,-,
OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
Ronormble Ceo, H. Rhepp8rd
ComDtmller of Public Acocmits
Austin, Texas
@seer Sir:
In the Taxa Old.40 Aselst-
a dafioit In the mount ot
hi8 foot, you are advised
ertain Interest-bearing
,779.OO which oonrtttuto an
the Texas Old 40 Assistance
sued and are now outstanding
37, Acte, 44th Legislature,
11s Roe. 179 end 1046, date,
n; and under osrtain pro-.
by the Legislature these
ant deferred lIrbIl~tI.~
which are to be retfred at future dates as direoted by
House Bill Ro. 179, supre, and provisions or oontmots
entered Into by and between the T~XU Old Age AesIetanoe
Commission and holders of raid warrants, whloh controote
Honorable George H. Sheppard, Peg8 E
waze exeouted by virtue of authority oontelned In raid
lBW& Ret&rement of these obligrtlons egeinat the TOXEB
Old Age Aseietenoe Fund, 8~ represented by these warrant8
end treasury oertlrloet88 lxahenged thereror, i~ rpeoIfIoel-
ly pro,vlded for by statute, end said warrants do not oon-
stltute en ImmedIete obligation agaInat the Texas Old 4e
Aselstenoe Fund.
Vy vlrtue~of the l pproprletlon eot that providen for
epproprletlone for State Departments for the blennl~ end-
ing August 31, 1939, llB~\,?ncometo the Texas Old 40
Aeeietenoe Pund together dth any monies In the fund et
the end or a prior ii6081 year, are appropriated tar oer-
tein purpO#eB, emo whioh~ ia lbofnIstretIve expenses
lnourred in the ads nirtretion Of the Texee Old Age Aeslet-
- en08 Lew dthln the limits or thet Ler. Your ettentlon~
la oelled to the provlslons of ROUBOBill lo. 8, dote,
44th LegIsleture, Srd Celled Sesslon,end partloulerly
to Seation lib Or ATfIOle 2 of raid Act, which In part
reeda a8 roUow8: ‘Provided that Ir the fund Is lneurrlolent
to pey lll grants In fill, the 8eme should be peld prorate
based on the amount granted to each ractplent.* Your etten-
tion IB further oelled to the fact that by other prorlelonn
or House Bill wo. 6, nupre , oertein revenues are lllooeted,
88 eeme are oolleoted, to the Old Age Assistance Pund to
.be 8xpendeU r0r purposes or carrying out provielons 0r the
'bid Age Aseiatanoe Lewa, By these mentioned provisions or
the laws 0r Texas, when ourrent runds are~innurri0ient to
uet etithorized expenditures ror eseistenoe bemilts end
administrative expenses, there is no alternative exoept
‘that grant8 or oaeletanoe must be prorated BO that no
actual deflolt oen loorue when eeaIetenoe warrants end ed-
ministrative expense verrante are issued.
wWt3rrantt8In payment or edminlatratire expenses are
drawn from the Taxa Old Age AdmInIstratIon Fund, uhioh
fund ie created (not by Statute) by transfer of money from
the Texas Old Age ~esIetenoe Pund to the AdmInIstratIon
Fund, end after the tranerer Is made the AdmlnIstretlon
puna shows a credit balance.
“IQ view or these reote, pleaee edvisi whether this de-
partment should Irsue warrants in payment of selarlee,
expenses, eto., Inourred In the edmlnietrotlon of the Texee.
Old Age Assistance Lawn.
“It you reply in the negative, please advise What pro-
+u=* Bhould be followed In 1s~~1ng warrants ror e&InIetre-
tlve expensea.*
Honorable Geo. H. Sheppard, Page 3
Senate Blli Ro. 138, Chapter 304, Aota, Regular Saneion,
43th Legislature, oommonly known es the Departmental Approprle-
tlon Bill, sets up ior the b!ennIum ending August 31, 1939, 8
eohedule of admIni8tretIoe relerIea end ~Intenenoe lxpeneee ior
the TexeB Old Age kSBiBt8nO0 ConuIIIrrIon, a dIvlalcn of the State
Board Or COntrOl, End in this oonnection ahkes the tollowIng appro-
priction from the Texan Old Age Aerietenoe Fund:
“Al.1 inoome to the TEXEBOld Age Assietanoe Fund
together with any balenoee on hand st the and of a prior
iisoel year, are hereby appropriated ror each or the
fiSCe1 years onding AUgu#t 31, 1938, end August 31, 1939,
to the Texas Old Age AsBirtanoe Commission for eid end
lBBiBtanC8, end ior Beleriee, equipment, eupplies, travel,
meIntene~o8 end oontingent expenses neoessery in the ex-
tension of old end in edmInIsterIng all the duties required
:Or raid cOlld.BBiOn by the Old Age ABBiBtanO8 Laws, and for
payment ot intereet bearing rarrents, together with interest
thereon, outstanding on AUgUBt 51, 1937, that were ieeued
einet the Texer Old Age A#ri#tanoe lknd under the pro-
BiOZlBOr House Blll 37, ALetS of the Forty-rourth Legis-
‘lEturn, Third Celled Session; provided, In accordance with
reId laws, that the edminlstratIve expensee ior any year
rhell never exoeed rive per cent of the total amount ex-
I. prnded for Old Age Assietenoe. Provided ‘further, that aid
end 8#rlsta,noe shell be ,granted end ex$ended In the manner
provided by law, In the event the above total Itemized
lgproprietlons ror edmlnIstratlon are less then rive per
oent or the.totel rxpendI,tures for old age eeslstenoe end
8 necessity theretor exists, the CommIseion Is authorized
$0 hire additions1 employees and pay additional rdmInletre-
tire expenses; provided In all events‘the total expendIturee
fqr all administration ohs11 not 8xoeed flre~per cent of
the total expenditures ror old eeeIstenoe, end that no
eddltlonel ~employee used shell be paid larger ~elsrlea then
are’ above fixed ror emp~loyees rendering ~lmller mervIoes.w
In order to determine whether tlie~e are currently any avsil-
Honorable Coo. B. Sheppard, Page 4
. . I
oherg* against the Old Age A#elstenoe Fund, then It must follow,
by virtue of certain provleIons in the Old 4e Pension Law and the
Depertmentsl Approprlttlon Aot, that there Is not now a derlolt
in the Old .Ag.eAsaiet&noe ?und.
The provision In the Old Age Aesietenoe Aot., House Bill
No. 0, Acts, 3rd Celled Session, Uth LegIsleture, to which we
rarer fs that clause In Section llb of Article 8 of said Abt, whloh
.reedB: *Provided thet If the rund, is InsuSfIolent to pay all grants
in full, the same should be paid pro rata besaC on the amount
granted to each reoIpIent.~ And the language In the goner81 Depert-
mental Appropriation Bill to whloh we advert Is that proviso uhloh
-*ys; Oprovlded, in looordanoe with said lewe, fhst the ddmlnis-
tretlve ex~ensee for any year shell never lxoeed five (3$) per oent
of the total emount expended for Old Age ABBi8t8n08.a Considering
W-888 two quoted oleueee together, end bearing in mind that the
TEX86 Old Age ABBfBtanO0 Fund is epproprIeted for end devoted to
sly the two purposes to *hioh much oleuees relate, to-viii: the pey-
pent of grant8 to ~elIglble aged end admlnl8tretlre expenses of the
TEXBBCld A88 Assistenoe Commfasion it 08.11be demonstrated, with
aethemstIoU oerteinty, that no dodolt is pOBBibl0 et ‘the present
~time nor oen beoome possible in the future. .ThIs is beoeu#e grhnts
of l##Istenoe era prorated where the funds~ in the Old Age ABsIBt-
qntie lMnd are fneufiloient to pey 6uoh grant8 in full, and ed-
~hinlrtratIte expenses are oorrespondingly limited by these reduced
leelstenoe beneilts by reason ~of the express limitation of suoh
lx p ensse to rive (S$] per oetit of the total emo$nt expended for Old
4e AB~iBt0IlO0. So we see that the Legisleture, In Its wisdom, by
the prorises--abort quoted., oaueed 8xpendItures ror esslstenoe bene-
tits end edmInlstretive expenses to keep step with the inoome rlnd-
lng its way Into the Texas Old Age ABBf8t8nO8 Fund from oertein
revenues in the wey of oo?upetlon taxes which era ellooeted to ruoh
~e;dn~der House Bill No. 0, Acts, ‘Sld Celled Session, Uth LegIS-
.
Of oourse, en herelnebove 8tressed,-Our oonolusion that
no aotuel derIoIt exist.6 in the Texas Old Age ABBiBt8nO8 Fund by
reason of the ieBuanoe Or aurrent ESBiBtano0 wafiBnti3 end EdBLiniBtr8-.
tire ‘expense werrente against such Fund is grounded upon the preml68
that certain interest-bearing werrents theretofore issued in p8yXWnt
of old age assIetenoe benefite~under authority o? rpeoftio stetutee,
in the aggregate amount or $3,230,779.00 is not to be ooneldered
es a present eubsIstIng charge against the Texas Old Age ABBfBtBIIO8
Fund. We Hill now prooeed to a determlnetlon of this queetlon, end
ror this purpose e review of~the legl#letlre beokgrou?d IS neoes#ery.
The iIr#t etetute up& this aubjeot is HOUSe Bill N6. 37,
Chapter 496, Cenerel and Special Lews, 3rd Celled Session, Uth
Honorable Gee. H. Sheppard, Page S
Leglal~ture, the purpose of which Is plainly stated in the Emer-
genoy Clause es roiiowg:
WSectIon 7. The feat that them era now accruing
old age lsBi#tenoe beneiits in emounte greeter then
the present monthly inoome to the Texas Old Age Asslst-
once Fund, the toot thet any tax bills pee#ed by the
present Celled Session of the Leglsleture will likely
not bring in eny.revenuee for sererel months, end the
-tact that it would be unfelr to require the reoeIplents
of old age essI#tenoe ben.erIts to diroount their wer-
rents' or oerry the interest burden of,the derIoIt,
oreste en 6mergenoy e?d sn lmperstlre public neoeasIty
i . ."
,To this and, Section 1 of the cited not oleerly~ authorizes
end requires the Texas Old 48 ABSiBtEno8 Commission to issue inter-
est-bearing warrants egeinst the TexaB Old Age Aeslstanoe Fund for
the payment of Old Age Ae#If#tenoe SenefltB, even though such fund
should be olearly overdrawn and out of funds to pey euoh warrants.
language ol this Seotlon Is es Sollowa:
wSeotlon 1. 'The Texas Old AgO ABBIBtanO0 Commission
is hereby luthorlzed to pey interest, so long es Said
werrents are unpeld, on warrants issued 'against the Texas
Old Age ABBfStanO0 Pund for the payment of old mge eerfst-
anon benerlte when the cash belanoe of the money8 deposited
to the oredlt of said fund by the State of Texas is in-
-8ufrloIent to psy In cash the State's pert of the pension
requIremente; end there is hereby epproprieted out.or any
aonwye BpprOpriBted to the Texas Old AgO AsBIBt8nO8 Fund
a sutsIolent amount to pe:; interest oherge~~.eoorulng
under this Act, but in the.everit thst interest Is paid
on or on eooount,or such warrants 8% authorized In this
Aot, no suoh werrent, lsvac<. ror a s,ingle month, including
both prlnolpel end Interest peld thereon or therefor,
shell ever exceed Fiiteen(@S) Dollars of State money.W
it is further provided in the dot that the Old Age ABBIBtenO0
COUNU~BB~O~
.r IS not authorized to issue these interE#t-bearing
warrants In axons8 of ~3,000,000.00 or miter Xeroh.l, 1937. Seotloa
2 of this Act provides thet the form end method of issuing such
warrants and of paying the interest thereon shell be prescribed by
the T0m6 Old Age AesIetenoe Commleslon, end the Comptroller'end
Treasurer are authorized end directed to perform #uoh~dutiee as are
required of them under the Aot to EOOOmpliBhits purpose.
Honorable Cao. H. Sheppard, Page 6
Under this 8tetutory authority the Texee Old Age Assfst-
anoe Commission, for end in behelf o$ the State of Texe8, ontered
intO a oontreotual relation, erldenoed by written oontreot or
date November SS, 1936, with the Republic National Rank and Trust
Company or Dallas, Texas, by the term8 or whloh 8uoh Rank wee to
purohese such interest-bearing werrents end hold them subject to
cell by the o$fIoials designeted in the not. By reason or this
statutory authorization end oontreot executed pursuant thereto, the
Texas Old Age ABBiEtenO0 Commiesfon We6 able to oontfnue the payment
In full or ell.granta of lssIstenoe to the aged or Taxes, out ol
Income and revenue ellooeted to the Old Age AB8fStBnO0 Fund, all in
keeping with the re8ult Bought.to be eooomplIshed, beyond all doubt
by the‘Leglsleture under the Aot hereinabove disoueBed authorizing
the issuance of interest-bearing wcrrente 60 the extent OS (3,000,OOO.
This notion by~the Old Age ABBiBt8nO0 CommIesion in e8eoutlng 8uoh
oontreot end oontinuing with the peynmnt In full of old age eselet-
once grants was in all things validated end confirmed by House Bill
No. 1046, Acts Regular Saneion, 46th Leglsleture.
Again, in 1939, the Legialeture found, as molted In the
emergency oleuee ot House Bill No. 179, Aote Regular Session, 46th
Legislature, thst there were "now ~,ocrulng old age eeei8tenoe
benefits in amounts greeter then th'e present monthly Ino?me to ihe
Texas Old Age AB8i#tenoe Fund,- end thet~mp tax bills pesBed by thi8
Legislature would likely not bring In any revenues for soverel
months, end *it would be unfair to require the reoIpIents of old ego
l#Bf#tenoe benefit6 to dlsoount their warrants,or oerry the fnt8rEBt
burden of the deilolt." Thererore, the Legisleture, by Rouse Bill
No. 179, Acts, Reguelr Session, 46th Legislature, again authorized
the Taxes Old Age essIstanoe Conrmisslon to Issue Intereat-bearing
werrente against the Texas Old Age Assistance Fund for the payment
or old age aselstenoe benetlts en though the cash belenoe of the
money.deE;osIte,d to the credit of said Fund was lnsutflolent to pay
the State's part OS the pension requirements. The emocnt or euph
interest-bearing warrants which oould be so issued was lImIted to
59G0,000.00.
AS in the case ot t;he first Statute upon thla aubjeot,
the State of Texas, through It8 proper offlolels, hnd underthe euth-
orlty of the statute next ebore cited end disousBed, entered into
oontraotuel relations with the Repilbllo National Bank and Trust Compsny
of Dallas, TeX66, on February 84, 1939, of like tenor, aSfact,
end reading a8 the contreot heretcir~re desorlbed but Inyolvlng
only interest-bearing warrants In.the emoimt ot ~900,000.00. The
avowed purpose of this lest etetute end the oontraot thereunder, es
the first, wee t0 allow the .Old 48 Aseistanoe cpUah3iOn t0 OOnthUe
Honorable Geo. H; Shipperd, Page 7
to pay In full a&l grants of 61d age lssIstenoe benetlts to the
aged, end all acts of the Colllmieeloti In this regard were in ell'thlngs
relideted end confirmed by House BIl% NO. 1046, Aots, Regular Session,
46th Leglelsture.
The interest-bearing nrrente now outstending In the emount
of $2,230,779.00, deeorIbed in your letter, Include not only interest-
bearing Wsrrsnts In the EBIO2nt Of #900,000.00 iseued by the Taxes Old
Aesfetanoe Commission under House Bill No. 179, Acts, Regular Session,
46th Legisleture, but the belenoe of interest-bearing warrants re-
maining unp&ld of the. #3,000,000.00 issue of suoh werrents authorized
by House Bill No. 37, Chapter 496, Acts; 3rd Celled Session, 44th
LegIsleture. The LegIsleture provided by House Bill No. 179, Acts,,
Reguiler~Seselon, 46th Legleleture .dor the retirement end lIquIdatlon
of'thie Entire out-#tending bElEnC8 Of~fntEMBt-b8er'iIIg WErrPntB iSSUEd
under these twoacts, et the times rnd in the EBIOUntBend manner
rlxed end provided by %OtfOnB 6 end 7 thewof. And by reeecn or its
oontrolllng 8rfEOt In determining whether mob outstanding werrente
create 6 present derlclt in the Old Age ASBfBt6~00 Fund, we copy In
full such portion or the Statute:
:&OtiOn 6 (,a) StEt0 Treasurer Payment Or Outstending
Warrants, It Is provided thet the Treasurer of the State
of Texas 8hell cell all warrants now outstending that have
heretorore been iSBU0d under the euthorlty and prorIelone
of Chapter 496, Page 2084, Acts 1936, Forty-fourth Legle-
latnre, Third Celled Session, end he la directed end euth-
orlzed to pay said werrents,~together with interest thereon,
out Of the Tel88 Old Age Assiatenoe Fund, eooor6ing to the
SollowIng schedule:
uOn October 10, '1939, werrents In the ekount of Ones
Hundred Thirty-Thousend, Nine Hundred end Eighty-seven
Dollars ($130,987) shell be o&led and peld by the Tree8urer,
together with Interest thereon, end on the 10th day of each
month thereafter, the Treasurer Is directed end authorized
to cell and psy the remslnlng outstand1 3 rerrents In the
amount of Two Hundred Thousand Dollars ( 200,000) per month,
together with Interest thereon, until euoh time es all out-
standing warrants herelnebore referred to shall be called
end paid in full, end there Is hereby epproprleted out of
funds allocated in preeent end/or future laws of the Old
Age Asslstenoe Fund a cum Burrlolent to.pey BEid obligations
end the Interest thereon.
Yieotion 6 (b) Same-'Peyment of Warrants Hereef~er ISSUed.,
5he Treasurer of the State of Texas is dlreoted end author-
lzed to 0611 end pay $lrrrrants fhst might hereafter be
Honorable Ceo. H. Sheppard, Page S
issUOd.UUd8r and by VIrtU8 O? th8 PrOVIsIOns O? this Act
In epprorimate equal monthly lnetellments on the 10th
day or the months May, 1940, to September, 1940, both
iholusive, together with intore& thereon, out or the
Texas old Age Assistanoe runa, ma there ie hereby appm-
prIat8a out 0r tunas allocated In present and/or rutur8
laws to the old Age Acslstanoe mna l sum murioi8nt to
pay said obligations and the interest thereon.
"Section 7 (1) Issuanoes of State's Obligation ror
Warrants Authorized. ,That the Old A&e Assistance CommIs-
eI0n be and is hereby luthorIzed and directed to crier to
and deliver to th8 hbia8r, or holders, or the krrants
whioh'may be lsaued under the provisions or this Aot and
or the warrants heretorore Irsued r0r old ng8 ASS~~*CW~
Und8r authority of Chapter.496, Page 8084, Acts 1936,
Forty-fourth Legislature, Third Called Session, and now
outstanding, the State.'a obligation in the same principal
amount, or amounts, In suoh forms and denominations as shall
be determined by such Comml88lon, approved by the Attorney
Generel, snd aooeptable to such holder, or holders, bear-
ing interest at not to lxoeed one and six-tenths (1.6)
per cent per ennum or not to exceed the rate or.Interest
which shall be pe1d on or on eooount of the warrants
which mey be Issued under the terms or this Act, uhioh-
ever rate 1s the lower. Said obligations shall bear
dates to be fixed by the CommIssfon end shell mature ex-
actly ecoording to the schedules set out In Section 6
hereor.
"(3) State Treasurer-Duties. Upon exohange of the
original warrants for the QbligatiOnS authorized hereunder~
the Stat8 Treasurer shall retain In his possession in
escrow as trustee said orl@nEl warrants until the obll-
gaticns herein authorized are paid In full. And the
holder, or holders, or such obligations, In addition to
all other rights, shell be subrogated to the rights of the
holders of such original warrants. Upon peynmnt of such
obligation said original warrants shall be canoelW by
the State Treasurer. There Is herob lpproprieted~ out of
runas allocated In present and/or future lews to the Old
Age Assistance Fund a EIU suffiolent to pay said oblIgatlOne
and the interest thereon.
"(3) Interest. Interest on such original warrants
shall be paid in acoordanoe with the oontraot or oontracts
under whfch they mere issued up to the date of the ex-
ohange for the obligations authorized herein.
Honorab18 George H. Sheppard, Page 9
"(4) Obllge.tlons as S8Ourity iOr Stat.8 Deposits.
Suoh obligations to b8 substituted therefor shall be
81lgib18 t0 secure deposits Of all funds Of the Stat8
or Texas, and 0r oountles, oltles, aistricts,,ana poll-
tic81 SubdiViSiOnS Or and in th8 State Of Texas on the
basis of one dollar principal amount of such obligbtions
for eech dollar Of deposited funds.
“(5) Duties cr Stet8 orriO8rS. The Gove%or, State
Treesurer, Attorney General, Texas oia Age Assistbnc8
Commission, Comptoroll8r 0r Public Accounts, ena the s80-
retary or State are hereby dlIWOt8d to a0 any and 811
ttt;g" necessary'to aooompllsh the purpose8 of this Seo-
.
"(6) Obllgctlcns Inoont8stsb18. When such obllga-
tions shall hare b88n issued in scoordanca with a resolu-
tion adopted by the TOXOB eia Age Assistance Commission
and shall hare been epprored by the Attorney General, they
shall be inoontestable and the full faith and credit of
the Stat8 Shall b8 plOdgOd t0 their paym8nt.w
w8 think the 8ffOdt Of the above pUOt8d provisions Of
HOUS Bill NO. 179, AOtS, R8gUlar S8sSicn, 46th LOgiEtlbtur8, is to
. Oreat d8fOrrOd obllgetions Or the Stat8 against the Texas Old Ag8
Asslstanoe Fund, with maturity dates in ecaordanca with the schedule
Thererore such interest-bearing warrants or TrOasUw
$t%OatOB 1ssUOi in 1i8U thereoi oannot, by reason of such ae-
fOr.TOdmnturlty dates, be oonsidere~ as present and subslstlng
ohargea against the Texas Old Age AsslstEnoe Fund 80 8s tocreate
8 d8riOlt th8rOln at this time. The moving purpose and controlling
Intent of the Leglsleture, in the enactment of the Aots h8rOlnabOV8
r8vi8wed, was to authorize the issuance Of warrtntS against the
.TeXeS old A68 Assistanoe Puna when there were no tuna8 existing to
pay said warrants, end to darer the payment of such warrants by
allowing interest to 8ocrue thereon, with the expectancy that the
income allocated to such fina rrom certain tax measures would in the
future be SUrfiOiOnt to ru1iy pay auoh outstanding lnt8r8st-bearing
warrants, along with 8urrent assistance and expense warrants: and
until such time, to allow the old Age AsSiSt8nO8 Commieeion to oon-
tlnue to pay In rul1 current old age assistenoe b8nOfits and admlnistre-
tiV8 8Xp8lM;eS.
We, thererore, oonoluae that the Texas old Age Assletanca
Fund at the present time has funds 8vailab18 for the payment of the
~onorablo f380. H. Sheppard, Peg8 10
ld.ElinistrOtiVO aalari8s a nd8XpOn88s m8ntloned in four letter,
and that you say lawfully is8118 varrants against uoh Fund or the
Tex8s Old Age Administration Fund, 8 IIOn-•tatUtOw fund Or88tOd
for oonTenieno8, in ecoordanoe with th8 governing D8partmental Ap-
proprietion Bill,
Trusting the foregoing tully lnswers your inquiry, we ore
Icur VOW truly
By (Signed) Pat Y. Herr, Jr,
Pat Y. m8rr Jr.
Amairtnnt
APPROVED ADO 19, 1939
(si@IOa) GOrSla c. MaInI
ATTORWEY GENERAL OF TEXAS Approvea
OpilliOn COZldtt88
Untitled Texas Attorney General Opinion
Combined Opinion