Court Opinion

ID: 4131698
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:18:39.620824+00
Date Added: 2024-06-11T14:32:50.747364
License: Public Domain

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                      The Attorney          General of Texas
                                       August 31. 1981
                                          1
MARK WHITE
Attorney General

                   Mr. W. J. Estelle, Jr.. Director       Opinion No. MW-363
                   Texas Department of Corrections
                   Huntsville, Texas 77340                Re: Whether certain funds in
                                                          the custody of the Texas
                                                          Department of Corrections are
                                                          excepted from the requirements
                                                          of House Bill 1623
                   Dear Mr. Estelle:

                        You have requested our opinion as to whether certain funds in the
                   custody of the Texas Department of Corrections [hereinafter TDCI are
                   excepted from the requirements of House Bill 1623, recently enacted by
                   the 67th Legislature.

                        Section 4 of Rouse Bill 1623, the State Funds Reform Act of 1981.
                   provides:

                             All fees, fines, penalties, taxes, charges, gifts,
                             grants, donations, and other funds collected or
                             received by a state agency as authorized or
                             required by law shall be deposited in the state
                             treasury, credited to a special fund or funds, and
                             subject to appropriation only for the purposes for
                             which they are otherwise authorized to be expended
                             or disbursed. Deposit shall be made within seven
                             days after the date of receipt.

                   Section 2 of House Bill 1623 defines "state agency" as:

                             ...any department, commission, board, office,
                             institution, or other agency that is in the
                             executive branch    of   state government, has
                             authority that is not limited to a geographical
                             portion of the state, and was created by the
                             constitution or a statute of this state, but does
                             not include an institution of higher education as
                             defined in Section 61.003, Texas Education Code,
                             as amended, and does not include the Banking
                             Department of Texas. the      Savings and Loan
                             Department of Texas, and the Office of the
                             Consumer Credit Commissioner, whose funds are

                                               p. 1212
W. J. Estelle - Page 2   @IW-363)          l’

          subject to the budgetary ~control of the Finance
          Commission of Texas by virtue of existing laws,
          and does not include the Credit Union Department
          of Texas whose funds are subject to the budgetary
          control of the Credit Union Commission of Texas.

Section 3(b) of the bill states, however. that the act does not apply
to:

          (1) funds pledged to the payment of bonds, notes,
          or other debts if the funds are not otherwise
          required to be deposited in the state treasury;

          (2) funds held in trust or escrow for the benefit
          of any person or entity other than a state agency;

         (3) funds set apart out of earnings derived from
         investment of funds held in trust tar others, as
         administrative expenses of the trustee agency;

         (4) funds, grants, donations. and proceeds from
         funds, grants, and donations, given in trust to
         the Texas State Library and Archives Commission
         for the establishment and maintenance of regional
         historical resource depositories and libraries in
         accordance with Section 2A. Chapter 503. Acts of
         the 62nd Legislature, Regular Session, 1971, as
         amended (Article 5442b. Vernon's Texas Civil
         Statutes); or

         (5) the deposit of funds for state agencies
         subject to review under the Texas Sunset Act
         (Article 5429k. Vernon's Texas Civil Statutes) for
         1981. which shall be determined by each agency's
         enabling statute.

Your question is whether the Educational and Recreational [hereinafter
E6R] Funds and the Windham Independent School District [hereinafter
WISD] Fund are excepted by section 3(b) from required deposit in the
state treasury.

     A local E&R fund for each TDC facility is authorized in a rider
to the present General Appropriations Act. The rider appropriates to
the EhR funds:

         .,.receipts from the operation of commissaries.
         prison-sponsored     recreational    shows     and
         entertainment [and] all gifts and other income for
         inmate welfare.

Such funds may be expended:

                                    p.   1213
W. J. Estelle - Page 3    (MW-363)

          ...only for direct benefits to prisoners including
          commissaries. reimbursement for travel to persons
          providing free dental and medical services,
          prisoner educational matters     and recreational
          benefits of inmates...and for no other purposes.

The Windham Independent,School District is a non-geographical school
district operated by TDC for the benefit of its inmates. You state
that its funds are at present entirely provided by the Foundation
School Program. But see Educ. Code 529.03. You suggest that the E&R
funds and the WISD Fund are exempt from deposit in the state treasury
under section 3(b)(2) of House Bill 1623, as "funds held in trust or
escrow tor the benefit of any person or entity other than a state
agency."

     In our opinion, the EAR Funds may be said to constitute "funds
held in trust." The language of the rider which details the purposes
for which the funds may be expended comports with the requirements for
the creation of an express trust. Pottorff v. Stafford. 81 S.W.2d 539
(Tex. Civ. App. - El Paso 1935, writ ref'd). It is well established
that no particular words are necessary to create a trust. Kurtz v.
Robinson, 279 S.W.Zd 949 (Tex. Civ. App. - Amarillo 1955, writ ref'd
n.r.e.). So long as the parties intend that particular property be
held for the benefit of others, a court of equity will affix to that
intent the character of a trust. Patrick v. McGaha. 164 S.W.2d 236
(Tex. Civ. App. - Ft. Worth 1942, no writ).

     Furthermore, in Attorney General Opinion H-610 (1975). this
office, in holding that the Board of Corrections was authorized to
invest or spend the E8R Fund, declared:

         Although we have been furnished no trust indenture
         and have not found any general statutory authority
         (but see,   Education Code.     029.03) for    the
         establishment or collection of such a fund by the
         Texas Board of Corrections, the long-established
         and consistent characterization of the fund as a
         trust fund and its tacit recognition as such by
         the Legislature since at least 1957 convinces us
         that it should be treated as such. We think a
         confidential,   fiduciary    relationship. exists
         between the Board of Corrections and the prisoners
         committed to its care with respect to the
         disposition of labor and property (and the fruits
         thereof) donated to the fund.

H-610 (1975), at 3.   (Citations omitted.)

We are in accord with this view. It is therefore our opinion that the
E&R Funds held by the Department of Corrections constitute "funds held
in trust." and as such, in accordance with    section 3 of House Bill
1623, they need not be deposited in the state treasury.

                                 p. 1214
W. J. Estelle - Page 4   (MW-363)      .

     Although the existence of the WISD is recognized by regulation of
the Board of Corrections, it is not specifically established by
statute. The relevant statute, former article 6203b-2. V.T.C.S.,
repealed. Acts 1971, 62nd Leg.. ch. 405, §54(2). at 1533. now codified
as 529.01 of the Education Code, provides that the "Board of
Corrections may establish and operate schools at the various units of
the Department of Corrections." According to 529.04 of the Education
Code. all WISD funds are provided by the Foundation School Program:

          The total cost of operating the schools authorized
          by this chapter shall be borne by the state and
          shall be paid from the Foundation School Program
          Fund.

Foundation School Program funds are appropriated biennially by the
General Appropriations Act. See, e.g., H.B. 558, Acts 1979. 66th
Leg.. R.S., ch. 843. at 2757-2758.    Section 3(a) of House Bill 1623
states that its provisions are applicable to a state agency "only to
the extent that it is not otherwise required to deposit funds in the
state treasury." Since Foundation School Funds are appropriated funds
and thus, have previously been deposited in the state treasury at the
time they are transferred to WISD, it would appear that House Bill
1623 does not apply to them. We conclude that the WISD Fund as
presently constituted need not be deposited in the state treasury.

                             SUMMARY

         Educational and Recreational funds held by the
         Texas Department of Corrections for the benefit of
         its inmates are "trust funds" and thus exempted
         from deposit in the state treasury under the terms
         of House Bill 1623.       Funds of the Windham
         Independent School District are at present
         entirely appropriated from the Foundation School
         Program and as such, are not subject to House Bill
          1623.

                                           MARK      WHITE
                                           Attorney General of Texas

JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY III
Executive Assistant Attorney General

                                   p. 1215
    .
.       W. J. Estelle - Page 5   (MU-363)   '

        Prepared by Rick Gllpin
        Assistant Attorney General

        APPROVED:
        OPINION COMMITTEE

        Susan L. Garrison, Chairman
        Jon Bible
        Rick Gilpin
        Jim Moellinger
        Brenda Smith
        Bruce Youngblood

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