Untitled Texas Attorney General Opinion ( 1985 )

The Attorney General of Texas
JIM MAlTOX April 9, 1985
Attorney General
Supreme Ca~rl Bulldin Mr. Ed Grieham Opinion No. m-306
P. 0. BOX 12549 chairmen
Austin, TX. 79711. 2549 Texas Employment Cc~nlrlmission Re: Disposition of interest
512f4752501 T.E.C. Building, Rcsm 624 earned on money in the Unemploy-
Telex 910/57&1387
Telecopier 51214750288
Austin, Texas 70i 70 ment Compensation Fund
Dear Chairman Grisham:
714 Jackson. Suite 700
Dallas. TX. 75202.4505 You ask whether interest earned on money in the Unemployment
2141742-9944
Compensation Fund m%stahlished by section 9 of the Texas Unemployment
Compensation Act, c,odified as article 5221b-7. V.T.C.S., should be
4924 Alberta Ave.. Suite 180 credited to that IFund or to the state’s General Revenue Fund. We
El Paso, TX. 799052793 conclude that suck. interest should be credited to the Unemployment
915153x3494 Compensation Fund.
1001 Texas. Suile 799 The fund in question was established in 1936 as a
Houston, TX. 77002.3111
713l22W999 special :Iund, separate and apart from all public
moneys or funds of this State . . . which shall be
administctred by the Commission exclusively for the
606 Broadway. Suite 312
Lubbock, TX. 79401-3479
purposes of this Act. This fund shall consist of
905f747~5239 (1) all contributions collected under this
Act . i . (2) all fines and penalties collected
pursuant to the provisions of this act; (3)
4309 N. Tenth. Suite B
interest earned upon any moneys in the fund; (4)
McAllen. TX. 79501-1555
5121882.4547
any prope’rty or securities acquired through the
use of moneys belonging to the fund; and (5) all
earnings c’f such property or securities.
200 MaIn Plan, suite 400
San Antonlo. TX. 792052797
Acts 1936. 44th Let;., 3rd C.S., ch. 402, 59(a), at 2004. Section 9(b)
51212254191
of that act provida!tr that the “State Treasurer shall be treasurer and
custodian of the Cund. . . .‘I && Althouth these provisions were
An Equal OppOrtunitYi subsequently emend&l. the character of the fund has not changed. -See
Aflirmailve Action EmPlOYW Acts 1945, 49th Let;.. ch. 347, 55. at 594.
In 1941. the Texas Supreme Court determined that the State
Treasurer acts es custodian and trustee of the fund but the fund is
not the property cf the state and the money collected for the fund
does not belong ir, the State Treasury. Friedman v. American Surety
Co. of New York, 1581 S.W.2d 570 (Tex. 1941). The Supreme Court stated
that the money in t,b,e Unemployment Compensation Fund
p. 1390
Mr. Ed Griaham - Page 2 (JR-3061
is not the propert:r of the state in any capacity,
but is a trust fur,d to be held out of the State
Treasury, but in tie hands of the State Treasurer
as trustee, for the benefit of a class of
employees. . , .
-Id. at 580.
Also in 1941, this offim referred to the Supreme Court decision
in Priedmaa v. American Surtrt:y Co. of New York, in determining that
the designation of the unel&loyment fund as a trust fund and the
admonition to establish a &patate fund to be held apart from all
public money of this state differentiates this money from the general
and special funds of the state. Attorney General Opinion O-3607
(1941).
Subsequent to the act tstablishing the Unemployment Compensation
Fund, the legislature, in 19#5!#, enacted a statutory provision relevant
to the disposition of depoaL,tory interest. Article 2543d, V.T.C.S.,
provides. in pertinent part, ,thst
Section 1. Interest received on account of
time deposits of moneys in funds and accounts in
the charge of 1:he State Treasurer shall be
allocated as follows: To each constitutional fund
there shall be credited the pro rata portion of
the interest rece:lved due to such fund. The
remainder of the interest received, with the
exception of that portion required by other
statutes to be credited on a pro rata basis to
protested tax paynenta. shall be credited to the
General Revenue Fund. The interest received shall
be allocated on a monthly basis.
. . . .
Sec. 3: As to the proper interpretation and
application of this Article. the State Treasurer
is entitled to re:.y upon the opinion and advice of
the Attorney General.
This office previously has determined that the provision of
article 2543d which directs that interest earned on money in funds in
the charge of the State Treasurer be credited to the General Revenue
Fund does not apply to interest on trust funds which are not the
property of the state and which the State Treasurer holds as trustee
out of the State Treasury. Opinions issued by this office consia-
tently have determined that interest on such trust funds becomes part
of the principal and part of the fund which generated the interest.
p. 1391
,’
Rr. Ed Griaham - Page 3 (Jn-306)
See Attorney General Opinions JR-300 (1985); RR-82 (1979); H-1040
m77); M-468 (1969). Cf.
- Attorney General Opinions FM-338 (1981);
H-1167 (1978).
The Supreme Court settled the issue that the Unemployment
Compensation Fund is a trust fund out of the State Treasury for the
benefit of a class of emp:.oyeea. It is our opinion that interest
earned on the Unemployment Compensation Fund should not be deposited
to the General Revenue Funcl pursuant to article 2543d hut, instead,
should be credited to the Uremployuent Compensation Fund.
SUMMARY
Interest earned on money in the Unemployment
Compensation Fund established by article 5221b-7,
V.T.C.S.. should be credited to the Unemployment
Compensation Fund,
JIM MATTOX
Attorney General of Texas
TOMGREEN
First Assistant Attorney General
DAVID R. RICHARDS
Executive Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Nancy Sutton
Assistant Attorney General
APPROVED:
OPINIONCOMMITTEE
Rick Gilpin, Chairman
Jon Bible
Colin Carl
Susan Garrison
Tony Guillory
Jim Moellinger
Jennifer Riggs
Nancy Sutton
p. 1392