c
HonorableT. 0. ,Walton,President
Agricdtutialand MechanicalCollegeof Texas
CollegeStation,Texas
Dear Dr. Walton: opinionNo. o-2469
Re: Is the Board of Directorsof
the Agriculturaland Mechanical
Collegeempoweredto pay any
part of the premiumson a policy
of group life insurancecovering
the dployees from studentfee
funds, local funds, or other in-
stitutionalfunds under the jur-
isdictionof the Board - and re-
lated question?
We beg to acknowledgereceiptof your letter of June 5, 1940, request-
ing an opinionfrom this department,such letterbeing as follows,to-wit:
"On or about April 1, 1931, the SouthwesternLife Insurance
Company,of Dallas,Texas, issuedto the Agriculturaland Mechani-
cal College its policy of Group Insurance,insuringthe full-time
employees(employeeseither on a nine months or twelvemonths ba-
sis) of the Collegeagainstdeath and total and permanentdisabi-
lity. The insurancehas been in full force since that date, and
employeeshave been requiredto carry the insuranceas a part of
their contract.* * *
"Underthe plan of insurance,the cost of premiumswas paid
jointlyby the insuredemployeesand the College,the insuredem-
ployeespaying approximatelyseven-eighthsof the premiumsand
the Collegepaying approximatelyone-eighth. The proportionate
part of the premiumspaid by the Collegewas and is made from un-
assignedlocal funds;that is, from funds of the Collegenot ap-
propriatedout of the State Treasuryand not designatedto be
used for any particularpurpose.* * *
"The Board.of Directorsgave the matter carefulconsidera-
tion when the plan was establishedand it was their jud&mentf&at
the benefitto the CnlJ.ege& fmpra~eoed~.f#Xale
of the staffwould
be worth much more ths&the cost k-the institution.The judg-
ment of the Board in this respecthas been amply substantiatedby
our experienceunder the plan. The total cost to the Collegehas
averagedbetween$3.00 and $4.00 per insuredemployeeper year,
HonorableT. 0. Walton,Page 2 (C-2469)
and we have consideredthis as being in the nature of a small supple-
ment to the salaryand permlsaibleunder the appropriation act.
"We would appreciateit, therefore,if you would informus on
the followingpoints:
"1. Is the Board of Directorsof the A. & M. Collegeempowered
to pay any part of the premiumson a policy of Group Life Insurance
coveringthe employeesfrom studentfee funde, local,fundr,or other
institutional funds under the jurledictionof the Board7
"2. If this cannotbe dons, can the Board legallypay its part
of the premiumsfrom the Group InsurancePremiumsRevolvingAccount
made up as outlinedabove of refundsma& by the InsuranceCompany
under the participatingfeatureof the policy and held in trust for
the insuredemployees?"
SectionI(a) of House Bill No. 255, the Appropriation
Act for Insti-
tutions of Higher Learningfor the currentbiennium,declare8:
"Thatall balance8in the institutional funds of the several
State institutionsnamed in this Act, at the close of the fiscal
year endingAugust 31, 1939, includingbalancesin their revolv-
ing funds at that time, and the entire incor to said funds dur-
ing each of the two fiscal years endingAugust 31,~1940, and Aug-
ust 31, 1941, which are not otherwiseappropriatedfor either or
both of said fiscalyears, are herebyappropriatedfor the sup-
port, maintenance,operationand improvementof said State insti-
tutions duringeach of the said fiscal years respectively."
In OpinionNo, O-1661,construingChapter144, Acts 45th Legislature--
the GeneralAppropriationBill -- with respectto balancesin institutional
funds,we held that such funds may not be used to pay a part of the premiums
for group hospitalizationend life insurancepoliciescoveringfacultymembers
and for their benefit.
The same rule, upon the same reasoning,appliesto your inquiry.
These institutionalfunds have been appropriatedfor the support,maintenance,
operationand improvementof the respectiveState institutions.We there said:
"There is no just relationbetweenthe insuranceto protect
studentstravelingin connectionwith the activitiesof the insti-
tution that would justifythe paymentof premiumstherefor. Such
insuranceis not reasonablynecessary,nor do we think it la even
proper as an incidentto the maintenanceof the institution."
Your first question,therefore,is answeredin the negative.
Pxm-thermore,
the Board is not authorizedto pay any part of the pre-
miums under considerationfrom the group insurancepremiumsrevolvingaccount
HonorableT. 0. Walton,Page 3 (O-2469)
refundedto the Board under the insuranceplan. Theee refundstake the place
and occupythe status of the fund6 originallyused -- wrongfully,as we are
holdingit to have been -- by the Board In purchasingsuch insurance.
Of course,we are not consideringthe matter from the standpoint
of businesspolicy, such a8 might guide an individualin the conductof hie
own affairs,but on the contrary,we are coneideringit solelyfrom the stand-
point of legislativeauthorityin the Board to make the purchaseof such in-
suranceout of the public institutional funds.
Your second questionis thereforelikewiseansweredin the negative.
We have answeredyour questionsbroadlyas you have statedthem.
Of course,nothingwe have said shouldbe construedas to excludethe use of
funds for such group insuranceproperlybelongingindividuallyto sn employee
as a beneficiaryof such fund, where the employeebeneficiaryconsentsto such
use. It is his individualmoney and thereforenot withinthe rule we have
discussedabove.
Neither shouldour answerbe construedso as to preventa supplement-
ing of an employee'ssalaryout of the funds and in the menner specifically
providedfor in subsection(2) of the GeneralProvisionsattachedto House
Bill No. 255 -- Regular Session,46th Legislaturefor Institutionsof Higher
Learning.
Very truly yours
APPROVEDJUL g, 1940 ATPORNEYGENERALOFTEEAS
/s/ Glenn R. Lewis
By /a/ Ocie Speer
ACTINGA!il'OREEY
GENERAL Ocie Speer
OF TEEAS Assistant
OS-MR-LM
THIS OPINION
CONSIDEREDAND
APPROVEDIN
LIMITED
CONFEREECE