,-,

OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN

Ronormble Ceo,H. Rhepp8rd ComDtmller of Public Acocmits Austin, Texas

@seerSir:

In the Taxa Old.40 Aselsta dafioit In the mount ot hi8 foot, you are advised ertain Interest-bearing ,779.OO which oonrtttuto an the Texas Old 

### 40 Assistance sued andare nowoutstanding 37, Acte, 44th Legislature, 11s Roe. 179 end 1046, **date,** n; andunder osrtain pro-. by the Legislature these ant deferred lIrbIl~tI.~ which are to be retfred at future datesas direoted by House Bill Ro. 179, supre, andprovisions or oontmots entered Into by and between the T~XU Old AgeAesIetanoe Commission and holders of raid warrants, whloh controoteHonorable George H. Sheppard, **Peg8 E** 

waze exeouted by virtue of authority oontelned In raid lBW& Ret&rement of these obligrtlons egeinat the TOXEB Old AgeAseietenoe Fund, 8~ represented by these warrant8 end treasury oertlrloet88 

### l xahenged thereror, i~ rpeoIfIoelly pro,vlded for by statute,end said warrants do not oonstltute en ImmedIete obligation agaInat the Texas Old 

### 4e Aselstenoe Fund. Vy vlrtue~of the 

### l pproprletlon eot that providen for epproprletlone for State Departments for the blennl~ ending August 31, 1939, 

### l lB~\,?ncome

to the Texas Old

### 40 **Aeeietenoe** Pund together dth any monies In the fund et the end or a prior ii6081 year, are appropriated tar oertein purpO#eB, emo

ds whioh~ia l

bofnIstretIve expenses lnourred in the a nirtretion Ofthe Texee Old AgeAeslet-

- en08Lew dthln the limitsor thetLer. Your ettentlon~ la oelled to the provlslons of ROUBO Bill lo. 8, dote, 44th LegIsleture, **Srd** Celled Sesslon,end partloulerly to Seation **lib Or**  ATfIOle 2 of raid **Act,** which In part **reeda a8**  roUow8: ‘Provided that Ir the fund Is lneurrlolent topey l

ll grantsIn fill, the 8emeshould bepeld prorate based on the amountgranted to each ractplent.* Your ettention IB further oelled to the fact that by other prorlelonn
or House Bill wo. 6, nupre, oertein revenues are l llooeted, 88 eemeare oolleoted, to the Old **Age** Assistance Pundto .be 8xpendeU r0r purposes or carrying out provielons 0r the 'bidAgeAseiatanoeLewa, Bythese mentioned provisions or the laws 0r Texas, whenourrent runds are~innurri0ient to uet etithorized expenditures ror eseistenoe bemilts end administrative expenses, there is no alternative exoept

‘that grant8 or oaeletanoe must be prorated BOthat no actual deflolt oen loorue wheneeaIetenoe warrants end edministrative expense verrante are issued.

wWt3rrantt8

In payment or edminlatratire expenses are drawnfrom the Taxa **Old** AgeAdmInIstratIon Fund, uhioh fund ie created (not by Statute) by transfer of moneyfrom the Texas Old Age~esIetenoe Pundto the AdmInIstratIon Fund, end after the tranerer Is madethe AdmlnIstretlon 

### puna shows a credit balance.

“IQ view or these reote, pleaee edvisi whether this department should Irsue warrants in payment of selarlee, expenses, eto., Inourred In the edmlnietrotlon of the Texee. Old **Age**Assistance Lawn.

“It you reply in the negative, please advise Whatpro- +u=* Bhould be followed In 1s~~1ng warrants ror e&InIetretlve expensea.*Honorable Geo. H. Sheppard, Page 3

Senate Blli Ro. 138, Chapter 304, **Aota,** Regular Saneion, 43th Legislature, oommonlyknownes the Departmental Approprletlon Bill, sets up ior the b!ennIum ending August 31, 1939, 8 eohedule of admIni8tretIoe relerIea end ~Intenenoe l xpeneee ior the TexeB Old Age kSBiBt8nO0ConuIIIrrIon, a dIvlalcn of the State Board Or COntrOl, Endin this oonnection ahkes the tollowIng appropriction from the Texan Old AgeAerietenoe Fund:

“Al.1 **inoome** to the TEXEB Old AgeAssietanoe Fund together with any balenoee on handst the and of a prior iisoel year, are hereby appropriated ror each or the fiSCe1 years onding **AUgu#t** 31, 1938, end August 31, 1939, to the Texas **Old** AgeAsBirtanoe Commission for eid end 

### l BBiBtanC8, end ior **Beleriee,** equipment, eupplies, travel, meIntene~o8 end oontingent expenses neoessery in the extension of old end in edmInIsterIng all the duties required :Or raid cOlld.BBiOn by the Old AgeABBiBtanO8Laws, andfor payment ot intereet bearing rarrents, together with interest thereon, outstanding onAUgUBt 51, 1937, that were ieeued einet the Texer Old AgeA#ri#tanoe lknd under the proBiOZlB OrHouse Blll 37, ALetSof the Forty-rourth Legis-

‘lEturn, Third Celled Session; provided, In accordance with reId laws, that 

### theedminlstratIve expensee ior anyyear rhell never **exoeed** rive per cent of the total amountexI.prnded for Old AgeAssietenoe. Provided ‘further, that aid **end** 8#rlsta,noe shell be ,granted end ex$ended In the manner provided by law, In the event the above total Itemized 

### l gproprietlons ror edmlnIstratlon are less then rive per oent or the.totel rxpendI,tures for old age eeslstenoe end 8 necessity theretor exists, the CommIseion Is authorized $0 hire additions1 employees andpay additional rdmInletretire expenses; provided In all events‘the total expendIturee fqr all administration ohs11 not 8xoeed flre~per cent of the total expenditures ror 

### oldeeeIstenoe, end that no eddltlonel ~employeeused shell be paid larger ~elsrlea then
are’ above fixed ror emp~loyeesrendering ~lmller mervIoes.w
In order to determine whether tlie~e **are** currently any avsil-. . I Honorable Coo. B. Sheppard, Page 4

oherg* against theOld AgeA#elstenoe Fund, then It must follow, by virtue of certain provleIons in the Old 

### 4e Pension Lawandthe Depertmentsl Approprlttlon Aot, that there Is not nowa derlolt in the Old .Ag.eAsaiet&noe ?und.

Theprovision In the Old Age Aesietenoe Aot., HouseBill No. 0, Acts, 3rd Celled Session, Uth LegIsleture, to which we rarer fs that clause In Section llb ofArticle 8 of saidAbt, whloh .reedB : *Provided thet If the rund,is InsuSfIolent to **pay** all grants in full, thesameshould **be** paid pro rata besaC on the amount granted to each reoIpIent.~ Andthe language In 

### thegoner81 Depertmental Appropriation Bill 

### towhloh we advert Is that proviso uhloh -*ys; Oprovlded, in l ooordanoe with said lewe, fhst the 

### ddmlnistretlve ex~ensee for any year shell never l xoeed five (3$) per oent of the total emount expended for Old Age ABBi8t8n08.a Considering W-888**two** quoted oleueee together, end bearing in mind that the TEX86Old AgeABBfBtanO0Fundis epproprIeted for end devoted to sly the twopurposes to *hioh mucholeuees relate, to-viii: the peypent of grant8 to~elIglbleagedend admlnl8tretlreexpensesof the TEXBB

**Cld A88** Assistenoe Commfasion it 08.11 be demonstrated, with aethemstIoU oerteinty, that no dodolt is pOBBibl0 et ‘the present ~time nor oen **beoome**possiblein thefuture. .ThIs is **beoeu#e** grhnts of l ##Istenoe era prorated where the funds~in the Old AgeABsIBtqntie lMndare fneufiloient to pey 6uoh grant8 in full, and **ed-** ~hinlrtratIte expenses are oorrespondingly limited by these reduced leelstenoe beneilts **by** reason ~ofthe express limitation of suoh lxpensse



### torive 

### (S$]per oetit of the total emo$nt expended for Old 

### 4e AB~iBt0IlO0. Sowe see that the Legisleture, In Its wisdom, by the prorises--abort quoted., oaueed 8xpendItures ror esslstenoe benetits **end** edmInlstretive expenses to keep step with the inoome rlndlng its wayInto the Texas Old AgeABBf8t8nO8 Fundfrom oertein
revenues in the weyof oo?upetlon taxes which era ellooeted to ruoh ~e;dn~der House Bill No. 0, Acts, ‘Sld Celled Session, Uth LegIS-

. Of oourse, enherelnebove 8tressed,-Our oonolusion that
no aotuel derIoIt exist.6 in the Texas Old AgeABBiBt8nO8Fundby
reason of the ieBuanoe Or aurrent ESBiBtano0 wafiBnti3 end EdBLiniBtr8-. tire ‘expense werrente against such Fundis grounded upon the preml68 that certain interest-bearing werrents theretofore issued in p8yXWnt of old age assIetenoe benefite~under authority o? rpeoftio stetutee, in the aggregate amountor $3,230,779.00 is not to be ooneldered
es a present eubsIstIng charge against the Texas Old AgeABBfBtBIIO8 Fund. WeHill nowprooeed to a determlnetlon of this queetlon, end
ror this purpose e **review** of~the legl#letlre beokgrou?d IS neoes#ery.

The iIr#t etetute up& this aubjeot is HOUSe Bill N6. 37, Chapter 496, Cenerel andSpecial Lews, 3rd Celled Session, UthHonorable Gee. H. Sheppard, Page S

Leglal~ture, the purpose of genoy Clause es roiiowg: which Is plainly stated in the EmerWSectIon 7. Thefeat that them era now accruing old age lsBi#tenoe beneiits in emounte greeter then the present monthly inoome to the Texas Old AgeAsslstonce Fund, the toot thet any tax bills pee#ed by the present Celled Session of the Leglsleture will likely not bring in eny.revenuee for sererel months, endthe -tact that it would be unfelr to require the reoeIplents of old age essI#tenoe ben.erIts to diroount their werrents' or oerry the interest burden of,the derIoIt, oreste en 6mergenoy e?d sn lmperstlre public neoeasIty i

. ."

,To this and, Section 1 of the cited not oleerly~ authorizes end requires the Texas Old 48 ABSiBtEno8Commission to issue interest-bearing warrants egeinst the TexaBOld AgeAeslstanoe Fundfor the payment of Old AgeAe#If#tenoe SenefltB, even though such fund should be olearly overdrawn and out of funds to pey euohwarrants. language ol this Seotlon Is es Sollowa:
wSeotlon 1. 'The Texas Old AgOABBIBtanO0Commission is hereby l

uthorlzed to pey interest, so long es Said werrents are unpeld, onwarrants issued 'against the Texas Old AgeABBfStanO0Pundfor the payment of old mgeeerfstanon benerlte whenthe cash belanoe of the money8deposited to the oredlt of said fund by the State of Texas is in- -8ufrloIent to psy In cash the State's pert of the pension requIremente; end there is hereby epproprieted out.or any aonwye BpprOpriBted to the Texas Old AgOAsBIBt8nO8Fund
a sutsIolent amountto pe:; interest oherge~~.eoorulng under this Act, but in the.everit thst interest Is paid
on or on eooount,or such warrants 8%authorized In this Aot, no suoh werrent, lsvac<. ror a s,ingle month, including both prlnolpel end Interest peld thereon or therefor, shell ever exceed Fiiteen(@S) Dollars of State money.W

it is further provided in the dot that the Old AgeABBIBtenO0 COUNU~BB~O~

IS not authorized to issue these interE#t-bearing .r warrants In axons8 of ~3,000,000.00 or miter Xeroh.l, 1937. Seotloa 2 of this Act provides thet the form end method of issuing such warrants and of paying the interest thereon shell be prescribed by the T0m6 Old AgeAesIetenoe Commleslon, endthe Comptroller'end Treasurer are authorized end directed to perform #uoh~dutiee as are required of themunder the Aot to EOOOmpliBh its purpose.Honorable Cao. H. Sheppard, Page 6

Underthis 8tetutory authority the Texee Old AgeAssfstanoe Commission, for end in behelf o$ the State of Texe8, ontered intO a oontreotual relation, erldenoed bywritten oontreot or date NovemberSS, 1936, with the Republic National RankandTrust Companyor Dallas, Texas, bythe term8 or whloh 8uohRankwee to purohese such interest-bearing werrents end hold themsubject to cell by the o$fIoials designeted in the not. Byreason **or** this statutory authorization end oontreot executed pursuant thereto, the TexasOld Age **ABBiEtenO0** Commiesfon We6able to oontfnue the payment In full or ell.granta of lssIstenoe to the aged or Taxes, out ol Income and revenue ellooeted to the Old AgeAB8fStBnO0 Fund, all in keeping with the re8ult Bought.to be eooomplIshed, beyond all doubt by the‘Leglsleture under theAot hereinabove disoueBed authorizing the issuance of interest-bearing wcrrente 60 the extent OS(3,000,OOO. This notion by~the Old AgeABBiBt8nO0CommIesion in e8eoutlng 8uoh oontreot end oontinuing with the peynmnt In full of old age eseletonce grants was in all things validated end confirmed byHouse Bill No. 1046, Acts Regular Saneion, 46th Leglsleture.

Again, in 1939, the Legialeture found, as molted In the emergency oleuee ot House Bill No. 179, Aote Regular Session, 46th Legislature, thst there were "now~,ocrulng old age eeei8tenoe benefitsin amounts greeter then th'e present monthly Ino?me to ihe Texas Old AgeAB8i#tenoe Fund,- end thet~mp tax bills pesBed by thi8 Legislature would likely not bring In any revenues for soverel months, end *it would be unfair to require the reoIpIents of old ego l#Bf#tenoe benefit6to dlsoount their warrants,or oerry the fnt8rEBt burden of the deilolt." Thererore, the Legisleture, byRouse Bill No. 179, Acts, Reguelr Session, 46th Legislature, again authorized the Taxes Old Age essIstanoe Conrmisslonto Issue Intereat-bearing werrente against the Texas Old AgeAssistance Fundfor the payment
or old age aselstenoe benetlts en though the cash belenoe of the money.deE;osIte,d to the credit of said Fundwas lnsutflolent to pay the State's part OSthe pension requirements. The emocnt or euph interest-bearing warrants which oould be so issued was lImIted to 

### 59G0,000.00.

AS in the case ot t;hefirst Statute upon thla aubjeot, the State of Texas, through It8 proper offlolels, hndunderthe euthorlty of the statute next eborecitedend disousBed, entered into oontraotuel relations with the Repilbllo National BankandTrust Compsny of Dallas, TeX66, on February 84, 1939, of like tenor, aSfact, end reading a8 the contreot heretcir~re desorlbed but Inyolvlng only interest-bearing warrants In.the emoimt ot ~900,000.00. The avowed purpose of this lest etetute end the oontraot thereunder, es the first, wee t0 allow the .Old48 Aseistanoe cpUah3iOn t0 OOnthUeHonorable Geo. H; Shipperd, Page 7

to pay In full a&l grants of 61dage lssIstenoe benetlts aged, end all acts of the Colllmieeloti In this regard were to the in ell'thlngs relideted end confirmed by House BIl% NO. 1046, Aots, Regular Session, 46th Leglelsture.

Theinterest-bearing nrrente 

### nowoutstending In the emount of $2,230,779.00, deeorIbed in your letter, Include not only interestbearing Wsrrsnts Inthe EBIO2ntOf #900,000.00 iseued bythe Taxes Old Aesfetanoe Commission under House Bill No. 179, Acts, Regular Session, 46th Legisleture, but the belenoe of interest-bearing warrants remaining unp&ld of the. #3,000,000.00 issue of suoh werrents authorized by House Bill No. 37, Chapter 496, Acts; 3rd Celled Session, 44th LegIsleture. TheLegIsleture provided byHouse Bill No. 179, Acts,, Reguiler~Seselon, 46th Legleleture .dor the retirement end lIquIdatlon of'thie Entire out-#tending bElEnC8Of~fntEMBt-b8er'iIIg WErrPntBiSSUEd under these 

### two

acts, et the times rnd in the EBIOUntB endmanner rlxed end provided by %OtfOnB 6 end 7 thewof. Andby reeecn or its oontrolllng 8rfEOt In determining whether mob outstanding werrente create 6present derlclt in the Old AgeASBfBt6~00 Fund, wecopy In full such portion or the Statute:

:&OtiOn 6 (,a) StEt0 Treasurer Payment OrOutstending Warrants, It Is provided thet the Treasurer of the State of Texas 8hell cell all warrants nowoutstending that have heretorore been iSBU0dunder the euthorlty and prorIelone of Chapter 496, Page 2084, Acts 1936, Forty-fourth Leglelatnre, Third Celled Session, end he la directed end euthorlzed to pay said werrents,~together with interest thereon, out Ofthe Tel88 Old AgeAssiatenoe Fund, eooor6ing to the SollowIng schedule:

uOnOctober 10, '1939, werrents In the ekount of Ones HundredThirty-Thousend, Nine Hundred endEighty-seven Dollars ($130,987) shell be o&led and peld bythe Tree8urer, together with Interest thereon, end onthe 10th day of each monththereafter, the Treasurer Is directed end authorized to cell andpsy the remslnlng outstand1 amountof TwoHundredThousand Dollars ( 200,000) per month, 3 rerrents In the together with Interest thereon, until euoh time es all outstanding warrants herelnebore referred to shall be called end paid in full, end there Is hereby epproprleted out of funds allocated in preeent end/or future laws of the Old Age Asslstenoe Funda cumBurrlolent to.pey BEidobligations end the Interest thereon.

Yieotion 6 (b) Same-'Peyment of Warrants Hereef~er ISSUed., 5he Treasurer of the State of Texas is dlreoted end authorlzed to 0611 end pay $lrrrrants fhst might hereafter beHonorable Ceo. H. Sheppard, Page S

issUOd.UUd8r andbyVIrtU8 O?th8 PrOVIsIOns O?this Act In epprorimate equal monthly lnetellments on the 10th day or the monthsMay, 1940, to September, 1940, both iholusive, together with intore& thereon, out or the Texas old AgeAssistanoe runa, ma there ie hereby appmprIat8a out 0r tunas allocated In present and/or rutur8 laws to the old Age Acslstanoe mna l summurioi8nt to pay said obligations andthe interest thereon.

"Section 7 (1) Issuanoes of State's Obligation ror Warrants Authorized. ,That theOld A&eAssistance CommIseI0n be and is hereby l uthorIzed and directed to crier to and deliver to th8 hbia8r, or holders, or the krrants whioh'may be lsaued under the provisions or this Aot and or the warrants heretorore Irsued r0r old ng8 ASS~~*CW~ Und8rauthority of Chapter.496, Page 8084, Acts 1936, Forty-fourth Legislature, Third Called Session, and now outstanding, the State.'a obligation in thesameprincipal amount, or amounts, In suoh forms and denominations as shall be determined by such Comml88lon,approved by the Attorney Generel, snd aooeptable to such holder, or holders, bearing interest at not to l xoeed one andsix-tenths (1.6) per cent per ennumor not to exceed the rate or.Interest which shall be pe1d on or on eooount of the warrants which meybe Issued under the terms or this Act, uhiohever rate 1s the lower. Said obligations shall bear dates to be fixed by the CommIssfonend shell mature exactly ecoording to the schedules set out In Section 6 hereor. "(3) State Treasurer-Duties. Uponexohange of the original warrants for the QbligatiOnS authorized hereunder~ the Stat8 Treasurer shall retain In his possession in
escrow as trustee said orl@nEl warrants until the obllgaticns herein authorized are paid In full. Andthe holder, or holders, or such obligations, In addition to all other rights, shell be subrogated to the rights of the holders of such originalwarrants. Uponpeynmnt of such obligation said original warrants shall be canoelW by the State Treasurer. There Is herob 

### l pproprieted~ out of
runas allocated In present and/or future lews to the Old AgeAssistance Funda EIUsuffiolent to pay said oblIgatlOne andthe interest thereon. "(3) Interest. Interest on such original warrants shall be paid in acoordanoe with the oontraot or oontracts under whfch they mere issued up to the date of the exohange for the obligations authorized herein.Honorab18 George H. Sheppard, Page 9

"(4) Obllge.tlons as S8Ourity iOr Stat.8 Deposits. Suoh obligations to b8 substituted therefor shall be 81lgib18 t0 secure deposits Of all funds Of the Stat8
or Texas, and 0r oountles, oltles, aistricts,,ana polltic81 SubdiViSiOnS Orand in th8 State OfTexas on the basis of one dollar principal amount of such obligbtions for eech dollar Ofdeposited funds.
“(5) Duties cr Stet8 orriO8rS. TheGove%or, State Treesurer, Attorney General, Texas oia AgeAssistbnc8 Commission, Comptoroll8r 0r Public Accounts, ena the s80- retary or State areherebydlIWOt8dto a0 anyand 811 ttt;g" necessary'to aooompllsh the purpose8 of this Seo-

."(6) Obllgctlcns Inoont8stsb18. Whensuch obllgations shall hare b88n issued in scoordanca with a resolution adopted by the **TOXOB** eia AgeAssistance Commission andshall hare beenepprored by the Attorney General, they shall be inoontestableandthe full faith and credit of the Stat8 Shall b8 plOdgOdt0 their paym8nt.w

w8 thinkthe 8ffOdt Ofthe above pUOt8dprovisions Of

**HOUS** Bill **NO.** 179, **AOtS, R8gUlar**  **S8sSicn,** 46th **LOgiEtlbtur8,** is to

. Oreat d8fOrrOd obllgetions Orthe Stat8 against the Texas Old Ag8 Asslstanoe Fund, with maturity dates in ecaordanca with the schedule

Thererore such interest-bearing warrants or TrOasUw $t%OatOB 1ssUOi in 1i8U thereoi oannot, by reason of such aefOr.TOd mnturlty dates, be oonsidere~ as present and subslstlng ohargea against the Texas Old Age AsslstEnoe Fund808s tocreate 8 d8riOlt th8rOln at this time. Themoving purpose and controlling Intent of the Leglsleture, in the enactment of the Aots h8rOlnabOV8 r8vi8wed, was to authorize the issuance OfwarrtntS against the .TeXeS old A68Assistanoe Punawhenthere were no tuna8 existing to pay said warrants, end to darer the payment of such warrants by allowing interest to 8ocrue thereon, with the expectancy that the income allocated to such fina rrom certain taxmeasures would in the future be **SUrfiOiOnt** to ru1iy pay auoh outstanding lnt8r8st-bearing warrants, along with 8urrent assistance and expense warrants: and until such time, to allow the old AgeAsSiSt8nO8 Commieeion to oontlnue to pay In rul1 current old age assistenoe b8nOfits andadmlnistretiV8 8Xp8lM;eS.

We, thererore, oonoluae that theTexas old Age Assletanca Fundat the present time has funds 8vailab18 for the payment of the~onorablo f380. H. Sheppard, Peg8 10

ld.ElinistrOtiVO aalari8s and 8XpOn88sm8ntloned in four letter, and that you say lawfully is8118varrants against uoh Fundor the Tex8s Old AgeAdministration Fund, 8 IIOn-•tatUtOw fund Or88tOd for oonTenieno8, in ecoordanoe with th8 governing D8partmental Approprietion Bill,

Trusting the foregoing tully lnswers your inquiry, weore
Icur VOW truly

By (Signed) Pat Y. Herr, Jr,

Pat Y. m8rr Jr. Amairtnnt

APPROVED ADO19, 1939 (si@IOa) GOrSla c. MaInI ATTORWEY GENERAL OF TEXAS Approvea OpilliOn COZldtt88