- . 

Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Austin, Texas 

Opinion No. V-1329. 

Re: Authority of the Comptroller 

to issue warrants in favor 

of the revolving fund used 

in connection with the Repair 

, Dear Sir: 

and Warehouse Department of 

the A. & M. College System. 

You have requested an opinion of this office concerning the legality of a proposed method of 

operation of the Repair and Warehouse Department of 

the Agricultural and Mechanical College of Texas. 

The specific fact situation here Involved 

and the proposed operation may be summarized as follows: 

There are five separate branches of the 

A. & M. College System located on the campus at College Station, each receiving a separate appropriation. The Board of Directors of A. & M. College has 

set up one central Repair and Warehouse Department 

In an effort to prevent a duplication of functions 

within its system, and as a means of securing more 

economical repairs and replacements. The Board established a revolving fund to be used to purchase 

repair materials, to pay for labor, and to pay the 

necessary overhead expenses. Each of the separate 

branches Is billed for the actual cost of material 

and labor used on a repair job, plus 10% of the labor and 20% of the materials. The percentages are 

the pro rata part of the overhead allocated to each 

repair job, and are set at a point which keeps the 

Department functioning, but which yields no profit. 

The revolving fund is placed in a local 

bank. Materials are purchased through the Board of 
Hon. Robert S. Calvert, Page 2 (V-1329) 

Control, but since purchased out of the revolving 

fund placed in a local bank, the Comptroller has no 

knowledge that the purchases are made through the 

Board of Control. 

The proposed plan of operation is for the 

Repitlr and Warehouse Department to bill each of the 

separate A. & M. branches for the actual cost of material and labor used on a given repair job, plus 

10% of the labor and 20% of ,the material as overhead. 

The responsible officer at A. & M. College would 

then attach a certificate stating that the material 

had been purchased through the Board of Control and 

billed at the proper price. The bill and certificate would then be forwarded to the Board of Control, 

and the Board, after satisfying Itself that the material charge was correct and that the material had 

bean purchased as required by statute, would certify 

the same to the Comptroller. The Comptroller would 

then issue a warrant in favor of the revolving fund, 

and charge it against the appropriation of the proper 

A. & M. branch. 

Based on the above, you have asked the following questions: 

(1) Does the Comptroller have authority to 

issue warrants to reimburse the revolving fund of the 

Repair and Warehouse Departm6nt and charge these warrants against funds appropriated for the operation of 

the various parts of the A. & M. Collage System and 

from the funds appropriated to A. & M. College? 

(2) Is the proposed method of certification 

of the purchase of materials a proper one? 

(3) Is it proper for the Repair and Warehouse Department to charge 10% on labor and 20% on materials to defray overhead expenses? 

There is no general statute setting up the 

mechanics for the operation of either warehouse or repair departments for the A. & M. College System. In 

the General Provisions of the "Higher Education" section of the general appropriation bill, it is provided: 

"The said Governln Board fif each 

educational lnstitutio xi? Is held strictly 

accountable to the Legislature for spending the appropriations herein made wisely, 
Hon. Robert S. Calvert, Page 3 (V-1329) 

economically, and for the best interests of the several institutions of 

higher learning and the State.” Art. 

V, Sec. 15, H.B. 426, Acts 52nd Leg., 

R.& 1951, ch. 499, p. 1228, at pa 

. 

However, such a policy statement is not sufficient 

to allow a warrant to be drawn In favor of a revolving fund and charged to an appropriation made for 

labor and materials. In deciding that the Comptroller could not draw a warrant against an appropriation to A. & M. College to reimburse a revolving fund 

used to ay laborers, this office held in Att’y Gen. 

Op. o-6962 (1945) that the warrant must be issued in 

favor of the person performing the labor, because 

the appropriation was made for that purpose. It was 

then stated: 

“We note the statement In your letter that the method suggested by you was 

authorized by the Legislature in 1927. 

We think, however, that the continuous 

failure of the Legislature since t at 

time to enact simil r provisions 

w.7 

evolving fund provlsio in subsequent appropriations indicates that it did not want 

the practice continued. We think such 

action, or rather inaction, on the part 

of the Legislature is particularly significant in view of the fact that for the 

past several years, the departmental construction on the part of the Comptroller 

has been that payroll warrants must be 

made payable to the employees.” 

Apparently the Legislature had the above 

opinion In mind when it placed the f ollcnving riders 

in the general appropriation bill for the biennium 

ending August 31, 1953: 

‘l(e) Appropriations to the Agricultural and Mechanical College of Texas or 

any other parts of the Texas Agricultural 

and Mechanical College System, except 

funds appropriated exclusively for salaries may be used to reimburse any revolving knd operated for the benefit of one 
Hon. Robert S. Calvert, Page 4 (V-1329) 

or more parts of said system, such as a 

motor pool, a feed supply center, an office supply or laboratory supply center, 

or any other operation of a similar nature established by authority of the 

Board of Directors of the Agricultural 

and Mechanical College of Texas.” (Art. 

V, Sec. 4, H.B. 426, Acts 52nd Leg. 

R.S. 1951, ch. 499, p. 1228, at p. 1463.) 

“Each institution affected by this 

Section is hereby authorized to set up a 

Revolving Fund to facilitate the payment 

of nominal expenses, to pay bills within 

cash discount periods, and to pay day and 

weekly payroll claims, etc. Disbursements 

from the revolving funds are to be reimbursed from the respective appropriations 

made herein, the State Comptroller being 

hereby authorized to make such reimbursements on claims filed with him by the institutions under his regularly prescribed 

procedures except that one (1) voucher and 

one (1) warrant may cover any number of 

claims for this purpose. These reimbursement claims shall meet the same requirements as other claims against State appropriations, and each Institution shall prepare such a reimbursement claim as at the 

close of business on the last day of each 

month and as many times during each month 

as may be expedient in order to make unnecessary the maintaining of an unreasonably large revolving fund. 

“The respective governing boards 

shall determine, subject to the fp;;zval 

of the Legislative Budget Board, 

amounts of the revolving funds to be set 

up for each institution, and may increase 

or decrease the amounts in the same manner if necessary. Such Board shall designate a depository bank for each revolving 

fund, and shall specify the officers and/or 

employees to sign checks drawn on each such 

J./ This function of the Legislative Budget Board 

was declared unconstitutional in Att’y Gen. Op, V-1254 

(1951). 
Hon. Robert S. Calvert, Page 5 (V-1329) 

fund. The revolving fund for each institution may be set up from State appropriations herein made for General Operating Expenses, or from local funds on hand 

at August 31, 1951. The depository bank 

for each revolving fund shall be required 

to secure the deposit as provided by law.” 

(Art. V, Sec. 31, H.B. 426 Acts 52nd Leg., 

R.S. 1951, ch. 499, p. 1228, at p. 1472.) 

The above provisions do not specifically 

authorize a revolving fund for a Repair and Warehouse Department, but the terms used are sufficiently 

broad to allow this particular fund to be set up. 

These riders clearly give authority to the Comptroller to Issue a warrant in favor of the revolving fund 

instead of the individual or firm that does the work 

or furnishes the materials. The warrant may be &arged 

against State appropriations made from the General 

Revenue Fund, except those made exclusively for salaries, or against appropriations made from local funds 

in the Treasury belonging to A. & M. College or belonging to any part of the A. & M. College System. 

Thus, the riders make possible the use of a revolving 

fund. Further, these riders merely detail the manner 

of using the appropriation, are necessarily connected 

with and incidental to the appropriation and are 

therefore valid. Att’y Gen. op. v-1254 11951). You 

are therefore advised in answer to your first question 

that the Comptroller has authority to issue warrants 

from the proper funds in favor of the revolving fund. 

Before issuing a warrant involving a purchase of materials, the Comptroller must be satisfied 

that the purchases have been properly made. The procedure proposed here, whereby the Board of Control certifies that the purchases have been properly made and 

the Comptroller receives the certificate prior to lssuing a warrant in favor of the revolving fund, is adequate to assure the Comptroller that the purchasing 

statutes are being complied with. Your second question, 

therefore, is answered in the affirmative. 

Your third question concerns the method of 

charging the overhead expense among the various parts 

of the A. & M. System receiving the advantages of the 

Repair and ~Warehouse Department. In authorizing the 

use of revolving funds for operations such as the one 
. 

Hon. Robert S. Calvert, Page 6 (V-1329) 

in question, the Legislature certainly envisioned 

that each benefited member would pay its pro rata 

share of the necessary expenses incident to such an 

operation. The method of allocation is one to be 

left to the discretion of the proper administrative 

officials. There is no legal objection to the method proposed for the allocation of these expenses if 

it properly divides the expenses, and we have no 

reason to believe that it does not. 

The riders In the general appropriation bill for the biennium ending August 

31 1953 Grt. v., Sec. 4 Par. (e), and 

Adi V. Sec. 31 H.B. 428 Acts 52nd Leg., 

R.S. l&l, ch. 449, p. 1228, at pp. 1463 

and l&72), authorizing the use of revolving funds by the Texas Agricultural and 

Mechanical College System are sufficiently 

broad to allow the Board of Directors of 

the A. & M. College System to set up a Repair and Warehouse Department for the use 

of all units of the System. The Comptroller is authorized to issue warrants against 

the funds appropriated to the various 

parts of the System in favor of the revolving fund. The Comptroller must be satisfied that the purchasing statutes have been 

complied with prior to issuing a warrant, 

and the proposed method whereby the Board 

of Control certifies to the Comptroller 

that the purchases In question have been 

properly made is adequa to assure him of 

compliance with the 

Yours very truly, 

APPROVED : 

C. K. Richards 

Trial & Appellate Division 

Jesse P. Luton, Jr. 

Reviewing Assistant 

Charles D. Mathews 

First Assistant 

PRICE DANIEL 

Attorney General 

BY r, w,$J- &b-U 

E. Wa e Thode 

Assistant 

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