The Attorney General of Texas
March 11, 1982
RK WHITE
orney General
Gary E. Miller, M.D. Opinion No. MN-454
rem Court Bullding commissioner
.Box 12548 Texas Department of Mental Health Re: Application of House Bill
tin. TX. 76711. 2546
and Mental Retardation No. 1623 to funds held by the
475.2501
I 910/874.1367 P. 0. Box 12668 Texas Department of Mental
copier 5121475-0266 Austin, Texas 78711 Health and Mental Retardation
Dear Dr. Miller:
’ MaIn St., sulle 1400
as,TX. 75201.4709
742.6944 You have requested our opinion regarding the application of House
Bill No. 1623, recently enacted by the Sixty-seventh Legislature.
That statute, to be codified as article 4394c. V.T.C.S.. provides, in
4 Alberta Ave.. Suile 160 pertinent part:
‘aso.TX. 79905.2793
‘533-3464
All fees, fines, penalties. taxes, charges, gifts,
grants, donations, and other funds collected or
0 Dallas Ave., Sulle 202 received by a state agency as authorized or
ISIon. TX. 77002.6966
required by law shall be deposited in the state
‘650.0666
treasury, credited to a special fund or funds, and
subject to appropriation only for the purposes for
Broadway. Suite 312 which they are otherwise authorized to be expended
bck.TX. 79401-3479 or disbursed. Deposit shall be made within seven
!747-5236
days after the date of receipt.
0 N.Tenth. Sulte S Section 2 of House Bill No. 1623 defines “state agency” as:
%-I.TX. 76501.1665
)MJ2-4547 . ..any department, commission, board, office,
Institution, or other agency that is in the
executive branch of state government, has
MaIn Plim.. suite 400
Ihlonio, TX. 76205.2797 authority that is not limited to a geographical
1225.4191 portion of the state, and was created by the
constitution or a statute of this state, but does
not include an institution of higher education as
h.1 Opporlunllyr
,rm411vaAclion Employer defined in Section 61.003, Texas Education Code,
as amended, and does not include the Banking
Department of Texas, the Savings and Loan
Department of Texas, and the Office of the
Consumer Credit Commissioner, whose funds are
subject to the budgetary control of the Finance
Commission of Texas by virtue of existing laws,
and does not include the Credit Union Department
i
Dr. Gary E. Miller - Page 2 (MW-454)
of Texas whose funds are subject to the budgetary
control of the Credit Union Cowmission of Texas.
Section 3(b) of the bill states, however, that the act does not apply
to:
(1) funds, pledged to the payment of .,bonds,
notes, or other debts if the funds are not
otherwise required to be deposited in the state
treasury;
(2) funds held in trust or escrow for the
benefit of any person or entity other than a state
agency;
(3) funds set apart out of earnings derived
from investment of funds held in trust for others,
as administrative expenses of the trustee agency;
(4) funds, grants, donations, and proceeds
from funds, grants, and donations, given in trust
to the Texas State Library and Archives Commission
f.or the establishment and macntenance of regional
historical resource depositories and libraries in
accordance with Section 2A, Chapter 503, Acts of
the 62nd Legislature, Regular Session, 1971. as
amended (Article 5442b. Vernon’s Texas Civil
Statutes); or
(5) the deposit of funds for state agencies
subject to review under the Texas Sunset Act
(Article 5429k, Vernon’s Texas Civil Statutes) for
1981, which shall be determined by each agency’s
enabling statute.
Acts 1981, 67th Leg.. ch. 835, at 3189-90. Your question is whether
any of six kinds of funds maintained by the Department of Mental
Health and Mental Retardation are excepted by section 3(b) from
required deposit in the state treasury.
Although articles 3179 and 3179a. .V.T.C.S., provide that funds
received by the institutions under the supervision of the Department
of Mental Health and Mental Retardation shall be placed in the state
treasury. these provisions do not apply where there is later or more
specific statutory authority for holding funds outside of the
treasury. See Porwood v. City of Taylor, 214 S.W.2d 282 (Tex. 1948);
Cole v. Stazex rel. Cobolini, 170 S.W. 1036 (Tex. 1914).
p. 1573
(Mw-454)
I
Dr. Gary E. Miller - Page 3
You first inquire about the “patient benefit fund” maintained at
each facility of the department. This fund consists of the interest
accruing on the personal funds of inmates of which the department acts
as trustee. Section 1 of article 3183~. V.T.C.S.. provides:
Section 1. The superintendent of any State
institution under the jurisdiction of the Board
for Texas State Hospitals and Special Schools may
deposit any funds of inmates in his possession in
any bank in the State, or in bonds or obligations
of the United States of America or for the payment
of which the faith and credit of the United States
are pledged, and for the purposes of deposit or
investment only, may mingle the funds of any
inmate with the funds of other inmates. The
superintendent may deposit the interest or
increment accruing on such funds in a special
fund, to be designated the ‘Benefit Fund,’ of
which he shall be the trustee. He may expend the
moneys in any such fund for the education or
entertainment of the inmates of the institution,
or for the actual expense of maintaining the fund
at the institution.
To the extent that the benefit fund may be expended “for the education
or entertainment of the inmates,” it is a fund “held in tNSt... for
the benefit of any person or entity other than a state agency” and
therefore exempt under section 3(b)(2) of House Bill No. 1623. To the
extent that it may be expended “for the actual expense of maintaining
the fund at the institution,” it is a fund “set apart out of earnings
derived from investment of funds held in trust for others, as
administrative expenses of the trustee agency” and thus exempt under
section 3(b) (3).
You next ask about “sheltered workshop funds.” The department is
authorized by section 2.17(b)(2) of article 5547-202, V.T.C.S., “to
contract with individuals or public or private entities for the sale
of goods and services produced or made available by the sheltered
workshop programs.” That statute further provides, in pertinent part:
(3) An operating fund may be established for
each sheltered workshop operated by the
Department. and any money derived, from gifts,
grants. and donations received for sheltered
workshop purposes and all proceeds from the sale
of sheltered workshop goods and services shall be
deposited in the operating fund. Any operating
fund shall be maintained in a national or state
bank which is a member of the Federal Deposit
p. 1574
Dr. Gary E. Miller - Page 4 (Mw-454)
Insurance Corporation. Money in the operating
funds may only be expended in the operation of
sheltered workshops for the purchase of supplies.
materials, services, and equipment; for the
payment of salaries and wages to participants and
employees; for the construction, maintenance,
repair, and ,renovation of facilities and
equipment; and for the establishment and
maintenance of a petty cash fund not to exceed
$100.
V.T.C.S. art. 5547-202, 52.17(b)(3). Although the statute recites a
limited number of purposes for which sheltered workshop funds may be
expended, all of them are essentially purposes of the department.
Since sheltered workshop funds are not “held in trust or escrow for
the benefit of any person or entity other than a state agency,” they
are not excepted from deposit in the state treasury.
“Occupational therapy funds” are recognized by article 3174b-3,
V.T.C.S.. which provides. in part:
Section 1. The Board for Texas State
Hospitals and Special Schools may furnish
equipment, materials. and merchandise at any
institution under the control and management of
said Board for occupational therapy programs. The
finished goods and products produced in these
programs may be sold, and the proceeds thereof may
be placed in the patients’ benefit fund, patients’
trust fund, or a revolving fund for their further
use; or the patient may purchase from the state
the material to be used and keep the finished
product.
. . . .
Sec. 3. The Board is authorized to accept
donations in money or materials to be used in
these programs and mati use and expend the
donations in the manner requested by the donor, if
not contrary to the policy of the Board for Texas
State Hospitals and Special Schools.
To the extent that occupational therapy funds are placed In the
patients’ benefit fund or patients’ trust fund, they assume the
character of those funds and are thus exempt under section 3(b) of
House Bill No. 1623. To the extent, however, that they are
transferred to a “revolving fund for their further use,” they become
merely’operating funds of the department and thus not excepted from
p. 1575
Dr. Gary E. Miller - Page 5 (Mu-454)
deposit. Amounts donated to the occupational therapy fund must be
used “in the manner requested by the donor.” If the donor directs
that money be used “for the benefit of any person or entity other than
a state agency,” it need not be deposited in the state treasury;
otherwise, it is not exempt from deposit therein.
The “unemployment ‘trust fund” is established by section 55 of
article V of the current General Appropriations Act. Acts 1981, 67th
Leg., ch. 875, at 3820. Heads of state agencies are directed thereby
to reimburse the comptroller for unemployment compensation benefits
paid on behalf of their particular agency. There is no indication
that these funds are set aside “for the benefit of any person or
entity other than a state agency,” and thus, they are not exempt from
deposit under House Bill No. 1623.
You also ask about “merchandise canteen coupon funds.” which you
state:
. ..are maintained at many facilities to hold money
in trust for clients who are unable to handle
their own funds. Such clients use a system in
which trust fund money is used to purchase coupons
which are then used to purchase canteen items.
The canteen then turns the coupons into the fund
for reimbursement. The clients can also obtain
reimbursement in cash for their coupons upon
furlough or discharge or if it is determined at
any time that the client can handle his own money.
The money held in this fund is used for no other
purpose.
I From the circumstances described, it appears that this fund is used
merely as a conduit for money derived from an individual patient’s
1 trust fund. To the extent that these funds retain the character of
patient trust funds, we believe they are excepted from deposit by
section 3(b)(2) of House Bill No. 1623.
Your final inquiry is directed to proceeds derived from estates.
If a legal instrument directs that funds be used specifically “for the
benefit of any person or entity other than a state agency.” such
proceeds are exempt under section 3(b)(2). If It does not do so, the
money is not exempted. As we said in Attorney General Opinion MW-363
(1981):
. ..no particular words are necessary to create a
trust.... So long as the parties intend that
particular property be held for the benefit of
others, a court of equity will affix to that
intent the character of a trust.
p. 1576
Dr. Gary E. Miller - Page 6 (MI?-454)
SUMMARY
“Patient benefit funds” and “merchandise
canteen coupon funds” are excepted from required
deposit in the state treasury under the terms of
section 3(b) of House Bill No. 1623, of the
Sixty-seventh Legislature, to be codif ied as
article 4394c.
funds” and “unemployment
V.T.C.S.
trust
“Sheltered’
funds”
workshop
are not so
I
excepted. “Occupational therapy funds” are exempt
only if they are placed in the patients’ benefit
fund
derived
or the patients’
from estates
trust fund.
are exempt if the appropriate
Proceeds /
legal instrument directs that the funds be used
specifically “for the benefit of any person or
entity other than a state agency.”
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Rick Gilpin
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Roxanne Caperton
Rick Gilpin
Patricia Hinojosa
Jim Moellinger
p. 1577