JIM MAllOX 

Attorney General 

supm OolJrt sulwng 

‘. 0. Box 12545 

rurwt. TX 75711.2545 

51w75.2501 

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An 5eudolloAnnrr . . 

Afnmm(k Adlql5molqw 

The Attorney General of Texas 

Hewh 18. 1985 

Mr. Clayton T. G6rrbon 

Eucutive Director 

prployces Retiremew: System 

of Tuu 

P. 0. Box 13207 

Auotin* TexaB 787Ll. 

opinion no. m-300 

Re: Whether the Employees 

Retirement System is entitled 

to depository intereat on a 

particular fuud under article 

6543d. V.T.C.S. 

Dear l4r. Gerriwn: 

You request am. opinion from thie office conceroing the dispoaition of deporitory .:lnterest earned by an l ccount held. by the atate 

treaeurer .ou .behalf of the Lav Rnforcemeut and Cuetodial Officer 

.Supplemutel Retircmmt Fund. .Thia account, deeignated Fund No. 977 

by the etete treaturer, is estebliehed es a pert of the Employees 

Retirement.Syrtem cf Texas. a portion of whose esoete is credited to 

the fund. V.T.C.S. Title llOB, Public Retirement Systems, (25.306(7) 

(1985Pamphlet). 

Pou inform ue that while the fund retains the incoW derived from 

iuvestnut made~owtride the state treasury, it has not been credited 

with the depository interest earned by Pund No. 977. Accordingly, you 

l k vhether the fund-is entitled to mxh interest and, if so, whet 

~uthod should be wed to calculete previously eccumulated Interest not 

credited to Fund lo. 977. 

..’ 

.:: & ~&&ory provision relevant'to the diapoaitior'of depository 

futerest.i8 l rticlw2543d~~V.T.C.S.. which provides the follcuing in 

pertinent part: i' 

Intertat~receive~ on accouut of the deposita 

of- moueya iu funds. and l c o unte in the. charge of 

the Stat11 Treenurer shall be allocated ,ee follavs: 

_~ 'C To ,uch~-.constitotionel fund there .&all be 

credited: the pro tata portion oft the. inter&t 

received due to such ‘fund. The remeinder of the 

: .lnterert ireceived; with the. exception of thnt' 

'~ .~ iportion-,wquired.by other statutea'to bi ~creditkd 

:on a,.prwrata basis to protected tax pajmkntr. 

Au111 br. credited to the General Rweme Pund. 

Tha intweet received shell be allocated on e 

monthly basis. 

. 

p. 1355 
Mr. Cleytou T. Garrison - Ptrge 2 (JR-300) 

V.T.C.S. art. 2543d. il. This office has deteruined ou nuuerous 

occasious that in addition w the funds exeupted above, assets held in 

the foru of A trust sre alw exempt frou the requirements of article 

2543d. See Attorney Gene181 Opinious RR-338 (1981); IN-82 (1979); 

E-1040 cl-); n-468 (1969). 

The opinions just cited establish that in order to be characterized as trust funds, the assets in question should reflect, auong 

other things, (1) that they are aduinistered by a trustee or trustees, 

(2) tbat the assets sre neither granted to the state in its sovereign 

capacity nor collected for the general operation of state governmeat. 

and (3) that they are to bez spent and invested for specific, limited 

purposes and for the bemfit of A specific group of individuals. 

Being in the ueture of a trust , such assets are eutitled to retain the 

proceeds frou their investment. Attorney General Opinions MW-481 

(1982); U-468 (1969). Cf. Attorney General Opinion B-1243 (1972) 

(interest earned in join~~uuds must be deposited into the general 

revenue fund). The saue theory applies to interest earned ou tiue 

deposits of these assete. kttorney General Opiniou If-468 (1969). SLe 

Lauson v. BaRer, 220 S.U. 26'S, 272 (Tex. Civ. App. - Austin 1920. writ 

ref’d). Accordingly, thqr are not ,subject to the provisions of 

article 25436. Attorney Gencr~l Opinions Ml-82 (1979); Ii-1040 (1977). 

In ours opinion, ths Lav Enforcement and Custodial Officer 

Sappl-tal Retirement Puud is A trust fund entitled to retain 

depository interest. The retireuent fund is administered by the board 

of trustees of the Euployeos Retirement System. V.T.C.S. Title 1lOB. 

Public Retirement Syntema, '125.101 (1985 Pauphlet). This office has 

previously deteruined that: the assets of the Euployees Retireuent 

system, of uhich the retitement fund is A part, exe trust funds. 

Attorney General Opinion UW-565 (1959). The retireueut fund is not 

collected for. the general. operation of the state; rether, it is 

AVAihblA Ody t0 PAY "supplemsntal retir-t and death benefits to 

lau enforcement And cuetodf,al officers" and for "edministratiou of the 

fuod.” .P.T.C.S:.Title llO:B, w. 525.313(b); ~' The method and form 

of lnvestmmt of retirement fund assets are limited, see V.T.C.S. 

Title 1lOB. m. 1125.103(c) end '25.302. and the proceeds of any 

such investment are expressly made part ~of the retir-t fund. See 

V.T.C.S.I-.Title llOB, Sara. 125.313(a). These features iiK. 

eufficient. iu oar view, to, remove the .retiremsnt fund from the 

coverage, :-of article 2543d,, The interest eerned on deposits of the 

retirement~fund, therefore, arot,be credited ~to the retirement fund 

itself end not deposited in the general rweuue fund. 

Your ,ucond inquiry ~concerne the'proper method of crediting the 

retirement fund for interel#t l erned in previous years. We are unable 

to giv~e Advice AS to the specific accounting method or tims intervals 

tQ be -used in cakulating 'past interest.. The ansuer to this question 

depends on ioformetion act provided by your request -- a, the 

terms. duration, sod types Iof deposits , appliuble rates of IntSrSSt. 

etc. We c*n 8tate *a e geueral matter. however. that the retirement 

p. 1356 
. 

Mr. Clayton T. Gerriroo - Page 3 (JR-300) 

fund hAS exhibited the l foleuentioned trust fund ChAYACtAYi6tiCS since 

its crention in 1979. St,e Acts 1979. 66th Leg., eh. 269, et 528 

(Meting foroer nrticle~~iSf-1. V.T.C.S., l steblishing LAW Enforccmt And Curtodinl Off ICC!: Suppleuentel Retireuent Fuod). ConrequAAtlY* the retiremeot fund la entitled to credit for depository 

ioterest from that date. Before the retireuent fund pay be’ credited 

with this interest, however. esrtain lioitations~ oo the use of 

trenoury funds mst be coucidered. 

Article VIII, section 6 of the TexAr Constitutioo prohibits 

vithdreunl of funds from the stnte treneury in the Absence of 

legirlative l ppropriatioo. The TeXAs Supreue Court he8 held that 

fundr l rroueously deposite~l in the general revenue fund are oevertheless subject to this couetltutionel liuitetion end uy oot be removed 

frou the trenrury uithout :lc!gisletive actlou. lienion v. Lockhnrt. 114 

S.W.2d 216. 219 (Tex. 1938:l.s Accordingly. the legislnture uost make a 

specific Appropriation before AO~ ioterest erroneourly deposited in 

the general reveoue fund my be returned to the retirement fund. 

SUIIMARY 

The tnr tnforcement and Custodial Officer 

Suppleuental Retlcemeot Fund must be credited for 

ioterest earned on deporits of the fund. Any 

interest previourly deposited in the geoeral 

rwenue fund uurt receive epecified legirlative 

l pproprintion ba:Eore return to the retireueot 

fund. 

~+tYJy-& 

MATTOI 

Attorney hOerA of Texae 

TonGRan 

F%rrt Assistant Attorney General 

DAVID R. RICRARDS 

Executive ASSiStAnt Attorney CaoerAl 

RIa( GILPIR 

Chairman, Opioion Colnittce 

Prepared by Rick Gilpin 

AsSiAtAnt Attorney GeoerAl 

p. 1357 
Mr. Claytoo t. Garrbou - PASS 4 (Jn-300) 

AFPsmm: 

0PIn101 cmmxntP 

Rick Gilpin, CIuirmm 

JonBible 

CollaCarl 

suun&rriAon 

Tar* m=-=Y 

Jim Moellinger 

Jmntfer Uggs 

IlAuy suttm 

p. l358 

.