Case Information

*1 The Attorney General of Texas Hewh 18. 1985

JIM MAllOX

Attorney General Clayton T. G6rrbon opinion no. m-300

supm OolJrt sulwng Eucutive Director ‘. 0. Box 12545 Re: Whether Employees prployces Retiremew: System rurwt. TX 75711.2545 51w75.2501 Tuu Retirement System is entitled Telex 2lw74lS7 P. 0. Box 13207 to depository on a intereat hcoplw 513l47bo2w Auotin* TexaB 787Ll. particular fuud under article

6543d. V.T.C.S.

Dear l4r. Gerriwn:

You request am. opinion thie office conceroing dispoai- tion deporitory .:lnterest earned by an ccount held. by the atate treaeurer .ou .behalf the Lav Rnforcemeut and Cuetodial Officer .Supplemutel Retircmmt Fund. .Thia account, deeignated Fund No. 977 the etete treaturer, is estebliehed es a pert of the Employees cf Texas. a portion of whose esoete is credited to Retirement.Syrtem fund. V.T.C.S. Title llOB, Public Retirement Systems, (25.306(7) (1985Pamphlet). Pou inform ue that while the fund retains the incoW derived from

w5 Bmwwy. wt. 312 iuvestnut made~owtride the state treasury, it has not been credited Lubboak,lx.7wol34To with the depository interest earned by Pund No. 977. Accordingly, you low7474225 l k vhether the fund-is entitled to mxh interest and, if so, whet ~uthod should be wed to calculete previously eccumulated Interest not 43WN.lOll*r4SUluS credited to Fund lo. 977. uanm,Tx. 75wl-lws ..’ 31-7 .:: & ~&&ory provision relevant'to the diapoaitior'of depository futerest.i8 rticlw2543d~~V.T.C.S.. which provides the follcuing in

aloualnRu4sLin.400 pertinent part: i' 5ulAnlonlo.Tx.~7 512R25415l Intertat~receive~ on accouut deposita of- moueya iu funds. and l c ounte in the. charge of the Stat11 Treenurer shall be allocated ,ee follavs: An 5eudolloAnnrr . . . _~ 'C To ,uch~-.constitotionel fund there .&all be Afnmm(k Adlql5molqw credited: the pro tata portion oft the. inter&t

received due to such ‘fund. The remeinder of the : .lnterert i received; with the. exception thnt' '~ .~ iportion-,wquired.by other statutea'to bi ~creditkd :on a,.prwrata basis protected tax pajmkntr. Au111 br. credited to the General Rweme Pund. Tha intweet received shell be allocated on e monthly basis. *2 Cleytou T. Garrison - Ptrge 2 (JR-300)

V.T.C.S. art. 2543d. il. This office has deteruined ou nuuerous occasious that in addition w the funds exeupted above, assets held in foru of A trust sre alw exempt frou the requirements of article 2543d. See Attorney Gene181 Opinious RR-338 (1981); IN-82 (1979); E-1040 cl-); n-468 (1969).

The opinions just cited establish that in order to be charac- terized as trust funds, the assets in question should reflect, auong other things, (1) that they are aduinistered by a trustee or trustees, (2) tbat assets sre neither granted to the state in its sovereign capacity nor collected for the general operation of state governmeat. and (3) that they are to bez spent and invested for specific, limited purposes and for the bemfit of A specific group of individuals. Being in the ueture a trust , such assets are eutitled to retain the proceeds frou their investment. Attorney General Opinions MW-481 (1982); U-468 (1969). Cf. Attorney General Opinion B-1243 (1972) (interest earned in join~~uuds must be deposited into the general revenue fund). The saue theory applies to interest earned ou tiue deposits these assete. kttorney General Opiniou If-468 (1969). SLe Lauson v. BaRer, 220 S.U. 26'S, 272 (Tex. Civ. App. - Austin 1920. writ Accordingly, thqr are not ,subject to the provisions of ref’d). article 25436. Gencr~l Opinions Ml-82 (1979); Ii-1040 (1977).

In ours opinion, ths Lav Enforcement and Custodial Officer Sappl-tal Retirement Puud is A trust fund entitled to retain depository interest. The retireuent fund is administered by board trustees of the Euployeos Retirement System. V.T.C.S. Title 1lOB. Public Retirement Syntema, '125.101 (1985 Pauphlet). This office has previously deteruined that: the assets of the Euployees Retireuent system, of uhich the retitement fund is A part, exe trust funds. Attorney General Opinion UW-565 (1959). The retireueut fund is not collected for. the general. operation of state; rether, it is AVAihblA Ody t0 PAY "supplemsntal retir-t and death benefits to lau enforcement And cuetodf,al officers" and for "edministratiou the fuod.” .P.T.C.S:.Title llO:B, w. 525.313(b); ~' The method and form lnvestmmt of retirement fund assets are limited, see V.T.C.S. Title 1lOB. m. 1125.103(c) end '25.302. and the proceeds of any such investment are expressly made part ~of the retir-t fund. See V.T.C.S.I-.Title llOB, Sara. 125.313(a). These features iiK. to, remove the .retiremsnt fund from the eufficient. iu oar view, coverage, :-of article 2543d,, The interest eerned on deposits of the retirement~fund, therefore, arot,be credited ~to the retirement fund itself end not deposited in general rweuue

Your ,ucond inquiry ~concerne the'proper method of crediting the retirement fund for interel#t erned in previous years. We are unable giv~e Advice AS to the specific accounting method or tims intervals tQ -used in cakulating 'past interest.. The ansuer to this question depends on ioformetion act provided by your request -- a, terms. duration, sod types Iof deposits , appliuble rates of IntSrSSt. etc. We c*n 8tate *a e geueral matter. however. the retirement *3 Mr. Clayton T. Gerriroo - Page 3 (JR-300)

fund hAS exhibited the l foleuentioned trust fund ChAYACtAYi6tiCS since its crention in 1979. St,e Acts 1979. 66th Leg., eh. 269, et 528 (Meting foroer nrticle~~iSf-1. V.T.C.S., l steblishing LAW Enforcc- mt And Curtodinl Off ICC!: Suppleuentel Retireuent Fuod). Conre- quAAtlY* the retiremeot fund la entitled to credit for depository ioterest date. Before retireuent fund pay be’ credited with this interest, however. esrtain lioitations~ oo the use of trenoury funds mst be coucidered.

Article VIII, section 6 of TexAr Constitutioo prohibits vithdreunl of funds from the stnte treneury in Absence of legirlative l ppropriatioo. The TeXAs Supreue Court he8 held that fundr rroueously deposite~l in the general revenue fund are oeverthe- less subject to this couetltutionel liuitetion end uy oot be removed frou the trenrury uithout :lc!gisletive actlou. lienion v. Lockhnrt. 114 S.W.2d 216. 219 (Tex. 1938:l.s Accordingly. the legislnture uost make a specific Appropriation before AO~ ioterest erroneourly deposited in general reveoue fund my returned to the retirement fund.

SUIIMARY The tnr tnforcement and Custodial Officer Suppleuental Retlcemeot Fund must be credited for ioterest earned on deporits of fund. Any interest previourly deposited in geoeral rwenue fund uurt receive epecified legirlative pproprintion ba:Eore return to the retireueot ~+tYJy-&

MATTOI Attorney hOerA of Texae TonGRan F%rrt Assistant Attorney General

DAVID R. RICRARDS

Executive ASSiStAnt Attorney CaoerAl

RIa( GILPIR

Chairman, Opioion Colnittce

Prepared Rick Gilpin

AsSiAtAnt GeoerAl

p. 1357

Mr. Claytoo t. Garrbou - PASS 4 (Jn-300)

AFPsmm:

0PIn101 cmmxntP

Rick Gilpin, CIuirmm

JonBible

CollaCarl

suun&rriAon

Tar* m=-=Y Jim Moellinger

Jmntfer Uggs

IlAuy suttm

p. l358