,-, 

OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

Ronormble Ceo, H. Rhepp8rd 

ComDtmller of Public Acocmits 

Austin, Texas 

@seer Sir: 

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 and are now outstanding 

37, Acte, 44th Legislature, 

11s Roe. 179 end 1046, date, 

n; and under osrtain pro-. 

by the Legislature these 

ant deferred lIrbIl~tI.~ 

which are to be retfred at future dates as direoted by 

House Bill Ro. 179, supre, and provisions or oontmots 

entered Into by and between the T~XU Old Age AesIetanoe 

Commission and holders of raid warrants, whloh controote 
Honorable George H. Sheppard, Peg8 E 

waze exeouted by virtue of authority oontelned In raid 

lBW& Ret&rement of these obligrtlons egeinat the TOXEB 

Old Age Aseietenoe 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 Of the Texee Old Age Aeslet- 

- en08 Lew dthln the limits or thet Ler. 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 

to pey l ll grants In fill, the 8eme should be peld prorate 

based on the amount granted 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 eeme are oolleoted, to the Old Age Assistance Pund to 

.be 8xpendeU r0r purposes or carrying out provielons 0r the 

'bid Age Aseiatanoe Lewa, By these mentioned provisions or 

the laws 0r Texas, when ourrent 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 BO that no 

actual deflolt oen l oorue when eeaIetenoe warrants end edministrative expense verrante are issued. 

wWt3rrantt8 In payment or edminlatratire expenses are 

drawn from the Taxa Old Age AdmInIstratIon Fund, uhioh 

fund ie created (not by Statute) by transfer of money from 

the Texas Old Age ~esIetenoe Pund to the AdmInIstratIon 

Fund, end after the tranerer Is made the 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 What pro- 

+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, oommonly known es 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 kSBiBt8nO0 ConuIIIrrIon, a dIvlalcn of the State 

Board Or COntrOl, End in this oonnection ahkes the tollowIng appropriction from the Texan Old Age Aerietenoe Fund: 

“Al.1 inoome to the TEXEB Old Age Assietanoe Fund 

together with any balenoee on hand st 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 Age AsBirtanoe 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 Age ABBiBtanO8 Laws, and for 

payment ot intereet bearing rarrents, together with interest 

thereon, outstanding on AUgUBt 51, 1937, that were ieeued 

einet the Texer Old Age A#ri#tanoe lknd under the proBiOZlB Or House Blll 37, ALetS of the Forty-rourth Legis- 

‘lEturn, Third Celled Session; provided, In accordance with 

reId laws, that the edminlstratIve expensee ior any year 

rhell never exoeed rive per cent of the total amount exI. prnded for Old Age Assietenoe. 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 and pay additional rdmInletretire expenses; provided In all events‘the total expendIturee 

fqr all administration ohs11 not 8xoeed flre~per cent of 

the total expenditures ror old eeeIstenoe, end that no 

eddltlonel ~employee used shell be paid larger ~elsrlea then 

are’ above fixed ror emp~loyees rendering ~lmller mervIoes.w 

In order to determine whether tlie~e are currently any avsil- 
. . I 

Honorable Coo. B. Sheppard, Page 4 

oherg* against the Old Age A#elstenoe Fund, then It must follow, 

by virtue of certain provleIons in the Old 4e Pension Law and the 

Depertmentsl Approprlttlon Aot, that there Is not now a derlolt 

in the Old .Ag.e Asaiet&noe ?und. 

The provision In the Old Age Aesietenoe Aot., House Bill 

No. 0, Acts, 3rd Celled Session, Uth LegIsleture, to which we 

rarer fs that clause In Section llb of Article 8 of said Abt, whloh 

.reedB : *Provided thet If the rund, is InsuSfIolent to pay all grants 

in full, the same should be paid pro rata besaC on the amount 

granted to each reoIpIent.~ And the language In the goner81 Depertmental Appropriation Bill to whloh 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 

TEX86 Old Age ABBfBtanO0 Fund is epproprIeted for end devoted to 

sly the two purposes to *hioh much oleuees relate, to-viii: the peypent of grant8 to ~elIglble aged end admlnl8tretlre expenses of 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 possible in the future. .ThIs is beoeu#e grhnts 

of l ##Istenoe era prorated where the funds~ in the Old Age ABsIBtqntie lMnd are fneufiloient to pey 6uoh grant8 in full, and ed- 

~hinlrtratIte expenses are oorrespondingly limited by these reduced 

l eelstenoe beneilts by reason ~of the express limitation of suoh 

l x p ensse to rive (S$] per oetit of the total emo$nt expended for Old 

4e AB~iBt0IlO0. So we 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 way Into the Texas Old Age ABBf8t8nO8 Fund from oertein 

revenues in the wey of oo?upetlon taxes which era ellooeted to ruoh 

~e;dn~der House Bill No. 0, Acts, ‘Sld Celled Session, Uth LegIS- 

. 

Of oourse, en herelnebove 8tressed,-Our oonolusion that 

no aotuel derIoIt exist.6 in the Texas Old Age ABBiBt8nO8 Fund by 

reason of the ieBuanoe Or aurrent ESBiBtano0 wafiBnti3 end EdBLiniBtr8-. 

tire ‘expense werrente against such Fund is 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 amount or $3,230,779.00 is not to be ooneldered 

es a present eubsIstIng charge against the Texas Old Age ABBfBtBIIO8 

Fund. We Hill now prooeed 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 and Special Lews, 3rd Celled Session, Uth 
Honorable Gee. H. Sheppard, Page S 

Leglal~ture, the purpose of 

genoy Clause es roiiowg: 

which Is plainly stated in the EmerWSectIon 7. The feat that them era now accruing 

old age l sBi#tenoe beneiits in emounte greeter then 

the present monthly inoome to the Texas Old Age Asslstonce 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, end the 

-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 ABSiBtEno8 Commission to issue interest-bearing warrants egeinst the TexaB Old Age Aeslstanoe Fund for 

the payment of Old Age Ae#If#tenoe SenefltB, even though such fund 

should be olearly overdrawn and out of funds to pey euoh warrants. 

language ol this Seotlon Is es Sollowa: 

wSeotlon 1. 'The Texas Old AgO ABBIBtanO0 Commission 

is hereby l uthorlzed to pey interest, so long es Said 

werrents are unpeld, on warrants issued 'against the Texas 

Old Age ABBfStanO0 Pund for the payment of old mge eerfstanon benerlte when the cash belanoe of the money8 deposited 

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 AgO AsBIBt8nO8 Fund 

a sutsIolent amount to 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 Age ABBIBtenO0 

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 Age AesIetenoe Commleslon, end the Comptroller'end 

Treasurer are authorized end directed to perform #uoh~dutiee as are 

required of them under the Aot to EOOOmpliBh its purpose. 
Honorable Cao. H. Sheppard, Page 6 

Under this 8tetutory authority the Texee Old Age Assfstanoe Commission, for end in behelf o$ the State of Texe8, ontered 

intO a oontreotual relation, erldenoed by written oontreot or 

date November SS, 1936, with the Republic National Rank and Trust 

Company or Dallas, Texas, by the term8 or whloh 8uoh Rank wee to 

purohese such interest-bearing werrents end hold them subject to 

cell by the o$fIoials designeted in the not. By reason or this 

statutory authorization end oontreot executed pursuant thereto, the 

Texas Old Age ABBiEtenO0 Commiesfon We6 able to oontfnue the payment 

In full or ell.granta of l ssIstenoe to the aged or Taxes, out ol 

Income and revenue ellooeted to the Old Age AB8fStBnO0 Fund, all in 

keeping with the re8ult Bought.to be eooomplIshed, beyond all doubt 

by the‘Leglsleture under the Aot hereinabove disoueBed authorizing 

the issuance of interest-bearing wcrrente 60 the extent OS (3,000,OOO. 

This notion by~the Old Age ABBiBt8nO0 CommIesion in e8eoutlng 8uoh 

oontreot end oontinuing with the peynmnt In full of old age eseletonce grants was in all things validated end confirmed by House 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 

benefits in amounts greeter then th'e present monthly Ino?me to ihe 

Texas Old Age AB8i#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 benefit6 to dlsoount their warrants,or oerry the fnt8rEBt 

burden of the deilolt." Thererore, the Legisleture, by Rouse Bill 

No. 179, Acts, Reguelr Session, 46th Legislature, again authorized 

the Taxes Old Age essIstanoe Conrmisslon to Issue Intereat-bearing 

werrente against the Texas Old Age Assistance Fund for the payment 

or old age aselstenoe benetlts en though the cash belenoe of the 

money.deE;osIte,d to the credit of said Fund was lnsutflolent to pay 

the State's part OS the 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;he first Statute upon thla aubjeot, 

the State of Texas, through It8 proper offlolels, hnd underthe euthorlty of the statute next ebore cited end disousBed, entered into 

oontraotuel relations with the Repilbllo National Bank and Trust 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 .Old 48 Aseistanoe cpUah3iOn t0 OOnthUe 
Honorable Geo. H; Shipperd, Page 7 

to pay In full a&l grants of 61d age l ssIstenoe 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. 

The interest-bearing nrrente now outstending In the emount 

of $2,230,779.00, deeorIbed in your letter, Include not only interestbearing Wsrrsnts In the EBIO2nt Of #900,000.00 iseued by the 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. The LegIsleture provided by House Bill No. 179, Acts,, 

Reguiler~Seselon, 46th Legleleture .dor the retirement end lIquIdatlon 

of'thie Entire out-#tending bElEnC8 Of~fntEMBt-b8er'iIIg WErrPntB iSSUEd 

under these two acts, et the times rnd in the EBIOUntB end manner 

rlxed end provided by %OtfOnB 6 end 7 thewof. And by reeecn or its 

oontrolllng 8rfEOt In determining whether mob outstanding werrente 

create 6 present derlclt in the Old Age ASBfBt6~00 Fund, we copy In 

full such portion or the Statute: 

:&OtiOn 6 (,a) StEt0 Treasurer Payment Or Outstending 

Warrants, It Is provided thet the Treasurer of the State 

of Texas 8hell cell all warrants now outstending that have 

heretorore been iSBU0d under 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 Of the Tel88 Old Age Assiatenoe Fund, eooor6ing to the 

SollowIng schedule: 

uOn October 10, '1939, werrents In the ekount of Ones 

Hundred Thirty-Thousend, Nine Hundred end Eighty-seven 

Dollars ($130,987) shell be o&led and peld by the Tree8urer, 

together with Interest thereon, end on the 10th day of each 

month thereafter, the Treasurer Is directed end authorized 

to cell and psy the remslnlng outstand1 

amount of Two Hundred Thousand 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 Fund a cum Burrlolent to.pey BEid obligations 

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 be 
Honorable Ceo. H. Sheppard, Page S 

issUOd.UUd8r and by VIrtU8 O? th8 PrOVIsIOns O? this Act 

In epprorimate equal monthly lnetellments on the 10th 

day or the months May, 1940, to September, 1940, both 

iholusive, together with intore& thereon, out or the 

Texas old Age Assistanoe runa, ma there ie hereby appmprIat8a out 0r tunas allocated In present and/or rutur8 

laws to the old Age Acslstanoe mna l sum murioi8nt to 

pay said obligations and the interest thereon. 

"Section 7 (1) Issuanoes of State's Obligation ror 

Warrants Authorized. ,That the Old A&e Assistance 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~ 

Und8r authority of Chapter.496, Page 8084, Acts 1936, 

Forty-fourth Legislature, Third Called Session, and now 

outstanding, the State.'a obligation in the same principal 

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 and six-tenths (1.6) 

per cent per ennum or not to exceed the rate or.Interest 

which shall be pe1d on or on eooount of the warrants 

which mey be Issued under the terms or this Act, uhiohever rate 1s the lower. Said obligations shall bear 

dates to be fixed by the CommIssfon end shell mature exactly ecoording to the schedules set out In Section 6 

hereor. 

"(3) State Treasurer-Duties. Upon exohange 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. And the 

holder, or holders, or such obligations, In addition to 

all other rights, shell be subrogated to the rights of the 

holders of such original warrants. Upon peynmnt 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 

Age Assistance Fund a EIU suffiolent to pay said oblIgatlOne 

and the 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 Or and in th8 State Of Texas on the 

basis of one dollar principal amount of such obligbtions 

for eech dollar Of deposited funds. 

“(5) Duties cr Stet8 orriO8rS. The Gove%or, State 

Treesurer, Attorney General, Texas oia Age Assistbnc8 

Commission, Comptoroll8r 0r Public Accounts, ena the s80- 

retary or State are hereby dlIWOt8d to a0 any and 811 

ttt;g" necessary'to aooompllsh the purpose8 of this Seo- 

. 

"(6) Obllgctlcns Inoont8stsb18. When such obllgations shall hare b88n issued in scoordanca with a resolution adopted by the TOXOB eia Age Assistance Commission 

and shall hare been epprored by the Attorney General, they 

shall be inoontestable and the full faith and credit of 

the Stat8 Shall b8 plOdgOd t0 their paym8nt.w 

w8 think the 8ffOdt Of the above pUOt8d provisions Of 

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

. Oreat d8fOrrOd obllgetions Or the 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 Fund 80 8s tocreate 

8 d8riOlt th8rOln at this time. The moving purpose and controlling 

Intent of the Leglsleture, in the enactment of the Aots h8rOlnabOV8 

r8vi8wed, was to authorize the issuance Of warrtntS against the 

.TeXeS old A68 Assistanoe Puna when there 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 tax measures 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 Age AsSiSt8nO8 Commieeion to oontlnue to pay In rul1 current old age assistenoe b8nOfits and admlnistretiV8 8Xp8lM;eS. 

We, thererore, oonoluae that the Texas old Age Assletanca 

Fund at the present time has funds 8vailab18 for the payment of the 
~onorablo f380. H. Sheppard, Peg8 10 

l d.ElinistrOtiVO aalari8s a nd 8XpOn88s m8ntloned in four letter, 

and that you say lawfully is8118 varrants against uoh Fund or the 

Tex8s Old Age Administration Fund, 8 IIOn-•tatUtOw fund Or88tOd 

for oonTenieno8, in ecoordanoe with th8 governing D8partmental Approprietion Bill, 

Trusting the foregoing tully l nswers your inquiry, we ore 

Icur VOW truly 

By (Signed) Pat Y. Herr, Jr, 

Pat Y. m8rr Jr. 

Amairtnnt 

APPROVED ADO 19, 1939 

(si@IOa) GOrSla c. MaInI 

ATTORWEY GENERAL OF TEXAS Approvea 

OpilliOn COZldtt88