Untitled Texas Attorney General Opinion ( 1975 )

TEIE ATFOKNEY GENEWAL OF %-EXAS Avans - 78711 November 21, 1975 The Honorable R. W. Steen, President Stephen F. Austin State University Nacogdocher. Texa6 7596 1 Opinion No. H- 742 Re: Whether a state university may u6c appropriated fund6 or auxiliary cntcrpriae fund6 to purchacle liability insurance for administrative Dear Prerident Steen: officers and regents. You have reque6ted our opinion regarding whether a state university may use appropriated fund6 or auxiliary enterpriee funds to purchacle liability inrurance for it6 adminietrative officer6 and regents. In Attorney General Opinion H-70 (1973), we concluded that the trustees of an independent school district might purchase liability insurance to pro- tect themllelve6 from the expense of defending litigation brought against them individually for acts or omiseions committed by them in the good faith discharge of their official duties , and to protect themselver from awards in all case6 in which the district was or might have been held liable for the same damagee. The opinion was predicated upon rection 20.48 of the ‘Texas Education Code, which specifically permits the expenditure of “[l]ocal school funds . . . for the payment of insurance premiums. ” Neither the Education Code nor any other statute, however, makes any provision for the purchare of general liability insurance by or on behalf 0f.a state univerrity. We believe that the absence of any statutory authoriza- tion similar to rection 20.48 which would authorize liability insurance cover- age as to the Univerrity itrelf i6 fatal to the argument that coverage may be extended to the trustees. The 1975 General Appropriation6 Act. Act6 1975, 64th Leg., ch. 743, article 4, section 19-b. permit6 the purchase of “insurance premiumr, where authorized by law . . . from appropriated fund6. ” (Emphasis added). Since there is, however, no statutory authoriza- tion for the payment of 6uch premium6, even by implication as in Opinion p. 3153 The Honorable R. W. Steen, page 2 (H-742) . H-70, it is apparent that this expenditure may not be made from appropriated funds. We note that article 5. section 55 of the General Appropriations Act, found at Acts 1975. 64th Leg., ch. 743. specifically prohibits the expenditure of appropriated fund6 “for the purpose of purchasing policies of insurance covering claim6 arising under the Texas Tort Claims Act.” Neither do we believe that liability insurance may be purchared from auxiliary enterprise funds. Although such funds are committed to the control of the governing board of the institution by section 51.002 of the Education Code, section 51.006 provide6 that “the provisions of this subchapter are subordinate to the general appropriations act for the support of each institution. ” Since. as we have indicated, the General Appropriation6 Act permits the purchase of insurance premiums only where authorized by law, it ir our opinion that the payment of liability insurance premium6 for adminietrative officers and regent6 would not be a proper expenditure of the kind of auxiliary enterprise fund6 recognized by 6ection 51.002. We therefore conclude that a state university may use neither appropriated funds nor auxiliary enterprise funds to purchase liability insurance for it6 adminigtrative officer6 and regents. SUMMARY A state univereity may use neither appropriated fund6 nor auxiliary enterprise fund6 to purchase liability insurance for its administrative officers and regents. Very truly yours, Attorney General of Texa6 // p. 3154 Ihe Honorable H. W. Steen. page 3 (H-742) APPROVED: DAVID M. KENDALL, First Assistant C. ROBkRT HEATH. Chairman Opinion Committee p. 3155