The Attorney General of Texas 

Dezmber 31, 1985 

JIM MATTOX 

Attorney General 

Supreme Cowl Building 

P. 0. Box 12548 

Austin, TX. 78711. 2548 

512!475-2501 

Telex 910/874-1367 

Telecopier 512/4750266 

714 Jackson. Suite 700 

Oallas. TX. 752ON506 

214I742.8944 

4824 Alberta Ave.. Suite 164 

El Paso, TX. 79905-2793 

91515333484 

1001 Texas, Suite 700 

Houston, TX. 77002.3111 

7131223-5886 

4309 N. Tenth, Suite B 

McAllen, TX. 78501-1685 

512/682-4547 

200 Main Plaza, Suite 400 

San Antonio, TX. 782052797 

51212254191 

An Equal Opportunity/ 

Affirmative Action Employer 

Mr. Marvin J. Titmm 

Executive Director 

Texas Surplus Prollerty Agency 

P. 0. Box 8120 

San Antonio, Texas; 78208 

Opinion No. JM-417 

Re: Whether the Texas Surplus 

Property Agency is subject to 

section 35.405 of Title llOB, 

which requires reimbursement to 

the general revenue fund for 

state retirement contributions 

Dear Mr. Titsman: 

You ask whether the Texas Surplus Property Agency must pay 

reimbursement to the general revenue fund for state retirement 

contributions pursuant to 35.405 of Title llOB, V.T.C.S., because it 

receives donatiors of property from the federal government. We 

conclude that the provisions of section 35.405 do not apply to the 

Texas Surplus Property Agency in the situation you describe. 

Section 35.4C5 provides that 

(a) If an employer applies for money provided 

by the United States, an agency of the United 

States, or a privately sponsored source, and if 

any of the money will pay part or all of an 

employee,'s salary, the employer shall apply for 

any legs,lly available money to pay state contributions rr,quired by Section 35.404 or 36.201 of this 

subtitle. 

(b) When an employer receives money for state 

contribr,tions from an application made in accordance with Subsection l(a) of this section, the 

employer shall immediately send the money to the 

retirement system for deposit in the general 

revenue fund of the state treasury. 

Cc) Monthly, employers shall report to the 

retirement system in a form prescribed by the 

system: 

(1) the name of each employee paid in whole 

or part from a grant; 

p. 1903 
Mr. Marvin J. Titzman - Pa3e 2 (JM-417) 

(2) the s#>urce of the grant; 

(3) the amount of the employee's salary 

paid from the Srant; 

(4) the amount of the money provided by the 

grant for staz contributions for the employee; 

and 

(5) any other information the retirement 

system determkxs is necessary to enforce this 

section. 

(d) The retirement system may: 

(1) require from employers reports of 

applications Em money; 

(2) require evidence that the applications 

include requests for funds available to pay 

state contrit~utions to the retirement system 

for employees paid from the grant: and 

(3) exami:le the records of any employer to 

determine compliance with this section and 

rules promulg;%ted under it. 

(e) A person conunits an offense if the person 

is an administrr.tor of an employer and knowingly 

fails to comply with this section. 

(f) An offense under Subsection (e) of this 

section is a Claljs C misdemeanor. 

(g) An employer who fails to comply with this 

section may not, after the failure, apply for or 

spend any money from a federal or private grant. 

The retirement ;qrstem shall report alleged noncompliance to t.ke attorney general, the state 

treasurer, the Legislative Budget Board, the 

comptroller of public accounts, and the governor. 

The attorney general shall bring a writ of 

mandamus against the employer to compel compliance 

with this section.. 

We consider initially the meaning of section 35.405. The Texas 

Supreme Court has stated t&at the dominant rule to be observed in the 

construction of statutes i:a to give effect to the intention of the 

legislature and that, generally, the intent and meaning .is obtained 

primarily from the language of a statute. See City of Sherman v. - 

p, 1904 
i 

Mr. Marvin J. Titsman - Page 3 (JM-417) 

Public Utility Commission of Texas, 643 S.W.2d 681, 684 (Tex. 1983). 

See also Seay v. gall, 677?.W.2d 19, 25 (Tex. 1984). Also, the words 

employed in a statute are ordinarily given their plain meaning. 

V.T.C.S. art. 10; Attorney (General Opinion H-193 (1974). 

Section 35.405 of Title 1lOB is intended to be a recodification, 

without substantive change, of chapter 3, section 3.63 of the Texas 

Education Code which originally was enacted by Bouse Bill No. 2083 of 

the Sixty-sixth Legislature in 1979. The specific language throughout 

the section in question refers to money provided from federal or 

private source* for emplcyees' salaries and to money provided by a 

grant for the state contributions to the retirement system for 

employees paid from a grant. The bill analysis to House Bill No. 2083 

prepared for the House Committee on Public Education, on file with the 

Legislative Reference Library, describes that section of the bill as a 

new section to the Texas Education Code “to provide for the collection 

of federal grant money fcr the state's contribution to [the Teacher 

Retirement System]." Furt,ber, it is well established that penal acts 

and statutes imposing a penalty must be strictly construed. See 

535.405(e), (f), (g); &z v. American Liberty Pipe Line Co., 172 

S.W.2d 972, 974 (Tex. 1943); State v. Duke, 137 S.W. 654, 662 (Tex. 

1911). 

We conclude that tt,e legislature intended section 35.405 to 

require reimbursement to 1:h.e general revenue fund for Teacher Retirement contributions on salaries that are paid from money provided by 

grants from the United States, an agency of the United States, or a 

privately sponsored source. It is our opinion that the Surplus 

Property Agency normally do,es not receive such money. 

The Federal Property and Administrative Service Act of 1949, as 

amended, provides that surplus personal property under the control of 

an executive agency of the! federal government may be transferred to a 

state agency which is designated by state law as the agency 

responsible for the fair and equitable distribution of the property in 

accordance with the provisions of the act. See 40 U.S.C. 5484(j). 

Section 484(j)(4)(D) allow:3 the state agency to assess and collect 

service charges from participating recipients to cover costs of the 

state agency's activities. The federal act requires such charges to 

be based on services performed by the state agency. 

The Texas Legislature created and designated the Texas Surplus 

Property Agency as the si:ate agency for the purpose of the Federal 

Property and Administrative Services Act of 1949. See V.T.C.S. art. 

6252-6b. 54. Its primary function is the acquisition, warehousing, 

and distribution of surplus federal personal property to entities that 

qualify under the federal act. The Surplus Property Agency may assess 

service charges for such acquisition, warehousing, and distribution, 

which are deposited in the Service Charge Trust Fund that is not part 

of the State Treasury. The receipts from such charges are authorized, 

p. 1905 
Mr. Marvin J. Titsman - Page 4 (JM-417) 

as needed, for the operation of the agency. See art. 6252-6b. %4, - 

subsets. (1). cm). 

The operating funds from which the Surplus Property Agency pays 

the salaries of its employees are generated by the agency's charges 

for the acquisition and r~~distribution of federal surplus property. 

The federal government's donations of surplus property generates 

activity that results in payment of employees' salaries and the 

state's liability for r,etirement contributions. The salaries, 

however, are not paid from the donations but from charges paid by 

units of local or state gt,vernment that participate in the program. 

Such charges are not money from federal or private grants. Hence, we 

conclude that section 35.405 of Title 1lOB does not require the Texas 

Surplus Property Agency to reimburse the general revenue fund for 

state ~retirement contributkns unless salaries are paid by the agency 

from direct grants of money to the agency from federal or private 

sources. 

SUMMARY 

Section 35.4X of Title 1lOB. V.T.C.S., 

requires reimbur,sement to the state's general 

revenue fund for state retirement contributions 

that occur on salaries paid from money provided by 

federal or private grants. The funds from which 

the Texas surplus Property Agency Pays the 

salaries of its tnlployees are generated by charges 

to the recipientr; of federal surplus property that 

the agency acquires and distributes. Since such 

charges are not money from federal or private 

grants, the reinbursement requirement of section 

35.405 does not ,~pply to the normal operations of 

the Texas Surplus Property Agency. 

Very truly you J AL 

JIM MATTOX 

Attorney General of Texas 

JACK HIGBTOWER 

First Assistant Attorney Goneral 

MARY KELLER 

Executive Assistant Attorney General 

ROBERT GRAY 

Special Assistant Attorney General 

p. 1906 
Mr. Marvin J. Titanan - Pa:ge 5 ~fncb17) 

. . 

RICK GILPIN 

Chairman, Opinion Comitte~z 

Prepared by Nancy Sutton 

Assistant Attorney General 

p. 1907