JIM MATTOX Attorney General

Supreme Court Building P. 0. Box 12546 Austin. TX. 76711. 2546 51214752501 Telex 9101674-1367 Telecopier 5121475-0266

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An Equal Opportunity/ Afflrmatlve Action Employer 

# The Attorney’ General of Texas

S~zptember

22, 1986

Mr. JosephC. Gagen OpinionNo.JM-549 Chairman Texas IndustrialAcc.Ldent Board Re: Whether the IndustrialAccident' 105W. RiversideDrive Board is entitled to interest Austin, Texas 78700 earned in the Compensation to Victims of Crime Fund

DearMr. Gagen:
Article 8309-I.,V.T.C.S., the Crime Victims Compensation Act, creates at section 14 the Victims of Crime CompensationFund "in the state treasury,"which is tobe used by the IndustrialAccident Board for the payment of compensation to claimants. Revenues for the fur.d are derived from additional court costs imposed by the act upon persons convictedof certainoffenses. The act specificallyprohibits the payment of general revenues to persons seeking compensationunder the act. You ask tne followingquestion:

Is the IndustrialAccident Board entitled to have the interestearned on the CompensationtoVictims of Crime Funddeposited in theFund?

We answer your qc,estionin the negative; we conclude that such interestmust be deposited in the GeneralRevenue Fund.
Article VIII, section 7, of the Texas Constitutionprovides the following:

The Legislature shall not have power to borrow, or in any manner divert from its purpose. any special fund thatmay, or ought to, come into theTreasury; and shall make it penal for any person or persons toborrow,withhold or in anymanner to divert from itspurposeany special fund, or any part thereof.
Article VIII, section 7, has been construed to require that intereston constitxionally dedicated fundsmay be spent only for the purposes for which the funds were created; a diversion of such interest to other purposeswould violate the constitution. Lawson v. m, 220 S.W. 26t1,272 (Tex.Civ. App. - Austin 1920,writ ref'd). Consequently, interest earned on a constitutional fund must be credited to that fund, UdSSS the constitution itself otherwise directs. Attorney General Opinions JM-323, JM-321 (1985); M-468

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(1969). The interest on state funds dedicated by statute, however, may be legally severed and placed in the general fund. See Gulf -- Insurance Co. v. James, 18!5S.W.Zd 966 (Tex. 1945) (article VIII, section 7, of the Texas Constitution applies only to special funds created by the constitution, not by--statute);-Attorney General Opinions JF-323, JM-321 (l!l85); Mw-338 (1981); see also Brazos River Conservation & Reclamation~District v. McGraw, 91 S.W.2d 665, 674 (Tex. 1936) (article VIII, section 7, does not apply to general revenue funds). Article 2543d (since repealed and re-codified as section 3.042(a)of article 4393-1,V.T.C.S.) effects such a severanqe of intereston statutory fundsas a generalrule.
Section 3.042(a) of article 4393-1, V.T.C.S., the article that sets forth the powers and duties of the state treasurer,provides the following:

Interest received from time deposits of money in funds and accounts in the charae of the treasurer shall be allocated as follows: to each constitutional fund there:shall be credited the pro rata portion of the i&rest receiveddue the fund; the remainder of thi interest received, with the excention of that nortion required bv other statutes to be credited on a pro rata basis to protested tax payments, shall be credited to the GeneralRevenue Fund. The interestreceived shall be allocated on--a monthly basis. (Emphasis added).

The funds about which you inquire are not constitutionallydedicated funds; rather, they are statutory funds. Consequently, pursuant to section 3.042(a), the interest on such funds would normally be credited to the General Rerenue Fund. However, the rule with regard to the dispositionof intere:st earnedby the depositof trust funds is different.
This officepreviouslyhas determined that theprovisionsofwhat is now section 3.042(a) of .article4393-1,V.T.C.S., do not apply to interest earned on trust funds that are not the property of the state and that the state treastrcerholds as trustee out of the state treasury. Opinions issued by this officeconsistentlyhavemaintained that interest on such trust funds becomes part of the principal and, consequently, part of the fund that generated the interest. See Attorney General Opinions :I+306, JM-300 (1985);MU-82 (1979);H-1040 (1977);M-468 (1969). Cf. Attorney General Opinions MW-338 (1981); H-1187 (1978). The adopxn of such a doctrine is strongly supported by language set forth in section 4.003 of article 4393-1, V.T.C.S., setting forth exemptions to the reach of the act and providing at subsection (b) the following: "This chapter does not apply to:

. . . (2) funds held in trust or escrow for the benefit of a person or entity other thm a state agency." The issue, then, is

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whether the funds aboutwhich you inquireare trust funds, as opposed to statutoryfunds. We conolude that they are statutoryfunds.

The opinions cited abrre indicate that in order to be characterized as trust funds, the funds in question should reflect, among other things, (1)that they are administeredby a trusteeor trustees, (2) that the funds neither are granted to the state in its sovereign capacitynor collected for t~he general operation of state government, and (3) that they are to bszspent and invested for specific, limited purposes and for the benefit of a specific group of individuals. Being in the nature of a trust, such funds are entitled to retain the proceeds from their investment. Attorney General Opinions MW-481 (1982);M-468 (1969). It :.E; clear from a reading of article 8309-1, V.T.C.S.,.that the funds atout which you inquire fail to exhibit the requisite trust characteristicsand are thereby statutory fundswhose earned interestmust be cretllited to theGeneralRevenue Fund.
Section 14 of the act :)rovides the following inpertinentpart:

Sec. 14. (a) The Compensation to Victims of Crime Fund is created in the State Treasury to be used by theboard-for the payment of compensation to claimantsunder this Act and other expenses in administering th& Act. The Compensation to Victims of Crime &xiliary Fund is created in the State Treasury tc-be used by the board only for the payment of '%mpensation to claimants under this Act. The board shall make no compensation payments which exceed the amount of money in the combined funds. 30 general revenues may be used forpaymentsunde:LthisAct.
(b) A person s!aall pay $20 as a court cost on conviction of any felony, $15 as a court cost on conviction of a misdemeanor punishable by imprisonment or by a fine ofmore than $200, and $3 as a court cost, <'II conviction of a misdemeanor punishableby a fine of not more than $200, other than a misdemeanor that regulatespedestrians and the parking of motor vehicles.

. . . The court shall require a pIersonconvicted of an offense listed under this section to pay the court cost whether or not the court grants the person a probated sentence. If a person is granted deferred adjudicationunder Article 42.12, 42.13, or 45.54, Code of Criminal Procedure, 1965, as amended, at the time the court grants deferred adjudication,theperson shallpay as a court cost the amount that the person would have otherwise been requiredto 'pay under this subsectionhad the

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adjudicationnot 'lee*deferred and had theperson been finallyconv:.cted of the offense.
(c) Court costs under this section are collected in the .samemanner as other fines or costs.
(d) The officer collecting the costs in a municipal court case shall keep separate records of the funds colleztedas costsunder this section and shall deposft the funds in the municipal treasury. The officer collecting the costs in a justice. county,or district court case shallkeep separate records DE the funds collected as costs under this sectlo:;and shall deposit the funds in the county treasmy:.

Text of (e)as amendedby Acts 1983, 68thLeg., p. 1739,ch. 335,12
(e) On receipt, the custodian of a municipal
or county treasur]' may deposit the funds collected under this secticn in interest-bearing accounts. The custodian sha:tl. keep records of the amount of funds on deposit rollectedunder this section and shall remit to the comptroller of public accounts before the 10th day of each month the funds collectedunder this section during the preceding month. The city and the county may retain five percent of the fuais collectedunder this section
as a collection fee. The city or countymay also retain all intererit accruedon the funds. ,
Text of (e)as amendedby Acts 1983, 68thLeg., p. 2764, ch. 475.11 -- (e) The custodian of a municipal or county treasury shallkeep records of the amount of funds
on deposit collec,:ed under this section and shall remit to the comptrollerof public accountsbefore the last day of each calendar quarter the funds collected under this section during the preceding quarter. The city and the county may retain 10 percent of the furds collectedunder this section
as a collection Eoe. If no funds due as costs under this sectien have been collected in a quarter, the report required for the quarter shall be filed in the regular manner, and the report must state that no funds due under this section
were collected. ---.

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(f) The compt:rollerof public accounts shall deposit the funds received by him or her under this section iny:he Compensation to Victims of Crime Fund. Funis collected are subject to audit by the comptrolle; and funds expended are subject to auditby the StateAuditor. (Emphasisadded).
Unlike, for example, the funds created under articles 1066c, 1118x, lllSy, 5221b-7. and 6243e.V.T.C.S. (which govern local sales and use tax, metropolitnn rapid transit authorities, regional transportation authoritier., unemployinent compensation, and fire fighters' relief and retirement, respectively), the funds created under the Crime Victims Cclmpensation Act do not manifest sufficient trust fund characteristics;. See Attorney General Opinions JM-539 (19861,;

JM-323, JM-321, JM-,306 (1985). The act does not provide that the funds are to be administeredby a trustee or trustees or by any public officer "in trust"; rather, the act specifies that the fund "is created in the State Treasury." It is the case, of course, that the act does not specify that the funds are granted to the state in its sovereign capacity, that the act specifies rather that such funds be paid only as compensationto claimantsunder the act;but the language
so earmarking the funds Liffers in no material way from language typicallyfound in theAppropriationsAct directing the expenditureof state funds. Further, the actdoes not specify that the fundsbe held for a specificor identifiablegroup of individuals;in this instance, the group entitled to claim compensation consists of an open-ended, indefiniteclass.

We conclude that the funds created pursuant to article 8309-1, V.T.C.S., the Crime Victins Compensation Act, are statutory funds. Accordingly,we conclude that the Victims of Crime Compensation Fund is not entitled to be cred:.ted with interest earnedby deposit of its funds; article 4393-1, sect,ion3.042(a),V.T.C.S., requires that such interestbe credited to the GeneralRevenue Fund.

SUMMARY
The Victims o:iCrime Compensation Fund is not entitled to be credited with interest earned by deposit of its funds; article 4393-1, section 3.042(a),V.T.C.S.,requires that such interestbe credited to the GeneralRevenue Fund.

Very 

# dtrulyyours,

A.-k JIM MATTOX Attorney General of Texas

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JACK HIGHTOWER FirstAssistantAttorney Ge:wral

MARY KELLER ExecutiveAssistantAttome:{General

RICK GILPIN Chairman,OpinionCommittee
Preparedby JimMoellinger AssistantAttorneyGeneral

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