Hon.William G. Button

Chairman, Board of Regents East Texas State University Commerce, Texas 75428

Dear Sir: OpinionNo.W-595 Re:Whether the employees' contributions under the Optional Retirement Program (Article 2922-li, V. C. S.) may also be used topurchase life insurance benefits.

You have reauested the opinion of this office concerning the above question. In connection with your request you have furnished uswith the following information.

"This request has come after a recognition on the part of the University Insurance Committee thatmost of the faculty who have exercised their option togowith the Optional Retirement Program (ORP)have not taken insurance to cover the death benefits they are surrendering when they leave the Teacher Retirement System of Texas. The Committee believes that partof this reluctance lies in the fact that currently a faculty member would have to pay for such coverage, inaddition to the regular sixpercent contribution he makes to the ORP. The University believes that the law actually permits the various carriers tooffer such life insurance death benefits within theprogram. HOWever, it is felt that theAttorney General's opinion isneeded tomake this clear.

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Ron. William G. Button, page 2 (M-595)

"Ourbelief that this inclusion of life insurance death benefits within the ORP isbased upon the following factors: "1. The title of theAct, as contained in the Session Laws 60th Legislature Laws 1967, page 1955 reads: 'AnAct concerning an optional retirement program for teachers and administrative personnel employed by state-supported institutions ofhigher education and annuity and insurance contracts issued for these and related purposes: and declaring an emergency.’ "2. Section 1of theAct uses the broad language 'Retirement Program' as opposed to the more restrictive 'Annuity,' and speaks of an intention toprovide 'fulland complete retirement benefits.'

“3. The defined term, 'Optional Retirement Program' speaks only of 'annuities.' But, Section 4. which authorizes the purchase of 'annuity contracts,‘ ignores the defined term and refers to 'annuity andgroup insurance contracts made pursuant toabenefit proqram authorized by the Governing Board,' as if to recognize adistinction between a strict annuity and an annuity contract containing special features adding up to a 'benefitprogram' as opposed to the defined 'OptionalRetirement Program."' We quote the following pertinent provisions fromArticle 2922-li, Vernon's Civil Statutes, the Optional Retirement Program: "Sec. 2. As used in this Act, unless the context otherwise reguires:

.".a.. II

....

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Hon. William G. Button, page 3 (M-595)
"(f) 'Optional Retirement Program' means the optional retirement program created by thisAct 9 provide fixed orvariable retirement annuities. including retirement unit annuity certificates ofparticipation for faculty members.

II

. . . . "Sec. 4. Inadministering the Optional Retirement Program a Governing Board may provide for thepurchase of annuity contracts from any insurance or annuity company qualified and admitted todobusiness in this state. Any life insurance or annuity company aualified and admitted todobusiness in this State shall be exempt from thepayment of all franchise orpremium taxes as to all annuity or croup insurance contracts made pursuant to abenefit proqram authorized by the qoverninq board of an institution ofhigher education, or by any private non-profit educational institution ofhigher learning,which benefit program ispaid for inwhole or inpart from the funds of such institution." (Emphasisadded.) We first note that the definition of "Optional Retirement Program" contained inSection 2(f), supra, doesnot encompass a life insurance feature. If theAct contains any authorization for the inclusion of life insurance as apart of the Optional Retirement Program, such canbe found only in Section 4. A close analysis of the terms of Section 4 reveals only an authorization for annuity contracts, since the sentence that contains thephrase "group insurance contracts" relates only to the exemption of insurance companies from certain franchise orpremium taxes. We areunable to infer an intent toalter the expressed definition of the term "Optional Retirement Program", so as to include theauthority to purchase life insurance on any basis.

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Hon. William G. Button, page 4(*595)
As further discussion of thisproblem, we note from your letter of request that itwas contemplated that the life insurance protection would be written as an integral part of the annuity contract purchased by each individual faculty member. Even assuming themost liberal construction possible, Section 4, supra, could only be construed as authorizing group life insurance, and not individual policies. Going even further, we observe that State colleges and universities are specifically authorized to enter intogroup life insurance contracts on behalf of all their employees, by virtue of Article 3.50, Texas Insurance code. SeeAttorney General's Opinion M-502 (1970). Life insurance protection is thus available without the necessity of involving the Optional Retirement Program. You are accordingly advised that it is the opinion of this office that the Optional Retirement Program authorized byArticle 2922-li, Vernon's Civil Statutes, is limited to fixed or variable retirement annuities, and the statutory program does not contemplate the life insurance feature. SUMMARY The Optional Retirement Program authorizedby Article 29227li,V.C.S., is limited: to fixed or variable retirement annuities, and the statutory program does not contemplate the life insurance feature.

General of Texas Prepared by Malcolm L. Quick Assistant Attorney General

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APPROVED: OPINION COMMITTEE Kerns Taylor, Chairman Bill Allen, Acting Co-Chairman Jack Sparks Fielding Early Alan Minter John Richards MEADE F. GRIFFIN Staff Legal Assistant ALFRED WALKER Executive Assistant NOLA WHITE First Assistant

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