THE ,~TORNEY GENERAL
OF TEXAS
Mrs. B.B. Sapp; Director and Executive Secretary
Teacher Retirement System of ~Texas
Austin. Texas
Dear Mrs. Sapp: Opinion Number O-4908
Re: Investment of moneys now In sus-
pense account.
We have received your letter of February 16, 1943, which
we quote in part as follows:
"The Teacher Retirement System respectfully
requests an opinion from your Department on the
following questions:
"This year due to the emergency so many
teachers are changing from school to school it
makes It very difficult to clear reports. As
a result we have,in Fund No. 63, known as a
suspense account, approximately $400,000. This
mqneg is Idle and as a result the Interest rate
for teachers on their investments will be mater-
ially affected; since within a few months these
reports will be cleared and this money properly
deposited, would we have the right to invest
approximately three fourths of this money held
In suspense account in order to receive interest
and thereby give the members of the Teacher Re-
tlrement System full benefit of their investment?
Would It be within our rights to transfer from
Fund No. 63 (Suspense Fund) a lump sum to Fund
No. 103 and mark it Undistributed?
"I am herewith outlining the method the
Teacher Retirement System will use in exhaust-
ing the amount transferred to Fund No. 103, Un-
distributed. Each day reports will be completed
to the extent that all credits can be applied to
the individual accounts. Such reports will be
listed daily by Register Numbers. If the reports
Include membership fees, such fees will be trans-
ferred direct from Funds No. 63 to Fund No. 108.
All credits to individual accounts will be applied
against the Fund No. 103 Undistributed Fund until
Mrs. B.B. Sapp, page 2 o -4908
the Fund is completely exhausted. The Summary of
Deposits to Funds submitted to the State Treasurer
will not include the amount applied against Fund
No. 103 Undistributed. This amount will be carried
In a different column to be used in the office of
the Teacher Retirement System only. The Teacher
Retirement System will exhaust the complete 103
Undistributed Fund before August 31, 1943.
"We will appreciate your immediate attentionin
this instance because this amount of money idle, as
I have aforesaid, will seriously affect our interest
credit to the individual teachers' accounts."
Section'8 of the Teacher Retirement Act (Article 2922-1,
Vernon's Annotated Civil Statutes) sets up seven different
funds for teacher retirement moneys. You have informed us that
Fund No. 103, menti-onedIn your letter is the Teacher Saving
Fund. Subsection 1 of Section 8 provldes in part as follows:
"1. The Teacher Saving Fund.
"(a) The Teacher Saving Fund shall be a fund
1n which shall be accumulated regular five (5) per
centum contributions from the compensation of mem-
bers, including current interest earnings. Contrl-
butions to and payments from the Teachers Saving
Fund shall be made as follows:
l l * *fl
"lb)
Subsection (l), Section 7 of the Retirement Act reads
as follows:
"Sec. 7. (1) The State Board of Trustees
shall be the trustees of the~~severalfunds as
herein created by this Act, and shall have full
power to invest and reInvest such funds subject
to the following limitations and restrictions:
All retirement funds, as are'received by the
Treasury of the State of Texas from contribu-
tions of teachers and employers as herein pro-
vided, may be invested only in bonds of the
United States, the State of Texas, or counties,
or cities, or school districts have not default-
ed in principal or interest on bonds within a
period of ten (10) years, or in bonds issued by
any agency of the United States Government, the
payment of the principal and interest on which
Is guaranteed by the United States; and in in-
Mrs. B,B. Sapp, page 3 o-4908
terest-bearing notes or bonds of the University
of,Texas Issued under and by virtue of Chapter
40, Ac,tsof the Forty-third Legislature, Second
Called Session; provided that a sufficient amount
of said fund,sshall be kept on hand to meet the
immediat,epayment'of'the amounts that may become
due each year as provided in this Act. The State
Board of Trustees shall have full power by proper
resolution to hold, purchase, sell, assign, trans-
fer, and dispose of any of the securities and ln-
vestments in which any of the funds created herein
shall have been invested, as well as the proceeds
of sais Fnvestments and any moneys belonging to
said funds, provided tha,tany money on hand shall
be subject to the State Depository Laws of Texas."
The suspense account is a fund set up by the State Board
of Trustees of the Retirement System for retirement moneys
received by the Retirement System which but for some error in
the reports of the school district or other employer or in the
amount of money sent would be placed In the Teacher Saving Fund
and the Expense Fund. In most instances the error Is minor and
will in a short time be corrected. Also, in the great majority
of cases the error concerns only one or two teachers of the
employer whereas the reports and contributions fully and ad-
equately cover all the remaining teachers of such employer.
In other words, because of an error which affects only one or
two teachers of the employer, the report must necessarily be
held up until the error is corrected. The contributions of
all the teachers covered by the report of the employer In the
past have been placed in the suspense account until the error
is corrected. You now wish to know whether part of the moneys
,presently in the suspense account may be transferred to the
Teacher Saving Fund in an undistributed lump sum, earmarked
as such, and then itemized and properly-distributed as the
reports are cleared up. In other words, you wish to transfer
part of the suspense account, which part you feel offers very
little doubt and feel certain will promptly be cleared, -and
then moneys will thereafter be cleared In the Teacher Savlng
Fund instead of first being cleared in the suspense account.
and-then transferred to the Teacher Saving Fund. In this man-
ner, such moneys may promptly be invested and start earning
Interest.
It seems to us that this is a matter properly lying
within the discretion of the State Board of Trustees. The con-
tributions of the members of the Retirement System under the
Act are to be placed in the Teacher Saving Fund (Subsection (1)'
of Section 8) D The Act is silent as to the means whereby-errors
in reports and in contributions are to be corrected, Of course,
Mrs. B.B. Sapp, page 4 0 -4908
it Is contemplated that such errors will be corrected, and we
think that the means of such correction are for the State Board
of Trustees to determine.
Subsection (7) of Section 6 provides aa follows:
"(7) Subject to the limitations of this Act;
the State-Board of Trustees shall, from time to
time, establish rules and regulations for ellgi-
bility of membership and for the admlnistratlon
of the funds created by this Act and for the trans-
action of Its business."
In answer to your question, it is our opinion that if
the State Board of Trustees in its discretion determines that~
the transfer of moneys from'the suspense account to the Teacher
Saving Fund, as outlined, is reasonable and proper, we know of
no legal inhibition to the same.
Very truly yours
ATTORNEY GRNRRAL OF TRXAS
By a/George W. Sparks
George~~W.Sparks
Assistant
GWS/s/wc
APPROVE) FRR 26, 1943
s/Grover Sellers
FIRST ASSISTANT
ATTORNEY GENERAL
Approved Opinion Committee By s/BWB Chalrman
Untitled Texas Attorney General Opinion
Combined Opinion