Honorable T. 0. ,Walton, President 

Agricdtutial and Mechanical College of Texas 

College Station, Texas 

Dear Dr. Walton: opinion No. o-2469 

Re: Is the Board of Directors of 

the Agricultural and Mechanical 

College empowered to pay any 

part of the premiums on a policy 

of group life insurance covering 

the dployees from student fee 

funds, local funds, or other institutional funds under the jurisdiction of the Board - and related question? 

We beg to acknowledge receipt of your letter of June 5, 1940, requesting an opinion from this department, such letter being as follows, to-wit: 

"On or about April 1, 1931, the Southwestern Life Insurance 

Company, of Dallas, Texas, issued to the Agricultural and Mechanical College its policy of Group Insurance, insuring the full-time 

employees (employees either on a nine months or twelve months basis) of the College against death and total and permanent disability. The insurance has been in full force since that date, and 

employees have been required to carry the insurance as a part of 

their contract. * * * 

"Under the plan of insurance, the cost of premiums was paid 

jointly by the insured employees and the College, the insured employees paying approximately seven-eighths of the premiums and 

the College paying approximately one-eighth. The proportionate 

part of the premiums paid by the College was and is made from unassigned local funds; that is, from funds of the College not appropriated out of the State Treasury and not designated to be 

used for any particular purpose. * * * 

"The Board. of Directors gave the matter careful consideration when the plan was established and it was their jud&ment f&at 

the benefit to the CnlJ.ege& fmpra~eoed~.f#Xale of the staff would 

be worth much more ths&the cost k-the institution. The judgment of the Board in this respect has been amply substantiated by 

our experience under the plan. The total cost to the College has 

averaged between $3.00 and $4.00 per insured employee per year, 

c 
Honorable T. 0. Walton, Page 2 (C-2469) 

and we have considered this as being in the nature of a small supplement to the salary and permlsaible under the appropriation act. 

"We would appreciate it, therefore, if you would inform us on 

the following points: 

"1. Is the Board of Directors of the A. & M. College empowered 

to pay any part of the premiums on a policy of Group Life Insurance 

covering the employees from student fee funde, local,fundr, or other 

institutional funds under the jurlediction of the Board7 

"2. If this cannot be dons, can the Board legally pay its part 

of the premiums from the Group Insurance Premiums Revolving Account 

made up as outlined above of refunds ma& by the Insurance Company 

under the participating feature of the policy and held in trust for 

the insured employees?" 

Section I(a) of House Bill No. 255, the Appropriation Act for Institutions of Higher Learning for the current biennium, declare8: 

"That all balance8 in the institutional funds of the several 

State institutions named in this Act, at the close of the fiscal 

year ending August 31, 1939, including balances in their revolving funds at that time, and the entire incor to said funds during each of the two fiscal years ending August 31,~ 1940, and August 31, 1941, which are not otherwise appropriated for either or 

both of said fiscal years, are hereby appropriated for the support, maintenance, operation and improvement of said State institutions during each of the said fiscal years respectively." 

In Opinion No, O-1661, construing Chapter 144, Acts 45th Legislature -- 

the General Appropriation Bill -- with respect to balances in institutional 

funds, we held that such funds may not be used to pay a part of the premiums 

for group hospitalization end life insurance policies covering faculty members 

and for their benefit. 

The same rule, upon the same reasoning, applies to your inquiry. 

These institutional funds have been appropriated for the support, maintenance, 

operation and improvement of the respective State institutions. We there said: 

"There is no just relation between the insurance to protect 

students traveling in connection with the activities of the institution that would justify the payment of premiums therefor. Such 

insurance is not reasonably necessary, nor do we think it la even 

proper as an incident to the maintenance of the institution." 

Your first question, therefore, is answered in the negative. 

Pxm-thermore, the Board is not authorized to pay any part of the premiums under consideration from the group insurance premiums revolving account 
Honorable T. 0. Walton, Page 3 (O-2469) 

refunded to the Board under the insurance plan. Theee refunds take the place 

and occupy the status of the fund6 originally used -- wrongfully, as we are 

holding it to have been -- by the Board In purchasing such insurance. 

Of course, we are not considering the matter from the standpoint 

of business policy, such a8 might guide an individual in the conduct of hie 

own affairs, but on the contrary, we are coneidering it solely from the standpoint of legislative authority in the Board to make the purchase of such insurance out of the public institutional funds. 

Your second question is therefore likewise answered in the negative. 

We have answered your questions broadly as you have stated them. 

Of course, nothing we have said should be construed as to exclude the use of 

funds for such group insurance properly belonging individually to sn employee 

as a beneficiary of such fund, where the employee beneficiary consents to such 

use. It is his individual money and therefore not within the rule we have 

discussed above. 

Neither should our answer be construed so as to prevent a supplementing of an employee's salary out of the funds and in the menner specifically 

provided for in subsection (2) of the General Provisions attached to House 

Bill No. 255 -- Regular Session, 46th Legislature for Institutions of Higher 

Learning. 

Very truly yours 

APPROVED JUL g, 1940 

/s/ Glenn R. Lewis 

ACTINGA!il'OREEY GENERAL 

OF TEEAS 

OS-MR-LM 

ATPORNEYGENERALOFTEEAS 

By /a/ Ocie Speer 

Ocie Speer 

Assistant 

THIS OPINION 

CONSIDERED AND 

APPROVED IN 

LIMITED 

CONFEREECE