# GENERAL

TH-EA~TORNEY'

OF TEXAS
AUIWX’XN. 

# 'I%CXAS 78711
JOEN L. x3xX& *-~NmY 0 -Ax. August 12, 1977

Honorable Jesse James State Treasurer OpinionNo. H-1040 P. 0. Box 12608, Capitol Station Re: Dispositionof interest Austin, Texas 78711 from the Employees Life, Accidentand Health Insurance and Benefits Fund Account. Dear Mr. James: You inquireabout the disposition of intereston the Employees Life, Accident and Health Insuranceand Benefits Fund Account, known as Fund No. 973. The Fund, created by article 3.50-2, section 16, of the InsuranceCode, consists of contributions for group life, accidentand health insurancemade by the state and state employees. It was "createdwith the treasury of the State of Texas" to be administered by the trustees of the EmployeesRetirement System. Ins. Code art. 3.50-2, 99 3(11), 16(a). You wish to know whether interest earned on time depositsmade by the Treasurer from Fund 973 shouldbe credited to the Fund itself or deposited into the General Revenue Fund pursuant to article 2543d,V.T.C.S. Article 2543d,V.T.C.S., provides inpart:

Sec. 1. Interest received on account of time deposits of moneys in fundsand accounts in the charge of the State Treasurer shallbe allocated as follows: To each constitutional fund there shall be credited the pro rata portionof the interestreceived due to such fund. The remainder of the interest received,with the exception of that portion required by other statutes to be creditedon a pro rata basis to protested taxpayments, shall be credited to the GeneralRevenue Fund. The interest received shallbe allocated on a monthly basis.

i. I ! Attorney General Opinion M-468 (1969)held that article 2543a

did not apply to intereston federal fundsgranted to the State

p. 4282.
Honorable Jesse James - Page 2 (H-1040)

for specificpurposes. Characterizing them as trust funds, the opinion determined that any income becamepart of the fund, to be used only for the purposes forwhich the grant was made, and not for the general operation of State government.We believe that Fund 973 is also a trust fund as were the federal fundsdiscussed in Attorney General Opinion M-468. It is administeredby a trusteewith considerablediscretion as to how the fund shall be invested and spent. Ins. Code art. 3.50-2, SS 4, 16(c). Although the trustee may pay administration expenses only within limitationsspecified annually by the legislature, itmay pay for insurance coverages without fiscal year limitation. Id. 9 16(a). The Fund may, of course, be spent only for insuzce coverageand administration expenses. The trustee which administersFund 973 also administers the Employees Retirement SystemFunds, which this office has determined to be trust funds. Attorney General OpinionWW-565 ~(1959);see Letter AdvisoryNo. 132 (1977). Interest on investmentsof Fund 973 is expresslymade part of the fund. Ins. Code 3.50-2, 8 16(c). We believe that interest on time deposit accounts, although it is not interest on an investment, see Lawson v. Baker, 220 S.W. 260, 268 (Tex.Civ. APP. -- Austin1920, writ ref'd), must alsobecome part of the fund. As a trust fund, it is not subject to the provisions of article 2543d. See Attorney General Opinion O-3607 (1941). - SUMMARY Interest on time deposits of the Employees Life, Accident and Health Insuranceand Benefits Fund Account must be credited to the Fund itself and not deposited to the General Revenue Fund pursuant to article 25436,V.T.C.S.

# ;_ (J$cZ&

.

,,Attorney General of Texas APPROVED:

DAVID M. KENDALL, First Assistant

! p. 4283Honorable Jesse James - Page 3 (H-1040)

c. ROBERT REATH, Chairman Opinion Committee jst

p. 4284