The Attorney General of Texas 

May 29, 1981 

Honorable John A. Traeger 

Chairman 

Committee on Intergovernmental 

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 of insurance 

You ask two questions regarding the Interlocal Cooperation Act, 

article 4413(32c), V.T.C.S. Your first question is as follows: 

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) of the Interlocal Cooperation Act? 

The Interlocal Cooperation Act permits local governments to contract 

for the nerformance of governmental services. Local government is defined 

as follows: 

sec. 3(l). 

a county; a home rule city or a city, 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 a combination of political subdivisions. 

Governmental functions and services is defined as follows: 

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). 

D. 1149 
Honorable John A. Traeger - Page Two @a+3471 

The term administrative functions includes purchasing. Sec. 3(3). The contracts may 

be “for the performance of any governmental functions or services 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 a particular 

kind of insurance, the decision as to the authority to do so has always been made on a 

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 is not immune). 

We therefore, 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 it jointly 

with another county under the Interlocal Cooperation Act. 

Your second question is as follows: 

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 in providing 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. We have local governments may contract to form self insurance pools to 

cover risks which each member is authorized to protect against. We express no opinion 

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), in the absence of additional facts. Any 

agreement must of course be consistent with constitutional provisions. 

p. 1150 
Honorable John A. Traeger - Page Three (Rw-347) 

SUMMARY 

Under the Interlocal Cooperation Act, local governments 

may act together to purchase insurance and form 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 of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Susan L. Garrison 

Assistant Attorney General 

APPROVED: 

OPINION COMMlTTEE 

Susan L. Garrison, Chairman 

James Allison 

Rick Gilpin 

Jim Moellinger 

p. 1151