Honorable Everett L. Anschutz 

Executive Secretary 

Opinion No. M-979 

Employees Retirement System 

of Texas 

Capitol Station 

Austin, Texas 78711 

Re: Whether Presidential Executive Order No. 11615, dated 

August 15, 1971, freezing 

prices, wages, etc., prohibits implementation of S. B. 

Dear Mr. Anschutz: 

531, 62nd Leg., R.S., 1971, 

as it related to benefits and 

funding increases paid from 

and into the trust funds administered by the State Employees Retirement System 

of Texas. 

We acknowledge receipt of your opinion request in which you ask 

the following questions: 

“1. Senate Bill 531, 62nd Legislature, Regular 

Session, provides for an increase in all retirement annuities, effective September 1, 1971, for persons previously retired and those whb will; retire thereafter. 

Does this Presidential Executive Order prohibit the implementation of these increases? 

“2. We conclude from your Opinion M-919 that 

the amount available for participation in insurance premiums for retirees is related to the availability of funds 

for payment of such premiums for active employees. 

Such premiums for retired employees are made part of 

the benefit increases provided in Senate Bill 531, 62nd 

Legislature, Regular Session. Does the Presidential 

Order prohibit the payment of such premiums? 

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Honorable Everett L. Anschutz, page 2 (M-979) 

“3. Senate Bill 531, 62nd Legislature, Regular 

Session, provides that both the employee contribution 

and the State matching rate under the Retirement Act 

shall be increased to 6 percent of compensation effective 

September 1, 1971. (The current rate is 5 percent. ) 

Does this Presidential Executive Order prohibit implementation of the 6 percent contribution and matching rate? 

“4. Senate Bill 531, 62nd Legislature, Regular 

Session, provides that certain previous State service 

which had been waived or with respect to which contributions had been refunded may be established only upon 

payment of a 5 percent penalty interest from date of 

waiver or refund. (The current penalty interest rate is 

2 l/2 percent. ) Does this Presidential Executive Order 

prohibit implementation of the 5 percent penalty interest 

rate? ” 

While it is the policy of this office not to pass upon questions 

arising under the federal law, particularly in the absence of a ruling 

or interpretation by the federal agency charged with its administration 

and enforcement, yet in this instance you have secured a federal ruling 

and interpretation by the agency concerned and you now await only the 

opinion of this office advising you as to whether in our opinion you may 

properly act in accordance therewith. You have furnished us with a copy 

of your request for a ruling from the Office of Emergency Preparedness 

and also a copy of the letter ruling addressed to you under date of October 12, 1971, from the Executive Office of the President, Office of 

Emergency Preparedness, Washington, D. C., from which we quote in 

part as follows: 

“Paragraph 501(d) of Economic Stabilization 

Circular No. 2 provides: 

‘Previously planned increases in pension 

benefits for those retired before the freeze or 

those about to retire are allowed, but unplanned 

increases are not allowed. For example, a 

scheduled increase in pensions which is planned 

for October 15 may also receive this increase. ’ 

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Honorable Everett L. Anschuts, page 3 (M-979) 

“Therefore, it appears from the information 

provided that the retirement annuity increases provided for in Senate Bill 531 may be paid both to those 

who retired before the freeze and those about to retire during the freeze. 

“Paragraph 502(e) of Economic Stabilization 

Circular No. 3 provides: 

‘An increase in an employer’s contribution can be made to a pension fund to finance 

a benefit increase which was granted and became effective before August 15. ’ 

“Paragraph 504(l) of Economic Stabilization 

Circular No. 15 provides: 

‘An employer may increase contributions 

to a pension fund during the freeze, if that increase is used to fund benefit increases that 

were effective or declared prior to August 15. 

This is true regardless of when increased benefits are to go into effect. Employers may not 

increase pension contributions to finance benefit increases announced during the freeze. 

‘Employers may p:ay increased benefits 

schedules to go into effect during the freeze to 

all retired employees eligible to receive the increase, including employees who retire during 

the freeze. However, after August 15, employers 

may not make new benefits increases to go into 

effect during the freeze. ’ 

“In line with the above guidance from the Cost of 

Living Council, it appears that the freeze does not preclude the payment of increased contributions of the type 

you inquired about. 

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Honorable Everett L. Anschutz, page 4 (M-979) 

“In response to your last question interest 

rates are not covered by the freeze. However, the 

President has requested that in the spirit of the freeze, 

they not be increased. I’ 

We published Attorney General Opinion No. M-942 (1971), in 

which we concluded that President Nixon’s recent Executive Order provided for stabilization of prices, rents, wages and salaries was valid 

and applicable to the State of Texas. Executive Orders are held to have 

the force and effect of statutes enacted by Congress. Farkas v. Texas 

Instruments, 375 F. 2d 629, 632, cert. den., 389 U.S. 977 (C.A. 5th, 

1967. ) Likewise, the federal regulations and rulings of the federal agencies 

charged with enforcement of the law will be followed by our courts unless 

clearly wrong. 42 Am: Jur. 392, Statutes, Sec. 78, pp. 398-400, Sec. 79. 

Your questions arise out of the definition in Paragraph 501(B) of 

the Wage and Salary Guidelines which states: 

“For purposes of the regulation, wage, salary, 

or other form of compensation includes all forms of 

remuneration to an employee by an employer for personal services including, but not limited to, premium 

overtime rate payments, night shift, year-end, and 

other bonus payments, incentive payments, commissions, vacation and holiday payments, employer contributions to or payments of insurance or welfare benefits or pension funds or annuities; and payments in 

kind. (Underlining for emphasis. ) 

The definition set forth in Paragraph 501(B), as interpreted and 

clarified by the issuance of Economic Stabilization Circular No. ‘s 2, 3, 

and 15 quoted above, is applicable to Senate Bill ,531, 62nd Legislature, 

Regular Session, 1971, and we agree with such ruling or interpretation 

as above set out. You are advised, therefore, that all four of your questions 

should be answered in the negative and that all provisions of Senate Bill 531 

related to your questions may be fully implemented on and after the effective 

dates prescribed therein. 

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Honorable Everett L. Anschuts, page 5 (M-979) 

SUMMARY 

The provisions of Senate Bill 531, 62nd Legislature, 

Regular Session, 1971, as they relate to the benefits and 

funding increases paid from and into the trust funds administered by the State Employees Retirement System of 

Texas constitute a “Previously planned increases in pension 

benefits . ” within the meaning of Economic Stabilization 

Circulars No. ‘s 2, 3, and 15, and therefore, Senate Bill 

531 may be fully implemented on and after the effective dates 

prescribed therein. 

The increase in retirement annuities for retirees 

both before and after September 1, 1971, may be allowed, 

and the payment of insurance premiums for retired employees is not prohibited. The Presidential Freeze Order 

does not prohibit state payment of the six percent contribution and matching rate under the Retirement Act nor implementation of the five percent penalty interest rate increase as to those claiming prior state service previously 

waived or for which contributions had been refunded. 

ey General of Texas 

Prepared by Kerns Taylor 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

W. E. Allen, Acting Chairman 

Rex White 

James McCoy 

Ray McGregor 

John Banks 

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’ . 

Honorable Everett L. Anschutz, page 6 (M-979) 

SAM MCDANIEL 

Staff Legal Assistant 

ALFRED WALKER .’ 

Executive Assistant 

NOLA WHITE 

First Assistant 

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