TH-EA~TORNEY' GENERAL 

OF TEXAS 

AUIWX’XN. 'I%CXAS 78711 

JOEN L. x3xX& 

*-~NmY 0 -Ax. August 12, 1977 

Honorable Jesse James 

State Treasurer 

Opinion No. H-1040 

P. 0. Box 12608, Capitol Station Re: Disposition of interest 

Austin, Texas 78711 from the Employees Life, 

Accident and Health Insurance 

and Benefits Fund Account. 

Dear Mr. James: 

You inquire about the disposition of interest on the 

Employees Life, Accident and Health Insurance and Benefits 

Fund Account, known as Fund No. 973. The Fund, created by 

article 3.50-2, section 16, of the Insurance Code, consists 

of contributions for group life, accident and health insurance made by the state and state employees. It was 

"created with the treasury of the State of Texas" to be administered by the trustees of the Employees Retirement System. 

Ins. Code art. 3.50-2, 99 3(11), 16(a). You wish to know 

whether interest earned on time deposits made by the Treasurer 

from Fund 973 should be 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 in part: 

Sec. 1. Interest received on account 

of time deposits of moneys in funds and 

accounts in the charge of the State 

Treasurer shall be allocated as follows: 

To each constitutional fund there shall 

be credited the pro rata portion of the 

interest received due to such fund. The 

remainder of the interest received, with 

the exception of that portion required 

by other statutes to be credited on a 

pro rata basis to protested tax payments, 

shall be credited to the General Revenue 

Fund. The interest received shall be 

allocated on a monthly basis. 

i. 

I 

! 

Attorney General Opinion M-468 (1969) held that article 2543a 

did not apply to interest on federal funds granted to the State 

p. 4282 
. 

Honorable Jesse James - Page 2 (H-1040) 

for specific purposes. Characterizing them as trust funds, 

the opinion determined that any income became part of the 

fund, to be used only for the purposes for which 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 funds discussed in Attorney General Opinion M-468. 

It is administered by a trustee with considerable discretion 

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 limitations specified annually by the legislature, it may pay for insurance coverages 

without fiscal year limitation. Id. 9 16(a). The Fund may, 

of course, be spent only for insuzce coverage and administration expenses. The trustee which administers Fund 973 also 

administers the Employees Retirement System Funds, which this 

office has determined to be trust funds. Attorney General 

Opinion WW-565 ~(1959); see Letter Advisory No. 132 (1977). 

Interest on investmentsof Fund 973 is expressly made 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 also become 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 Insurance and 

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

c. ROBERT REATH, Chairman 

Opinion Committee 

jst 

p. 4284