Case Information
*1 c Honorable T. 0. ,Walton, President
Agricdtutial and Mechanical College of Texas
College Station, Texas opinion No. o-2469
Dear Dr. Walton:
Re: Is the Board of Directors of the Agricultural and Mechanical College empowered to pay any part of the premiums on a policy of group life insurance covering the dployees from student fee funds, local funds, or other in- stitutional funds under the jur- isdiction of the Board - and re- lated question?
We beg to acknowledge receipt of your letter of June 1940, request- ing an opinion from this department, such letter being as follows, to-wit:
"On or about April 1, 1931, the Southwestern Life Insurance Company, of Dallas, Texas, issued to the Agricultural and Mechani- cal College its policy of Group Insurance, insuring the full-time employees (employees either on a nine months or twelve months ba- sis) of the College against death and total and permanent disabi- lity. The insurance has been in full force since that date, and employees have been required to carry the insurance as a part of their contract. * * *
"Under the plan of insurance, the cost of premiums was paid jointly by the insured employees and the College, the insured em- ployees paying approximately seven-eighths of the premiums and the College paying approximately one-eighth. The proportionate part of the premiums paid by the College was and is made from un- assigned local funds; that is, from funds of the College not ap- propriated out of the State Treasury and not designated to be used for any particular purpose. * * *
"The Board. of Directors gave the matter careful considera- tion when the plan was established and it was their jud&ment f&at the benefit to the CnlJ.ege& fmpra~eoed~.f#Xale of the staff would be worth much more ths&the cost k-the institution. The judg- ment of the Board in this respect has been amply substantiated by our experience under the plan. The total cost to the College has averaged between $3.00 and $4.00 per insured employee per year, *2 Honorable T. 0. Walton, Page 2 (C-2469)
and we have considered this as being in the nature of a small supple- ment to the salary and permlsaible under the appropriation act.
"We would appreciate it, therefore, if you would inform us on the following points:
"1. Is the Board of Directors of the A. & M. College empowered to pay any part of the premiums on a policy of Group Life Insurance covering the employees from student fee funde, local,fundr, or other institutional funds under the jurlediction of the Board7
"2. If this cannot be dons, can the Board legally pay its part of the premiums from the Group Insurance Premiums Revolving Account made up as outlined above of refunds ma& by the Insurance Company under the participating feature of the policy and held in trust for the insured employees?"
Section I(a) of House Bill No. 255, the Appropriation Act for Insti- tutions of Higher Learning for the current biennium, declare8:
"That all balance8 in the institutional funds of the several State institutions named in this Act, at the close of the fiscal year ending August 31, 1939, including balances in their revolv- ing funds at that time, and the entire incor to said funds dur- ing each of the two fiscal years ending August 31,~ 1940, and Aug- ust 1941, which are not otherwise appropriated for either or both of said fiscal years, are hereby appropriated for the sup- port, maintenance, operation and improvement of said State insti- tutions during each of the said fiscal years respectively."
In Opinion No, O-1661, construing Chapter 144, Acts 45th Legislature -- the General Appropriation Bill -- with respect to balances in institutional funds, we held that such funds may not be used to pay a part of the premiums for group hospitalization end life insurance policies covering faculty members and for their benefit.
The same rule, upon the same reasoning, applies to your inquiry. These institutional funds have been appropriated for the support, maintenance, operation and improvement of the respective State institutions. We there said:
"There is no just relation between the insurance to protect students traveling in connection with the activities of the insti- tution that would justify the payment of premiums therefor. Such insurance is not reasonably necessary, nor do we think it la even proper as an incident to the maintenance of the institution."
Your first question, therefore, is answered in the negative. Pxm-thermore, the Board is not authorized to pay any part of the pre- miums under consideration from the group insurance premiums revolving account
Honorable T. 0. Walton, Page 3 (O-2469)
refunded to the Board under the insurance plan. Theee refunds take the place and occupy the status of the fund6 originally used -- wrongfully, as we are holding it to have been -- by the Board In purchasing such insurance.
Of course, we are not considering the matter from the standpoint of business policy, such a8 might guide an individual in the conduct of hie own affairs, but on the contrary, we are coneidering it solely from the stand- point of legislative authority in the Board to make the purchase of such in- surance out of the public institutional funds.
Your second question is therefore likewise answered in the negative. We have answered your questions broadly as you have stated them.
Of course, nothing we have said should be construed as to exclude the use of funds for such group insurance properly belonging individually to sn employee as a beneficiary of such fund, where the employee beneficiary consents to such use. It is his individual money and therefore not within the rule we have discussed above.
Neither should our answer be construed so as to prevent a supplement- ing of an employee's salary out of the funds and in the menner specifically provided for in subsection (2) of the General Provisions attached to House Bill No. 255 -- Regular Session, 46th Legislature for Institutions of Higher Learning.
Very truly yours APPROVED JUL g, 1940 ATPORNEYGENERALOFTEEAS /s/ Glenn R. Lewis
By /a/ Ocie Speer Ocie Speer ACTINGA!il'OREEY GENERAL Assistant OF TEEAS OS-MR-LM
THIS OPINION
CONSIDERED AND
APPROVED IN
LIMITED
CONFEREECE