TRE
OF EXAS

Dr. Henry A. Holle Commissioner,State Department of Health Austin, Texas

Dear Dr. Holle:

concerns of House Session, Your request for an opinion,dated August 12, 1957,

the interpretationand execution of the provisi,ons Bill 434, page 235? Acts 55th Legislature,Regular 1957. August 26, 1957

OpinionNo. Ww-241

Re: Handling of funds received from the federal governmentand variousmunicipalitiespursuant to provisions of House Bill 434, Acts of 55th Legislature,Regular Session, 1957.

The Act was designed to enable the State to participate in and receive grants pursuant to the Federal Rousing Act of 1954, as amended. The latter Act, and the administrative rules promulgatedpursuant thereto,make federal funds available to state planning agencies to "facilitateurban planning for smaller communXties lacking adequate planning resources", The federal grants in each instance shallnot exceed 5C per centum of the estfmated cost of thework for which made. The remainder of the aggregate costsmust be provided by the state and may be derived by the latter from "various sources such as state appropriations,,giftsor contributionsof cash or technical services from afdedmunicipalities". House Bill 434 designates the State Department of Health as the State agency to receive said federal funds and to contractwith reference thereto,

In connectionwith the foregoing,you have propounded for our consideration the following questions:

1. May the Department of Health assess each particfpattig city a sum9 in addition to the actualproject costs, sufficient to employ personnel needed to effectivelyadminister the program7
2. If the funds from the federal government and from the applicant-cityare deposited in the State Treasury, canwarrants against such a special account be issued?Dr. Henry A. Holle, page 2 (~~-241)

3. If there is no authority for depositing funds from municipalities in the State Treasury and withdrawing them, can the funds received from the federal governmentand from themunicipalities legally be deposited in a local bank and checks issued against said account for planning services rendered in order to carry out the planningprogram?
4. If either of the abovementioned procedures are not authorized,will you kindly suggest to us, if possible, the procedure for handling these fundswhich will permitus to carry out the intent of the provisions of H.B. 4347
Section 1 of House Bill 434 provides as follows:
"The State Department of Health is hereby authorized,upon request of the governingbody of any municipalityhaving a population of 25,000 or less in this State; (a) to arrange planning assistance (includingsurveys,urban renewalplans, technical servicesand other planningwork) and to arrange for the making of a'study or,reportupon any planning problem of suchmunicipality, submitted to the State Department of Health, providinghowever that the employees of the State Department of Health shallnot themselvesmake such surveys, studies or reports. (b) to agree with such governingbody as to the amount, if any, to be paid to the State Department of Heal~th for such service,and (c) to apply for and accept grants from the Federal Government or other sources in connectionwith any such assistance, study, or report, and to contract,with respect thereto. The regular functions of the Texas State Department of Health may be utilized on thisprogram,provided that any additional employees shallbe paid from
sources other than General Revenue funds of the State."

It is noted that the Legislaturehas not appropriated any state funds to carry out the provisions of House Bill 434. Section lb of the Act authorizes the State Department of Health to agree with the governingbody of each participatingcity as to the amount, if any, to be paid to the State Department of Health and Section lc prohibitsuse of general revenue funds to employ additional personnel for such service. We think it clear that the Legislature contemplated that the state's share of the project costs shouldbe derived from the participatingcities with the single exception that the regular functions of the Department of Health may be utilized.Dr. Henry A. Holle, page 3 (W-241)

House Bill 434 authorizes the State Department of Health and the participating city to agree on the amount to be paid by the city. The amount agreed upon can doubtless include not only the state’spro rata share of the project cost but may include, if necessary, an additional sum representing the city’s fair share of the added administrative costs, of a continuing nature, incurred by theHealth Department in administering tl;;?

r: This vfew ffnds support in the fact thatHouse Bill ;tgig,essly prohibits theuse of general revenue funds for such purposes but indicates that funds derived from otherS~LTQB may be so expended. 'Thedistributionand assessment of such costsmust, of course, thevarious cities. be fairly and equitablymade as between

Your ffrst question is accordfnglyanswered in t& affirmative.

Your secondquestion involves the handling and MSbursement of the funds received from both the federal government and themunicipalities. A careful analysis of the objects sought to be attainedby House Bill 434 and theFederal Housing Act of 1954, excludes the idea that such funds shouldbe deposited in the general revenue fund and be subject to payment only by legislativeappropriatfons, We think that suchmonies may properlybe placed in thehands of the State Treasurer,but not in the State Treasury,who becomes a custodian or trustee thereof, disbursing sameunder the directions of the State Department of Health in fulfillment of the purposes for which sazewere received. In otherwords, the funds here provided ari-trust funds and do not belong to the State in its sovereign capacity, but are received and are to be expended for a specialpurpose.

This view is supportedby the Supreme Court of Texas in the case of FriedmanvO American Surety Co. of ?Iew York, 151 S.W.2d 570s In discussing a special fund (Unem>lzy?entPompensation Fund) the Court said:

"Themoney here involved is not the property of the State in any capacity but is a Trust Fund to be held out of the State Treasury,but in the hands of the State Treasureras trustee, for the benefit of a class of employees. O O O

"In Manionv. Lockhart, 114 S.W.2d 216, this court clearly decided that it is not in violation of our constitution tomake the State Treasurer custodian of a fund that does not belong to the State, and does not belong in the State Treasury."- ..

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Dr. Henry A. Holle, page 4 (WW-241)

See also: Manionv* Lockhart, State Treasurer,131 Tex. 175, 114 S.W.2d 218; Smith v. Paschal, 1 S.W.2d 1086 (Tex. Comm.App..);

Tatumv. Wheeless, 1.80Miss.gO0, 178 So. 95; 108 A.L.R. 595.

In reply toyour second questionyou are advised that the funds received from both the federal governmentand the municipalitiesmay properlybe placed in thehands of the State Treasurer,but not in the State Treasury,as a trust fund, and be disbursed therefrom for the purposes for which received.

In view of our answer to your second question, it becomesunnecessary thatwe answer the last two questions.

Pursuant to House Bill 434, Acts 55th Legislature, Regular Session, 1957, page 235, the State Department of Health is authorized to agree with SUMMARY

each participatingmunicipalityas to the latterrs pro rata share of the project costs. The amount agreed upon may include an additional sum representing each city's fair share of the added administrative costs, of a continuingnature, incurredby the State Department of Health in administering the Act. The funds receivedby the State Department of Health from both the federal governmentand the participatingmunicipalitiesmay properly be placed in thehands of the State Treasurer,but not in the State Treasury,as a trust fund, and be disbursed therefrom for the purposes for which received,
Very trulyyours,
WILL WILSON Attorney General of Texas

Lp:jl:wb
APPROVED: OPINION COMMITTEE H. Grady Chandler, Chairman Mary Rate Wall W. R. Hemphill Roger Daily REVIEWED FOR THE ATTORNEY GENERAL BY: Geo. P. Blackburn Lbonard Passmore Assistant