THE ,~TORNEY GENERAL 

OF TEXAS 

Mrs. B.B. Sapp; Director and Executive Secretary 

Teacher Retirement System of ~Texas 

Austin. Texas 

Dear Mrs. Sapp: Opinion Number O-4908 

Re: Investment of moneys 

pense account. 

We have received your letter of February 16, 

we quote in part as follows: 

1943, which 

"The Teacher Retirement System respectfully 

requests an opinion from your Department on the 

following questions: 

"This year due to the emergency so many 

teachers are changing from school to school it 

makes It very difficult to clear reports. As 

a result we have,in Fund No. 63, known as a 

suspense account, approximately $400,000. This 

mqneg is Idle and as a result the Interest rate 

for teachers on their investments will be materially affected; since within a few months these 

reports will be cleared and this money properly 

deposited, would we have the right to invest 

approximately three fourths of this money held 

In suspense account in order to receive interest 

and thereby give the members of the Teacher Retlrement System full benefit of their investment? 

Would It be within our rights to transfer from 

Fund No. 63 (Suspense Fund) a lump sum to Fund 

No. 103 and mark it Undistributed? 

now In sus- 

"I am herewith outlining the method the 

Teacher Retirement System will use in exhausting the amount transferred to Fund No. 103, Undistributed. Each day reports will be completed 

to the extent that all credits can be applied to 

the individual accounts. Such reports will be 

listed daily by Register Numbers. If the reports 

Include membership fees, such fees will be transferred direct from Funds No. 63 to Fund No. 108. 

All credits to individual accounts will be applied 

against the Fund No. 103 Undistributed Fund until 
Mrs. B.B. Sapp, page 2 o -4908 

the Fund is completely exhausted. The Summary of 

Deposits to Funds submitted to the State Treasurer 

will not include the amount applied against Fund 

No. 103 Undistributed. This amount will be carried 

In a different column to be used in the office of 

the Teacher Retirement System only. The Teacher 

Retirement System will exhaust the complete 103 

Undistributed Fund before August 31, 1943. 

"We will appreciate your immediate attentionin 

this instance because this amount of money idle, as 

I have aforesaid, will seriously affect our interest 

credit to the individual teachers' accounts." 

Section'8 of the Teacher Retirement Act (Article 2922-1, 

Vernon's Annotated Civil Statutes) sets up seven different 

funds for teacher retirement moneys. You have informed us that 

Fund No. 103, menti-oned In your letter is the Teacher Saving 

Fund. Subsection 1 of Section 8 provldes in part as follows: 

"1 . The Teacher Saving Fund. 

"(a) The Teacher Saving Fund shall be a fund 

1n which shall be accumulated regular five (5) per 

centum contributions from the compensation of members, including current interest earnings. Contrlbutions to and payments from the Teachers Saving 

Fund shall be made as follows: 

"lb) l l * *fl 

Subsection (l), Section 7 of the Retirement Act reads 

as follows: 

"Sec. 7. (1) The State Board of Trustees 

shall be the trustees of the~~several funds as 

herein created by this Act, and shall have full 

power to invest and reInvest such funds subject 

to the following limitations and restrictions: 

All retirement funds, as are'received by the 

Treasury of the State of Texas from contributions of teachers and employers as herein provided, may be invested only in bonds of the 

United States, the State of Texas, or counties, 

or cities, or school districts have not defaulted in principal or interest on bonds within a 

period of ten (10) years, or in bonds issued by 

any agency of the United States Government, the 

payment of the principal and interest on which 

Is guaranteed by the United States; and in in- 
Mrs. B,B. Sapp, page 3 o-4908 

terest-bearing notes or bonds of the University 

of,Texas Issued under and by virtue of Chapter 

40, Ac,ts of the Forty-third Legislature, Second 

Called Session; provided that a sufficient amount 

of said fund,s shall be kept on hand to meet the 

immediat,e payment'of'the amounts that may become 

due each year as provided in this Act. The State 

Board of Trustees shall have full power by proper 

resolution to hold, purchase, sell, assign, transfer, and dispose of any of the securities and lnvestments in which any of the funds created herein 

shall have been invested, as well as the proceeds 

of sais Fnvestments and any moneys belonging to 

said funds, provided tha,t any money on hand shall 

be subject to the State Depository Laws of Texas." 

The suspense account is a fund set up by the State Board 

of Trustees of the Retirement System for retirement moneys 

received by the Retirement System which but for some error in 

the reports of the school district or other employer or in the 

amount of money sent would be placed In the Teacher Saving Fund 

and the Expense Fund. In most instances the error Is minor and 

will in a short time be corrected. Also, in the great majority 

of cases the error concerns only one or two teachers of the 

employer whereas the reports and contributions fully and adequately cover all the remaining teachers of such employer. 

In other words, because of an error which affects only one or 

two teachers of the employer, the report must necessarily be 

held up until the error is corrected. The contributions of 

all the teachers covered by the report of the employer In the 

past have been placed in the suspense account until the error 

is corrected. You now wish to know whether part of the moneys 

,presently in the suspense account may be transferred to the 

Teacher Saving Fund in an undistributed lump sum, earmarked 

as such, and then itemized and properly-distributed as the 

reports are cleared up. In other words, you wish to transfer 

part of the suspense account, which part you feel offers very 

little doubt and feel certain will promptly be cleared, -and 

then moneys will thereafter be cleared In the Teacher Savlng 

Fund instead of first being cleared in the suspense account. 

and-then transferred to the Teacher Saving Fund. In this manner, such moneys may promptly be invested and start earning 

Interest. 

It seems to us that this is a matter properly lying 

within the discretion of the State Board of Trustees. The contributions of the members of the Retirement System under the 

Act are to be placed in the Teacher Saving Fund (Subsection (1)' 

of Section 8) D The Act is silent as to the means whereby-errors 

in reports and in contributions are to be corrected, Of course, 
Mrs. B.B. Sapp, page 4 

it Is contemplated that 

think that the means of 

0 -4908 

such errors will be corrected, and we 

such correction are for the State Board 

of Trustees to determine. 

Subsection (7) of Section 6 provides aa follows: 

"(7) Subject to the limitations of this Act; 

the State-Board of Trustees shall, from time to 

time, establish rules and regulations for ellgibility of membership and for the admlnistratlon 

of the funds created by this Act and for the transaction of Its business." 

In answer to your question, it is our opinion that if 

the State Board of Trustees in its discretion determines that~ 

the transfer of moneys from'the suspense account to the Teacher 

Saving Fund, as outlined, is reasonable and proper, we know of 

no legal inhibition to the same. 

Very truly yours 

ATTORNEY GRNRRAL OF TRXAS 

GWS/s/w c 

By a/George W. Sparks 

George~~W. Sparks 

Assistant 

APPROVE) FRR 26, 1943 

s/Grover Sellers 

FIRST ASSISTANT 

ATTORNEY GENERAL 

Approved Opinion Committee By s/BWB Chalrman