Court Opinion

ID: 4132698
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:29:25.389704+00
Date Added: 2024-06-11T09:20:34.704187
License: Public Domain

September    3, 1975

The Honorable     Leonard Prewitt                   Opinion No.      H-   681
Executive   Secretary
Teacher Retirement      System of Texas             Re:        Authority  of the
1001 Trinity Street                                            Teacher Retirement
Austin,   Texas 78701                                          System to purchase
                                                               liability, property
                                                               and workmen’s     com-
Dear Mr.   Prewitt:                                            ensation insurance.

    You have requested    our opinion concerning          the following   question:

        May the Teacher Retirement     System of Texas
        enter into contracts and pay premiums     from
        its expense account for general liability
        insurance,   for insurance on its building and
        contents,  for valuable papers insurance or
        for worlanen’s    compensation insurance?

    Article 16, section 67 of the Texas Constitution,   which establishes
the Teacher Retirement   System,   provides in subsection   (a)(3):

            .%ach statewide benefit system must have a
        board of trustees     to administer    the system and to
        invest the funds of the system in such securities
        as the board may consider prudent investments.
        In making investments.        a board shall exercise
        the judgment and care under the circumstances
        then prevailing    that persons of ordinary prudence,
        discretion,    and intelligence    exercise  in the manage-
        ment of their own affairs.        not in regard to specu-
        lation, but in regard to the permanent disposition        of
        their funds, considering       the probable income there-
        from as well as the probable safety of their capital.
         The legislature   by law may further restrict the
        investment    discretion    of a board.

                                    p. 2964
The Honorable       Leonard    Prewitt.   page 2       (H-681)

   Section    3. 59(a) of the Education         Code provides    in part:

        General administration  of and responsibility    for
        proper operation of the reti,rrment system in . .
        are vested in a State Board of Trustees    . . .

    Section     3.60(a)   provides   in part:

        The State Board of Trustees    shall be the trustee
        of all funds, securities,  money,   and other assets
        of the retirement   system with full power to invest
        and reinvest them as authorized by Article               III,
        Section 48b of the Texas Constitution.

     While article 3, section 48b was repealed by article 16, section 67 of
the Texas Constitution,      the powers of the Board of Trustees under
section 3.60(a) of the Education Code are to be measured by the terms
of the repealed constitutional     provision,  since it is incorporated by
reference    into section 3.60.    The repealed section 48b established    the
same investment standard as the presently         operative article 16. sec-
tion 67(a)(3),   and speciIical.ly empowered    the Board,

        to invest.  e . in home office facilities   to be
        used in administering    the Teacher Retirement
        System including,   land, equipment,     and office
        building . s e

-See Attorney     General     Opinion M-644      (1960).

    Pursuant to this authorization such an office building has been erected.
You ask whether insurance on the building,   its contents., and valuable
papers may be purchased by the System.

    In Senate Concurrent Resoluti~on No. 3. Acts 1921, 37th Leg.,   2nd Called
Session,  p* 369, the State’s policy in this regard is expressed as follows:

        the State shall carry it,s own insurance upon
        State buildings and contents,    and that no in-
        surance policies   shalY be t,aken out upon any
        of the public buildings of the State, nor upon
        the contents thereof 0 e .

                                      p. 2965
.

         The Honorable      Leonard    Prewitt,    page 3     (H-681)

         The Resolution additionally   provides for a sinking fund in the amount of
         ten percent of the total value of all State buildings, such fund to be
         accumulated   from biennial   appropriations.    However,  the Comptroller’s
         Annual Reports indicate that no such fund has ever been in existence.

               Article   16, section 67 (a)(3) establishes          a prudent person standard
         with regard to investments            of the Board.      However,     that subsection
          additionally provides that “the Legislature              by law may further restrict
         the investment        discretion    of [the] board. I’ (Emphasis       added) Assuming
         without deciding that the office building of the Teacher Retirement
          System is a “state building” within the meaning of the aforementioned
          resolution,     it is in either event our opinion that the Board’s investment
          discretion    is not thereby limited,         for a “resolution    cannot be given the
         .effect of a law. ” Mosheim            v. Rollins,   79 S. W. 2d 672 (Tex. Civ. App. --
          San Antonio 1935, writ dism’d. ); see also Commercial                   Standard Fire
          & Marine Co. v. Commissioner                of Insurance,    429 S. W..2d 930 (Tex. Civ.
          APP.    --Austin     1968,  no  writ);   Terre11   Wells   Swimming     Pool v. Rodriquez,
          182 S. W. 2d 824 (Tex. Civ. App. --San Antonio 1944, no writ).                  In light of
          the constitutional       limitation on the amount the State may contribute to the
          Teacher        Retirement      System,    art. 16, sec. 67(b)(3),      and since the
          building, its contents and valuable papers are assets of the System which
          are held in trust for its members,              sec. 67 (a)(l),   it is our opinion that
          it is within the discretion        of the Board to purchase insurance to protect
          these assets from loss.           Due to the particular       characteristics    of the
          Teacher Retirement           System,    we do not believe this determination          is in
    ,.    conflict with prior opinions of this office reaching the opposite conclusion
          with respect to other state agencies and instrumentalities.                   See Attorney
          General Opinion M-1257 (1972).

             You also ask whether the System may purchase “general liability
         insurance.  ” It is our understanding  that your question is limited to
         insurance for claims under the Texas Tort Claims Act, article 6252-19.
         V. T. C. S. Section 9 of that Act provides in part:

                   all units of government   are hereby expressly
                   authorized to purchase policies of insurance
                   providing protection for such units of govern-
                   ment, their officers,   agents and employees
                   against claims brought under the provisions    of
                   this Act.   . . .

                                                  p.   2966
The Honorable     Leonard   Prewitt,    page 4     (H-681)

While article    V, section 54 of the current Appropriations      Act prohibits
the expenditure     of appropriated   funds for such insurance,    Acts 1973,
63rd Leg.,    ch. 659, p. 2217, this prohibition does not affect the
Teacher     Retirement    System,   for the account from which the premium
will be paid does not consist of appropriated       funds.   Attorney General
Opinion M-949      (1971). See also Attorney General Opinion WW-600           (1959).
Accordingly,     section 9 of the Texas Tort Claims Act authorizes        the
Teacher     Retirement     System to purchase insurance     to cover claims
authorized   to be bought and paid under the Act.         And see Attorney General
Opinion H-70 (1973).

    Your final question concerns whether the Teacher          Retirement
System may purchase worlunen’s       compensation   insurance,    Article 83098,
V. T. C. S., provides for workmenIs     compensation   insurance for state
employees.    Section l(1) provides:

             ‘Employee’ means a person in the service of the
        state under an appointment or express     contract of hire,
        oral or written, whose compensation     is paid by warrant
        issued by the Comptroller,   except a person employed
        by the State Highway Department    or by an institution of
        higher education subject to a separate workman’s      com-
        pensation law.

See also Senate Bill 829, 64th Leg.        Section 2 provides that “the state is
self-insuring.    ” We have ruled that compensation       may be provided for
injuries to state employees      occurring   on or after July 18. 1975.     Attorney ‘~’
General Opinion H-637 (1975). -See House Bill 169, Acts 1975, 64th Leg.,
ch. 55, p. 119, Vernon’s      Texas Session Law Service No. 2. In our view
employees      of the Teacher     Retirement    System are within the definition
contained in section l(l),    for. “all payments from the accounts        shall be
made . . . on warrants ~drawn by’ thk~ state comptroller         . . . . ” Educa-
tion Code, sec. 3.60(c).       In Matthews v. University     of Texas,    295 S. W. 2d
270 (Tex. Civ. App. --Waco       1956, no writ), the court held that since the
University     of Texas was the subject of a specific workmen’s        compensation
statute, article 8309d. the general workmen’s          compensation    statute,
article 8306, was not applicable.        We believe the same reasoning applies
to the Teacher Retirement        System.

                                       p.   2967
    .

.
        The Honorable   Leonard    Prewitt,    page 5        (H-681)

            Accordingly,   Teacher     Retirement System employees      are eligible
        for workmen’s    compensation   only under article 8309g.    Since section 2
        of article 8309g provides that the State shall be a self-insurer    and
        thereby limits the investment    discretion  of the Board of Trustees,    Tex.
        Const. art. 16, sec. 67(a)(3),   it is our opinion the Teacher     Retirement
        System may not purchase workmen’s         compensation  insurance.

                                   SUMMARY

                     The Teacher       Retirement System may purchase
                insurance   for liability under the Texas Tort Claims
                Act.   Insurance on its building, its contents,  and
                valuable papers may also be purchased,      but workmen’s
                compensation    insurance may not.

                                                      Very    truly yours,

                                                      Attorney     General   of Texas

        APPROVED:

        DAVID   M.   KEN’DALL,    First   Assistant

        C. ROBERT HEATH,          Chairman
        Opinion Committee

                                              p.   2968