The Attorney General of Texas 

March 11, 1982 

RK WHITE 

orney General 

rem Court Bullding 

.Box 12548 

tin. TX. 76711. 2546 

475.2501 

I 910/874.1367 

copier 5121475-0266 

’ MaIn St., sulle 1400 

as,TX. 75201.4709 

742.6944 

4 Alberta Ave.. Suile 160 

‘aso.TX. 79905.2793 

‘533-3464 

0 Dallas Ave., Sulle 202 

ISIon. TX. 77002.6966 

‘650.0666 

Broadway. Suite 312 

bck.TX. 79401-3479 

!747-5236 

0 N.Tenth. Sulte S 

%-I.TX. 76501.1665 

)MJ2-4547 

MaIn Plim.. suite 400 

Ihlonio, TX. 76205.2797 

1225.4191 

h.1 Opporlunllyr 

,rm411va Aclion Employer 

i 

Gary E. Miller, M.D. 

commissioner 

Opinion No. MN-454 

Texas Department of Mental Health Re: Application of House Bill 

and Mental Retardation No. 1623 to funds held by the 

P. 0. Box 12668 Texas Department of Mental 

Austin, Texas 78711 Health and Mental Retardation 

Dear Dr. Miller: 

You have requested our opinion regarding the application of House 

Bill No. 1623, recently enacted by the Sixty-seventh Legislature. 

That statute, to be codified as article 4394c. V.T.C.S.. provides, in 

pertinent part: 

All fees, fines, penalties. taxes, charges, gifts, 

grants, donations, and other funds collected or 

received by a state agency as authorized or 

required by law shall be deposited in the state 

treasury, credited to a special fund or funds, and 

subject to appropriation only for the purposes for 

which they are otherwise authorized to be expended 

or disbursed. Deposit shall be made within seven 

days after the date of receipt. 

Section 2 of House Bill No. 1623 defines “state agency” as: 

. ..any department, commission, board, office, 

Institution, or other agency that is in the 

executive branch of state government, has 

authority that is not limited to a geographical 

portion of the state, and was created by the 

constitution or a statute of this state, but does 

not include an institution of higher education as 

defined in Section 61.003, Texas Education Code, 

as amended, and does not include the Banking 

Department of Texas, the Savings and Loan 

Department of Texas, and the Office of the 

Consumer Credit Commissioner, whose funds are 

subject to the budgetary control of the Finance 

Commission of Texas by virtue of existing laws, 

and does not include the Credit Union Department 
Dr. Gary E. Miller - Page 2 (MW-454) 

of Texas whose funds are subject to the budgetary 

control of the Credit Union Cowmission of Texas. 

Section 3(b) of the bill states, however, that the act does not apply 

to: 

(1) funds, pledged to the payment of .,bonds, 

notes, or other debts if the funds are not 

otherwise required to be deposited in the state 

treasury; 

(2) funds held in trust or escrow for the 

benefit of any person or entity other than a state 

agency; 

(3) funds set apart out of earnings derived 

from investment of funds held in trust for others, 

as administrative expenses of the trustee agency; 

(4) funds, grants, donations, and proceeds 

from funds, grants, and donations, given in trust 

to the Texas State Library and Archives Commission 

f.or the establishment and macntenance of regional 

historical resource depositories and libraries in 

accordance with Section 2A, Chapter 503, Acts of 

the 62nd Legislature, Regular Session, 1971. as 

amended (Article 5442b. Vernon’s Texas Civil 

Statutes); or 

(5) the deposit of funds for state agencies 

subject to review under the Texas Sunset Act 

(Article 5429k, Vernon’s Texas Civil Statutes) for 

1981, which shall be determined by each agency’s 

enabling statute. 

Acts 1981, 67th Leg.. ch. 835, at 3189-90. Your question is whether 

any of six kinds of funds maintained by the Department of Mental 

Health and Mental Retardation are excepted by section 3(b) from 

required deposit in the state treasury. 

Although articles 3179 and 3179a. .V.T.C.S., provide that funds 

received by the institutions under the supervision of the Department 

of Mental Health and Mental Retardation shall be placed in the state 

treasury. these provisions do not apply where there is later or more 

specific statutory authority for holding funds outside of the 

treasury. See Porwood v. City of Taylor, 214 S.W.2d 282 (Tex. 1948); 

Cole v. Stazex rel. Cobolini, 170 S.W. 1036 (Tex. 1914). 

p. 1573 
I 

Dr. Gary E. Miller - Page 3 (Mw-454) 

You first inquire about the “patient benefit fund” maintained at 

each facility of the department. This fund consists of the interest 

accruing on the personal funds of inmates of which the department acts 

as trustee. Section 1 of article 3183~. V.T.C.S.. provides: 

Section 1. The superintendent of any State 

institution under the jurisdiction of the Board 

for Texas State Hospitals and Special Schools may 

deposit any funds of inmates in his possession in 

any bank in the State, or in bonds or obligations 

of the United States of America or for the payment 

of which the faith and credit of the United States 

are pledged, and for the purposes of deposit or 

investment only, may mingle the funds of any 

inmate with the funds of other inmates. The 

superintendent may deposit the interest or 

increment accruing on such funds in a special 

fund, to be designated the ‘Benefit Fund,’ of 

which he shall be the trustee. He may expend the 

moneys in any such fund for the education or 

entertainment of the inmates of the institution, 

or for the actual expense of maintaining the fund 

at the institution. 

To the extent that the benefit fund may be expended “for the education 

or entertainment of the inmates,” it is a fund “held in tNSt... for 

the benefit of any person or entity other than a state agency” and 

therefore exempt under section 3(b)(2) of House Bill No. 1623. To the 

extent that it may be expended “for the actual expense of maintaining 

the fund at the institution,” it is a fund “set apart out of earnings 

derived from investment of funds held in trust for others, as 

administrative expenses of the trustee agency” and thus exempt under 

section 3(b) (3). 

You next ask about “sheltered workshop funds.” The department is 

authorized by section 2.17(b)(2) of article 5547-202, V.T.C.S., “to 

contract with individuals or public or private entities for the sale 

of goods and services produced or made available by the sheltered 

workshop programs.” That statute further provides, in pertinent part: 

(3) An operating fund may be established for 

each sheltered workshop operated by the 

Department. and any money derived, from gifts, 

grants. and donations received for sheltered 

workshop purposes and all proceeds from the sale 

of sheltered workshop goods and services shall be 

deposited in the operating fund. Any operating 

fund shall be maintained in a national or state 

bank which is a member of the Federal Deposit 

p. 1574 
Dr. Gary E. Miller - Page 4 (Mw-454) 

Insurance Corporation. Money in the operating 

funds may only be expended in the operation of 

sheltered workshops for the purchase of supplies. 

materials, services, and equipment; for the 

payment of salaries and wages to participants and 

employees; for the construction, maintenance, 

repair, and ,renovation of facilities and 

equipment; and for the establishment and 

maintenance of a petty cash fund not to exceed 

$100. 

V.T.C.S. art. 5547-202, 52.17(b)(3). Although the statute recites a 

limited number of purposes for which sheltered workshop funds may be 

expended, all of them are essentially purposes of the department. 

Since sheltered workshop funds are not “held in trust or escrow for 

the benefit of any person or entity other than a state agency,” they 

are not excepted from deposit in the state treasury. 

“Occupational therapy funds” are recognized by article 3174b-3, 

V.T.C.S.. which provides. in part: 

Section 1. The Board for Texas State 

Hospitals and Special Schools may furnish 

equipment, materials. and merchandise at any 

institution under the control and management of 

said Board for occupational therapy programs. The 

finished goods and products produced in these 

programs may be sold, and the proceeds thereof may 

be placed in the patients’ benefit fund, patients’ 

trust fund, or a revolving fund for their further 

use; or the patient may purchase from the state 

the material to be used and keep the finished 

product. 

. . . . 

Sec. 3. The Board is authorized to accept 

donations in money or materials to be used in 

these programs and mati use and expend the 

donations in the manner requested by the donor, if 

not contrary to the policy of the Board for Texas 

State Hospitals and Special Schools. 

To the extent that occupational therapy funds are placed In the 

patients’ benefit fund or patients’ trust fund, they assume the 

character of those funds and are thus exempt under section 3(b) of 

House Bill No. 1623. To the extent, however, that they are 

transferred to a “revolving fund for their further use,” they become 

merely’operating funds of the department and thus not excepted from 

p. 1575 
Dr. Gary E. Miller - Page 5 (Mu-454) 

deposit. Amounts donated to the occupational therapy fund must be 

used “in the manner requested by the donor.” If the donor directs 

that money be used “for the benefit of any person or entity other than 

a state agency,” it need not be deposited in the state treasury; 

otherwise, it is not exempt from deposit therein. 

The “unemployment ‘trust fund” is established by section 55 of 

article V of the current General Appropriations Act. Acts 1981, 67th 

Leg., ch. 875, at 3820. Heads of state agencies are directed thereby 

to reimburse the comptroller for unemployment compensation benefits 

paid on behalf of their particular agency. There is no indication 

that these funds are set aside “for the benefit of any person or 

entity other than a state agency,” and thus, they are not exempt from 

deposit under House Bill No. 1623. 

You also ask about “merchandise canteen coupon funds.” which you 

state: 

. ..are maintained at many facilities to hold money 

in trust for clients who are unable to handle 

their own funds. Such clients use a system in 

which trust fund money is used to purchase coupons 

which are then used to purchase canteen items. 

The canteen then turns the coupons into the fund 

for reimbursement. The clients can also obtain 

reimbursement in cash for their coupons upon 

furlough or discharge or if it is determined at 

any time that the client can handle his own money. 

The money held in this fund is used for no other 

purpose. 

I From the circumstances described, it appears that this fund is used 

merely as a conduit for money derived from an individual patient’s 

1 trust fund. To the extent that these funds retain the character of 

patient trust funds, we believe they are excepted from deposit by 

section 3(b)(2) of House Bill No. 1623. 

Your final inquiry is directed to proceeds derived from estates. 

If a legal instrument directs that funds be used specifically “for the 

benefit of any person or entity other than a state agency.” such 

proceeds are exempt under section 3(b)(2). If It does not do so, the 

money is not exempted. As we said in Attorney General Opinion MW-363 

(1981): 

. ..no particular words are necessary to create a 

trust.... So long as the parties intend that 

particular property be held for the benefit of 

others, a court of equity will affix to that 

intent the character of a trust. 

p. 1576 
Dr. Gary E. Miller - Page 6 (MI?-454) 

SUMMARY 

“Patient benefit funds” and “merchandise 

canteen coupon funds” are excepted from required 

deposit in the state treasury under the terms of 

section 3(b) of House Bill No. 1623, of the 

Sixty-seventh Legislature, to be codif ied as 

article 4394c. V.T.C.S. “Sheltered’ workshop 

funds” and “unemployment trust funds” are not so 

excepted. “Occupational therapy funds” are exempt 

only if they are placed in the patients’ benefit 

fund or the patients’ trust fund. Proceeds 

derived from estates are exempt if the appropriate 

legal instrument directs that the funds be used 

specifically “for the benefit of any person or 

entity other than a state agency.” 

I 

/ 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Rick Gilpin 

Assistant Attorney General 

APPROVED : 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

Roxanne Caperton 

Rick Gilpin 

Patricia Hinojosa 

Jim Moellinger 

Attorney General of Texas 

p. 1577