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 

of Mental Health and 

Mental Retardation 

can use appropriated 

funds to pay wages for 

a period of time when 

it is claimed the employee was unlawfully 

terminated etc., and 

related questions. 

You have requested the opinion of this office in answer to the following 

questions: 

“1. Is this Department authorized to use appropriated 

funds to pay back wages to a claimant pursuant to a 

conciliation agreement under Public Law No. 92-261 

or Executive Order 11246 . . . . ? 

“2. If your answer . . . is in the affirmative, from 

what source . . . .? 

“3. If your answer . . . is in the affirmative, can 

such wages be paid for any period of time subsequent 

to a rejected offer by this Department to reemploy 

. . . , promote . . . or employ the individual . . . ? 

In answering . . . , please consider . . . situations: 

(a) Where it was agreed that full wages 

be paid for the period prior to such offer 

. . , ; or 

p. 207 
The Honorable David Wade, page 2 (H-50) 

(b) Where it was not agreed that full wages 

be paid for the period . . . and . . . the 

claim for such prior wages was preserved; or 

(c) Where it was not agreed that full wages 

be paid for the period . . . and the . . . 

claim for such prior wages was required to 

be forfeited as a condition of the offer . . . . ” 

Section 6 of Article 8 of the Texas Constitution provides (in appropriate part): 

“No money shall be drawn from the Treasury but 

in pursuance of specific appropriations made by law; nor 

shall any appropriation of money be made for a longer 

term than two years . . . . ” 

There must be a specific appropriation for the purpose for which 

,moneys are to be drawn from the State Treasury. National Biscuit Co. 

v. State, 135 S. W. 2d 687 (Tex. 1940) ; State v. Angelina County, 150 S. 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 to a claimant as compensation for a period of time that the 

claimant allegedly was unlawfully terminated, denied promotion or denied 

employment by the Department because of race, color, religion, sex or 

national origin. A conciliation agreement is a contract. Funds would be 

available only if the contract is one within the power of your Department 

to make. Absent such authority, any contract made would be void. 

Article 3, Section 44, Texas Constitution, provides in part, “The 

Legislature . . . shall not . . . grant by appropriation or otherwise, any 

amount of money out of the Treasury of the State, to any individual, on a 

claim, real or pretended, when the same shall not have been provided for 

p. 208 
The Honorable David Wade, page 3 (H-50) 

by pre-existing law . . . , ” Fort Worth Cavalry Club v. Sheppard, 83 S. 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, if it 

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 to which 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 of the Texas Department of Mental Health and Mental 

Retardation are set forth in Article 5547-202, Vernon’s Texas Civil Statutes. 

The power 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 in the Department of Mental 

Health and Mental Retardation. 

The current appropriations bill allocates no funds for payment under 

such a contract. The only allocation which possibly could permit such payment is line item 12 of the appropriation to the Department of Mental 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. 209 
The Honorable David Wade, page 4 (H-50) 

Senate Bill No. 1, Third Called Session, 1972, p. 11-8. Since no preexisting 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. It is our 

opinion that the Department, by reason of Article 8, Section 6, Texas 

Constitution, is not authorized to use appropriated funds for payments 

under such conciliation agreements based on avoidance of “damages. ” 

We turn now to a discussion of conciliation agreements negotiated 

under Executive Order 11246. Section 202 of it provides for inclusion of 

a lengthy provision in government 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 and follow certain practices therein enumerated 

or referred to, for the purpose of encouraging equal employment opportunities. Section 209 of the Order sets forth sanctions and penalties which 

may be imposed upon violation of the non-discrimination provisions of the 

contract. Section 209(a) (5) permits cancellation or suspension of a contract for failure of the contractor to comply with the non-discrimination 

clauses, but Section 209(b) requires that an attempt to secure compliance 

by methods including conciliation be made before the contract is cancelled 

or suspended under subsection (a)(5). We assume for purposes of this 

part of the discussion that the conciliation agreement under Executive 

Order 11246 to which you refer is an agreement arrived at under such 

circumstances. 

The powers of the Texas Department of Mental Health and Mental 

Retardation are set forth in Article 5547-202, Vernon’s Annotated Civil 

Statutes. Section 2.15 thereof provides as follows: 

“The Department may negotiate with any agency 

of the United States in order to obtain grants to assist 

in the expansion and improvement of mental 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 

in the Executive Order. If such is the case, then it is apparent that a 

p. 210 
The 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 of any prior violations, would be within the 

power of the Department under Section 2.15, especially if matching 

federal grants of money are involved, in view of the adoptable language 

of Article 3, Section 51a of the Constitution. We think that under such 

an agreement 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 of which such 

concessions are to be made, 

In answer to your third question it is our opinion that payments, 

if made, should be made according to negotiated terms the Department 

considers fair. In this connection it should be noted that Section 209(b) 

of Executive Order 11246 does 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 of this Order by methods of 

conference, conciliation, mediation, and persuasion . . . before a 

contract shall be cancelled or terminated. . . .” 

SUMMARY 

The Department of Mental 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, ” but it 

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. 211 
The 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 

p. 212