JIM MAllOX Attorney General

supm OolJrt sulwng

‘

. 0. Box 12545 **rurwt. TX**  **75711.2545 51w75.2501**  **Telex 2lw74lS7**  **hcoplw 513l47bo2w** 

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43WN.lOll*r4SUluS uanm,Tx. 75wl-lws **31-7** 

### aloualnRu4sLin.400 **5ulAnlonlo.Tx.~7 512R25415l** 

**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. opinionno. m-300
Re: Whether the Employees Retirement

System is entitled to depository intereat on a particularfuud under article 6543d.V.T.C.S.


### Dearl4r. Gerriwn:
You request am.

opinion from thie office conceroing the dispoaition of deporitory.:lnterest earned by an lccount held. by the atate treaeurer .ou .behalf**of** the Lav Rnforcemeut and Cuetodial Officer .SupplemutelRetircmmt Fund. .Thia account,deeignatedFund 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 informue thatwhile the fund retains the incoW derived from iuvestnut made~owtridethe state treasury,it has not been credited with 

### the depository interest

earnedby Pund No. 977. Accordingly, you l k vhether 

### the fund-is entitled to **mxh** interest **and,** if so, whet 

### ~uthod shouldbe wed 

### to calculete previously

eccumulated

Interest

not 

### credited

to Fund lo. 977.

.. ’ .:: & ~&&ory provisionrelevant'to the diapoaitior'of depository futerest.i8l

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 lc o u nt e in the. charge of the Stat11

Treenurershallbe allocated,eefollavs: _~ '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 monthlybasis.

.

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

V.T.C.S. art. 2543d. il. This office has deteruined ou nuuerous occasiousthat in additionw the funds exeupted above, assetsheld 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 trusteeor trustees, (2) tbat the assets sre neither grantedto the state in its sovereign capacitynor collectedfor the general operation of **state** governmeat. and (3) that they are to bezspent 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 eutitledto retain the proceeds frou their investment. Attorney General Opinions MW-481 (1982); U-468 (1969). Cf. Attorney General Opinion B-1243 (1972) (interestearned 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 GeneralOpiniou If-468 (1969). SLe Lausonv. 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 RetirementSystem. V.T.C.S.Title 1lOB. Public RetirementSyntema, '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:.TitlellO: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 expresslymade 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 retirementfund itselfend not depositedin **the** generalrweuue fund.
Your ,ucond inquiry~concerne the'proper

method of creditingthe retirementfund **for** interel#t l erned in previousyears. We are unable to giv~e

Advice AS to the specificaccounting method or tims intervals tQ be -usedin 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)

fundhAS 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!:SuppleuentelRetireuent Fuod). **Conre** quAAtlY* the retiremeot fund la entitled to credit for depository ioterest**from** that date. Before **the** retireuentfund pay be’credited with this interest, however. esrtain lioitations~ oo the use of trenoury

fundsmst be coucidered.
Article VIII, section 6 of the **TexAr** Constitutiooprohibits 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 **oeverthe** less subjectto 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 specificAppropriation before **AO~** ioterest erroneourlydeposited in the generalreveouefundmy **be** returnedto the retirement fund.

SUIIMARY
The tnr tnforcement and Custodial Officer Suppleuental

Retlcemeot Fund must be creditedfor 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,

OpioionColnittce 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

.