THE ATTORNEY GENERAL 

OPI'EXAS 

Dr. David Wade, Commissioner Opinion No. N- 919 

Texas Department of Mental 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 in your recent request for a departmental opinion. 

"Your attention is directed to that part of Section 

10, Article V, of Senate Bill 11, Acts of the 62nd Legislature, Regular Session, 1971, which reads as followm: 

'State departments and agencies covered by this 

Act (Articles I through VI) shall utilize funds 

other than those for personal services, from any 

item which includes operating expenses to pay 

employee premiums on policies 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 or policies 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 

-4480- 
I 

Dr. David Wade, page 2 (M-919) 

policy and that said policy may be held jointly 

by two or more agencies and paid from funds appropriated to the agencies for payment of employee 

insurance premiums as set out above.' 

"This Department anticipates entering into a group 

insurance program whereby its employees who work at least 

twenty hours per week for the Department are eligible 

for coverage. Besides full-time employees, this Department employs persons on a permanent 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 to work 

only during a part of the year. During their employment such temporary/seasonal employees work either fulltime or part-time and are paid either by salary or by 

the hours. Further. certain of this Department's employees are paid in whole or in part from grant funds 

rece~ived by the Department from such sources as the 

Federal government or private foundations. 

"The above quoted portion of Senate Bill 11, Acts 

of the 62nd Legislature, Regular Session, 1971. has 

raised a number 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 to spay premiums 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 to pay premiums on 

policies of group insurance for: (a) its 

part-time employees: (b) its temporary/ 

seasonal employees? 

"3 . If your answer to either part of question 

No. 1 or question No. 2 is in the affirmative, 

-4481- 
Dr. David Wade, Page 3 (M-919) 

then what formula should be used to determine 

the proper amount of appropriated funds to 

be expended on insurance premiums for such 

employees? 

“4. Is this Department required to pay the group 

insurance premium up to a maximum of $12.50 

per month for each full-time employee? 

.I 5. If your answer to question No. 4 is in the 

negative, then what formula should be used 

to determine the proper amount of appropriated 

funds to be expended on insurance premiums for 

each such full-time employee? 

“6. Is there an over-all total amount of appropriated 

funds that this Department may expend for all employee premiums on group insurance? 

“7 . If the answer to question No. 6 is in the affirmative, then in what manner is such over-all 

total amount to be dalculated? 

"8 . Are Department employees eligible to receive a 

premium contribution from State appropriated 

funds if: (al they are paid in whole from grant 

funds: or (b) they are paid in part from grant 

funds and in part from State appropriated funds. 

"9. If one employee of this Department is covered 

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. If one 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 that you have quoted from Section 10, Article V, 

of Senate Bill No. 11 is a 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 35 of Article III of the 

Texas Constitution is concerned, in addition to appropriating money and stipulating the amount, manner, 

and purpose of the various items of expenditure to 

various departments and accounts, a general appropriation bill 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 for which it is therein appropriated, 

if the provisions or riders are necessarily connected 

with and incidental to the appropriation and provided 

they do not conflict with general legislation." 

In our opinion the quoted rider is intended to detail, limit, 

or restrict the use of appropriated funds, and is connected 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 

is a valid 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 and Article 3.51 relates 

to policies of group health, accident, accidental death and 

dismemberment, disability income replacement and hospital, 

surgical and/or medical expense insurance. 

*All Articles cited are Vernon's Texas Insurance Code, unless 

otherwise stated. 

-4483- 
Dr. David Wade, page 5 (M-919) 

Question No. 1 inquires whether your department is 

authorized to utilize appropriated funds to pay premiums on 

policies of group insurance for: (a) its part-time employees: 

(b) its temporary/seasonal employees. 

In our opinion such life insurance as you elect to offer 

your employees must be available to all employees, part-time, 

temporary and seasonal. Section 1(3)(a) of Article 3.50 reads 

as follows: 

"(a) The persons eligible for insurance under 

the policy shall be all of the employees of the employer or if the pol=holder is an association, &J 

of the members of the association." (Emphasis supplied.) 

On the other hand you may include or exclude part-time or 

seasonal gmplsyees as to the insurance authorized by Article 

3.51 of the Insurance Code. 

Section l(a) of Article 3.51 reads in part as follows: 

II . . . are authorized to procure contracts with 

any insurance company authorized to do business in 

this state insuring their respective employees, or 

if an association of public employees is the policyholder, insuring its respective members, or any class 

or classes thereof under a policy or policies 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 

to Utilize a&cqpriated funds to pay premiums on policies of 

group insura$b for'~(a) its part-time employees and (b) its 

temporary~sed+inai employees. 

Jn our opinion you are not required to pay premiums for any 

Qf your employee+. The statutes authorizing employer contributions, 

Artioles 3.50 and 3.51, are permissive. We do not construe the 

word Yshall":in the first Bentence of the paragraph quoted from 

Section 10, Artiole V of Senate Bill 11 to make state contribution mandatory. We think "shall" is mandatory only in designating 

the funds from which any contribution must be made. 

-4484- 
Dr. David Wade, page 6 (M-919) 

On the other hand, if you do elect to provide life insurance 

for your employees, then you are required to make it available to 

all employees. YOU may set up eligible classes for the other 

coverages authorized by Article 3.51. See our answer to your 

first question. 

Question No. 3 inquires as to a formula for determining your 

contribution for part-time or seasonal employees. We think the 

creation of a reasonable formula under the circumstances presented 

is a matter within the discretion and province of the particular 

department. We think you would be on firm ground if you used the 

amount expended for full-time employees as a guide line for a 

proportional formula. 

Questions Nos. 4, 5, 6 and 7 are answered together. Neither 

Article 3.50, Article 3.51, nor the rider places a minimum or a 

maximum on the contribution that a department may make to the cost 

of premiums on an individual employee. To the contrary, both 

statutes in the Insurance Code expressly provide that the premiums 

II . . . may be paid in whole or in part from funds contributed by the 

employer." We think the rider does restrict the overall contribution that a department may make in a month 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 the power to restrict available appropriated funds. Linden v. Finley, 92 Tex. 451, 49 S.W. 578 (1889). 

The formula that you use in allocating expenditures, within your 

overall limit, for each employee will be determined by the terms 

of the contracts which you are able to negotiate. 

Your department is further restricted by the rider in that 

it may expend for premiums only funds other than those for 

personal service, and from items which include operating expenses. 

Question No. El is answered in the affirmative as to both 

parts. Your question indicates that the persons involved are 

departmental employees, and not employees of the granting agency. 

You have advised us, in fact, that all payroll 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 

-4485- 
Dr. David Wade, page 7 (M-919) 

to make the same contribution to insurance policies for them 

that it is authorized under Articles 3.50 and 3.51 of the Texas 

Insurance Code to make for any of its other employees. The department has the same interest in their morale and mental state 

that it has in its other employees. See Attorney General's 

Opinion No, M-125 (1967) quoting from Appleman's Insurance Law 

and Practice, Volume I, pages 53 and 54. Note that under the 

provisions of Section 10, Article V, of Senate Bill No. 11. the 

department does not make contributions for insurance premiums 

from funds for personal 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 the premiums calculated for an employee and his dependents. An additional contribution on the grounds that a dependent is also an employee would 

cause the department to contribute a disproportionate part of the 

premium in terms of contribution for other employees. 

If each 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 in Section l(3) of 

Article 3.50 and in Se&ion l(a) of Articlr 5-51, Texas Insurance 

Code. ~These statutes provide for contribution ~by the employing 

department where the policy is "issued to" the department, or 

where the department procures the contract. We think it clear 

that the department is not authorized to contribute to the cost 

of premiums where the policy is not so issued or procured. 

As in Question 9, however, if your employee is eligible 

for coverage under your group policy, the fact that he is 

covered as a dependent under another group would not preclude his 

receiving a contribution if a certificate is issued in his name 

in your group. 

We think that in connection with your inquiry we should also 

discuss Section 3 of Article V, Senate Bill No. 11, the General 

Appropriation Act enacted by the 62nd Legislature, Regular Session, 1971 

-4406- 
,. . 

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

and Subsection B of Section 9, added to Article 622Ba, Vernon's 

Civil Statutes, by the same Legislature under Chapter 359 (Senate 

Bill No. 531, Section 11). 

The cited Section 3, after providing for the transfer of 

funds to pay "the proportionate cost of premiums of policies 

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 or policies for retired 

employees shall be limited to the amount of payment 

authorized for active employees. Notwithstanding any 

other provisions of this Act, any department or agency 

for which funds in this Act are appropriated shall make 

such transfers of funds as are necessary, except from 

those funds appropriated for personal services, to pay 

premiums for insurance for retired employees and officials 

as authorized in this Act." ~(Emphasis supplied.) 

Section 11 of S.B. 531 provided that, "The Board of 

Trustees shall adopt Rules and Regulations . . . providing for 

the payment of not less than one-half (4) the premium 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 in determining 

legislative intent. We are of the opinion that when so read 

they disclose a clear intent on the part of the Legislature to 

place the retired employee on equal footing with active employees 

as regards insurance benefits. 

Section 3 provides that payment of premiums for retired 

employees shall be limited to the amount authorized for active 

employees. The same section refers to transfer of funds to pay 

premiums for insurance for retired employees "as authorized in 

this Act." 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, from which 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 from which the 

member retired. 

In view of the above provisions of the statutes cited 

and the Appropriation Act, we have concluded that the statutes 

contemplate that a department will contribute to premiums for 

its retirees and that the overall sum will be determined by 

multiplying the number of retired persons in the group by not 

more than $12.50, and that the department may expend that sum 

in such a manner as in its best judgment accomplishes the 

purpose of these statutes for the benefit 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 or department from which the member 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 the Appropriation Bill, that contributions to premiums for retired employees may not exceed the 

amount authorized for active employees, must prevail. 

We have stated earlier that we 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 10 quoted at the 

outset of this opinion provides, in part, that, 

-4488- 
,. . 

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

$6 . ..The dependents 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 a department. Article 

3.51, Section l(a) provides, in part, that, 

II . ..The dependents of any such employees or association members, 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 it would authorize a contribution 

to provide for dependents accidental death and accident insurance 

not included in hospital, 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) and V-1254 (1951); 

Moore v. Sheppard, 144 Tex. 537, 192 S.W.Zd 559 (1946). 

SUMMARY 

State Departments are authorized to utilize 

appropriated funds to pay premiums or policies of 

group insurance for: (a) its part-time employees: 

and (b) its temporary/seasonal employees. 

The only mandatory feature of departmental 

contribqtions is that if the department elects 

to provide life insurance for any employees, then 

the same contribution must be available to all employees. 

The amount expended for part-time and seasonal 

employees in proportion to that expended for fulltime employees is within the discretion of the 

department. 

-4489- 
. . - 

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

The overall contribution that a department 

may make in a month 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 items which include operating expenses. 

Departmental employees are eligible to receive 

a premium contribution from State appropriated funds 

even though paid in part or in whole from grant 

funds. 

An employee of any department who is covered 

by the insurance policy of a second employee of 

the department is not thereby entitled to a premium 

contribution by the department. 

An employee of a department covered under the 

group insurance policy of an employee of another 

state department or agency is not thereby entitled 

to a premium 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 it would authorize a 

department of the State to contribute to ,i:he r)remium 

for accidental death and accident insurar:cc? for - dependents of departmental 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 

NOLA WHITE 

First Assistant 

-4491-