The Attorney General of Texas 

August 4, 1980 

MARK WHITE 

Attorney General 

Honorable Kenneth II. Ashworth 

Coordinating Board 

Texas College and University System 

P. 0. Box 12788, Capitol Station 

Austin, Texas 78711 

Opinion No. MW-215 

Re: Implementation of the Texas 

State College and University 

Employees Uniform Insurance 

Benefits Act, Ins. Code art. 3.50-3. 

Dear Commissioner Ashworth: 

You ask several questions concerning the Texas State College and 

University Employees Uniform Insurance Benefits program created by the 

provisions of article 3.50-3 of the Insurance Code. You first ask whether the 

institutions of higher education in Texas are required to adopt and 

implement a program of insurance premium payments for retired employees. 

Article 3.51-5 of the Insurance Code, enacted in 1975, provides that the 

“costs of group life and health insurance premiums to persons retired under 

the Teacher Retirement Act, who at the time of their retirement were 

employed by . . . a Texas senior college or university . . . shall be fully paid 

from the funds of such . . . institution. . . .‘I Article 3.50-3 of the Insurance 

Code enacted in 1977, states that one of its purposes is 

Sec. 2(f) to recognize the long and faithful service 

and dedication of employees of the Texas state 

colleges and universities and to encourage them to 

remain in service until eligible for retirement by 

providing health insurance and other group insurance 

benefits for such employees; 

Institutions covered by the Act are required to “contribute monthly to the 

cost of each insured employee’s coverage. . . .‘I Ins. Code art. 3.50-3, § 12. 

The Act &fines “employee ” to include employees who retire under the 

Teachers Retirement System of Texas or the Optional Retirement Program 

established by articles 51.351 - 51358 of the Texas Education Code. Ins. 

Code art. 3.50-3, SS 3(a)(2), (4). In our opinion, article 3.50-3 clearly 

requires state agencies of higher education to implement a program of 

insurance premium payments for retired employees. 

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Honorable Kenneth H. Ashworth - Page Two (Mw-215 1 

You next ask whether the institutions of higher education have authority to use 

institutional line item appropriations for other items to support the program for retired 

employees. Section 4b of article IV of the General Appropriations Act for 1979-81 states 

that “insurance premiums where authorized by law . . . may be purchased from 

appropriated funds.” Section 4d states that ” ‘General Operating Expenses’ as used in the 

medical and dental institutions shall include . . . insurance premiums where authorized by 

law. . . .‘I Section 5 provides that, with the approval of the governing board, “transfers 

may be made between the items of appropriations for the general academic institutions” 

regardless of whether the items are general revenue or local funds. In our opinion, 

institutions may transfer appropriation items to pay for insurance premiums for retired 

employees as permitted by article IV, sections 4b, 4d, and 5 of the General Appropriations 

Act. 

You next ask whether article 3.50-3 of the Insurance Code obligates junior college 

districts to implement a program of insurance premium payments for retired employees. 

Article 3.50-3 defines “employees” to include persons who have retired from junior college 

teaching. Sec. 3(A). Article 3.51-5 of the Insurance Code does not require junior colleges 

to pay insurance premiums for retired employees. However, its provisions are to be 

construed in harmony with the more recently enacted article 3.50-3, which is clearly 

applicable to retired junior college employees. See Goldman v. State, 277 S.W.Zd 217 (Tex. 

Civ. App. - Amarillo 1954, writ ref’d n.r.e.) (statutes in pari materia must be harmonized); 

see also Attorney General Opinion H-1114 (1978). A question has arisen as to whether the 

state may control funds of a junior college district other than appropriated funds. Junior 

college districts are oolitical subdivisions of the state. Attornev General Ooinion M-707 

(197Oj; see Shepherd vl San Jacinto Junior College Dist., 363 S.W.2”d 742 (Tex. ‘1963); King’s 

Estate v. School Trustees of Willacy County, 33 S.W.Zd 783 (Tex. Civ. App. - San 

Antonio 1930, writ ref’d). They are established pursuant to statutes enacted by the 

legislature. See Educ. Code ch.-130. In order to receive state appropriations, they must 

comply “with3 existing laws, rules, and regulations governing the establishment and 

maintenance of public junior colleges. . . . ‘I Educ. Code S 130.003(b)(3). They acquire local 

funds pursuant to state law. See Tex. Const. art. VII, S 3; Educ. Code § 130.121 (tax 

assessment). There is ample precedent for legislative control of local junior college funds. 

Educ. Code 5 130.084; see Educ. Code S 20.48; Attorney General Opinion MW-38 (19791. Of 

course, particular fundzay be earmarked for special purposes. See Educ. Code S 130.123 

(revenue bonds for acquisition of facilities). However, we find% general prohibition 

against legislation which would alter or control the expenditure of nonappropriated funds 

by junior colleges. 

Your next question is as follows: 

If the cost of the premium payment per employee for the basic 

coverage(s) prescribed under Article 3.50-3 of the Insurance Code 

exceeds the per employee amount appropriated in the General 

Appropriations Act for the purpose of insurance premium 

payments, do the institutions have an obligation to pay the portion 

of the premium that exceeds the amount appropriated per 

employee and included in the General Appropriations Act? If so, do 

P. 667 
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Honorable Kenneth H. Ashworth - Page Three (MW-215) 

the institutions have the authority to use funds included in other 

line item appropriations in view of Section [25] of Article IV of the 

General Appropriations Act? 

Section 11 of article 3.50-3 provides in part: 

From the first day of employment, each active full-time employee 

who has not waived basic coverage or selected optional coverages 

shall be protected by a basic plan of insurance coverage 

automatically. The premium for such coverage shall not exceed 

the amount of the employer contribution. . . . 

In our opinion, this provision contemplates a basic coverage that will be fully funded by 

the employer contribution. Section 12 requires that institutions and agencies covered by 

the Act “shall contribute monthly to the cost of each insured employee’s coverage no less 

than the amount appropriated therefor by the legislature in the General Appropriations 

Act. . . .” Section 25 of article IV of the current Appropriations Act provides that the 

state’s contribution for employee premiums on group life, health, and accident policies 

should not exceed $35 per month in fiscal 1980 and $40 per month in fiscal 1981. 

General legislation enacting or repealing a statute may not be included in a general 

appropriation bill. Tex. Const. art. III, S 35; Moore v. Sheppard, 192 S.W.Zd 559 (Tex. 

1946); Conley v. Daughters of the Republic of Texas, 151 S.W. 877 (Tex. Civ. App. - San 

Antonio 1912), aff’d, 156 S.W. 197 (Tex. 1913). In order to be valid, riders to the 

Appropriations Act must be related to and germane to the act. Jessen Associates, Inc. v. 

Bullock, 531 S.W.Zd 593 (Tex. 1975). If we construe section 25 to limit the permissible 

contribution under section 12 of article 3.50-3 to an amount less than the premium for the 

basic plan required by section 11, it will be inconsistent with those provisions of general 

law, and therefore an invalid attempt to enact general law in the general appropriations 

act. Statutes are to be construed to render them constitutional and valid where possible. 

Hamrick v. Simpler, 95 S.W.Zd 357 (Tex. 1936). Section 25 can be constitutionally 

construed as a limitation on the expenditure of appropriated funds. Thus, institutions 

receiving funds in article IV of the General Appropriations Act may spend from 

appropriated funds no more than $35 per employee premium per month in 1980 and no 

more than $40 per employee premium per month in 1981. Since section 12 of article 3.50-3 

authorizes covered institutions and agencies to contribute monthly “no less than the 

amount appropriated therefor by the legislature ‘I they may contribute more than the 

amounts appropriated. (Emphasis added). Since section 11 requires the premium for the 

basic plan to be fully funded from the employer contribution, it obligates the employer t0 

pay the excess over the amount appropriated. However, since section 25 of article IV 

limits the expenditure of appropriated funds, the excess must be paid from 

nonappropriated funds. 

You finally ask whether institutions must contribute to the premium payment of 

employees paid from nonappropriated funds an amount equal to the premium contribution 

for employees included in line item appropriations. You also inquire about the source of 

such premium payments. Section 12 of article 3.50-3 provides in part: 

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Honorable Kenneth H. Ashworth - Page Four (NW-215) 

Each institution and agency covered under the provisions of this 

Act shall contribute monthly to the cost of each insured employee’s 

coverage . . . as determined by the governing board of the 

institution in its respective official operating budget, if the 

employees are compensated from funds appropriated by such 

budgets rather than by the General Appropriations Act. . . . 

This provision gives the governing board some discretion as to the amount of premium and 

the sources within its operating budget. Sections 4b and d of Article IV of the General 

Appropriations Act permit payment of “insurance premiums where authorized by law” 

without limiting this benefit to persons compensated by appropriated funds. We therefore 

believe the governing board may use either appropriated or nonappropriated funds to pay 

insurance premiums of employees compensated by nonappiopriated funds, for example 

auxiliary employees. If appropriated funds are used, the limitations of premium payments 

found in section 25 of article IV will be applicable. Of course, the monthly contribution 

must be large enough to fund the premium for the basic plan to which each employee is 

entitled under section 1L 

SUMMARY 

Article 3.50-3 requires institutions of higher education in Texas, 

including junior colleges, to fund insurance premiums for retired 

employees. They may use appropriated funds for that purpose 

pursuant to sections 4b, 4d, and 5 of article IV of the General 

Appropriations Act, and subject to the limitations on dollar amount 

in section 25. If the cost of the premium payments for the basic 

coverage prescribed under section 11 of article 3.50-3 exceeds the 

per employee amount appropriated for that purpose, the institution 

must pay the additional amount. 

ve$u&%& 

MARK WHITE 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

Prepared by Susan Garrison 

Assistant Attorney General 

APPROVED: 

OPINION COMMlTTEE 

C. Robert Heath, Chairman 

Martha Allan 

David B. Brooks 

Susan Garrison 

William G. Reid 

P. 689