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

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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 ofMental Realth and Mental Retar'dation P. 0. Box 12668 Austin, Texas 78711 Re: Whether fundspaid to a Mental Eealth and Mental Retardation facility for services rendered pursuant to a contract are appropriated to that facility Dear Dr. Miller: You inquireabout the proper disposition of fundsreceivedby the Texas Department elf Mental Realth and Mental Retardation [hereinafter 

### -1 under a wntract with a private entity. You provide the followingbackground informationabout the contract:

State schools for thementally retarded
. . .have an oppol:tunityto 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 serviceprovider 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 FederalGovernment through the Texas Departmentof 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 :servicesof the school's employees under the provisionsof 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, communilgcenters,physicians and persons toplan,

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

develop and provide community-basedmental health andmental retardation services. You do not ask whc:thersection 2.13 authorizes such a contract, and if it does, vhether it could constitutionally do so. See Tex. - Comet. art. III, S51. !!tmask the folloving question:

Are funds receivedby a Texas Department ofMental Health andMental Retardation operated facilityas consideration :forservices rendered to a private, not for profit entity pursuant to contract reappropriated t,othe facility which provided such services? (Emphasisadded). You cite the follwing rider to the AppropriationsAct as being relevant toyour questim:

Sec. 27. RRIHBDRSEMENTS AND PAYMENTS. Any reimbursementsreceived by an agency of the state for authorixd services rendered to any other agency of thtzstate government, and any private sourcesand 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 fiscalyear inwhich they are received. The reimbc.rsements and payments received shall be credited by the comptroller to the agency's currentappropriationitems or accounts fromwhich the expendituresof like characterwere originally made, or in the case of damage settlementsto 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, shallbe 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. 1727Dr. Gary E. Miller - Page 3 (JM-378)

Fees, fines, pcualties, taxes, charges, gifts, grants, donations, and other funds collected ot received by a s'tateagency 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 tobe expendedor disbursed. A deposit shall be made at the earliest possible time that the treasury cat accept those funds,but not later than the seventhday after the date of receipt. V.T.C.S. art. 4393-1, 54.(1(,4(a) (formerV.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 themco,eyis expresslyrequired tobe 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 treasurywithin seven days after the date c'freceipt. Rider 27, quoted above, appropriates the payments received by MIIMRunder 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 TREMRNTALLY RETARDED

For theYears &ding August 31, August 31, 1986 1987 1. AdministrationProgram: [amountsof approa. Superinte:ldent(plus priation items

house ,and

utilities) deleted] b. OtherAdministrative

and Stn:Ef

Development Servic2:3 2. Auxiliary Seru:Lces Program

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

3. Residential !Servlces Program 4. Utilities (non-transferable) 5. Community-BasedResidential Service Program 6. Non-ResidentialTreatment. Education andRehabilitation ServicesProgram GRAND TOTAL, STATESCHOOLS $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 spczifiedfor 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:eSchool San Antonio Stite School Travis State S~:hool [specificamount allocated each schooldeleted]

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 appropriationto go to each school. The items numbered 1 through 6 are the items of appropriation vhich f'undthe state schools, including salaries of their employees. ArtLcleV, 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. 1729Dr. 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 thesereceiptsto the state Ischool whose employeesgenerated the=. SUMMARY The State Funds Reform Act, article 4393-1, V.T.C.S., applies to funds received by the Texas DepartmentofMent,alEealth andKental Retardation from a private source. These fundsmust be placed in the treasury. Article V. section 27 of the General Approprjstions Act appropriates those funds to the department'sappropriationitems from vhich the state'flexpendituresunder the contract were made.
Very trulyyours 

# J-A/b

.

- JIM MATTOX AttorneyGeneral of Texas MARY KELLER ExecutiveAssistantAttorney General ROBERTGRAY SpecialAssistantAttorney G,eneral RICKGILPIN Chairman,Opinion Committer! Preparedby Susan L. Garriwm AssistantAttorneyGeneral APPROVED: OPIHICNCOmITl'EE Rick Gilpin,Chairman ColinCarl SusanGarrison Tony Gulllory Jim noellinger JenniferRiggs Nancy Sutton SarahWoelk BruceYoungblood

p. 1730