.
The Attorney General of Texas
August 31. 1981
1
MARK WHITE
Attorney General
Mr. W. J. Estelle, Jr.. Director Opinion No. MW-363
Texas Department of Corrections
Huntsville, Texas 77340 Re: Whether certain funds in
the custody of the Texas
Department of Corrections are
excepted from the requirements
of House Bill 1623
Dear Mr. Estelle:
You have requested our opinion as to whether certain funds in the
custody of the Texas Department of Corrections [hereinafter TDCI are
excepted from the requirements of House Bill 1623, recently enacted by
the 67th Legislature.
Section 4 of Rouse Bill 1623, the State Funds Reform Act of 1981.
provides:
All fees, fines, penalties, taxes, charges, gifts,
grants, donations, and other funds collected or
received by a state agency as authorized or
required by law shall be deposited in the state
treasury, credited to a special fund or funds, and
subject to appropriation only for the purposes for
which they are otherwise authorized to be expended
or disbursed. Deposit shall be made within seven
days after the date of receipt.
Section 2 of House Bill 1623 defines "state agency" as:
...any department, commission, board, office,
institution, or other agency that is in the
executive branch of state government, has
authority that is not limited to a geographical
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
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
p. 1212
W. J. Estelle - Page 2 @IW-363) l’
subject to the budgetary ~control of the Finance
Commission of Texas by virtue of existing laws,
and does not include the Credit Union Department
of Texas whose funds are subject to the budgetary
control of the Credit Union Commission 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 tar 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
for the establishment and maintenance 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.
Your question is whether the Educational and Recreational [hereinafter
E6R] Funds and the Windham Independent School District [hereinafter
WISD] Fund are excepted by section 3(b) from required deposit in the
state treasury.
A local E&R fund for each TDC facility is authorized in a rider
to the present General Appropriations Act. The rider appropriates to
the EhR funds:
.,.receipts from the operation of commissaries.
prison-sponsored recreational shows and
entertainment [and] all gifts and other income for
inmate welfare.
Such funds may be expended:
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W. J. Estelle - Page 3 (MW-363)
...only for direct benefits to prisoners including
commissaries. reimbursement for travel to persons
providing free dental and medical services,
prisoner educational matters and recreational
benefits of inmates...and for no other purposes.
The Windham Independent,School District is a non-geographical school
district operated by TDC for the benefit of its inmates. You state
that its funds are at present entirely provided by the Foundation
School Program. But see Educ. Code 529.03. You suggest that the E&R
funds and the WISD Fund are exempt from deposit in the state treasury
under section 3(b)(2) of House Bill 1623, as "funds held in trust or
escrow tor the benefit of any person or entity other than a state
agency."
In our opinion, the EAR Funds may be said to constitute "funds
held in trust." The language of the rider which details the purposes
for which the funds may be expended comports with the requirements for
the creation of an express trust. Pottorff v. Stafford. 81 S.W.2d 539
(Tex. Civ. App. - El Paso 1935, writ ref'd). It is well established
that no particular words are necessary to create a trust. Kurtz v.
Robinson, 279 S.W.Zd 949 (Tex. Civ. App. - Amarillo 1955, writ ref'd
n.r.e.). 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. Patrick v. McGaha. 164 S.W.2d 236
(Tex. Civ. App. - Ft. Worth 1942, no writ).
Furthermore, in Attorney General Opinion H-610 (1975). this
office, in holding that the Board of Corrections was authorized to
invest or spend the E8R Fund, declared:
Although we have been furnished no trust indenture
and have not found any general statutory authority
(but see, Education Code. 029.03) for the
establishment or collection of such a fund by the
Texas Board of Corrections, the long-established
and consistent characterization of the fund as a
trust fund and its tacit recognition as such by
the Legislature since at least 1957 convinces us
that it should be treated as such. We think a
confidential, fiduciary relationship. exists
between the Board of Corrections and the prisoners
committed to its care with respect to the
disposition of labor and property (and the fruits
thereof) donated to the fund.
H-610 (1975), at 3. (Citations omitted.)
We are in accord with this view. It is therefore our opinion that the
E&R Funds held by the Department of Corrections constitute "funds held
in trust." and as such, in accordance with section 3 of House Bill
1623, they need not be deposited in the state treasury.
p. 1214
W. J. Estelle - Page 4 (MW-363) .
Although the existence of the WISD is recognized by regulation of
the Board of Corrections, it is not specifically established by
statute. The relevant statute, former article 6203b-2. V.T.C.S.,
repealed. Acts 1971, 62nd Leg.. ch. 405, §54(2). at 1533. now codified
as 529.01 of the Education Code, provides that the "Board of
Corrections may establish and operate schools at the various units of
the Department of Corrections." According to 529.04 of the Education
Code. all WISD funds are provided by the Foundation School Program:
The total cost of operating the schools authorized
by this chapter shall be borne by the state and
shall be paid from the Foundation School Program
Fund.
Foundation School Program funds are appropriated biennially by the
General Appropriations Act. See, e.g., H.B. 558, Acts 1979. 66th
Leg.. R.S., ch. 843. at 2757-2758. Section 3(a) of House Bill 1623
states that its provisions are applicable to a state agency "only to
the extent that it is not otherwise required to deposit funds in the
state treasury." Since Foundation School Funds are appropriated funds
and thus, have previously been deposited in the state treasury at the
time they are transferred to WISD, it would appear that House Bill
1623 does not apply to them. We conclude that the WISD Fund as
presently constituted need not be deposited in the state treasury.
SUMMARY
Educational and Recreational funds held by the
Texas Department of Corrections for the benefit of
its inmates are "trust funds" and thus exempted
from deposit in the state treasury under the terms
of House Bill 1623. Funds of the Windham
Independent School District are at present
entirely appropriated from the Foundation School
Program and as such, are not subject to House Bill
1623.
MARK WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
p. 1215
.
. W. J. Estelle - Page 5 (MU-363) '
Prepared by Rick Gllpin
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Jim Moellinger
Brenda Smith
Bruce Youngblood
p. 1216