating to the establishment and maintenance of personnel' standards on a merit 

basis, except that the Board shall exercise 

no authority with respect to the. selection, 

tenure of office, and compensation of any 

individual employed in accordance with such 

methods) as are found by the Board to be 

reasonably calculated to insure full payment 

of unemployment compensation when due; . . .' 

(Emphasis added). 

In Attorney General's Opinion v-427 (1947), this 

Department held that with respect to Federal funds expended, 

the Commission is primarily governed by the standards prescribed 

by the Social Security Administrator and the U.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 Opinion WW-1242 (1962), the authority of the Commission 

to administer the employment program in the most efficient manner 

-882- 
. . 

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

was held to be within the discretion of the Commission notwithstanding special provisions within the General Appropriation 

Act of the 57th Legislature to the contrary. Thus, we recognize 

the ~somewhat different status with regard to the Commission in 

comparison with other State agencies whose funds are not derived 

from Federal grants. In fact, such methods were recognized In 

House Bill 86 at page 111-56, which provides as follows: 

"In order to comply and conform with the 

terms of Federal laws and regulations and 

standards under which such moneys are.:gl"anted 

for administration shall be expended in accordance with the terms of the Texas Unemployment 

Compensation Act, the standards of the Bureau of 

Employment Security and/or United 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 compliance with applicable Federal social 

security regulations are necessary to qualify for Federal grants, 

it is concluded that the establishment of the recent Texas Employees Classification Act should be construed in harmony wlth 

these recognized and prior conditions. Therefore, so long as 

salary adjustments and increases do not increase the employee's 

salary to an amount outside of the salary ranges designated by 

House Bill 86, they are valid as a part of an agreement with the 

Federal Government in the establishing and maintaining of a merit 

system, 

In reaching this result, we are particularly persuaded 

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 Legislature has recognized 

the situation of a State-administered Federal grant program in 

an area of such mutual 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 convincing manner. 

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 agreements with the Federal 

Government pursuant to Federal standards for a Merit System 

of Personnel Administration. 

SUMMARY 

Merit Increases within the designated salary 

ranges for employees of the Texas Eknployment Commission 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 Increases within the designated salary 

ranges are governed by agreements with the Federal 

Government pursuant to Federal standards for a 

Merit System of Personnel Administration. 

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 

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