JIM MAlTOX 

Attorney General 

Supreme Court Building 

P. 0. Box 12546 

Austin. TX. 78711- 2546 

5121475-2501 

Telex 9101674.1367 

Telecooier 51214750266 

714 Jackson. Suits 700 

Dallas. TX. 75202.4506 

2141742.6944 

4624 Alberta Ave., Suite 160 

El Paso. TX. 799052793 

915/5333464 

1001 Texas, Suite 700 

Houston, TX. 77002-3111 

7131223.5686 

806 Broadway, Suite 312 

Lubbock, TX. 79401-3479 

8061747.5238 

4309 N. Tenth. Suite B 

McAllen. TX. 76501-1665 

51216824547 

200 Main Plaza. Suite 400 

San Antonio, TX. 762052797 

5121225.4191 

An Equal Opportunityi 

Affirmative Action Employer 

The Attorney General of Texas 

Narember 13. 1985 

Gary E. Miller, M.D. 

Colluaissioner 

Opinion No. JU-378 

Texas Department of Mental Realth 

and Mental Retar'dation 

P. 0. Box 12668 

Austin, Texas 78711 

Re: Whether funds paid to 

a Mental Eealth and Mental 

Retardation facility for 

services rendered pursuant 

to a contract are appropriated to that facility 

Dear Dr. Miller: 

You inquire about the proper disposition of funds received by the 

Texas Department elf Mental Realth and Mental Retardation [hereinafter 

-1 under a wntract with a private entity. You provide the 

following background information about the contract: 

State schools for the mentally retarded . . . have 

an oppol:tunity to assist private, not for profit 

service providers in the delivery of communitybased residential services through the use of 

state anployees to operate or partially operate 

such services on a contract basis. The private, 

not for profit service provider could qualify for 

ICF-MR 1:srtification [intermediate care facility 

for the mentally retarded; see 42 U.S.C. 

11396d(c), cd)] and thereby become eligible to 

receive reimbursement for such services from the 

Federal Government through the Texas Department of 

Human Resources. The private, not for profit 

service provider would, in turn, pay the state 

school rll or part of such funds as consideration 

for the :services of the school's employees under 

the provisions of the contract. 

You state that the contract will be made under authority of section 

2.13, article 5547-202, which provides as follows: 

Sec. 2.13. The Department may cooperate, 

negotiate and contract with local agencies, 

hospitals, private organizations and foundations, 

communilg centers, physicians and persons to plan, 

p. 1726 
Dr. Gary E. ~liller - Page 2 (JM-378) 

develop and provide community-based mental health 

and mental retardation services. 

You do not ask whc:ther section 2.13 authorizes such a contract, 

and if it does, vhether it could constitutionally do so. See Tex. - 

Comet. art. III, S51. !!tm ask the folloving question: 

Are funds received by a Texas Department of Mental 

Health and Mental Retardation operated facility as 

consideration :for services rendered to a private, 

not for profit entity pursuant to contract reappropriated t,o the facility which provided such 

services? (Emphasis added). 

You cite the follwing rider to the Appropriations Act as being 

relevant to your questim: 

Sec. 27. RRIHBDRSEMENTS AND PAYMENTS. Any 

reimbursements received by an agency of the state 

for authorixd services rendered to any other 

agency of thtz state government, and any private 

sources and aa:{ payments to an agency of the state 

save-nt male in settlement of a claim for 

damages, are hereby appropriated to the agency of -- 

the State rrwiving such reimbursements and payments for useliuring the fiscal year in which they 

are received. 

The reimbc.rsements and payments received shall 

be credited by the comptroller to the agency's 

current appropriation items or accounts from which 

the expenditures of like character were originally 

made, or in the case of damage settlements to the 

appropriation, items or accounts from which repairs 

or replacemerlts are made; provided, however, that 

any refund oi' less than fifty dollars ($50) to an 

institution c'f higher education for postage, 

telephone se.nrice, returned books and materials, 

cylinder ar.d container deposits, insurance 

premium and like items, shall be deposited to the 

current fund account of the institution in the 

State Treamry and such funds are hereby reappropriated. 

Acts 1985, 69th Leg., cb. 980, art. V. 527, at 7779. 

The payments uni,er the proposed contract are payments from 

private sources subject. to the above Appropriations Act provision. 

The State Funds Reform Act provides that: 

p. 1727 
Dr. Gary E. Miller - Page 3 (JM-378) 

Fees, fines, pcualties, taxes, charges, gifts, 

grants, donations, and other funds collected ot 

received by a s'tate agency under law shall be 

deposited in the treasury, credited to a special 

fund or funds, sad subject to appropriation on19 

for the purposes for which they are otherwise 

authorized to be expended or disbursed. A deposit 

shall be made at the earliest possible time that 

the treasury cat accept those funds, but not later 

than the seventh day after the date of receipt. 

V.T.C.S. art. 4393-1, 54.(1(,4(a) (former V.T.C.S. art. 4393c reenacted 

as part of Treasury Act, Acts 1985, 69th Leg., ch. 240. at 2078, 

2104). The funds are to be deposited to the credit of the General 

Revenue Fund unless the mco,ey is expressly required to be deposited to 

another fund or account. Id. 54.004(b). The Texas Department of 

Mental Health and Mental !%etardation is a state agency subject to the 

State Funds Reform Act. See Attorney General Opinion MW-454 (1982). 

Funds the department res:zes under the contract are subject to 

article 4393-1, V.T.C.S., a,nd must be deposited in the treasury within 

seven days after the date c'f receipt. 

Rider 27, quoted above, appropriates the payments received by 

MIIMR under contract for use during the fiscal year received. The 

funds are credited to the agency's appropriation items or accounts 

"from which the expendimres of like character were originally 

made. . . .'I The funds received under the proposed contract will 

constitute reimbursement for services of employees of state schools 

for the mentally retarded. The rider appropriates these payments to 

the items of appropriation or accounts from which the employees ware 

paid. 

The current General Appropriations Act includes the following 

items in the appropriation to the Texas Department of Mental Realth 

and Mental Retardation: 

STATE SCEOO1.S FOR TRE MRNTALLY RETARDED 

For the Years &ding 

August 31, August 31, 

1986 1987 

1. Administration Program: [amounts of approa. Superinte:ldent (plus priation items 

house ,and utilities) deleted] 

b. Other Administrative 

and Stn:Ef Development 

Servic 2:3 

2. Auxiliary Seru:Lces Program 

p. 1728 
Dr. Gary E. Miller - Pa:ce 4 (JM-378) 

3. Residential !Servlces Program 

4. Utilities (non-transferable) 

5. Community-Based Residential 

Service Program 

6. Non-Residential Treatment. 

Education and Rehabilitation 

Services Program 

GRAND TOTAL, STATE SCHOOLS $246,318,003 $246,318,003 

. . . . 

It is the i:n:ent of the Legislature that the above 

appropriated fmds be allocated and expended as nearly 

as practicable by the facilities enumerated below in 

the amounts spczified for each facility. 

Abilene State !Ichool 

Austin State School 

Brenham State Ikhool 

Corpus Christi State School 

Denton State School 

Fort Worth State School 

Lubbock State licbool 

Lufkin State S~:bool 

Mexla State School 

Richmond State School 

San Angelo Sta:e School 

San Antonio Stite School 

Travis State S~:hool 

[specific amount 

allocated each 

school deleted] 

TOTAL $246.318.003 $246.318.003 

Acts 1985, 69th Leg., c!a. 980, at 7536-37. 

The legislature appropriated funds to the state schools as a 

group for the various programs and purposes numbered 1 through 6, and 

it also stated the apprmimate amount of the total appropriation to go 

to each school. The items numbered 1 through 6 are the items of 

appropriation vhich f'und the state schools, including salaries of 

their employees. Art Lcle V, section 27 appropriates funds received 

under the proposed contract to the appropriation item from which 

derive the salaries of employees performing services under the 

contract. See Tcx. Coast. art. VIII, $6. - Therefore. funds received 

p. 1729 
Dr. Gary E. Miller - Page 5 (JM-378) 

under such contracts are appropriated to the Department of Mental 

Realth and Mental Retardation for the programs of the state schools 

described in the Appropriations Act. The rider does not appropriate 

these receipts to the state Ischool whose employees generated the=. 

SUMMARY 

The State Funds Reform Act, article 4393-1, 

V.T.C.S., applies to funds received by the Texas 

Department of Ment,al Eealth and Kental Retardation 

from a private source. These funds must be placed 

in the treasury. Article V. section 27 of the 

General Approprjstions Act appropriates those 

funds to the department's appropriation items from 

vhich the state'fl expenditures under the contract 

were made. 

Very truly yours J-A/b . 

- 

JIM MATTOX 

Attorney General of Texas 

MARY KELLER 

Executive Assistant Attorney General 

ROBERT GRAY 

Special Assistant Attorney G,eneral 

RICK GILPIN 

Chairman, Opinion Committer! 

Prepared by Susan L. Garriwm 

Assistant Attorney General 

APPROVED: 

OPIHICN COmITl'EE 

Rick Gilpin, Chairman 

Colin Carl 

Susan Garrison 

Tony Gulllory 

Jim noellinger 

Jennifer Riggs 

Nancy Sutton 

Sarah Woelk 

Bruce Youngblood 

p. 1730