Untitled Texas Attorney General Opinion

Honorable J. W. Edgar Opinion No. S-152 Commissionerof Education Texas Education Agency Re: Availabilityof the Austin, Texas Federal Social Secur- ity program to school Dear Dr. Edgar: districts. You have requested the opinion of this office concerningthe applicationof the Social Security Act of the United States to local school districts In Texas. Throughout this opinion we shall designate the Old Age and Survivors Insurance program under the Social Security Act as OASI, its popular designation. The Social Security Act was amended in 1950 by adding to Title II a new section,numbered 218, dealing with voluntary agreements for coverage~of employees of States and their political subdivisions(Section106 of Chapter 809, P.L. 734 Laws of 81st Congress, 2nd Session, 19501. Subsection (d3 of Section 218 excluded from the coverage of the Social Security Act employeeswho were mem- bers in a retirement system establishedby a State or by a political subdivisionthereof. See the Co ressional Com- mittee reports on this Act at pages.3287,3% 6, 3408 3489, U.S. Code CongressionalService, 81st Congress, 2nd &es- sion, 1950. The Legislature enacted Chapter 500, Acts of the 52nd Legislature,1951 page 1480 (codifiedas Article 695g, Vernon's Civil StatuJes) authorizingthe governing body of any county municipalityor other subdivisionof the State (acting through the agency of the State Depart- ment of Public Welfare) to enter into an agreementwith the Federal Security Administrationto obtain OASI coverage for their employees,and also authorized the governingbodies to make payments for the coverage benefits to the Federal agency from the body's official funds and from sums with- held from the salaries of its employees. A 1953 amendment by the Legislaturedid not change Article 6959 so far as discussionis concerned in this opinion (see Chapter 197, Acts of the 53rd Legislature Regular Session, 1953, page 5%) nor did a 1954 amendmen4 (see Chapter 58, Acts of the 53rd Legislature,1st Called Session, 1954, page 129). In 1954 Congress amended Section 218(d) of the So- cial Security Act so that employees of a State or one of its political subdivisionswho were members in a retirement sys- tem establishedby the State or a political subdivisioncould Hon. J. W. Edgar, page 2 (S-152) obtain OASI benefits under the Social Se~curityAct. See Section 101(h) of Chapter 1206, P.L. 761, Acts of the 83rd CongresG Second Session, 1954 (codifiedas 42 U.S.C.A. g 418 &/> and the Con ressionalCommittee Reports on this amendment at pages 6858 , 6863, 6897 and 6955, U.S. Code Congressionaland AdministrativeNews. The amendment pre- scribes a referendumin which a majority of the employees within a separate coverage group must vote by secretwritten ballot in favor of extendingthe OASI program to their re- tirement system. The amendmentprovides that, if the State so desires, members of a retirement system that covers em- ployees of more than one political subdivisionof the State may be consideredas a separateretirement system within each political subdivision. A question at once arises as to the validity of OASI contributionspaid from public funds held by the parti- cipating school districts for educationalpurposes. Sections 51 and 52 of Article III of the Constitutionof Texas prohib- it the grantof any public moneys by the Legislatureor a school district to'any individualor corporation. However, this is not applicableto the matching payments of OASI con- tributions. The Legislaturehas provided that such matching contributionsshall be construedas salary paid to the em- ) ployae. "The respectivegoverning bodies are authorizedto pay contributionsas required by these agreementsfrom those. ziznrom which the covered employeesreceive their compen- and the laws fixing the maximum compensation for co&; imployeesare amended "to allow payment of the matching contribution.. . in addition to any maximum compen- sations otherwisefixed by law." Section 6 of Article 695g, as amended in 1953. Now to answer your questions: "1. May a local Board of Trustees make a contract binding its successorsfor a minimum period of five years?" A school district has no inherent power of contract, but only such powers in making contracts,and fo;;u;hWt;;ms, as the Legislatureauthorizes. -4. 774 (Tex.Civ.App.1938 error ref.); -a).: i59 S.W. EZ4$Tex.Civ.App. 19133; Attorney General's Opi;i;nSEz953 In the case of Lee v. Leonard Indeaend n h 01 Dis- trict,'24 S.W.2d 449, 450 (Tex.Civ.App.1930, error ref.) the court said that Wchool districts are but subdivisionsof'the state government,organized for convenience in exercisingthe Hon. J. W. Edgar, page 3 (s-152) governmentalfunction of establishingand maintaining public free schools for the benefit of the people. School trustees are public officers, whose powers are under the control of the Legislature." Section 6 of Article 695g provides that "the respective governing bodies of the various. . . politi- cal subdivisionsof the State which are now or shall hereafter become eligible under Federal requirementsare hereby author- ized to enter into all necessary agreementswith the State Agency to enable the employees of the respective . . . politi- oal subdivisionsto have coverage under the Social Security Act." Thus, the Legislature,hasauthorized a local board of trustees to make a five-year contractwith the State Agency, since that is a "necessaryagreement . . . to enable (its) em- ployees . . . to have coverage under the Social Security Act." "2. May a local Board of Education under present statutes expend school funds to provide social security and survivors'benefit insurance for its employees?" Subdivision2 of Article 282'7,V.C.S., provides that "local funds from district taxes. . . and other local sources may be used for the purposes enumerated for State and county fusds . . . and for other purposes necessary in the conduct of the'public schools to be determinedby the Board of Trustees." Subdivision1 of this Article provides that the State and county available funds shall be used for the payment of teachers' and superintendents'salaries, among other things. Section 6 of A+ title 6959 authorizes a local board of education to pay contri- butions, as required by its agreement, "from those funds from which the covered employees receive their compensation.11Nei- ther Section 5 nor Section 6 of Article VII of the Texas Consti- tution, dealing with the State available fund and, respectively, with the county available fund, prohibits such an expenditure. “3. Article III, Section 48a of the Texas Constitutionprovides: ' . . . and provided that, the recipientsof such retirement fund shall not be eligible for any other pension retirementfunds or direct aid from the State of Texas, unless such retirementfund contributedby the State is re- leased to the State of Texas as a condition to re- ceiving such other pension aid.' ,Wouldthis con- stitutionalprovision prevent the receiving of both old age security benefits and teacher retirement benefits at one and the same time?" Hon. J. W. Edgar, page 4 (S-152) As held in AttorneyGeneral's Opinion s-151 (19551, the receipt of a benefit under OASI will not be the receipt of "pension retirementfunds or direct aid from the State of Texas" within the prohibitionof Section 48a of Article III of the Texas Constitution,so that it is not unlawful for the same person to receive benefits from the Teachers Retirement System and from the Social Security program at the same time. "4; The FoundationProgram provides a legal minimum salary. May the local Board of Trustees consider the matching funds paid by them as a por- tion of the requiredminimum salary and reduce the teacher's take-home pay correspondingly?" This question is substantiallyanswered in Question 2 above. Section 6,of Article 695g, as we have seen, author- izes the board of trustees to pay contributionsas required by the agreement from those funds from which the covered employ- ees receive their compensations. Continuing,the section pro- vides that all prior laws which fix a minimum compensationfor any covered employeesof counties are amended to allow payment of the matching contributionin addition to any maximum compen sations otherwise fixed by law. As shown by the underscoring, only the salaries of countv emoloveesrequire the contribution from OASI benefits to be in addition to previous salary maxi- mums. Where the Minimum Foundation Program salary has been es tablished as the maximum salary for a teacher by a board of trustees, then the take-home pay of the teacher will be de- creased by the amount of the OASI contribution. However, the board of trustees, in its discretion,could assume this paymen from the local funds governed by Article 2827, as discussed in Question 2, "in considerationof the employees'retention in or entry upon employment." Section 8 of Article 6959. "5. May a state-widereferendumbe called and, the employeesof all districts have opportunityfor coveragewith the State matching employee contribu- tions?" Section 3 of Article 695g authorized the State Agent: to enter into agreementswith the Federal Security Administrat: to obtain OASI coverage for employees of school districts. These agreementsmay contain any provisions relating to contrii tions on which the State Agency and the Administratorshall agj provided the agreementsare consistentwith the Constitutiona1 the laws of Texas. As noted in the legislative history above, the Social Security amendmentsof 1954 provided that all emplo: in positions which were covered by the same retirement system Hon. J. W. Edgar, page 5 (S-152) shall be considered as a separate coverage group. An alter- native separate coverage group was permittedwhere a retire- ment system covers employeesof more than one political sub- division of the State. If the State Agency, in its discretion, chooses to hold a state-widereferendum among the employees of the school districts who are also members of the Teacher Retirement System of Texas, there is no constitutionalprohi- bition of such action. Also, as held in the preceding @es- tjons 2 and 4 the State would be authorizedto make contri- butions match1ng employee contributions,the funds being de- ducted from either the Minimum Foundation Program salary funds or from the State availablefund. SUMMARY The Legislaturehas authorizeda local board of school trustees to contractwith the State Agency for a five-year period for OASI participa- tion. The local board of trustees is also author- ized to expend either local funds or Minimum Foundation Program salary funds for OASI benefits. 'A state-widereferendumof all members of the Teachers RetirementSystem of Texas is authorized. The State could match employee contributionsfrom either Minimum FoundationProgram salary funds or ... from the State AvailableFund. There is nothing in the Constitutionof Texas that prohibits the State or district participation in the Social Security Act. APPROVED: Yours very truly, J. C. Davis, Jr. JOHN BEI\I, SREPPERD County Affairs Division Attorney"Cenera1of Texas L. P. Lollar Reviewer John Reeves Reviewer Assistant John Ben Shepperd Attorney General BEL:cs:wb