Untitled Texas Attorney General Opinion
KP-0142
| Tex. Att'y Gen. | Jul 2, 2017Background
- The Texas Health Insurance Risk Pool (the Pool) was abolished by Senate Bill 1367, which transferred $5 million from the Pool to the Texas Health Services Authority (Authority).
- The $5 million originated from penalties and interest assessed against health insurers under general law and had been used by the Pool to finance premium discounts.
- Senate Bill 1367 authorized the Authority to use the transferred $5 million for any purpose within its enabling statute (health information exchange and related public purposes).
- The Authority asked whether the Public Funds Investment Act (PFIA), Tex. Gov’t Code ch. 2256, applies to these funds as "public funds."
- The PFIA defines "funds" to include "public funds in the custody of a state agency" not required to be deposited in the state treasury and that the investing entity has authority to invest.
- The opinion analyzed whether the $5 million are "public funds" (as opposed to special/custodial funds) by examining how the funds were raised, the State’s ownership, and whether the funds are held in trust for private beneficiaries.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $5M transferred to the Authority are "public funds" under the PFIA | Authority/request: funds were originally designated for premium discounts and might be special/custodial funds benefiting specific individuals, thus not subject to PFIA | AG/Legislature: funds were raised by general law (penalties), belong to the State, and were reallocated to the Authority for a public purpose, so PFIA applies | A court would likely conclude the funds are public funds governed by the PFIA |
Key Cases Cited
- Tex. Health Ins. Risk Pool v. Sigmundik, 315 S.W.3d 12 (Tex. 2010) (describing the Pool’s function)
- Phil H Pierce Co. v. Watkins, 263 S.W. 905 (Tex. 1924) (definition of general laws that operate uniformly on a class)
- San Antonio Bldg. & Constr. Trades Council v. City of San Antonio, 224 S.W.3d 738 (Tex. App.—San Antonio 2007) (adopting definition of "public funds" to construe PFIA)
- Sterling v. Alexander, 99 S.W.3d 793 (Tex. App.—Houston [1st Dist.] 2003) (monetary penalties paid to government become public funds)