### THE 

## ATTORNEY GENERAL OPI'EXAS

Dr. David Wade, Commissioner Opinion No. N-919 Texas Department ofMental Health and Mental Retardation Rc: Certain aspects of a group Box 12668, Capitol Station insurance program which Austin, Texaa 78711 a department may contemplate entering for its employees, both regular and retired. Dear Dr.Wade:
We quote below the information and questions submitted to this office inyour recent request for adepartmental opinion.

"Your attention isdirected to that part of Section 10,Article V, of Senate Bill 11,Acts of the 62nd Legislature, Regular Session, 1971,which reads as followm:
'Statedepartments and agencies covered by this Act (Articles I through VI) shall utilize funds other than those for personal services, from any itemwhich includes operating expenses topay employee premiums onpolicies containing group life, health, accident, accidental death and dismemberment, disability income replacement and hospital, surgical and/or medical expense insurante. The dependents of such employees may be ineured under group policies which provide accidental death, accident, hospital, surgical and/or medical expense insurance. Payment by the atate from the designated funds on any policy orpolicies shall be limited to twelve dollars and fifty cents ($12.50)per month per full-time employee. It is further provided that agencies shall cooperate so that employees from more than one agency may be combined under one group

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Dr. David Wade, page 2 (M-919)
policy and that said policy maybe held jointly by two or

### moreagenciesand paid from funds appropriated to the agencies forpayment of employee insurance premiums as set out above.' "This Department anticipates entering into agroup insurance program whereby its employees who work at least twenty hours perweek for the Department are eligible for coverage. Besides full-time employees, this Department employs persons on apermanent part-time basis who are paid either by salary or by the hour. The Department also hires individuals on a temporary or seasonal basis, that is, such individuals are employed towork only during apart of the year. During their employment such temporary/seasonal employees work either fulltime orpart-time and arepaid either by salary orby thehours. Further. certain of this Department's employees are paid 

### inwhole or inpart from grant funds rece~ivedby the Department from such sources as the Federal government orprivate foundations. "Theabove quoted portion of Senate Bill 11,Acts of the 62nd Legislature, Regular Session, 1971.has raised anumber of questions regarding this Department's contribution to employee 

### group insurance premiums. Wherefore, your opinion and advice with respect to the following questions is respectfully requested: "1
. Is this Department authorized to utilize appropriated funds tospaypremiums on policies of group insurance for: (a) its part-time employees: (b)its temporary/ seasonal employees? "2
. Is this Department required to utilize appropriated funds topay premiums on policies of group insurance for: (a)its part-time employees: (b) its temporary/ seasonal employees? "3
. Ifyour answer to either part of question No. 1 orquestion No. 2 is in the affirmative,

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thenwhat formula should be used to determine theproper amount of appropriated funds to be expended on insurance premiums for such employees? “4. Is thisDepartment required 

### topay the

### group insurance premium up to amaximum of $12.50 per month for each full-time employee? .I 5. Ifyour answer to question No. 4 is in the negative, thenwhat formula should be used to determine theproper amount of appropriated funds tobe expended on insurance premiums for each such full-time employee? “6. Is there an over-all total amount 

### ofappropriated funds that this Department may expend for all employee premiums on group insurance?
“7
. If the answer toquestion No. 6 is in the affirmative, then inwhat 

### manner is such over-all total amount tobe dalculated? "8
. Are Department employees eligible to receive a premium contribution from State appropriated funds if: (althey arepaid inwhole from grant funds: or (b)they arepaid inpart from grant funds and inpart from State appropriated funds. "9. If one employee of this Department iscovered under the insurance policy of a second employee of this Department, is the first employee entitled to the appropriate premium contribution by thio Department? "10. Ifone employee of this Department is covered under the group insurance policy of an employee of another State department or agency, is the employee of this Department entitled to the appropriate premium contribution by this Department?"

-4402-Dr. David Wade, page 4 (M-919)

The paragraph thatyou have quoted from Section 10,Article V, of Senate Bill No. 11 isa rider to the General Appropriation Act. Attorney General's Opinion No. V-1254 (1951) in its summary, makes the following statement of the law relating to riders on appropriation bills:

"In so far as Section 35ofArticle III of the Texas Constitution is concerned, inaddition toappropriating money and stipulating the amount, manner, and purpose of thevarious items of expenditure to various departments and accounts, ageneral appropriationbill may contain any provisions or riders which detail, limit, or restrict the use of the funds or otherwise insure that the money is spent for the required activity forwhich it is therein appropriated, if theprovisions or riders are necessarily connected with and incidental to the appropriation and provided they do not conflict with general legislation."
Inour opinion the quoted rider is intended to detail, limit, or restrict the use of appropriated funds, and isconnected with and incidental to the appropriation. It is therefore valid unless it is, or conflicts with. general legislation.
We are of the opinion that the rider conflicts with general legislation only to the extent later noted in this opinion and isavalid restriction on the expenditure of appropriated funds. The statutory authority for a State department or agency to contribute to insurance premiums for their employees is found in Articles 3.50 and 3.51 of the Texas Insurance Code.* Article 3.50 deals with group life insurance andArticle 3.51 relates topolicies of group health, accident, accidental death and dismemberment, disability income replacement and hospital, surgical and/or medical expense insurance.

*All Articles cited areVernon's Texas Insurance Code, unless otherwise stated.

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Question No. 1 inquires whether your department is authorized toutilize appropriated funds topay premiums on policies of group insurance for: (a) itspart-time employees: (b) its temporary/seasonal employees.
In our opinion such life insurance asyou elect to offer your employees must be available to all employees, part-time, temporary and seasonal. Section 1(3)(a) ofArticle 3.50 reads as follows:

"(a)The persons eligible for insurance under thepolicy shall be all of the employees of the employer or if the pol=holder is an association, &J of themembers of the association." (Emphasis supplied.)
On the other hand you may include or exclude part-time or seasonal gmplsyees as to the insurance authorized byArticle 3.51 of the Insurance Code. Section l(a) ofArticle 3.51 reads inpart as follows: II

... are authorized toprocure contracts with any insurance company authorized to do business in this state insuring their respective employees, or ifan association ofpublic employees is thepolicyholder, insuring its respective members, or any class or classes thereof under apolicy orpolicies of group health, accident, accidental death and dismemberment, disability income replacement and hospital, surgical and/or medical expense insurance..." (Emphasis supplied.) Question No. 2 inquires whether your department is required toUtilize a&cqpriated funds topay premiums onpolicies of group insura$b for'~(a)itspart-time employees and (b) its temporary~sed+inai employees.
Jn our opinion you are not required topay premiums for any Qf your employee+. The statutes authorizing employer contributions, Artioles 3.50 and 3.51, arepermissive. We do not construe the word Yshall":in the first Bentence of theparagraph quoted from Section 10,Artiole V of Senate Bill 11 tomake state contributionmandatory. We think "shall" ismandatory only indesignating the funds fromwhich any contribution must be made.

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On the other hand, ifyou do elect toprovide life insurance foryour employees, then you are required tomake itavailable to all employees. **YOU** may setup eligible classes for the other coverages authorized byArticle 3.51. See our answer toyour first question. Question No. 3 inquires as to a formula for determining your contribution forpart-time or seasonal employees. We think the creation of a reasonable formula under the circumstances presented is amatter within the discretion andprovince of theparticular department. We think you would be on firm ground ifyou used the amount expended for full-time employees as a guide line for a proportional formula. Questions Nos. 4, 5, 6and 7are answered together. Neither Article 3.50,Article 3.51, nor the rider places aminimum or a maximum on the contribution that a department may make to the cost ofpremiums on an individual employee. To the contrary, both statutes in the Insurance Code expressly provide that thepremiums II

... may bepaid inwhole or inpart from funds contributed by the employer." We think the rider does restrict the overall contribution that a department may make in amonth to a figure reached by multiplying $12.50 by the number of full-time employees on the departmental payroll. The rider could not under Section 35 of Article III of the Constitution amend or alter general legislation, but the Legislature has thepower to restrict available appropriated funds. Linden v. Finley, 92Tex. 451, 49 S.W. 578 (1889). The formula that you use inallocating expenditures, within your overall limit, for each employee will be determined by the terms of the contracts which you are able tonegotiate.

**Your** department is further restricted by the rider in that itmay expend forpremiums only funds other than those for personal service, and from itemswhich include operating expenses. Question No. Elisanswered in the affirmative as toboth parts. Your question indicates that thepersons involved are departmental employees, and not employees of thegranting agency. You have advised us, in fact, that allpayroll records for those persons are handled by your department or a local institution, and that those persons are members of the Employees Retirement System of Texas. Such being the case, the department is authorized

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tomake the same contribution to insurance policies for them that it isauthorized under Articles 3.50 and 3.51 of the Texas Insurance Code tomake for any of its other employees. The department has the same interest in their morale and mental state that ithas in its other employees. SeeAttorney General's Opinion No, M-125 (1967)quoting fromAppleman's Insurance Law and Practice, Volume I,pages 53and 54. Note that under the provisions of Section 10,Article V, of Senate BillNo. 11. the department does not make contributions for insurance premiums from funds forpersonal services. Question No. 9 is answered in the negative. In our view, the Legislature intended that the department's contribution should be limited to a share of the cost of thepremiums calculated for an employee and his dependents. An additional contribution on the grounds that a dependent isalso an employee would cause the department to contribute adisproportionate part of the premium in terms of contribution for other employees. Ifeach employee here involved is eligible for coverage in his own name under your group policy, however. we see no reason that a contribution could not be made to the cost of each employee's coverage. This assumes a separate certificate issued in the name of each employee. Question No. 10 is answered in the negative. The authority for the department's contribution is found inSection l(3) of Article 3.50 and in Se&ion l(a) ofArticlr 5-51, Texas Insurance Code. ~Thesestatutes provide for contribution ~bythe employing department where thepolicy is "issued to" the department, or where the department procures the contract. We think it clear that the department isnot authorized to contribute to the cost ofpremiums where thepolicy isnot so issued orprocured.
As inQuestion 9,however, ifyour employee is eligible for coverage under your group policy, the fact that he is covered as adependent under another group would notpreclude his receiving a contribution ifa certificate is issued inhis name inyour group. We think that inconnection with your inquiry we should also discuss Section 3ofArticle V, Senate Bill No. 11, theGeneral Appropriation Act enacted by the 62nd Legislature, Regular Session, 1971

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Dr. David Wade, page 8 (M-919)

and Subsection B of Section 9, added toArticle 622Ba, Vernon's Civil Statutes, by the **same** Legislature under Chapter 359 (Senate BillNo. 531, Section 11). The cited Section 3,after providing for the transfer of funds topay "theproportionate cost ofpremiums ofpolicies containing Group Life, Health, Hospital, Surgical, and/or Medical Expense Insurance for retired employees and officials," further provides as follows:

I‘

...Payment by the State from the designated funds on Group Insurance policy orpolicies for retired employees shall be limited to the amount ofpayment authorized for active employees. Notwithstanding any other provisions of this Act, any department or agency forwhich funds in thisAct are appropriated shall make such transfers of funds as are necessary, except from those funds appropriated forpersonal services, topay premiums for insurance for retired employees and officials as authorized in thisAct." ~(Emphasissupplied.) Section 11 of S.B. 531provided that, "TheBoard of Trustees shall adopt Rules and Regulations
...providing for thepayment of not less than one-half (4)thepremium cost of Group Life and Health coverage for all member retirees. Premium costs ...shall be based on rates not to exceed rates charged members of the Group Insurance Plan of department or agency from which the member retired..."
We think that the above cited statutes, together with the Appropriation Bill must all be read together indetermining legislative intent. We are of the opinion thatwhen so read they disclose a clear intent on thepart of the Legislature to place the retired employee on equal footing with active employees as regards insurance benefits. Section 3provides that payment ofpremiums for retired employees shall be limited to the amount authorized for active employees. The same section refers to transfer of funds topay premiums for insurance for retired employees "asauthorized in thisAct." The underscored language necessarily includes the

-4487-**Dr.** David Wade, page 9 (M-919)

provisions of Section 10. The latter section authorizes an overall fund, calculated by multiplying $12.50 by the number of full-time employees, fromwhich to pay premiums on all eligible employees. This is the concept of administering group insurance as authorized by the Legislature.
We have noted also that Subsection B provides that premium costs shall be based on rates not to exceed those charged members of the Group Insurance Plan fromwhich the member retired.
In view of the above provisions of the statutes cited and theAppropriation Act, we have concluded that the statutes contemplate that a department will contribute topremiums 

### for its retirees and that the overall sumwill be determined by multiplying the number ofretired persons in the group by not more than $12.50, and that the department may expend that sum in such amanner as in itsbest judgment accomplishes the purpose of these statutes for thebenefit of its retired employees. Subsection B provides that the department shall contribute not less than one-half the cost of premiums for retirees. That ,subsection,however, provides that premium costs shall be paid from the funds of the agency ordepartment from which themember retired. That being true, the funds are appropriated funds, and are subject to such limitation on their expenditure as the Appropriation Bill may include. We think the provision in Section 3,Article V of theAppropriation Bill, that contributions to premiums for retired employees may not exceed the amount authorized for active employees, must prevail.
We have stated earlier thatwe think an exception must be made to our opinion that Section 10,Article V, of Senate Bill No. 11 is a valid rider to the General Appropriation Act. The exception is this: The portion of Section 10quoted at the outset of this opinion provides, inpart, that,

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Dr. David Wade, page 10 (M-919)

$6
...Thedependents of such employees may be insured under group policies which provide accidental death, accident, hospital, surgical and/or medical expense insurance
..." (Emphasis supplied.) Article 3.50. Section l(3) of the Insurance Code provides life coverage for only the employees of adepartment. Article 3.51, Section l(a)provides, inpart, that,

II

...Thedependents of any such employees or associationmembers, as the case may be, may be insured under group policies which provide hospital, surgical and/or medical expense insurance..."(Emphasis supplied.)
We are of the opinion, therefore, that the above cited rider is invalid to the extent that itwould authorize a contribution toprovide for dependents accidental death and accident insurance not included 

### inhospital, surgical and/or medical expense insurance. Such provision for additional coverage not authorized by general statutes would be general legislation, would create a conflict with existing general legislation, and is therefore invalid. Attorney General's Opinions Nos. 2965 (1935)andV-1254 (1951); Moore v. Sheppard, 144Tex. 537, 192 S.W.Zd 559 (1946).
SUMMARY State Departments are authorized to utilize appropriated funds topay premiums or policies of group insurance for: (a)itspart-time employees: and (b)its temporary/seasonal employees. The only mandatory feature of departmental contribqtions is that if the department elects toprovide life insurance for any employees, then the same contribution must be available to all employees. The amount expended forpart-time and seasonal employees inproportion to that expended for full**time** employees iswithin the discretion of the department.

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Dr. David Wade, page 11 (M-919)

The overall contribution that a department may make inamonth to insurance premiums for its employees is limited to an amount reached by multiplying $12.50 by the number of full-time employees on the department's payroll. Neither statute nor rider limits the amount that may be contributed to premiums for an individual employee. Each department is.however, restricted by rider to the funds appropriated for other than personal services, and from itemswhich include operating expenses. Departmental employees are eligible to receive a premium contribution from State appropriated funds even though paid inpart or inwhole from grant funds.
An employee of any department who is covered by the insurance policy of a second employee of the department isnot thereby entitled to apremium contribution by the department.
An employee of a department covered under the group insurance policy of an employee of another state department or agency isnot thereby entitled to apremium contriubtion by that department. Section 10,Article V, of Senate Bill No. 11, Acts of the 62nd Legislature, Regular Session, 1971, is invalid to the extent that itwould authorize a department of the State to contribute to ,i:he r)remium for accidental death and accident insurar:cc? forde- pendents ofdepartmental employees. Yo@jjvery truly,

Atto&y General of Texas

-4490-Dr. David Wade, page 12 (M-919)

Prepared by James S. Swearingen Assistant Attorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor Chairman W. E.Allen, Co-Chairman Roger Tyler Jack Goodman Houghton Brownlee Mel Corley
MEADE F. GRIFFIN Staff Legal Assistant
ALFRED WALKER Executive Assistant
NOLAWHITE First Assistant

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