.
Honorable Robert S’.Calve& ,Opinion Noo, M-138
Comptroller of’Public Accounts
State Capitol Building Ret Whether a policy for group
Austin, ,Texas life insurance coverlng,employees
of the Comptroller’s Department,
executed prior .to the effective
date of Senate Bill 294, Acts
of the 6Qth Zegialrture, Regular
Session, Chapter 437, authorizes
the Comptroller“ t.6 ma,ke pr~emium
payments therefor from State funds,
Dear Mr 0 Calvert: and certain ‘relatedquestions.
Reference is made to your letter in which you request
an opinion from this office as to’the captioned matter. We,quote
from your letter, in part, as follows:
,,. “I am the policyholder of a ‘group policy ~~. .
covering employees of my department, such con-
tract being made~prfor to the effective ‘date ?P ”
Senate Bill 294, Acts of the 60th Legislature.
“(1) Does this,contract permit me to maka
premium payment.8from State funds, or
must a new contract be obtained before
payments can be made?
‘(2) Zs group 1%f8 insuTanC8 elltgiblefor
premium payments by the state?
8(31,.,Arye,,funds appropriated to ‘me for the
‘:
I .. .:. ,,,~ ~,’operatlon of th s department for the
‘, 6 fisca) year ending August 31, 1968,
: available for the payment of insuraW3
prcaiums?
..‘., ..$ll%h’reference
to question number (1 , you are advised
that State funda may be utilized as,wntribut for premium
,’ ‘,
),,
. 3
Honorable Robert~S..,
Calvert,:page 2,(M- 138) .,
?
,..,,
.,y
payments .under,jroslr'present'gr~~~.
insurance.contrait. ',
.Senate,'
'Bill~294 Acts,of ,the'69th :Legi~slatur~e,~~~~Rsgular
.Session,.I$$ :"~~'
:~~
Chapter &37,-,:Pages:::lOO7,
Its,*
devoid .,of'~,
any '1'anguagt:'which
would? '~,
require 'a~
departmental head~to..ex.ecut:e
a~,new.gro~p,pcQ$+con- ,’
tract for the purpose of making,premlum peg?aents,there,for"from
state.funds.
~.
The an&war to question ~~ber'(2),ire.~in.th8:.gffi~T.::,.
tive.~ ,The caption of .SenateBill ,294'providesas follows: '~'~
~'
"AR:ACT'ampndlng Paragraph (b)',.of
Subsection '.
~'&3) Of Sectionlof Article,3050 of the~Insuranc8,
ode and amending Subsection(a) of Section 1 of
.~~. .Article 3.51 of th8~InsUranC8 Code,to pein&t th8 '~
.: expenditure of stat8 fund,sto paysall nor any par- "
tiOn of tht~.p.remiums
for Certain group~.insurance
contracts'coverln& employees of the state;.. .~."
With relation to the expenditurc,of,state funds for
life pOliCy premiums;'Senate Bill,2g&ar@ndQd,Paragraph
Subsection (3) of Section.1, Article 3.50, 'by striking the
.~ "
~"Thepremium for the policg'shall be paid
by~the policyholder~wholly'from funds contribu-
ted.by the in,suredemployees?,
.~ ~~. .~.,
',and inserting in 'lieu.,the&f the following:,
premium it& the.pol+cy may be paid
'.'?!be
in whol~eorln part,fromfunds contributed ,by
the,policyholder or in whole or inpart'from
,fundscont,ributedby~the insured employees."
Subsection (3~),,
Section l,,/Article3*5O’bf the~Insurance Code ,.
provides Sn part: .~
.i
'((3), A policy ls$Ged tb: 0’D’~
; any aaso- ..~
:
ciation~of state employees . D a and any de-
..,partmentof~the state government which employer
or association shall be deeme~tthe',pollcyholder.
to insure the ~employeesho D *, .'
,.:
.,, 'I ~.~'.-
:
:-
.. .
Honorable Robert s..calvert, page 3 (M- 138) I, ‘..
From the foregolrigit is,apparent ~that state funds may be used
as contributions.toward group life premium payments when the
employer is the policyholder.
Lothas been heretofore held by this offlde that a state
agency may contribute state funds in payment of the premiums ,of,
group insurance covering its employees under the p.rovih$onaof
Subsection (a) of Section 1 of Article 3.51, ‘of the Insurance
Code, as amended by Senate Bill 294, Acts of the 60th Legisla-’
ture e Such is a public governmental purpose benefltting the
state a Opinion by the Justices, 30 So.2d 14 (Ala.Sup.1947 ;
?&.M:291,20. p.421 (19211;
658, 251 SW 46 (1923 ;
42 Cal. App..2d,40.9,108 ib 2d
,’ ,.
We are in agreement with the reasoning of the Supreme
Couri of Hisslsslppl in Mayor and Alderman of City of Vicksburg
v. Crichlow, 196 Miss, 239 lb Smy~ whereln the
statute concernina benefit; to ao&mental emDlouee8 was UD-
,held as not gratl;ties and as not extra compensation, but -
being prospective ,lt serves ,abeneficient and useful govern-
mental function in Its propensfty for stimulating and’renardtig
faithful public servic,esV
The same reasoning would hav,eapplication $0 the gxpendi-
ture of’state finds to pay.prem$wns on insurance ccktracts con-
cerning ‘state employees 1
Question number (3) as posed ln’your letter, “Are funds
appropriated to me for the operation of this deptitment for the
fiscal year ending August 31, 1968, available for the payment
of insurance premiums?” is also answered .ln the affirmative.
Of course , you are aware that Senate Rill 15, Acts of’
the 60th Zegislature, Regular Session, 1967, which is.the-
‘7
4 Appropriation Bill for the fiscal year September 1, 1967, to’
August 31, 1968,.contains no specific appropriation for the
Comptroller of Public Accounts to make premlum~payments in whole
,or in part, on group insurance contracts asp authorized by Senate
” Bill 294. In our opinion no specific appropriation is requfred.
In Senate Bill 15, p* IZf-33, the following appropria-
t$on has been made for the Comptroller of Publ&c Accounts:
: *
.
,.~ ,,~
‘.,‘,
( ..
I,
1
.~:
-640- ..~ 1,
,
. I ,,, . .
Honorable Robert S. Calvert, page 4 (M- 138)
"For the year ending'August 31>‘&8 ,.~..
”
. . e
1115. Consumable supplies and,
materials, current and recurring
operating expense, and capital
Z,
$1,846,340”
outlay ~~....~e.~e*.........*.....es~....~~.,
It is noted that on page v-34 of Senate Bill 15 the
Legislature placed certain limitationson the use of the expense
funds as reflected in item number 15 as shown above. These
limitations are, in part, as follows:
"Section 11. LIMITATIOES ON USE OF OTREI'EXPERSE
FOR m S-S AWD WAC%%
"Funds appropriated in Articles I, II, .and
III of this Act, or for the Central Education
Agency.in Article IV of this Act, in items design- ,:~
nated for consumable supplies and materials,
current and recurring operating expense or capital
outlay shall be expended only for items set out
in the Comptroller's Manual of Accounts, Expendi-
. ture Classification, effective November 1, 1965;
as.~amend,ed,
and numbered from.lO.to.19'for,.!'.don~~,~..:.
sumable supplies and materials", 20 through 28
for "current and recurring operating expense,"
and 60 through 69 for "capital outlay". It is
further provided that such terms shall not include
expenditures for personal services including
salaries and wages, unless the langua e of those
items explicitly authorizes such use.if
An examination of the Manual of kckounts, State of
Texas, Comptroller of Public Accounts, reflects on page 4-25
under Current or Recurring Operating Expense, Expenditure Code
'number 027, in part, the following:
n027 IRSUl&ECE AND BOND PREMIUMS
Authority: Legislative Appropriation
,
Purpose: To .recordpayment of in-
surance and surety bond,
premiums.
.
.
. .
1
3onorable Robert S. Calveat, page ,5 (W- 138)
,.
As was stated in Attorney General's Opinion.130.j
wi,f-888
(1960):
"The house and utilities to be.furnished s
the business manager are not a part of his salary.
.They are.something in addition thereto,,..... .
That is to say, they are Incident to the position j
of businoss,manager, something gained from the
employment above and beyond the salary or wages
for services rendered. Therefore, the rental
payments are 8 general operating expense,properly
payable from Line Item 8 of the appropriation to
the Denton State School."
The reasoning of Attorney General's Opinion No. WW-888
appe,arsapplicable to our situation at hand. Insurance pre:
mium payments made on behalf of state employees with state
funds are not salaries or wages to that employee but are a
benefit to the employer. Therefore, in conjunction with
question number (3), you are advised that the payment of
group insurance premiums as authorized by Senate Bill 294 may
be paid frommoneysappropriated to your agency for the fiscal
year ending August 31, 1968, for operational expenses.
SUMMARY
-------
Senate Bill 294 does not require the department
head of a state agency to execute a new group
policy contract before premium payments can be
made with state funds wherein the department
head is the policyholder of,a group policy
contract, wh.ichwas executed prior to the ef-
fective date of such bill.
Senate Bill,294 authorizes the.use of state
funds as pr@um contributions on group life
,insurancekherein the employing agency is the
policyholder.
Moneys appropriated to the Comptroller of Public
Accounts for the fiscal year ending August 31,
1968, for "current and recurring operating ex-
pense? .is available for the payment of insurance
premiums,'as authorized by Senate Bill 294.
- 642 -~
.
Honorable Robert S. Calvert, page 6 (~-138)
,GEHERAL.OF TEXAS,
Prepared by Ray McGregor
Assistant Attorney General"
.:
APPROVED:
OPINION COMMITTEE
Hawthorne Phillips, Chairman
:
Kerns Taylor, Co-Chairman
Sam Kelley ‘.
John Banks
Roger Tyler
Malcolm Quick
John Reeves
c
- 643 -