# The Attorney General of Texas May29, 1981

Honorable John A.Traeger Chairman Committee onIntergovernmental Relations Texas State Senate Austin, Texas 787ll Dear Senator Traeger: Opinion No. ~~-347 Re: Whether Interlocal Cooperation Act allows local governments to enter into interlocal contracts to provide all forms ofinsurance

You ask two questions regarding the Interlocal Cooperation Act, article 4413(32c),V.T.C.S. Yourfirst question isasfollows:

Under the Interlocal Cooperation Act, do ‘local governments,’ acting together, have the statutory authority to purchase insurance to cover the governmental functions and services covered under section 3(2)ofthe Interlocal Cooperation Act? TheInterlocal Cooperation Act permits local governments to contract for the nerformance ofgovernmental services. Local government isdefined asfollows:

sec. 3(l). a county; a home rule city or acity, village, or town

organized under the general laws of this state; a special district; a school district; a junior college district; any other legally constituted political subdivision of the State of Texas or any adjoining state; or acombination ofpolitical subdivisions.

Governmental functions and services isdefined asfollows: all or part of any function or service included within the following general areas: police protection and detention services; fire protection; streets, roads, and drainage; public health and welfare; Parks; recreation; library services; museum services; waste disposal; planning; engineering; administrative functions; and such other governmental functions which are of mutual concern to the contracting parties. (Emphasis added). See. 3(2).
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The term administrative functions includes purchasing. Sec. 3(3). The contracts may be“forthe performance ofany governmental functions orservices which all parties to the contract are legally authorized to perform.

...” Sec. 4(b). Since the statute expressly authorizes interlocal contracts for the purpose of purchasing, we believe that local governments may contract together to purchase an insurance contract covering risks which each party to the contract has independent authority to insure against. We cannot, however, say that each kind of local government has authority to insure against risks arising out of all governmental functions and services listed in section 3(2). The Texas Tort Claims Act authorizes political subdivisions to purchase insurance to protect against claims brought thereunder. V.T.C.S. art. 6252-19, S9. Article 3.51-2(a), V.T.C.S., Insurance Code, authorizes political subdivisions to purchase group life, health, and accident insurance to cover employees. See also V.T.C.S. art. 1937(county must purchase errors and omissions policy for countWhere, however, no statute authorizes a political subdivision to purchase aparticular kind ofinsurance, the decision asto the authority to dosohas always been made ona case-by-case basis. See, e.g., Attorney General Opinions H-1300(1978)(county may purchase a nonassessable policy from a recipriocal insurance exchange); H-958 (19771 (county may purchase insurance coverage for reserve deputy sheriffs limited to risk of loss for medical expenses voluntarily assumed under article IlI, section .52e of the Texas Constitution); H-70 (1973)(school district may purchase insurance to indemnify district against litigation expenses and damages where district isnot immune). Wetherefore, cannot conclude that each local government could contract under article 44l3(32c), V.T.C.S., to purchase jointly with another political subdivision insurance to cover risks arising out of the enumerated governmental functions and services. Where, however, a statute or other law clearly provides that a county, for example, may purchase a particular kind of insurance, then it may purchase itjointly with another county under the Interlocal Cooperation Act. Yoursecond question isasfollows: Under the, Interlocal Cooperation Act, do ‘local governments’ have the statutory authority to form self-insurance pools as they have done in the workers’ compensation and health fields to cover risks inherent inproviding governmental functions and services? Self Insurance is a function of local governments if they do not purchase insurance. See V.T.C.S. arts. 6252-19, 6252-19b; Attorney General Opinion H-887 (19761. Wehave local governments may contract to form self insurance pools to cover risks which each member isauthorized to protect against. Weexpress noopinion as to how such an insurance pool should be structured, and how obligations may be allocated among the members. See Attorney General Opinion H-1300(1978). Nor can we state that each local government may join a pool to insure against each governmental function &fined in section 3(2),inthe absence ofadditional facts. Any agreement must ofcourse beconsistent with constitutional provisions.

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SUMMARY Under the Interlocal Cooperation Act, local governments mayact together topurchase insurance andform self insurance pools to cover governmental functions and services which each contracting local government has statutory or other legal authority to insure.

MARK WHITE Attorney General ofTexas JOHN W.FAINTER, JR. First Assistant Attorney General RICHARD E.GRAYIII Executive Assistant Attorney General Prepared bySusan L.Garrison Assistant Attorney General APPROVED: OPINIONCOMMlTTEE Susan L.Garrison, Chairman James Allison Rick Gilpin Jim Moellinger

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