RNEU GENERAL. 

OF%EXAS 

September 27, 1972 

Honorable George W. McNiel 

State Auditor 

Opinion No. M-1224 

Sam Houston State Office Building Re: 

Austin, Texas 78711 

Legality of investment in United States 

Postal Service Bonds 

for various state 

Dear Mr. McNiel: funds 

You have requested our opinion as to whether the United 

States Postal Service (hereinafter styled Postal Service) 

may be deemed an agency of the United States within the meaning of the Texas Constitution and state statutes governing 

the investment of (1) the funds of the Teacher Retirement 

System of Texas, (2) the Permanent University Fund, (3) the 

Permanent School Fund, (4) the funds of Employees Retirement System of Texas, and (5) the funds of the Texas County 

and District Retirement System. 

The pertinent provisions of the Texas Constitution and 

state statutes which authorize the investment of these 

various funds by their respective governing boards are as 

follows: 

(1) Teacher Retirement System of Texas. 

TexasConstitution, Article III, Section 48b: I! .Said Board is hereby authorized and empowered to invest and reinvest. . .in bonds, 

notes, or other evidences of indebtedness 

issued or assumed or guaranteed in whole or in 

part, by the United States or any agency of the 

United States, . . ." 

(2) Permanent University Fund. Texas 

!onstitution, Article VII, Section lla: 

. . .the Board of Regents of The University 

of Texas may invest . . . in securities, bonds 

or other obligations issued, insured, or 

guaranteed in any manner by the United States 

Government, or any of its agencies, . . .'I 

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Hon. George W. McNiel, page 2, (M- 1224) 

(3) Permanent School Fund. Texas 

Education Code, Sec. 15.02(a): '. . . the 

State Board of Education is authorized and 

empowered to invest the permanent school 

fund in 

obligations is~~~d~e~~~~~s~syo~o~~~~a~~e~~~~ 

any manner by the United Stites Government o'r 

any of its agencies; . . .' 

(4) Employees Retirement System of Texas. 

Texas Constitution, Article XVI, Sec. 62(a): 1, . . .Said Board is hereby authorized and 

empowered to invest and reinvest. . . in bonds, 

notes or other evidences of indebtedness issued, 

or assumed or guaranteed in whole or in part, 

by the United States or any agency of the 

United States, . . ."l. 

(5) Texas County and District Retirement 

System, V.C.S. Article 6228g, Sec. 8, subd. 7: 

"The assets of the System . . . as determined 

by the Board, shall be invested and reinvested 

in the following types of securities: (a) 

Interest-bearing bonds or other evidences of 

indebtedness: . . . of the United States or of 

any authority or agency of the United States, 

or any such securities which are guaranteed as 

to the payment of principal and interest by 

the United States or by any authority or agency 

of the United States." 

It is clear that the governing boards of the Systems 

and Funds in question may invest in the bonds issued by an 

agency of the United States whether or not the principal 

and interest thereof is guaranteed by the United States. 

1 V.C.S., Art. 6228a., Sec. 7.A, speaks to the investment 

of the Employees Retirement System of Texas. However, Tex. 

Const., Article XVI, Section 62(a), provides: 'I. . .This 

Amendment shall be self-enacting and shall become, effective 

immediately upon its adoption without any enabling legislation." 

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Hon. George W. McNiel,, page 3, (M-1224) 

The Postal Service is wholly owned by the United States 

Government and was established as "an independent establishment of,the executive branch of the Government of the United 

States" (39 U.S.C. Sec. 201) created by Act of Congress 

pursuant to the power granted to Congress by the Constitution 

"to establish post offices and post roads." U.S. Const., 

Art. 1, Sec. 8. Pursuant to the provisions of the Postal 

Reorganization Act, the Postal Service assumed the assets, 

revenues, functions, and duties of the Post Office Department on July 1, 1971. Congress made it clear that the 

United States has a direct interest in the Postal Service. 

The Postal Service is governed by a Board of Governors 

composed of eleven members. Nine of the members, known as 

Governors, are appointed by the President, by and with the 

advice and consent of the Senate. The Governors appoint and 

have the power to remove the Postmaster General, who is a 

voting member of the Board and who is the chief executive 

officer of the Postal Service. The Governors and the Postmaster General appoint and have the power to remove the 

Deputy Postmaster General who is a voting member of the 

Board and who is the alternate chief executive officer of 

the Postal Service. 39 U.S.C. Section 202. 

With limited exceptions, officers and employees of the 

Postal Service shall be in the postal career service, which 

is a part of the civil service. 39 U.S.C., Section 1001. 

Postal Service Officers and employees are covered by the 

Federal Workmen's Compensation law and civil service retirement laws. 39 U.S.C., Section 1005. 

The Postal Service is authorized to borrow money and to 

issue and sell such obligations as it determines necessary 

to carry out its authorized purposes - such obligations 

outstanding at any one time not to exceed $10,000,000,000. 

It may pledge its assets and pledge and use its revenues 

and receipts for the payment of the principal of or interest 

on such obligations, for the purchase and redemption thereof, and for other purposes incidental thereto. 39 U.S.C., 

Section 2005. Obligations issued by the Postal Service 

shall not be obligations of nor shall payment of the 

principal thereof or interest thereon be guaranteed by the 

Government of the United States, 39 U.S.C., Section 2005 

(d)(5), except that obligations issued by the Postal Service 

shall be obligations of the Government of the United States, 

and payment of principal and interest thereon shall be 

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Hon. George W. McNiel, page 4, (M- 1224) 

fully guaranteed by the Government of the United States if 

and to the extent that, (1) the Postal Service requests 

the Secretary of the Treasury to pledge the full faith and 

credit of the Government of the United States for the payment of principal and interest thereon, and (2) the 

Secretary in his discretion determines that it would be in 

the public interest to do so. 39 U.S.C., Section 2006(c). 

Financial transactions of the Postal Service are conducted through the Postal Service Fund, a revolving fund 

established in the Treasury of the United States. 39 U.S.C., 

Section 2003. 

The accounts and operations of the Postal Service are 

audited by the Comptroller General and reports thereon made 

to the Congress to the extent and at such times as he may 

determine. 39 U.S.C., Section 2008(a). The Postal Service 

shall cause to be prepared annually a budget program which 

shall be submitted to the Office of Management and Budget. 

39 U.S.C., Section 2009. The Postmaster General shall 

render an annual report concerning the operation of the 

Postal Service to the Board of Governors and upon its 

approval, the Board shall transmit such report to the 

President and the Congress. 39 U.S.C., Section 2402. 

The Postal Service shal! he operated as a basic and 

fundamental service provided to the people by the Government of the United States, authorized by the Constitution, 

created by Act of Congress, 

39 U.S.C., Section 101(a). 

and supported by the people. 

All of the foregoing have been considered with respect 

to the Postal Service and it is our opinion that the Postal 

Service has sufficient involvement with the United States 

government so as to constitute it an agency thereof. The 

obligations issued or to be issued by the Postal Service 

will not constitute obligations of the United States unless 

the Secretary of the Treasury has pledged the full faith 

and credit of the United States with respect to such 

obligations. However, since the Postal Service exercises 

powers conferred upon it by federal statute in a field 

which, under the Constitution of the United States, is within the sole jurisdiction of the federal government, the 

obligations to be issued by the Postal Service will clearly 

constitute obligations of an agency of the United States 

within the meaning of the cited provisions of the Texas 

Constitution and state statutes. 

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Hon. George W. McNiel, page 5, (M- 1224) 

SUMMARY 

For the purposes of Tex. Const. Art. III, 

Sec. 48b, Tex. Const. Art. VII, Sec. lla, Texas 

Education Code, Sec. 15.02(a), Tex. Const. Art. 

XVI, Sec. 62(a), and V.C.S., Art. 6228g, Sec. 8.7, 

the United States Postal Service is an agency of 

the United States Government. 

Prepared by James A. Maxwell 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

William Craig 

Fisher Tyler 

David Longoria 

Ben Harrison 

SAMUEL D. MCDANIEL 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NOLA WHITE 

First Assistant 

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