THE ,~TORNEY GENERAL

OF TEXAS

Mrs. B.B. Sapp;Director and Executive Secretary TeacherRetirement System of~Texas Austin. Texas

Dear Mrs. Sapp: OpinionNumber O-4908 Re: Investment of moneys pense account.

We have received your letter of February 16,
we quote in part as follows: 1943,which

"TheTeacherRetirement System respectfully requests an opinion from yourDepartment on the following questions:

"Thisyear 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 Interestrate for teachers on their investmentswill be materially affected; sincewithin 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 suspenseaccount in order to receive interest and thereby give the members of the Teacher Retlrement System full benefit of their investment? Would Itbe within our rights to transfer from Fund No. 63 (SuspenseFund) a lump sum to Fund No. 103 and mark itUndistributed? now In sus-

"I am herewith outlining the method the Teacher Retirement Systemwill 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 individualaccounts. Such reports will be listed daily by Register Numbers. If the reports Includemembership fees, such fees will be transferred direct from Funds No. 63 to Fund No. 108. All credits to individualaccountswill be applied against the Fund No. 103Undistributed Fund untilMrs. 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 includethe amount applied against Fund No. 103Undistributed. This amountwill 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.

"Wewill appreciateyour immediateattentionin this instancebecause this amount of money idle, as I have aforesaid,will seriouslyaffect our interest credit to the individual teachers' accounts."
Section'8 of the Teacher RetirementAct (Article2922-1, Vernon'sAnnotated Civil Statutes) setsup sevendifferent funds for teacher retirement moneys. You have informedus 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 shallbe a fund 1n which shallbe accumulated regular five (5)per centum contributions from the compensation ofmembers, including current interest earnings. Contrlbutions to and payments from the Teachers Saving Fund shallbe made as follows:

"lb) l l * *fl
Subsection (l), Section 7 of the RetirementAct reads
as follows:

"Sec. 7. (1) The State Board of Trustees shallbe 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 limitationsand restrictions: All retirement funds, as are'receivedby 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 schooldistricts have not defaulted inprincipal or interest on bonds within a period of ten (10)years, or in bonds issuedby 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-bearingnotes or bonds of theUniversity of,Texas Issuedunder and by virtue of Chapter 40,Ac,tsof the Forty-thirdLegislature, Second Called Session;provided that a sufficientamount of said fund,sshall be kept on hand to meet the immediat,e

payment'of'theamounts 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 securitiesand lnvestments inwhich any of the funds created herein shall have been invested,as well as the proceeds of sais Fnvestmentsand any moneys belonging to said funds, provided tha,t any money on hand shall be subject to the StateDepository Laws of Texas."

The suspenseaccount is a fund setup by the State Board of Trustees of the Retirement System for retirementmoneys received by the Retirement System which but for some error in the reports of the schooldistrict or other employer or in the amount of money sentwould be placed In the Teacher Saving Fund and the Expense Fund. Inmost 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 employerwhereas the reports and contributions fully and adequately cover all the remaining teachers of such employer. In otherwords, because of an errorwhich affects only one or two teachers of the employer, the report must necessarily be held up until the error is corrected. The contributionsof all the teachers covered by the report of the employer In the past have been placed in the suspenseaccountuntil the error is corrected. You now wish to knowwhether part of the moneys ,presently in the suspenseaccount may be transferred to the Teacher Saving Fund in an undistributed lump sum, earmarked
as such, and then itemized and properly-distributedas the reports are clearedup. In otherwords, you wish to transfer part of the suspenseaccount,which part you feel offers very littledoubt and feel certainwill promptlybe cleared,-and then moneyswill thereafterbe 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, suchmoneys may promptly be investedand 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 meanswhereby-errors in reports and in contributionsare to be corrected, Of course,Mrs. B.B. Sapp, page 4

it Is contemplated that think that the means of 0-4908

such errorswill be corrected, and we such correctionare for the State Board of Trustees to determine.

Subsection (7) of Section 6 provides aa follows:
"(7) Subject to the limitations of thisAct; the State-Board of Trustees shall, from time to time, establishrules 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 ofmoneys from'the suspense account to the Teacher Saving Fund, as outlined, is reasonable and proper,we know of
no legal inhibitionto the same.
Very truly yours

ATTORNEY GRNRRAL OF TRXAS

GWS/s/wc By a/GeorgeW. Sparks George~~W.

Sparks Assistant

APPROVE) FRR 26, 1943 s/Grover Sellers FIRST ASSISTANT ATTORNEY GENERAL
Approved Opinion CommitteeBy s/BWB Chalrman