The Attorney General of Texas
Hewh 18. 1985
JIM MAllOX
Attorney General
supm OolJrt sulwng Mr.ClaytonT. G6rrbon opinionno. m-300
‘. 0. Box 12545 Eucutive Director
rurwt. TX 75711.2545 prploycesRetiremew:System Re: Whether the Employees
51w75.2501
of Tuu RetirementSystem is entitled
Telex 2lw74lS7
hcoplw 513l47bo2w P. 0. Box 13207 to depository intereat on a
Auotin* TexaB 787Ll. particularfuud under article
6543d. V.T.C.S.
Dear l4r. Gerriwn:
You request am.opinion from thie office conceroingthe dispoai-
tion of deporitory.:lnterest earned by an lccount held.by the atate
treaeurer.ou .behalf of the Lav Rnforcemeut and Cuetodial Officer
.SupplemutelRetircmmt Fund. .Thia account, deeignatedFund No. 977
by the etete treaturer, is estebliehedes a pert of the Employees
Retirement.Syrtem cf Texas. a portion of whose esoete is credited to
the fund. V.T.C.S. Title llOB, Public RetirementSystems, (25.306(7)
(1985Pamphlet).
Pou inform ue that while the fund retains the incoW derived from
w5 Bmwwy. wt. 312
Lubboak,lx.7wol34To
iuvestnut made~owtridethe state treasury,it has not been credited
low7474225 with the depositoryinterestearned by Pund No. 977. Accordingly,you
lk vhether the fund-is entitled to mxh interest and, if so, whet
~uthod shouldbe wed to calculetepreviouslyeccumulatedInterestnot
43WN.lOll*r4SUluS
uanm,Tx. 75wl-lws
creditedto Fund lo. 977.
31-7
..’
.::
& ~&&ory provisionrelevant'tothe diapoaitior'ofdepository
futerest.i8lrticlw2543d~~V.T.C.S..which provides the follcuing in
aloualnRu4sLin.400 pertinentpart: i'
5ulAnlonlo.Tx.~7
512R25415l
Intertat~receive~on accouut of the deposita
of-moueya iu funds.and lc o u nte in the.charge of
An 5eudolloAnnrr .. the Stat11Treenurershallbe allocated,eefollavs:
Afnmm(k Adlql5molqw _~ 'C To ,uch~-.constitotionelfund there .&all be
credited:the pro tata portion oft the. inter&t
received due to such ‘fund. The remeinder of the
:.lnterertireceived; with the. exception of thnt'
'~ .~ iportion-,wquired.by other statutea'tobi ~creditkd
:on a,.prwrata basis to protected tax pajmkntr.
Au111 br. credited to the General Rweme Pund.
Tha intweet received shell be allocated on e
monthly basis.
.
p. 1355
Mr. Cleytou T. Garrison- Ptrge2 (JR-300)
V.T.C.S. art. 2543d. il. This office has deteruined ou nuuerous
occasiousthat in additionw the funds exeuptedabove, assets held in
the foru of A trust sre alw exempt frou the requirementsof article
2543d. See Attorney Gene181 Opinious RR-338 (1981); IN-82 (1979);
E-1040 cl-); n-468 (1969).
The opinions just cited establish that in order to be charac-
terized as trust funds, the assets in question should reflect, auong
other things, (1) that they are aduinisteredby a trusteeor trustees,
(2) tbat the assets sre neither granted to the state in its sovereign
capacitynor collectedfor the general operationof state governmeat.
and (3) that they are to bezspent and invested for specific, limited
purposes and for the bemfit of A specific group of individuals.
Being in the ueture of a trust, such assets are eutitledto retain the
proceeds frou their investment. Attorney General Opinions MW-481
(1982); U-468 (1969). Cf. Attorney General Opinion B-1243 (1972)
(interest earned in join~~uuds must be deposited into the general
revenue fund). The saue theory applies to interest earned ou tiue
depositsof these assete. kttorneyGeneralOpiniou If-468(1969). SLe
Lauson v. BaRer, 220 S.U. 26'S,272 (Tex. Civ. App. - Austin 1920. writ
ref’d). Accordingly, thqr are not ,subject to the provisions of
article 25436. Attorney Gencr~l OpinionsMl-82 (1979);Ii-1040(1977).
In ours opinion, ths Lav Enforcement and Custodial Officer
Sappl-tal Retirement Puud is A trust fund entitled to retain
depositoryinterest. The retireuentfund is administeredby the board
of trustees of the EuployeosRetirementSystem. V.T.C.S. Title 1lOB.
Public RetirementSyntema, '125.101(1985 Pauphlet). This office has
previously deteruined that: the assets of the Euployees Retireuent
system, of uhich the retitement fund is A part, exe trust funds.
Attorney General Opinion UW-565 (1959). The retireueut fund is not
collected for. the general.operation of the state; rether, it is
AVAihblA Ody t0 PAY "supplemsntalretir-t and death benefits to
lau enforcementAnd cuetodf,al officers"and for "edministratiou of the
fuod.”.P.T.C.S:.TitlellO:B,w. 525.313(b);~'The method and form
of lnvestmmt of retirement fund assets are limited, see V.T.C.S.
Title 1lOB. m. 1125.103(c)end '25.302.and the proceeds of any
such investmentare expresslymade part ~of the retir-t fund. See
V.T.C.S.I-.Title llOB, Sara. 125.313(a). These features iiK.
eufficient. iu oar view, to, remove the .retiremsntfund from the
coverage, :-of article 2543d,, The interest eerned on deposits of the
retirement~fund,therefore, arot,be credited~to the retirementfund
itself end not depositedin the general rweuue fund.
Your ,ucond inquiry~concernethe'propermethod of creditingthe
retirementfund for interel#tlerned in previousyears. We are unable
to giv~eAdvice AS to the specificaccountingmethod or tims intervals
tQ be -usedin cakulating 'pastinterest..The ansuer to this question
depends on ioformetion act provided by your request -- a, the
terms. duration,sod types Iofdeposits, appliuble rates of IntSrSSt.
etc. We c*n 8tate *a e geueral matter. however. that the retirement
p. 1356
.
Mr. Clayton T. Gerriroo- Page 3 (JR-300)
fund hAS exhibitedthe lfoleuentionedtrust fund ChAYACtAYi6tiCS
since
its crention in 1979. St,e Acts 1979. 66th Leg., eh. 269, et 528
(Meting foroer nrticle~~iSf-1. V.T.C.S.,lsteblishingLAW Enforcc-
mt And Curtodinl OffICC!:Suppleuentel Retireuent Fuod). Conre-
quAAtlY* the retiremeot fund la entitled to credit for depository
ioterestfrom that date. Before the retireuentfund pay be’credited
with this interest, however. esrtain lioitations~ oo the use of
trenouryfundsmst be coucidered.
Article VIII, section 6 of the TexAr Constitutioo prohibits
vithdreunl of funds from the stnte treneury in the Absence of
legirlativel ppropriatioo. The TeXAs Supreue Court he8 held that
fundr lrroueouslydeposite~l in the general revenue fund are oeverthe-
less subjectto this couetltutionelliuitetionend uy oot be removed
frou the trenruryuithout :lc!gisletive
actlou. lienionv. Lockhnrt. 114
S.W.2d 216. 219 (Tex. 1938:l.s
Accordingly.the legislntureuost make a
specific Appropriation before AO~ ioterest erroneourlydeposited in
the generalreveouefund my be returnedto the retirementfund.
SUIIMARY
The tnr tnforcement and Custodial Officer
SuppleuentalRetlcemeot Fund must be creditedfor
ioterest earned on deporits of the fund. Any
interest previourly deposited in the geoeral
rwenue fund uurt receive epecified legirlative
lpproprintion ba:Eore return to the retireueot
fund.
~+tYJy-&
MATTOI
Attorney hOerA of Texae
TonGRan
F%rrt Assistant Attorney General
DAVID R. RICRARDS
Executive ASSiStAnt Attorney CaoerAl
RIa( GILPIR
Chairman,OpioionColnittce
Preparedby Rick Gilpin
AsSiAtAntAttorney GeoerAl
p. 1357
Mr. Claytoo t. Garrbou - PASS 4 (Jn-300)
AFPsmm:
0PIn101 cmmxntP
Rick Gilpin, CIuirmm
JonBible
CollaCarl
suun&rriAon
Tar* m=-=Y
Jim Moellinger
Jmntfer Uggs
IlAuy suttm
p. l358 .
Untitled Texas Attorney General Opinion
Combined Opinion