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
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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