Untitled Texas Attorney General Opinion ( 1955 )

Honorable J. W. Edgar Opinion No. S-152
Commissionerof Education
Texas Education Agency Re: Availabilityof the
Austin, Texas Federal Social Secur-
ity program to school
Dear Dr. Edgar: districts.
You have requested the opinion of this office
concerningthe applicationof the Social Security Act of
the United States to local school districts In Texas.
Throughout this opinion we shall designate the Old Age and
Survivors Insurance program under the Social Security Act
as OASI, its popular designation.
The Social Security Act was amended in 1950 by
adding to Title II a new section,numbered 218, dealing
with voluntary agreements for coverage~of employees of
States and their political subdivisions(Section106 of
Chapter 809, P.L. 734 Laws of 81st Congress, 2nd Session,
19501. Subsection (d3 of Section 218 excluded from the
coverage of the Social Security Act employeeswho were mem-
bers in a retirement system establishedby a State or by a
political subdivisionthereof. See the Co ressional Com-
mittee reports on this Act at pages.3287,3% 6, 3408 3489,
U.S. Code CongressionalService, 81st Congress, 2nd &es-
sion, 1950. The Legislature enacted Chapter 500, Acts of
the 52nd Legislature,1951 page 1480 (codifiedas Article
695g, Vernon's Civil StatuJes) authorizingthe governing
body of any county municipalityor other subdivisionof
the State (acting through the agency of the State Depart-
ment of Public Welfare) to enter into an agreementwith the
Federal Security Administrationto obtain OASI coverage for
their employees,and also authorized the governingbodies
to make payments for the coverage benefits to the Federal
agency from the body's official funds and from sums with-
held from the salaries of its employees. A 1953 amendment
by the Legislaturedid not change Article 6959 so far as
discussionis concerned in this opinion (see Chapter 197,
Acts of the 53rd Legislature Regular Session, 1953, page
5%) nor did a 1954 amendmen4 (see Chapter 58, Acts of the
53rd Legislature,1st Called Session, 1954, page 129).
In 1954 Congress amended Section 218(d) of the So-
cial Security Act so that employees of a State or one of its
political subdivisionswho were members in a retirement sys-
tem establishedby the State or a political subdivisioncould
Hon. J. W. Edgar, page 2 (S-152)
obtain OASI benefits under the Social Se~curityAct. See
Section 101(h) of Chapter 1206, P.L. 761, Acts of the 83rd
CongresG Second Session, 1954 (codifiedas 42 U.S.C.A.
g 418 &/> and the Con ressionalCommittee Reports on this
amendment at pages 6858 , 6863, 6897 and 6955, U.S. Code
Congressionaland AdministrativeNews. The amendment pre-
scribes a referendumin which a majority of the employees
within a separate coverage group must vote by secretwritten
ballot in favor of extendingthe OASI program to their re-
tirement system. The amendmentprovides that, if the State
so desires, members of a retirement system that covers em-
ployees of more than one political subdivisionof the State
may be consideredas a separateretirement system within each
political subdivision.
A question at once arises as to the validity of
OASI contributionspaid from public funds held by the parti-
cipating school districts for educationalpurposes. Sections
51 and 52 of Article III of the Constitutionof Texas prohib-
it the grantof any public moneys by the Legislatureor a
school district to'any individualor corporation. However,
this is not applicableto the matching payments of OASI con-
tributions. The Legislaturehas provided that such matching
contributionsshall be construedas salary paid to the em- )
ployae. "The respectivegoverning bodies are authorizedto
pay contributionsas required by these agreementsfrom those.
ziznrom which the covered employeesreceive their compen-
and the laws fixing the maximum compensation
for co&; imployeesare amended "to allow payment of the
matching contribution.. . in addition to any maximum compen-
sations otherwisefixed by law." Section 6 of Article 695g,
as amended in 1953.
Now to answer your questions:
"1. May a local Board of Trustees make a
contract binding its successorsfor a minimum
period of five years?"
A school district has no inherent power of contract,
but only such powers in making contracts,and fo;;u;hWt;;ms,
as the Legislatureauthorizes. -4.
774 (Tex.Civ.App.1938 error ref.); -a).: i59 S.W.
EZ4$Tex.Civ.App. 19133; Attorney General's Opi;i;nSEz953
In the case of Lee v. Leonard Indeaend n h 01 Dis-
trict,'24 S.W.2d 449, 450 (Tex.Civ.App.1930, error ref.) the
court said that Wchool districts are but subdivisionsof'the
state government,organized for convenience in exercisingthe
Hon. J. W. Edgar, page 3 (s-152)
governmentalfunction of establishingand maintaining public
free schools for the benefit of the people. School trustees
are public officers, whose powers are under the control of
the Legislature." Section 6 of Article 695g provides that
"the respective governing bodies of the various. . . politi-
cal subdivisionsof the State which are now or shall hereafter
become eligible under Federal requirementsare hereby author-
ized to enter into all necessary agreementswith the State
Agency to enable the employees of the respective . . . politi-
oal subdivisionsto have coverage under the Social Security
Act." Thus, the Legislature,hasauthorized a local board of
trustees to make a five-year contractwith the State Agency,
since that is a "necessaryagreement . . . to enable (its) em-
ployees . . . to have coverage under the Social Security Act."
"2. May a local Board of Education under
present statutes expend school funds to provide
social security and survivors'benefit insurance
for its employees?"
Subdivision2 of Article 282'7,V.C.S., provides that
"local funds from district taxes. . . and other local sources
may be used for the purposes enumerated for State and county
fusds . . . and for other purposes necessary in the conduct of
the'public schools to be determinedby the Board of Trustees."
Subdivision1 of this Article provides that the State and county
available funds shall be used for the payment of teachers' and
superintendents'salaries, among other things. Section 6 of A+
title 6959 authorizes a local board of education to pay contri-
butions, as required by its agreement, "from those funds from
which the covered employees receive their compensation.11Nei-
ther Section 5 nor Section 6 of Article VII of the Texas Consti-
tution, dealing with the State available fund and, respectively,
with the county available fund, prohibits such an expenditure.
“3. Article III, Section 48a of the Texas
Constitutionprovides: ' . . . and provided that,
the recipientsof such retirement fund shall not
be eligible for any other pension retirementfunds
or direct aid from the State of Texas, unless such
retirementfund contributedby the State is re-
leased to the State of Texas as a condition to re-
ceiving such other pension aid.' ,Wouldthis con-
stitutionalprovision prevent the receiving of both
old age security benefits and teacher retirement
benefits at one and the same time?"
Hon. J. W. Edgar, page 4 (S-152)
As held in AttorneyGeneral's Opinion s-151 (19551,
the receipt of a benefit under OASI will not be the receipt
of "pension retirementfunds or direct aid from the State of
Texas" within the prohibitionof Section 48a of Article III
of the Texas Constitution,so that it is not unlawful for the
same person to receive benefits from the Teachers Retirement
System and from the Social Security program at the same time.
"4; The FoundationProgram provides a legal
minimum salary. May the local Board of Trustees
consider the matching funds paid by them as a por-
tion of the requiredminimum salary and reduce the
teacher's take-home pay correspondingly?"
This question is substantiallyanswered in Question
2 above. Section 6,of Article 695g, as we have seen, author-
izes the board of trustees to pay contributionsas required by
the agreement from those funds from which the covered employ-
ees receive their compensations. Continuing,the section pro-
vides that all prior laws which fix a minimum compensationfor
any covered employeesof counties are amended to allow payment
of the matching contributionin addition to any maximum compen
sations otherwise fixed by law. As shown by the underscoring,
only the salaries of countv emoloveesrequire the contribution
from OASI benefits to be in addition to previous salary maxi-
mums. Where the Minimum Foundation Program salary has been es
tablished as the maximum salary for a teacher by a board of
trustees, then the take-home pay of the teacher will be de-
creased by the amount of the OASI contribution. However, the
board of trustees, in its discretion,could assume this paymen
from the local funds governed by Article 2827, as discussed in
Question 2, "in considerationof the employees'retention in
or entry upon employment." Section 8 of Article 6959.
"5. May a state-widereferendumbe called and,
the employeesof all districts have opportunityfor
coveragewith the State matching employee contribu-
tions?"
Section 3 of Article 695g authorized the State Agent:
to enter into agreementswith the Federal Security Administrat:
to obtain OASI coverage for employees of school districts.
These agreementsmay contain any provisions relating to contrii
tions on which the State Agency and the Administratorshall agj
provided the agreementsare consistentwith the Constitutiona1
the laws of Texas. As noted in the legislative history above,
the Social Security amendmentsof 1954 provided that all emplo:
in positions which were covered by the same retirement system
Hon. J. W. Edgar, page 5 (S-152)
shall be considered as a separate coverage group. An alter-
native separate coverage group was permittedwhere a retire-
ment system covers employeesof more than one political sub-
division of the State. If the State Agency, in its discretion,
chooses to hold a state-widereferendum among the employees
of the school districts who are also members of the Teacher
Retirement System of Texas, there is no constitutionalprohi-
bition of such action. Also, as held in the preceding @es-
tjons 2 and 4 the State would be authorizedto make contri-
butions match1ng employee contributions,the funds being de-
ducted from either the Minimum Foundation Program salary funds
or from the State availablefund.
SUMMARY
The Legislaturehas authorizeda local board
of school trustees to contractwith the State
Agency for a five-year period for OASI participa-
tion. The local board of trustees is also author-
ized to expend either local funds or Minimum
Foundation Program salary funds for OASI benefits.
'A state-widereferendumof all members of the
Teachers RetirementSystem of Texas is authorized.
The State could match employee contributionsfrom
either Minimum FoundationProgram salary funds or ...
from the State AvailableFund.
There is nothing in the Constitutionof Texas
that prohibits the State or district participation
in the Social Security Act.
APPROVED: Yours very truly,
J. C. Davis, Jr. JOHN BEI\I,
SREPPERD
County Affairs Division Attorney"Cenera1of Texas
L. P. Lollar
Reviewer
John Reeves
Reviewer Assistant
John Ben Shepperd
Attorney General
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