Untitled Texas Attorney General Opinion

- . Hon. Robert S. Calvert Comptroller of Public Accounts Austin, Texas Opinion No. V-1329. Re: Authority of the Comptroller to issue warrants in favor of the revolving fund used in connectionwith the Repair and Warehouse Department of ,Dear Sir: the A. & M. College System. You have requested an opinion of this of- fice concerningthe legality of a proposed method of operation of the Repair and Warehouse Department of the Agriculturaland MechanicalCollege of Texas. The specific fact situationhere Involved and the proposed operation may be summarizedas fol- lows: There are five separate branches of the A. & M. College System located on the campus at Col- lege Station, each receiving a separate appropria- tion. The Board of Directors of A. & M. College has set up one central Repair and Warehouse Department In an effort to prevent a duplicationof functions within its system, and as a means of securing more economical repairs and replacements. The Board es- tablished a revolving fund to be used to purchase repair materials,to pay for labor, and to pay the necessary overhead expenses. Each of the separate branches Is billed for the actual cost of material and labor used on a repair job, plus 10% of the la- bor and 20% of the materials. The percentagesare the pro rata part of the overhead allocated to each repair job, and are set at a point which keeps the Department functioning,but which yields no profit. The revolving fund is placed in a local bank. Materials are purchased through the Board of Hon. Robert S. Calvert, Page 2 (V-1329) Control, but since purchased out of the revolving fund placed in a local bank, the Comptrollerhas no knowledge that the purchases are made through the Board of Control. The proposed plan of operation is for the Repitlrand Warehouse Departmentto bill each of the separateA. & M. branches for the actual cost of ma- terial and labor used on a given repair job, plus 10% of the labor and 20% of ,thematerial as overhead. The responsibleofficer at A. & M. College would then attach a certificatestating that the material had been purchased through the Board of Control and billed at the proper price. The bill and certifi- cate would then be forwarded to the Board of Control, and the Board, after satisfyingItself that the ma- terial charge was correct and that the material had bean purchased as required by statute,would certify the same to the Comptroller. The Comptrollerwould then issue a warrant in favor of the revolving fund, and charge it against the appropriationof the proper A. & M. branch. Based on the above, you have asked the fol- lowing questions: (1) Does the Comptrollerhave authority to issue warrants to reimburse the revolving fund of the Repair and Warehouse Departm6ntand charge these war- rants against funds appropriatedfor the operation of the various parts of the A. & M. Collage System and from the funds appropriatedto A. & M. College? (2) Is the proposed method of certification of the purchase of materials a proper one? (3) Is it proper for the Repair and Ware- house Department to charge 10% on labor and 20% on ma- terials to defray overhead expenses? There is no general statute setting up the mechanics for the operation of either warehouse or re- pair departmentsfor the A. & M. College System. In the General Provisions of the "Higher Education" sec- tion of the general appropriationbill, it is provided: "The said Governln Board fif each educationallnstitutioxi?Is held strictly accountableto the Legislature for spend- ing the appropriationsherein made wisely, Hon. Robert S. Calvert, Page 3 (V-1329) economically,and for the best inter- ests of the several institutionsof higher learning and the State.” Art. V, Sec. 15, H.B. 426, Acts 52nd Leg., R.& 1951, ch. 499, p. 1228, at pa . However, such a policy statement is not sufficient to allow a warrant to be drawn In favor of a revolv- ing fund and charged to an appropriationmade for labor and materials. In deciding that the Comptrol- ler could not draw a warrant against an appropria- tion to A. & M. College to reimburse a revolvingfund used to ay laborers, this office held in Att’y Gen. Op. o-6962 (1945) that the warrant must be issued in favor of the person performing the labor, because the appropriationwas made for that purpose. It was then stated: “We note the statement In your let- ter that the method suggestedby you was authorized by the Legislature in 1927. We think, however, that the continuous failure of the Legislature since t at time to enact simil r provisions evolv- ing fund provlsiow.7 in subsequentappro- priations indicates that it did not want the practice continued. We think such action, or rather inaction, on the part of the Legislature is particularlysig- nificant in view of the fact that for the past several years, the departmentalcon- struction on the part of the Comptroller has been that payroll warrants must be made payable to the employees.” Apparently the Legislature had the above opinion In mind when it placed the follcnvingriders in the general appropriationbill for the biennium ending August 31, 1953: ‘l(e) Appropriationsto the Agricul- tural and MechanicalCollege of Texas or any other parts of the Texas Agricultural and MechanicalCollege System, except funds appropriatedexclusivelyfor sala- ries may be used to reimburse any revolv- ing knd operated for the benefit of one Hon. Robert S. Calvert, Page 4 (V-1329) or more parts of said system, such as a motor pool, a feed supply center, an of- fice supply or laboratory supply center, or any other operation of a similar na- ture establishedby authority of the Board of Directors of the Agricultural and Mechanical College of Texas.” (Art. V, Sec. 4, H.B. 426, Acts 52nd Leg. R.S. 1951, ch. 499, p. 1228, at p. 1463.) “Each institutionaffected by this Section is hereby authorizedto set up a Revolving Fund to facilitate the payment of nominal expenses, to pay bills within cash discount periods, and to pay day and weekly payroll claims, etc. Disbursements from the revolving funds are to be reim- bursed from the respective appropriations made herein, the State Comptroller being hereby authorized to make such reimburse- ments on claims filed with him by the in- stitutionsunder his regularly prescribed procedures except that one (1) voucher and one (1) warrant may cover any number of claims for this purpose. These reimburse- ment claims shall meet the same require- ments as other claims against State appro- priations,and each Institutionshall pre- pare such a reimbursementclaim as at the close of business on the last day of each month and as many times during each month as may be expedient in order to make un- necessary the maintainingof an unreason- ably large revolving fund. “The respective governing boards shall determine, subject to the fp;;zval of the Legislative Budget Board, amounts of the revolving funds to be set up for each institution,and may increase or decrease the amounts in the same man- ner if necessary. Such Board shall desig- nate a depository bank for each revolving fund, and shall specify the officers and/or employees to sign checks drawn on each such J./ This function of the Legislative Budget Board was declared unconstitutionalin Att’y Gen. Op, V-1254 (1951). Hon. Robert S. Calvert, Page 5 (V-1329) fund. The revolving fund for each insti- tution may be set up from State appro- priations herein made for General Operat- ing Expenses, or from local funds on hand at August 31, 1951. The depository bank for each revolving fund shall be required to secure the deposit as provided by law.” (Art. V, Sec. 31, H.B. 426 Acts 52nd Leg., R.S. 1951, ch. 499, p. 1228, at p. 1472.) The above provisions do not specifically authorize a revolving fund for a Repair and Ware- house Department, but the terms used are sufficiently broad to allow this particularfund to be set up. These riders clearly give authority to the Comptrol- ler to Issue a warrant in favor of the revolving fund instead of the individual or firm that does the work or furnishes the materials. The warrant may be &arged against State appropriationsmade from the General Revenue Fund, except those made exclusivelyfor sala- ries, or against appropriationsmade from local funds in the Treasury belonging to A. & M. College or be- longing to any part of the A. & M. College System. Thus, the riders make possible the use of a revolving fund. Further, these riders merely detail the manner of using the appropriation,are necessarily connected with and incidentalto the appropriation and are therefore valid. Att’y Gen. op. v-1254 11951). You are therefore advised in answer to your first question that the Comptrollerhas authority to issue warrants from the proper funds in favor of the revolvingfund. Before issuing a warrant involving a pur- chase of materials, the Comptrollermust be satisfied that the purchases have been properly made. The pro- cedure proposed here, whereby the Board of Control cer- tifies that the purchases have been properly made and the Comptroller receives the certificateprior to ls- suing a warrant in favor of the revolvingfund, is ade- quate to assure the Comptrollerthat the purchasing statutes are being compliedwith. Your second question, therefore, is answered in the affirmative. Your third question concerns the method of charging the overhead expense among the various parts of the A. & M. System receiving the advantages of the Repair and ~WarehouseDepartment. In authorizingthe use of revolving funds for operations such as the one . Hon. Robert S. Calvert, Page 6 (V-1329) in question, the Legislature certainly envisioned that each benefited member would pay its pro rata share of the necessary expenses incident to such an operation. The method of allocation is one to be left to the discretion of the proper administrative officials. There is no legal objection to the meth- od proposed for the allocation of these expenses if it properly divides the expenses, and we have no reason to believe that it does not. The riders In the general appropria- tion bill for the biennium ending August 31 1953 Grt. v., Sec. 4 Par. (e), and Adi V. Sec. 31 H.B. 428 Acts 52nd Leg., R.S. l&l, ch. 449, p. 1228, at pp. 1463 and l&72), authorizingthe use of revolv- ing funds by the Texas Agricultural and MechanicalCollege System are sufficiently broad to allow the Board of Directors of the A. & M. College System to set up a Re- pair and Warehouse Departmentfor the use of all units of the System. The Comptrol- ler is authorized to issue warrants against the funds appropriatedto the various parts of the System in favor of the revolv- ing fund. The Comptrollermust be satis- fied that the purchasing statutes have been compliedwith prior to issuing a warrant, and the proposed method whereby the Board of Control certifies to the Comptroller that the purchases In question have been properly made is adequa to assure him of compliancewith the Yours very truly, APPROVED: PRICE DANIEL Attorney General C. K. Richards Trial & Appellate Division Jesse P. Luton, Jr. BY r, w,$J- &b-U Reviewing Assistant E. Wa e Thode Assistant Charles D. Mathews First Assistant EWT:wb