RNEU GENERAL.
OF%EXAS
September 27, 1972
Honorable George W. McNiel Opinion No. M-1224
State Auditor
Sam Houston State Office Building Re: Legality of invest-
Austin, Texas 78711 ment in United States
Postal Service Bonds
for various state
Dear Mr. McNiel: funds
You have requested our opinion as to whether the United
States Postal Service (hereinafter styled Postal Service)
may be deemed an agency of the United States within the mean-
ing of the Texas Constitution and state statutes governing
the investment of (1) the funds of the Teacher Retirement
System of Texas, (2) the Permanent University Fund, (3) the
Permanent School Fund, (4) the funds of Employees Retire-
ment System of Texas, and (5) the funds of the Texas County
and District Retirement System.
The pertinent provisions of the Texas Constitution and
state statutes which authorize the investment of these
various funds by their respective governing boards are as
follows:
(1) Teacher Retirement System of Texas.
TexasConstitution, Article III, Section 48b:
I! .Said Board is hereby authorized and em-
powered to invest and reinvest. . .in bonds,
notes, or other evidences of indebtedness
issued or assumed or guaranteed in whole or in
part, by the United States or any agency of the
United States, . . ."
(2) Permanent University Fund. Texas
!onstitution, Article VII, Section lla:
. . .the Board of Regents of The University
of Texas may invest . . . in securities, bonds
or other obligations issued, insured, or
guaranteed in any manner by the United States
Government, or any of its agencies, . . .'I
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Hon. George W. McNiel, page 2, (M- 1224)
(3) Permanent School Fund. Texas
Education Code, Sec. 15.02(a): '. . . the
State Board of Education is authorized and
empowered to invest the permanent school
fund in
obligations is~~~d~e~~~~~s~syo~o~~~~a~~e~~~~
any manner by the United Stites Government o'r
any of its agencies; . . .'
(4) Employees Retirement System of Texas.
Texas Constitution, Article XVI, Sec. 62(a):
1,
. . .Said Board is hereby authorized and
empowered to invest and reinvest. . . in bonds,
notes or other evidences of indebtedness issued,
or assumed or guaranteed in whole or in part,
by the United States or any agency of the
United States, . . ."l.
(5) Texas County and District Retirement
System, V.C.S. Article 6228g, Sec. 8, subd. 7:
"The assets of the System . . . as determined
by the Board, shall be invested and reinvested
in the following types of securities: (a)
Interest-bearing bonds or other evidences of
indebtedness: . . .of the United States or of
any authority or agency of the United States,
or any such securities which are guaranteed as
to the payment of principal and interest by
the United States or by any authority or agency
of the United States."
It is clear that the governing boards of the Systems
and Funds in question may invest in the bonds issued by an
agency of the United States whether or not the principal
and interest thereof is guaranteed by the United States.
1 V.C.S., Art. 6228a., Sec. 7.A, speaks to the investment
of the Employees Retirement System of Texas. However, Tex.
Const., Article XVI, Section 62(a), provides: 'I. . .This
Amendment shall be self-enacting and shall become,effective
immediately upon its adoption without any enabling legislation."
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Hon. George W. McNiel,,page 3, (M-1224)
The Postal Service is wholly owned by the United States
Government and was established as "an independent establish-
ment of,the executive branch of the Government of the United
States" (39 U.S.C. Sec. 201) created by Act of Congress
pursuant to the power granted to Congress by the Constitution
"to establish post offices and post roads." U.S. Const.,
Art. 1, Sec. 8. Pursuant to the provisions of the Postal
Reorganization Act, the Postal Service assumed the assets,
revenues, functions, and duties of the Post Office Depart-
ment on July 1, 1971. Congress made it clear that the
United States has a direct interest in the Postal Service.
The Postal Service is governed by a Board of Governors
composed of eleven members. Nine of the members, known as
Governors, are appointed by the President, by and with the
advice and consent of the Senate. The Governors appoint and
have the power to remove the Postmaster General, who is a
voting member of the Board and who is the chief executive
officer of the Postal Service. The Governors and the Post-
master General appoint and have the power to remove the
Deputy Postmaster General who is a voting member of the
Board and who is the alternate chief executive officer of
the Postal Service. 39 U.S.C. Section 202.
With limited exceptions, officers and employees of the
Postal Service shall be in the postal career service, which
is a part of the civil service. 39 U.S.C., Section 1001.
Postal Service Officers and employees are covered by the
Federal Workmen's Compensation law and civil service retire-
ment laws. 39 U.S.C., Section 1005.
The Postal Service is authorized to borrow money and to
issue and sell such obligations as it determines necessary
to carry out its authorized purposes - such obligations
outstanding at any one time not to exceed $10,000,000,000.
It may pledge its assets and pledge and use its revenues
and receipts for the payment of the principal of or interest
on such obligations, for the purchase and redemption there-
of, and for other purposes incidental thereto. 39 U.S.C.,
Section 2005. Obligations issued by the Postal Service
shall not be obligations of nor shall payment of the
principal thereof or interest thereon be guaranteed by the
Government of the United States, 39 U.S.C., Section 2005
(d)(5), except that obligations issued by the Postal Service
shall be obligations of the Government of the United States,
and payment of principal and interest thereon shall be
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Hon. George W. McNiel, page 4, (M- 1224)
fully guaranteed by the Government of the United States if
and to the extent that, (1) the Postal Service requests
the Secretary of the Treasury to pledge the full faith and
credit of the Government of the United States for the pay-
ment of principal and interest thereon, and (2) the
Secretary in his discretion determines that it would be in
the public interest to do so. 39 U.S.C., Section 2006(c).
Financial transactions of the Postal Service are con-
ducted through the Postal Service Fund, a revolving fund
established in the Treasury of the United States. 39 U.S.C.,
Section 2003.
The accounts and operations of the Postal Service are
audited by the Comptroller General and reports thereon made
to the Congress to the extent and at such times as he may
determine. 39 U.S.C., Section 2008(a). The Postal Service
shall cause to be prepared annually a budget program which
shall be submitted to the Office of Management and Budget.
39 U.S.C., Section 2009. The Postmaster General shall
render an annual report concerning the operation of the
Postal Service to the Board of Governors and upon its
approval, the Board shall transmit such report to the
President and the Congress. 39 U.S.C., Section 2402.
The Postal Service shal! he operated as a basic and
fundamental service provided to the people by the Govern-
ment of the United States, authorized by the Constitution,
created by Act of Congress, and supported by the people.
39 U.S.C., Section 101(a).
All of the foregoing have been considered with respect
to the Postal Service and it is our opinion that the Postal
Service has sufficient involvement with the United States
government so as to constitute it an agency thereof. The
obligations issued or to be issued by the Postal Service
will not constitute obligations of the United States unless
the Secretary of the Treasury has pledged the full faith
and credit of the United States with respect to such
obligations. However, since the Postal Service exercises
powers conferred upon it by federal statute in a field
which, under the Constitution of the United States, is with-
in the sole jurisdiction of the federal government, the
obligations to be issued by the Postal Service will clearly
constitute obligations of an agency of the United States
within the meaning of the cited provisions of the Texas
Constitution and state statutes.
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Hon. George W. McNiel, page 5, (M- 1224)
SUMMARY
For the purposes of Tex. Const. Art. III,
Sec. 48b, Tex. Const. Art. VII, Sec. lla, Texas
Education Code, Sec. 15.02(a), Tex. Const. Art.
XVI, Sec. 62(a), and V.C.S., Art. 6228g, Sec. 8.7,
the United States Postal Service is an agency of
the United States Government.
Prepared by James A. Maxwell
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
William Craig
Fisher Tyler
David Longoria
Ben Harrison
SAMUEL D. MCDANIEL
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant
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