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**MARK WHITE**  **Attorney General** 

Supreme Court EuildlnO P. 0. BOX12546 Austin, TX. 7671% 2546 5121476-2501 T&x 9101674.1367 Telecopier 51214750266

1607 Main St.. Suite 1406 Dallas. TX. 75201-4766 21417428944

4624 Alberta Ave.. Suite 160 El Paso. TX. 79905-2793 915/5x?-3464

1220 Dallas Ave.. Suite 202 Houston. TX. 27002.6666 71316500666

606 Btoadway. Suite 312 Lubbock. TX. 73461-3476 8061747-5238

4309 N. Tenth. Suite S McAlle”, TX. 78501-1665 5w662.4547

200 Main. Plaza, Suite 400 San Antonio, TX. 762052797 6l2l2254191

An **Equal**

Oppcxlunftyl AffimWive Acifon Employer 

# The Attorney General of Texas

Way 20, 1982

Mr. Ernie W. Tullis Administrator Texas EmploymentCommission 101 **East** 15th Street Austin, Texas 78778 opinion NO. MN-474

Re: Propermethod of financing unemployment benefits for former state employees

Dear Mr. Tullis:

You inquire as to the proper method of financing unemployment insurance benefits for ex-state employees. You state that the Texas Employment Commission believes that funding beyond the original legislative appropriations for the Unemployment Compensation Benefit Account for former state employees should come from funds collectedby the comptroller from each state agency in reimbursement of unemployment benefits paid to the agency's ex-employees, a system of reimbursement contemplated by article V. section 55 of the current appropriationsact. On the otherhand, you state that the comptroller has failed to place such reimbursements in the Unemployment Compensation Benefit Account and that **he** insists that any additional funding of this account should come from Fund No. 165. a Special Administration Fund created by section 26 of the Texas Unemployment CompensationAct, codifiedas article 5221bL22a.V.T.C.S. [hereinafter these funds may be referred to as the "Benefit Account" and the "Administration Fund" respectively]. The Unemployment Compensation Benefit A&count is establishedby the Texas Unemployment Compensation Act and designatedby the commission as Fund No. 937. V.T.C.S. art. 5221b-7. You advise **that** the situation causing this disagreement developed in 1981.

In order to determine the proper method of additional funding of the Unemployment Compensation Benefit Account after' the regular legislative benefit appropriation for such account becomes insufficient, we must consider various provisions of the Texas Unemploytint CompensationAct under which, in 1972, the state elected to cover for unemployment~ insurancebenefits all services,performedin the employ of the state and to become a reimbursing employer. V.T.C.S. art. 5221b-22d.

The Un&ployment Compensation Fund is administered by the commission in payment of benefits as provided in the act, from the Unemployment Compensation Benefit Account. Actually, such benefits

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**Mr.** ErnieW. Tullls - Page 2 (MW-474)

are not paid directly from this BenefitAccount,but paymentsaremade from thisaccount to the FederalTrustAccount inWashington,D.C.. in reimbursementof the FederalTrust Account of all paymentsmade by it
as benefits to formerTexas state employees.

Article 5221b-22aestablishesa special fund, separateand apart from all public moneys or funds of this state as an Unemployment Compensation SpecialAdministrationFund. As amended in 1979. it now provides that the commission may use this fund to pay costs of administering the act. including costs of reimbursing the Benefit Account for unemployment compensationbenefits paid to former state employeeswhich are based on service **for** the .state.and the costs of construction and purchase of buildings and land necessary in such administration. Article 5221b-22a; as amended in 1979, further provides, among other things. that all interest and penalties collectedunder the provisions of the Texas UnemploymentCompensation Act and all moneys now on deposit in the Unemployment Compensation Special Administration Fund shall be paid into the Unemployment CompensationSpecialAdministrationFund establishedby that article. It also provides that the commissionmay, by resolution duly entered in its minutes, charge against said moneys any expenditureswhich it deems proper in the good administration of **the** act, provided the commission in such resolutionfinds that no other funds are available
or can properlybe used to finance such expenditures. .Apparently;the fund designated in this article from which all moneys **on** deposit thereinwere transferred is a state treasury special fund established theretoforeunder the UnemploymentCompensationAct.

As already stated, the SpecialAdministrationFund is createdby section26 of theTexas UnemploymentCompensationAct, and denominated
as Fund No. 165 by the commission. After the amendment of article 5221b-22a in 1979, the article no longer provided a continuous appropriationof .suchfunds as it did prior to amendment. However.a rider in the 1979GeneralAppropriationsAct, provided that:

la111monevs granted to this state by the federal

**_ _**  **eovernment gor**  the administration of the UnemploymentCompensationAct or which are now on deposit to the credit of any funds maintained by the state treasurer for the Texas Employment Commission and any moneys received for the credit of such funds are hereby appropriated for the purposes authorized by the... Texas Unemployment CompensationAct and/or for thepurposes forwhich suchmoneyswere granted. (Emphasisadded).

Acts 1979. 66th Leg., ch..843, art. III, at 2632. A similarlyworded rider appears on page 3403, chapter 875 of the General Appropriations

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**Mr.** Ernie W. Tullis - Page 3 (MW-474)

Act for fiscal years 1982-1983. Acts 1981, 67th Leg., ch. 875. art. I, at 3403.
Considering the foregoing statutes in conjunction with the provisions of the appropriationsbills enacted by the Sixty-seventh Legislature, it **seems** clear that reimbursements of the payment of unemployment benefits for former state employees is authorized to be made from the Special Administration Fund No. 165 from the moneys appropriatedby the legislaturefor suchpurposeby **the** aforementioned appropriationsbill riders. Article 5221b-22aexpresslyprovides such authority.
Further,a rider to the 1981 GeneralAppropriationsAct provides
as follows:

a. At the close of each calendarquarter, the

Texas Employment Commission shall prepare a statement reflecting the amount of unemployment benefits paid to all former State employeesbased
on wages earned from State employment and present it to the Comptrolier of Public Accounts, who is hereby directed to pay by warrant out of funds appropriated from the General Revenue Fund such amount to the Unemployment Compensation Benefit Account to reimburse it for suchpayments.

The heads of State agencies, institutions, departments, commissions, boards, divisions, or other units of State government are directed to determine the proportionate amount of the reimbursementor payment due from funds'other than General Revenue Funds and to present the Comptroller of Public Accounts a purchase or transfer voucher requesting reimbursement from such funds to General Revenue,and shall reimburse the General Revenue Fund with a check for funds not in **the** State Treasury. Such transfers and payments as are authorizedunder law shall be made periodically. The Comptroller of Public Accounts -Y prescribe accounting procedures. and regulations to implement this section.

~b. An

.agency. institution, department, commission,board. divisionor other unit of State government is authorized to allocate funds to a revolving account created on'its books to receive contributions from funds **other** than **General** Revenue based on a percentage-of-payroll assessment to be determined by such unit of

**P- 1665** r Mr. ErnieW. Tullis - Page 4 (MW-4741

government for the purpose of reimbursing the General Revenue Fund for unemployment benefits paid.

Acts 1981, 67th Leg., ch. 875. art.V. 955 at 3820-21. See also Acts 1979.66th Leg., ch. 843. art.V. 057at 2922-23.

A state agency as an employer under the Texas Unemployment CompensationAct is liableunder article 5221b-5a to the reimbursement provisions as is any other reimbursing employer.- Article 5221b-5b(c)(2) provides that upon notice by the commission of delinquency in payment of reimbursementsby a governmental employer, the comptrollershallpay a sum to the commission in the amount of the 'delinquencyfrom any fundswhichwould otherwisebe due from the state to the delinquent governmental employer. You do not advise as to whether any such'transfer of funds has occurred. The funds herein under considerationare fundedperiodicallyby appropriations from the state'sgeneral revenue and from the FederalUnemploymentTrust Fund.~ You inform us that the lack of reimbursementof the Benefit Account from funds of the various ,participatingstate agencies results from the failure of the legislature to appropriate funds to individual agencies for such purpose. Cf. Acts 1981,67th Leg., ch. 875, art. I, at 3403, 3406; Acts 1979.66thLeg., ch. 843, art. III. at 2632. 2636 (specificappropriationsto T.E.C. forAdministrationFund).

The foregoing legislative actions created a **system** carefully designed to reimburse the expenditures of the Texas Employment Commission in paying unemployment benefits to which former state employees are entitled. Fund No. 937, the Unemployment Compensation Benefit Account, definitely appears to be the primary source from which benefit payments are to be made. This fund is designed to be replenished by periodically assessed reimbursements from the state agencies for ,thebenefits receivedby their former employees. These reimbursementsare to be collected by the comptroller and paid into such Benefit Account,which is under the general control of the Texas EmploymentCommission.

If this 'statutorysystem was fully implemented, this Benefit Accountwould **seem** to be self-sustainingwith respect ,tdits funds for the purpose of paying benefits. In practice, however, .accordingto information submitted in connection with this opinion request. the Benefit Account is not self-sustaining, because no funds are appropriatedto state agencies to use in reimbursing the expenditures of the Texas EmploymentCommissionof sumspaid into the Trust Fund in Washington, D.C., for benefits paid therefrom to their former employees. Reimbursementsfrom these agencieswould have to come from their funds which you state have already been appropriated for other statepurposes. Consequently,as we are informed, the T.E.C. Benefit ~Accounthas been operatingwith a deficit the last few years due to

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. . Mr. ErnieW. Tullis - Page 5 (MW-474)

the lack of reimbursement from these agencies. This deficit appears to have been partially remedied during this time by periodic legislative appropriations to the Benefit Account from the state's general revenue and funds transferred from the supplementary fund, SpecialAdministrationFund **No.** 165.
This Administration Fund is funded by interest and penalties collected from the employers for infractions of the Unemployment Compensation Act, article 5221b-1, et seq., V.T.C.S.. federal money grants and state general revenue appropriatedby the legislature for payment of administrative expenses of the unemployment benefit program, ,including p yment of the benefits theniseiveswhenever *eC=.5Sary. See V.T.C.;. art. 5221b-22a. This supplementary function of the Administration Fund is further substantiatedby the specific transfer appropriations by the legislature from this Administrative Fund to the Benefit Fund, General Appropriations Act, Acts 1981, Sixty-seventhLegislature, chapter 875, article I, at 3402, together with the generally worded appropriation of the balance of the Administration Fund for the purposes authorized by the Texas UnemploymentCompensationAct. id. at 3403. and.more specifically,by the additional provision in article 5221b-22a that any expenditures from thisAdministrativeFundwhich the commissiondeems propermay be made upon a finding that no other funds.are available or can properly be used to finance .such expenditures. Under the prevailing circumstances concerning the status of the Benefit Account, there is nothing in the statutes to prevent the commission from resolving that the only funds now available to finance such benefit payments are those contained in theAdministrativeFund. We caution,however, **that** any federal fundsplaced in Fund No. 165may be used for the purposes authorizedby article 5221b-22a.V.T.C.S.. onlywhere the terms of the grant permit their use for those purposes. Cf. 42 U.S.C.A. - §1103(c)(l), (2) (certain federal funds transferred to state for payment of benefitsmay be used for administrativeexpenses onlywhere appropriationspecifiesamount for administrativeexpense).

We conclude, therefore, that benefits to former state employees may properly be financed from either or both of such funds during the fiscal lives of the .1980-1981Appropriations Bill and the current 1982-1983 Appropriations Bill, although the funds of the Administration Fund should be used to reimburse or supplement the Benefit Account only when the funds in that account are found by the commission to be insufficient for such purposes. In no instance is any state official involved authorized to draw, issue or honor for payment a warrant on any appropriation in the state treasury for any amount in excess of the amount then contained in such appropriated funds. Tex. Const. art..VIII, 56.

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S U M M A R-Y
Payments of unemployment benefits to former state employees entitled thereto are to be financed primarily from the Unemployment Compensation Benefit Account, designated as Fund NO. 937. When such fund is exhausted or insufficient, it may be replenished for such purpose secondarily from the Special Administrative Fund, designated as Fund No. 165. In such cases. both fundsare.properly considered
as being subject to the financing of benefit payments. No funds may be withdrawn from the state treasury in excess of the amount therein appropriated for the purposes for which the warrant is drawn.

kwn?w%&l

MARK WHITE AttorneyGeneral of Texas

JOHNW. FAINTER. JR. FirstAssistantAttorneyGeneral

RICHARD-E.GRAY III ExecutiveAssistantAttorney General
Preparedby RobertL. Lattimore AssistantAttorney General

APPROVED: OPINION COMMITTEE

SusanL. Garrison, Chairman Jon Bible Rick Gilpin PatriciaEinojosa RobertL. Lattimore Jim Moellinger

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