The Attorney General of Texas
December 22, 1981
MARK WHITE
Attorney General
Supreme Court Building
Mr. Vernon M. Arrell Opinion No.m-416
P. 0. Box 12546 COlIUUiSSiOIler
Austin, TX. 76711 Texas Rehabilitation Commission Re: Whether article 4350,
5121475.2501 118 East Riverside Drive V.T.C.S., may be used to assist
Telex 9101674-1367
Austin, Texas 78704 the Texas Rehabilitation
Telecopier 512/4750266
Commission in the collection
of money due from rehabilita-
1607 Main St., Suite 1400 tion facilities in default
Dallas, TX. 75201
21417428944
Dear Mr. Arrell:
4024 Alberta Ave., Suite 160 You have requested our opinion on whether article 4350, V.T.C.S.,
El Paso, TX. 79905 authorizes the comptroller of public accounts to withhold the issuance
915/533-3464 of warrants to an independent school district acting as fiscal agent
for a private nonprofit rehabilitation entity, where financial audit
1220 Dallas Ave., Suite 202
exceptions have been taken on an establishment grant made by the
Houston, TX. 77002 commission. Such grants may be made for the establishment of
71rY650-0666 nonprofit rehabilitation facilities pursuant to the Rehabilitation Act
of 1973. 29 U.S.C. §§706(4), 711(c), 723(b). See also Human Res.
Code $5111.054, 111.056. You have submitted correspondence and
SO6 Broadway, Suite 312
Lubbock, TX. 79401
documents concerning a grant made to an independent school district as
606/747-5236 fiscal agent for a Multi-County Special Education Cooperative serving
a number of school districts. The governing board of the cooperative
consists of the fiscal agent and three elected members who are school
4309 N. Tenth, Suite 6
superintendents of participating schools. The grant application was
McAllen, TX. 76501
51216624547
signed by the superintendent of the school district serving as fiscal
agent. Correspondence relating to the audit of the grant and
requesting a refund of the entire grant award was also addressed to
200 Main Plaza, Suite 400 him. Our opinion, necessarily, is limited to the facts and questions
San Antonio, TX. 76205
you present.
512/225-4191
Article 4350, V.T.C.S., reads as follows:
An Equal Opportunity/
Affirmative Action Employer No warrant shall be issued to any person indebted
or owing delinquent taxes to the State, or to his
agent or assignee, until such debt or taxes are
paid.
In our opinion, the school district is not indebted to the state
within the meaning of article 4350. Therefore, we need not consider
whether the statute applies to warrants to be issued to a school
p. 1418
Mr. Vernon M. Arrell - Page 2 (MW-416)
district. Your question raises the issue of whether an independent
school district in the capacity of fiscal agent for nonprofit
rehabilitation entity that has received an establishment grant becomes
"indebted" to the state when financial audit exceptions are taken
thereunder by the Texas Rehabilitation Commission. To resolve this
issue, initially we turn to the language of the agreement accompanying
your request. This agreement is the document entitled "Application
for an Establishment Grant...," which provides the following terms and
conditions:
(1) Grant funds will be utilized to develop
rehabilitation services for handicapped
individuals.
(2) Programs and procedures will be
initiated to enable the applicant organization to
make substantial progress toward meeting the
standards developed by the Texas Rehabilitation
Commission.
(3) Appropriate, complete and detailed
administrative and financial records will be
maintained in accordance with instructions from
the Texas Rehabilitation Commission. Such records
will be made available for audit at the
commissioner's request.
(4) The Assurance of Compliance (Form
HEW-441) previously filed or attached hereto,
applies to this project.
(5) If staff is involved, salaries and
qualifications will be commensurate with the
duties performed.
(6) Matching funds made available by the
applicant will not be used to obtain any other
Federal funds.
The foregoing, including agreement to comply with all guidelines,
rules, and other appropriate regulatory matter provided by the Texas
Rehabilitation and Service Administration, is subscribed to by the
independent school district and would appear to represent its complete
undertaking. Clearly, no express statement with respect to financial
liability is present in the application.
Over the years, this office has addressed a number of questions
on the scope of article 4350, V.T.C.S. In a fairly recent Letter
Advisory, this office stated that for a warrant to be validly
p. 1419
. ,.
Mr. Vernon M. Arrell - Page 3 (MW-416)
withheld, the article requires that a debt be established either by
agreement between the state and the debtor; by the state's proper
allegation of the existence of a debt by statutory reference; or by
some other lawfully effective means. Letter Advisory No. 57 (1973).
Even earlier, this office concluded that a warrant should not issue
under circumstances where a statute required the comptroller to
disallow a refund claim. Attorney General Opinion O-2765 (1941).
Again, a later opinion involving local government, approved
withholding delivery of a warrant by statutory authority. Attorney
General Opinion O-4824 (1942). These opinions established that
warrants may be withheld only on a proper statutory allegation of the
existence of the debt, either by agreement or by lawfully effective
means. Conversely, there is no authority to withhold warrants under
article 4350, V.T.C.S., where there is a contrary statute. Attorney
General Opinion O-4655 (1942); or where no "debt" exists in the usual
and ordinary sense of the word. Attorney General Opinion O-5249
(1943).
On the basis of the instruments and correspondence presented with
your request, we are of the opinion that the terms, conditions and
assurances in the "Application for an Establishment Grant...,"
constitute a full and complete agreement between the subscribing
independent school district and the commission. We find nothing,
express or implied, in the agreement found in the application that
would support financial liability on the part of the district for
audit exceptions that may ultimately be taken by the commission. It
follows that a subscribing independent school district does not become
"indebted" to the state under article 4350, V.T.C.S., solely by virtue
of its role as fiscal agent for a private nonprofit rehabilitation
facility or entity, in the absence of an agreement or statutory
authority to the contrary. Accordingly, if there is no "debt"
established, the comptroller of public accounts is without authority
to withhold warrants otherwise due and payable to the district.
You inquire further, if article 4350, V.T.C.S.. reaches the
private nonprofit rehabilitation entity alone. We would conclude, in
this instance, that the debt must first be established by a lawfully
effective means, s, become an established legal obligation, by
which is meant such obligation as would form the basis of a judgment
in a court of competent jurisdiction.
Finally, you ask if an applicable statute of limitation would
foreclose a civil action against either the independent school
district or the private nonprofit facility. With respect to the
state, article 5517, V.T.C.S., reads in part: "The right of the
state. all counties, incorporated cities and all school districts
shall not be barred by any of the provisions of this Title...." The
title referred to is Title 91, V.T.C.S., Limitations. We believe that
if a debt owed the state is established, limitations will not be a bar
p. 1420
Mr. Vernon M. Arrell - Page 4 (MW-416)
to the state's right of action. Hemphill County v. Adams, 408 S.W.2d
926 (Tex. 1966). However, with respect to the independent school
district, the state, in effect, would be suing itself. Under article
4413 (32~). section 3(l), V.T.C.S., a school district is defined as a
"local government" and political subdivision of the State of Texas.
As to a private nonprofit entity, applicable provisions of Title 91,
V.T.C.S., control.
SUMMARY
The state comptroller of public accounts is
without authority under article 4350, V.T.C.S., to
withhold warrants otherwise due and payable to an
independent school district acting as fiscal agent
for a private nonprofit rehabilitation entity that
has received an establishment grant from the Texas
Rehabilitation Commission, where such grant
becomes subject to the financial audit exceptions
under the existing application for grant funds
presently in use by the commission.
AZ%
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Ward A. White
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Eva Loutzenhiser
Jim Moellinger
Ward A. White
p. 1421
Untitled Texas Attorney General Opinion
Combined Opinion