Hon. David Wade, M.D., Commissioner Texas Department of Mental Health and Mental Retardation Box 12668, Capitol Station Austin, Texas 78711

Dear Dr. Wade: Opinion No. H- 50 Re: Whether Department

ofMental Health and Mental Retardation can use appropriated funds to pay wages for aperiod oftime when it is claimed the employee was unlawfully terminated etc., and related questions. You have requested the opinion ofthis office inanswer to the following questions:

“1. Is this Department authorized to use appropriated

funds topay back wages toa claimant pursuant toa conciliation agreement under Public Law No. 92-261 or Executive Order 11246 . . . .?

“2. Ifyour answer . . . is inthe affirmative, from what source . . . .?

“3. Ifyour answer . . . is inthe affirmative, can such wages be paid for any period oftime subsequent to a rejected offer bythis Department to reemploy

. . . , promote . . . or employ the individual
. . .? Inanswering . . . , please consider
. . . situations: (a) Where itwas agreed that full wages be paid for the period prior to such offer

. . , ; or

p. 207The Honorable David Wade, page 2 (H-50)
(b) Where itwas not agreed that full wages be paid for the period
. . . and
. . . the claim for such prior wages was preserved; or (c) Where itwas not agreed that full wages bepaid for the period
. . . and the
. . . claim for such prior wages was required to be forfeited as a condition ofthe offer
. . . .” Section 6ofArticle 8ofthe Texas Constitution provides (inappropriate part): “No money shall be drawn from the Treasury but

inpursuance of specific appropriations made by law; nor shall any appropriation ofmoney be made for alonger term than two years . . . .” There must bea specific appropriation for the purpose for which ,moneys are to be drawn from the State Treasury. National Biscuit Co. v. State, 135S.W. 2d 687 (Tex. 1940);State v. Angelina County, 150S.W. 2d 379 (Tex. 1941); Bullock v. Calvert, 480 S.W. 2d 367 (Tex. 1972). The purpose for which such payments are sought must be matched against the purposes for which funds have been appropriated. Pursuant to a conciliation agreement under Public Law No. 92-261 or an agreement under Executive Order 11246, payment of “back wages” is to be made toa claimant as compensation for aperiod oftime that the claimant allegedly was unlawfully terminated, denied promotion or denied employment bythe Department because of race, color, religion, sex or national origin. A conciliation agreement is acontract. Funds would be available only ifthe contract is one within the power ofyour Department to make. Absent such authority, any contract made would be void. Article 3, Section 44, Texas Constitution, provides inpart, “The Legislature
. . . shall not . . . grant by appropriation or otherwise, any amount of money out ofthe Treasury ofthe State, to any individual, ona claim, real or pretended, when the same shall nothave been provided for

p. 208The Honorable David Wade, page 3 (H-50)
by pre-existing law
. . .,” Fort Worth Cavalry Club v. Sheppard, 83S.W. 2d 660 (Tex. 1935); Bullock v. Calvert, supra. The Equal Employment Opportunity Commission (42 U.S.C. Section 2000 e-4), upon the filing of charges alleging an employer has engaged in unlawful employment practices, shall investigate the charge, and, ifit determines that there is reasonable cause to believe that the charge is true, it “shall endeavor to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion. ” 42 U.S. C. Section 2000 e-5(b). We assume here that the conciliation agreement under Public Law No. 92-261 towhich you refer would be an agreement arrived at under such circumstances. That Act defines certain employment practices as unlawful (42 U.S.C. Section 2000 e-2) and creates a civil action which may be pursued after exhaustinn of specified administrative remedies, including an attempt to secure a satisfactory conciliation agreement by negotiations between the Commission and the employer (42 U.S. C. Section 2000 e-5). The powers ofthe Texas Department ofMental Health and Mental Retardation are set forth inArticle 5547-202, Vernon’s Texas Civil Statutes. Thepower to enter into such a contract does not appear and there is no preexisting law specifically authorizing such payments. Although the Legislature has authorized some agencies to settle claims in certain situations (see, for instance Articles 796-802, 828, 835f, 2351 (lo), 6252-19 Section 10, V. T. C.S.), we find no such power vested inthe Department ofMental Health and Mental Retardation. The current appropriations bill allocates nofunds for payment under such a contract. The only allocation which possibly could permit such payment is line item 12ofthe appropriation tothe Department ofMental Health and Mental Retardation, reading as follows:

“12. Other Operating Expenses, including maintenance and repairs, court costs, $25 per diem for Board members, capital outlay and all other activities for which no other provisions are made (including Legal and Claims Division) but excluding airplane maintenance and operating expenses. ”

p. 209The Honorable David Wade, page 4 (H-50)

Senate Bill No. 1, Third Called Session, 1972, p. 11-8. Since nopreexisting law authorizes the Department to enter the type contract under discussion, it is our conclusion that payment thereunder would not constitute an “operating expense” within the above appropriation. Itis our opinion that the Department, by reason ofArticle 8, Section 6, Texas Constitution, is not authorized to use appropriated funds for payments under such conciliation agreements based onavoidance of “damages. ” We turn now to adiscussion ofconciliation agreements negotiated under Executive Order 11246. Section 202 ofitprovides for inclusion of alengthy provision ingovernment contracts whereby the contractor (such as the Department) agrees not to discriminate against employees or applicants because of race, color, religion, sex. or national origin, and to comply with certain rules andfollow certain practices therein enumerated or referred to, for the purpose of encouraging equal employment opportunities. Section 209 ofthe Order sets forth sanctions and penalties which may be imposed upon violation ofthe non-discrimination provisions ofthe contract. Section 209(a) (5) permits cancellation or suspension ofacontract for failure ofthe contractor to comply with the non-discrimination clauses, butSection 209(b) requires that anattempt to secure compliance by methods including conciliation be made before the contract is cancelled or suspended under subsection (a)(5). We assume for purposes ofthis part ofthe discussion that the conciliation agreement under Executive Order 11246to which you refer is an agreement arrived at under such circumstances. The powers ofthe Texas Department ofMental Health and Mental Retardation are set forth inArticle 5547-202, Vernon’s Annotated Civil Statutes. Section 2.15 thereof provides as follows: “The Department may negotiate with any agency ofthe United States inorder to obtain grants toassist inthe expansion and improvement ofmental health and mental retardation services in this state. ” We assume the original contracts under consideration were negotiated under Section 2.15 and contain the non-discrimination clause provided for inthe Executive Order. Ifsuch is the case, then it is apparent that a

p. 210The Honorable David Wade, page 5 (H-50)
renegotiation under Section 209(b), guaranteeing future compliance with the original provisions and certain “back pay” concessions in exchange for forgiveness and waiver ofany prior violations, would bewithin the power ofthe Department under Section 2.15, especially ifmatching federal grants ofmoney are involved, inview ofthe adoptable language ofArticle 3, Section 51aofthe Constitution. We think that under such anagreement the Department would be authorized to use appropriated funds for payments as required by the contracting federal agency. Such payments, however, would not be paid as “back wages, ” since they would not be in payment for services rendered to the Department. Instead, they should be understood,as contractual adjustments necessary to secure continued benefits under federal contracts. Such payments therefore should be made from the funds appropriated in connection with securing the federal contract for the continuation ofwhich such concessions are to be made, Inanswer toyour third question itis our opinion that payments, if made, should be made according to negotiated terms the Department considers fair. Inthis connection it should be noted that Section 209(b) ofExecutive Order 11246does not specifically mention “back pay” concessions, but merely directs that the contracting federal agency “shall make reasonable efforts within a reasonable time limitation to secure compliance with the contract provision ofthis Order by methods of conference, conciliation, mediation, and persuasion . . . before a contract shall be cancelled or terminated.
. . .” SUMMARY The Department ofMental Health and Mental Retardation is not authorized by pre-existing law to use appropriated funds to pay “back wages” to claimants under Public Law No. 92-261 pursuant to extra-judicial “conciliation agreements, ” butit is authorized to adjust its contractual differences with the federal government pursuant to Executive Order 11246, which legal adjustments may encompass arrangements having the same practical effect as

p. 211The Honorable David Wade, page 6 (H-50)

“back wages” payments. Such adjustments may be made upon whatever terms (consistent with its original authority) the Department of Mental Health and Mental Retardation considers just and fair. Very truly yours, 

# u Attorney General of Texas APPROfiED:

DAVID M. KENDALL, Chairman Opinion Committee

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