. 

MARK WHITE 

Attorney General 

The Attorney General of Texas 

August 31. 1981 

1 

Mr. W. J. Estelle, Jr.. Director 

Texas Department of Corrections 

Huntsville, Texas 77340 

Opinion No. MW-363 

Re: Whether certain funds in 

the custody of the Texas 

Dear Mr. Estelle: 

Department of Corrections are 

excepted from the requirements 

of House Bill 1623 

You have requested our opinion as to whether certain funds in the 

custody of the Texas Department of Corrections [hereinafter TDCI are 

excepted from the requirements of House Bill 1623, recently enacted by 

the 67th Legislature. 

Section 4 of Rouse Bill 1623, the State Funds Reform Act of 1981. 

provides: 

All fees, fines, penalties, taxes, charges, gifts, 

grants, donations, and other funds collected or 

received by a state agency as authorized or 

required by law shall be deposited in the state 

treasury, credited to a special fund or funds, and 

subject to appropriation only for the purposes for 

which they are otherwise authorized to be expended 

or disbursed. Deposit shall be made within seven 

days after the date of receipt. 

Section 2 of House Bill 1623 defines "state agency" as: 

. ..any department, commission, board, office, 

institution, or other agency that is in the 

executive branch of state government, has 

authority that is not limited to a geographical 

portion of the state, and was created by the 

constitution or a statute of this state, but does 

not include an institution of higher education as 

defined in Section 61.003, Texas Education Code, 

as amended, and does not include the Banking 

Department of Texas. the Savings and Loan 

Department of Texas, and the Office of the 

Consumer Credit Commissioner, whose funds are 

p. 1212 
W. J. Estelle - Page 2 @IW-363) l í 

subject to the budgetary ~control of the Finance 

Commission of Texas by virtue of existing laws, 

and does not include the Credit Union Department 

of Texas whose funds are subject to the budgetary 

control of the Credit Union Commission of Texas. 

Section 3(b) of the bill states, however. that the act does not apply 

to: 

(1) funds pledged to the payment of bonds, notes, 

or other debts if the funds are not otherwise 

required to be deposited in the state treasury; 

(2) funds held in trust or escrow for the benefit 

of any person or entity other than a state agency; 

(3) funds set apart out of earnings derived from 

investment of funds held in trust tar others, as 

administrative expenses of the trustee agency; 

(4) funds, grants, donations. and proceeds from 

funds, grants, and donations, given in trust to 

the Texas State Library and Archives Commission 

for the establishment and maintenance of regional 

historical resource depositories and libraries in 

accordance with Section 2A. Chapter 503. Acts of 

the 62nd Legislature, Regular Session, 1971, as 

amended (Article 5442b. Vernon's Texas Civil 

Statutes); or 

(5) the deposit of funds for state agencies 

subject to review under the Texas Sunset Act 

(Article 5429k. Vernon's Texas Civil Statutes) for 

1981. which shall be determined by each agency's 

enabling statute. 

Your question is whether the Educational and Recreational [hereinafter 

E6R] Funds and the Windham Independent School District [hereinafter 

WISD] Fund are excepted by section 3(b) from required deposit in the 

state treasury. 

A local E&R fund for each TDC facility is authorized in a rider 

to the present General Appropriations Act. The rider appropriates to 

the EhR funds: 

.,. receipts from the operation of commissaries. 

prison-sponsored recreational shows and 

entertainment [and] all gifts and other income for 

inmate welfare. 

Such funds may be expended: 

p. 1213 
W. J. Estelle - Page 3 (MW-363) 

. ..only for direct benefits to prisoners including 

commissaries. reimbursement for travel to persons 

providing free dental and medical services, 

prisoner educational matters and recreational 

benefits of inmates . ..and for no other purposes. 

The Windham Independent, School District is a non-geographical school 

district operated by TDC for the benefit of its inmates. You state 

that its funds are at present entirely provided by the Foundation 

School Program. But see Educ. Code 529.03. You suggest that the E&R 

funds and the WISD Fund are exempt from deposit in the state treasury 

under section 3(b)(2) of House Bill 1623, as "funds held in trust or 

escrow tor the benefit of any person or entity other than a state 

agency." 

In our opinion, the EAR Funds may be said to constitute "funds 

held in trust." The language of the rider which details the purposes 

for which the funds may be expended comports with the requirements for 

the creation of an express trust. Pottorff v. Stafford. 81 S.W.2d 539 

(Tex. Civ. App. - El Paso 1935, writ ref'd). It is well established 

that no particular words are necessary to create a trust. Kurtz v. 

Robinson, 279 S.W.Zd 949 (Tex. Civ. App. - Amarillo 1955, writ ref'd 

n.r.e.). So long as the parties intend that particular property be 

held for the benefit of others, a court of equity will affix to that 

intent the character of a trust. Patrick v. McGaha. 164 S.W.2d 236 

(Tex. Civ. App. - Ft. Worth 1942, no writ). 

Furthermore, in Attorney General Opinion H-610 (1975). this 

office, in holding that the Board of Corrections was authorized to 

invest or spend the E8R Fund, declared: 

Although we have been furnished no trust indenture 

and have not found any general statutory authority 

(but see, Education Code. 029.03) for the 

establishment or collection of such a fund by the 

Texas Board of Corrections, the long-established 

and consistent characterization of the fund as a 

trust fund and its tacit recognition as such by 

the Legislature since at least 1957 convinces us 

that it should be treated as such. We think a 

confidential, fiduciary relationship. exists 

between the Board of Corrections and the prisoners 

committed to its care with respect to the 

disposition of labor and property (and the fruits 

thereof) donated to the fund. 

H-610 (1975), at 3. (Citations omitted.) 

We are in accord with this view. It is therefore our opinion that the 

E&R Funds held by the Department of Corrections constitute "funds held 

in trust." and as such, in accordance with section 3 of House Bill 

1623, they need not be deposited in the state treasury. 

p. 1214 
W. J. Estelle - Page 4 (MW-363) . 

Although the existence of the WISD is recognized by regulation of 

the Board of Corrections, it is not specifically established by 

statute. The relevant statute, former article 6203b-2. V.T.C.S., 

repealed. Acts 1971, 62nd Leg.. ch. 405, §54(2). at 1533. now codified 

as 529.01 of the Education Code, provides that the "Board of 

Corrections may establish and operate schools at the various units of 

the Department of Corrections." According to 529.04 of the Education 

Code. all WISD funds are provided by the Foundation School Program: 

The total cost of operating the schools authorized 

by this chapter shall be borne by the state and 

shall be paid from the Foundation School Program 

Fund. 

Foundation School Program funds are appropriated biennially by the 

General Appropriations Act. See, e.g., H.B. 558, Acts 1979. 66th 

Leg.. R.S., ch. 843. at 2757-2758. Section 3(a) of House Bill 1623 

states that its provisions are applicable to a state agency "only to 

the extent that it is not otherwise required to deposit funds in the 

state treasury." Since Foundation School Funds are appropriated funds 

and thus, have previously been deposited in the state treasury at the 

time they are transferred to WISD, it would appear that House Bill 

1623 does not apply to them. We conclude that the WISD Fund as 

presently constituted need not be deposited in the state treasury. 

SUMMARY 

Educational and Recreational funds held by the 

Texas Department of Corrections for the benefit of 

its inmates are "trust funds" and thus exempted 

from deposit in the state treasury under the terms 

of House Bill 1623. Funds of the Windham 

Independent School District are at present 

entirely appropriated from the Foundation School 

Program and as such, are not subject to House Bill 

1623. 

MARK WHITE 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

p. 1215 
. 

. W. J. Estelle - Page 5 (MU-363) ' 

Prepared by Rick Gllpin 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

Rick Gilpin 

Jim Moellinger 

Brenda Smith 

Bruce Youngblood 

p. 1216