Case Information

*1 The Attorney General of Texas March 11, 1982 RK WHITE

orney General Opinion No. MN-454

Gary E. Miller, M.D. rem Court Bullding commissioner .Box 12548 Texas Department of Mental Health Re: Application of House Bill tin. TX. 76711. 2546 and Mental Retardation No. 1623 to funds held by the 475.2501 Texas Department of Mental P. 0. Box 12668 I 910/874.1367 Austin, Texas 78711 Health and Mental Retardation copier 5121475-0266

Dear Dr. Miller: ’ MaIn St., sulle 1400 as,TX. 75201.4709 You have requested our opinion regarding the application of House 742.6944 Bill No. 1623, recently enacted by the Sixty-seventh Legislature. That statute, to be codified as article 4394c. V.T.C.S.. provides, 4 Alberta Ave.. Suile 160 pertinent part: ‘aso.TX. 79905.2793 ‘533-3464 All fees, fines, penalties. taxes, charges, gifts, and other collected or

grants, donations, 0 Dallas Ave., Sulle 202 by a state agency as authorized ISIon. TX. 77002.6966 required by law shall be deposited ‘650.0666 treasury, credited to a special fund or funds, and

subject to appropriation only the purposes which they are otherwise authorized to be expended Broadway. Suite 312 bck.TX. 79401-3479 or disbursed. shall be made within seven Deposit !747-5236 days after the date of receipt. 2 of House Bill No. 1623 defines “state agency” as:

0 N.Tenth. Sulte S %-I.TX. 76501.1665 )MJ2-4547 . ..any department, commission, board, office,

Institution, agency branch state government, executive has MaIn Plim.. suite 400 authority is not limited to a geographical Ihlonio, TX. 76205.2797 1225.4191 and was created portion state, constitution or a statute of this state, but does not include an institution of higher education h.1 Opporlunllyr defined in Section 61.003, Texas Education Code, ,rm411va Aclion Employer and does not include the Banking as amended,

Department Texas, the Savings and Loan of Texas, and the Office Department Consumer Credit Commissioner, whose subject to the budgetary control the Finance Commission of Texas by virtue of existing laws, and does not include the Credit Union Department i *2 (MW-454)

of Texas whose funds are subject to the budgetary control of the Credit Union Cowmission of Texas. 3(b) of the bill states, however, the act does not apply

to:

(1) funds, pledged to the payment of .,bonds, notes, debts funds are not otherwise required to be deposited the state treasury;

(2) funds held in trust or escrow agency;

(3) funds set apart out of earnings from investment funds held in trust for others, as administrative expenses of the trustee agency;

(4) funds, grants, donations, and proceeds from funds, grants, and donations, given in trust to the Texas State Library and Archives Commission f.or the establishment and macntenance of regional historical resource depositories and libraries

accordance with Section 2A, Chapter 503, Acts of the 62nd Legislature, Regular Session, 1971. as amended (Article 5442b. Vernon’s Texas Civil Statutes);

(5) the deposit funds for state agencies subject review under the Texas Sunset Act (Article 5429k, Vernon’s Texas Civil Statutes)

1981, which shall be determined by each agency’s enabling statute. Your question is whether

Acts 1981, 67th Leg.. ch. 835, at 3189-90. any of six kinds funds maintained by the Department of Mental Health and Mental Retardation excepted

required in the state treasury.

Although articles 3179 and 3179a. .V.T.C.S., provide by the institutions the supervision the Department

of Mental Health and Mental Retardation shall be placed

treasury. these provisions do not apply where there later or more specific statutory authority holding outside treasury. See Porwood v. City of Taylor, 214 S.W.2d 282 (Tex. 1948); Cole v. Stazex rel. Cobolini, 170 S.W. 1036 (Tex. 1914). *3 (Mw-454)

You first inquire about the “patient fund” maintained This fund consists of the interest each facility of the department.

accruing on the personal funds of inmates of which the department acts as trustee. Section 1 of article 3183~. V.T.C.S.. provides: 1. The superintendent of any State

institution the jurisdiction of the Board for Texas State Hospitals and Special Schools may any funds of inmates in his possession any bank in the State, or in bonds or obligations

of the United States of America or for the payment of which the faith and credit of the United States and for the purposes of deposit or are pledged, investment only, may mingle the funds of any inmate with the inmates. The may deposit the interest or superintendent increment accruing on such in a special fund, to be designated the ‘Benefit Fund,’ He may expend the

which he shall be the trustee.

moneys in any such for the education

entertainment the inmates of the institution, for the actual expense of maintaining

at the institution. the benefit fund may be expended “for the education or entertainment inmates,” it is a fund “held for tNSt... agency” and therefore exempt under section 3(b)(2) of House Bill No. 1623. To the extent it may be expended “for the actual expense of maintaining it is a fund “set apart out of earnings fund at the institution,” investment funds held others, administrative expenses of the trustee agency” and thus exempt under 3(b) (3).

You next ask about “sheltered workshop funds.” The department authorized by section 2.17(b)(2) of article 5547-202, V.T.C.S., “to contract with individuals or public or private entities the sale of goods and services produced or made available by the sheltered workshop programs.” That statute further provides, in pertinent part:

(3) An operating fund may be established each sheltered workshop operated

Department. and any money derived, from gifts, and donations sheltered grants.

workshop purposes and all proceeds from the sale of sheltered workshop goods and services shall be deposited the operating Any operating fund shall be maintained in a national or state bank which is a member of the Federal Deposit *4 (Mw-454) Money the operating Insurance Corporation.

funds may only be expended the operation of sheltered workshops for the purchase of supplies. equipment; for the

materials, services, and payment of salaries and wages to participants and employees; for the construction, maintenance, repair, and ,renovation facilities and the establishment and equipment; and for maintenance of a petty cash fund not to exceed $100. Although the statute recites a

V.T.C.S. art. 5547-202, 52.17(b)(3). limited number of purposes for which sheltered workshop funds may be expended, all them are essentially purposes the department.

Since sheltered workshop funds are not “held in trust or escrow than a state agency,” they are not excepted from deposit treasury. funds” are recognized by article 3174b-3,

“Occupational therapy V.T.C.S.. which provides. in part: 1. The Board Texas State

Hospitals and Special Schools may furnish equipment, materials. and merchandise any institution the control and management of said Board for occupational therapy programs. The finished goods and products produced these programs may be sold, and the proceeds thereof may be placed in the patients’ benefit fund, patients’ fund, or a revolving their further use; the patient may purchase from the state the material to be used and keep the finished product.

. . . . Sec. 3. The Board is authorized to accept donations in money or materials to be used

these programs and mati use and expend

donations in the manner requested by the donor,

not contrary to the policy of the Board for Texas State Hospitals and Special Schools. occupational funds are placed In

patients’ fund or patients’ fund, they assume those funds and are thus exempt under character however, House Bill No. 1623. To extent, they transferred to a “revolving their further use,” they become merely’operating funds of the department and thus not excepted *5 (Mu-454)

deposit. Amounts donated to the occupational fund must be used “in the manner requested by the donor.” If the donor directs that money be used “for the benefit other than a state agency,” it need not be deposited the state treasury; otherwise, it is not exempt from deposit therein.

The “unemployment ‘trust fund” is established by section 55 of article V of the current General Appropriations Act. Acts 1981, 67th ch. 875, at 3820. Heads of state agencies are directed thereby Leg., to reimburse the comptroller for unemployment compensation benefits paid on behalf their particular agency. There is no indication that these funds are set aside “for the benefit of any person entity than a state agency,” and thus, they are not exempt deposit under House Bill No. 1623.

You also ask about “merchandise canteen coupon funds.” which you state:

. ..are maintained at many facilities to hold money trust clients who are unable to handle their own funds. Such clients use a system which trust fund money is used to purchase coupons which are then used to purchase canteen items. The canteen then turns the coupons into fund reimbursement. The clients can also obtain reimbursement cash their coupons upon furlough or discharge it is determined any time that the client can handle his own money. The money held in this is used for no other purpose. it appears that this is used From the circumstances described, merely as a conduit for money derived from an individual patient’s that these retain the character

1 funds, we believe they are excepted from deposit patient 3(b)(2) of House Bill No. 1623.

Your final inquiry is directed to proceeds from estates. If a legal instrument directs that funds be used specifically “for of any person or entity agency.” such proceeds are exempt under section 3(b)(2). If It does not do so, As we said in Attorney General Opinion MW-363 money is not exempted.

(1981):

. ..no particular words are necessary to create a trust.... So long as the parties intend particular property be held others, a court equity will affix intent the character of a trust. *6 (MI?-454)

SUMMARY “Patient benefit funds” and “merchandise canteen coupon funds” are excepted from required treasury the terms of of House Bill No. 1623, Sixty-seventh Legislature, be codif ied article “Sheltered’ workshop 4394c. V.T.C.S. funds” and “unemployment funds” are not so excepted. “Occupational funds” are exempt only if they are placed in the patients’ / the patients’ Proceeds from estates are exempt the appropriate legal instrument directs funds be used specifically “for of any person entity than a state agency.” Attorney General of Texas JOHN W. FAINTER, JR.

First Assistant Attorney General

RICHARD E. GRAY III

Executive Assistant Attorney General

Prepared by Rick Gilpin

Assistant Attorney General

APPROVED :

OPINION COMMITTEE

Susan L. Garrison, Chairman

Jon Bible

Roxanne Caperton

Rick Gilpin

Patricia Hinojosa

Jim Moellinger