Court Opinion

ID: 4132340
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:25:34.216295+00
Date Added: 2024-06-11T14:37:38.574899
License: Public Domain

TH-EA~TORNEY'       GENERAL
                                             OF TEXAS
                                         AUIWX’XN. 'I%CXAS
                                                        78711

           JOEN   L.     x3xX&
         *-~NmY        0 -Ax.
                                                August 12, 1977

                  Honorable Jesse James                      Opinion No. H-1040
                  State Treasurer
                  P. 0. Box 12608, Capitol Station           Re: Disposition of interest
                  Austin, Texas 78711                        from the Employees Life,
                                                             Accident and Health Insurance
                                                             and Benefits Fund Account.
                  Dear          Mr. James:
                       You inquire about the disposition of interest on the
                  Employees Life, Accident and Health Insurance and Benefits
                  Fund Account, known as Fund No. 973. The Fund, created by
                  article 3.50-2, section 16, of the Insurance Code, consists
                  of contributions for group life, accident and health in-
                  surance made by the state and state employees. It was
                  "created with the treasury of the State of Texas" to be ad-
                  ministered by the trustees of the Employees Retirement System.
                  Ins. Code art. 3.50-2, 99 3(11), 16(a). You wish to know
                  whether interest earned on time deposits made by the Treasurer
                  from Fund 973 should be credited to the Fund itself or deposited
                  into the General Revenue Fund pursuant to article 2543d, V.T.C.S.
                                Article 2543d, V.T.C.S., provides in part:
                                       Sec. 1. Interest received on account
                                     of time deposits of moneys in funds and
                                     accounts in the charge of the State
                                     Treasurer shall be allocated as follows:
                                     To each constitutional fund there shall
                                     be credited the pro rata portion of the
                                     interest received due to such fund. The
                                     remainder of the interest received, with
                                     the exception of that portion required
                                     by other statutes to be credited on a
                                     pro rata basis to protested tax payments,
                                     shall be credited to the General Revenue
                                     Fund. The interest received shall be
                                     allocated on a monthly basis.
                  Attorney General Opinion M-468 (1969) held that article 2543a
                  did not apply to interest on federal funds granted to the State

    i.
I
!                                                      p. 4282
    .

        Honorable Jesse James         - Page 2   (H-1040)

        for specific purposes. Characterizing them as trust funds,
        the opinion determined that any income became part of the
        fund, to be used only for the purposes for which the grant
        was made, and not for the general operation of State govern-
        ment.
             We believe that Fund 973 is also a trust fund as were
        the federal funds discussed in Attorney General Opinion M-468.
        It is administered by a trustee with considerable discretion
        as to how the fund shall be invested and spent. Ins. Code
        art. 3.50-2, SS 4, 16(c). Although the trustee may pay ad-
        ministration expenses only within limitations specified an-
        nually by the legislature, it may pay for insurance coverages
        without fiscal year limitation. Id. 9 16(a). The Fund may,
        of course, be spent only for insuzce    coverage and adminis-
        tration expenses. The trustee which administers Fund 973 also
        administers the Employees Retirement System Funds, which this
        office has determined to be trust funds. Attorney General
        Opinion WW-565 ~(1959); see Letter Advisory No. 132 (1977).
        Interest on investmentsof Fund 973 is expressly made part of
        the fund. Ins. Code 3.50-2, 8 16(c). We believe that interest
        on time deposit accounts, although it is not interest on an
        investment, see Lawson v. Baker, 220 S.W. 260, 268 (Tex. Civ.
        APP. -- Austin1920, writ ref'd), must also become part of
        the fund. As a trust fund, it is not subject to the provisions
        of article 2543d. -See Attorney General Opinion O-3607 (1941).
                                 SUMMARY
                    Interest on time deposits of the Employees
                    Life, Accident and Health Insurance and
                    Benefits Fund Account must be credited to
                    the Fund itself and not deposited to the
                    General Revenue Fund pursuant to article
                    25436, V.T.C.S.

                                    ;_
                                     (J$cZ&
                                        .
                                      ,,Attorney General of Texas
        APPROVED:

        DAVID M. KENDALL, First Assistant

!                                   p. 4283
Honorable Jesse James        - Page 3   (H-1040)

c. ROBERT REATH, Chairman
Opinion Committee

jst

                            p. 4284