Judges: JIM MATTOX, Attorney General of Texas
Filed Date: 10/2/1986
Status: Precedential
Modified Date: 7/6/2016
Mr. John S. Cargile Chairman Board of Regents Texas State University System 505 Sam Houston Building Austin, Texas 78701
Re: Whether Southwest Texas State University may expend appropriated funds on behalf of real property donated in trust, and related questions
Dear Mr. Cargile:
You ask several questions concerning the Harold M. Freeman Educational Foundation which was created to make use of certain ranch property available to Southwest Texas State University by the medium of a testamentary trust. The property is not devised to the state or to the university or to a nonprofit corporation that supports the educational purposes of the university. Frost National Bank of San Antonio is an "Inactive Co-Trustee" and Southwest Texas State University is an "Operating Co-Trustee." Subject to the conditions of the trust, the ranch property is to be used and operated solely for farm, ranch, and game management, educational, and experimental purposes in connection with the educational activities carried on by Southwest Texas State University for the benefit of its students and the public. The trust did not receive funds with which to operate the trust property except for funds that may be generated by its own operation.
The trust is the real owner of the property. The trustees have a legal title, coupled with a power that may be exercised subject to the conditions of the trust. See Parrish v. Looney,
You ask whether Southwest Texas State University may spend state funds appropriated to it to erect permanent improvements on the trust's real property or to pay operational expenses of the trust and purchase equipment and livestock necessary to operate the trust. We assume that your inquiry relates to authority granted by the Texas Constitution, by the Texas statutes, and by the testamentary trust.
Part of your inquiry is whether the expenditure of appropriated funds to permanently improve the trust real property or to operate the trust would violate the prohibitions of article III, section 51, and article
[t]he Legislature shall have no power to make any grant or authorize the making of any grant of public moneys to any individual, association of individuals, municipal or other corporations whatsoever. . . .
Article XVI, section 6, provides, in part, that
[n]o appropriation for private or individual purposes shall be made, unless authorized by this Constitution. . . .
Both the courts and this office have approved statutes and appropriations that authorize grants of public funds to private entities so long as the expenditure is made for the direct accomplishment of a legitimate public purpose. See Barrington v. Cokinos,
No fixed rule delineates exactly what constitutes a public purpose. Public education is, however, an essential governmental function. Rainey v. Malone,
Southwest Texas State University is under the management and control of the Board of Regents, Texas State University System. Educ. Code §§
It is our opinion that funds appropriated and allocated for use by Southwest Texas State University for permanent improvements may be used, as provided by article
The authority of the university to spend state funds to improve or operate the trust property is determined not only by the Texas Constitution and statutes but also is determined by the terms and conditions of the trust. The trustee of a testamentary trust can exercise only such authority as is vested in him by the will under which he acts. Williams v. Smith,
The will that creates the trust in question directs the university, as the Operating Co-Trustee, to manage and operate the day-to-day and long-term operations of the trust property as a self-supporting entity fiscally separate from the operation of Southwest Texas State University. It appears that the terms of the will preclude the university's use of its own funds for the improvement or operation of the trust property as a laboratory in support of its agricultural and range management educational programs. See Attorney General Opinion
In addition to the provision of the will specifying that the trust and trust property be operated as a self-supporting entity fiscally separate from the university, the will also provides that the university, as the Operating Co-Trustee, shall, from the trust fund, discharge all obligations of the trust, including without limitation, property costs such as ad valorem taxes and insurance premiums for general liability and fire and extended coverage insurance on the improvements. Hence, it appears that the terms of the trust also preclude the university's use of appropriated funds to purchase insurance. You inquire, however, whether the university may spend appropriated funds to purchase fire and extended coverage insurance as required by the will.
It is the policy of this state that the state shall carry its own insurance on state buildings and contents and that no insurance policies be purchased on any of the public buildings of this state or their contents. See Senate Concurrent Resolution No. 3, Acts 1921, 37th Leg., 2nd C.S., at 369. In view of the legislative intent expressed in that resolution, this office in Attorney General Opinion M-1257 (1972) determined that Tyler State College could not purchase fire and extended coverage insurance on college buildings or their contents. See also Attorney General Opinions C-193 (1963); O-6246 (1944). The state has continued to self-insure its own property for fire and extended coverage insurance and makes special appropriations to repair and replace facilities and equipment destroyed or damaged by such events as fire, flood, windstorm, and hurricane. For instance, chapter 21, appropriates funds to Southwest Texas State University to repair or replace property damaged or destroyed by a flood on June 20, 1981. Acts 1981, 67th Leg., 1st C.S., ch. 21, at 239. See also Acts 1981, 67th Leg., chs. 628, 585, 83 (appropriations to Pan American University for damage caused by hurricane, to North Texas State University for wind damage, and to Texas Forest Service of Texas A M University System for windstorm damage); Acts 1979, 66th Leg., ch. 20, at 30 (appropriation to Sam Houston State University for damage caused by fire).
The governing bodies of state universities are creatures of statute and may exercise only powers delegated to them by the legislature. See Attorney General Opinion
You also inquire whether article V, section 56, of the 1985 General Appropriations Act or any other state law prevents the university from spending appropriated funds to purchase liability insurance covering tort claims that may arise from its operation of the trust property.
The Texas Tort Claims Act generally authorizes a governmental unit to purchase liability insurance to cover its operations. The provision in section 9 of article 6252-19, V.T.C.S., now codified as section
[e]ach governmental unit may purchase insurance policies protecting the unit and the unit's employees against claims under this chapter [Texas Tort Claims Act].
However, the legislature consistently has provided that none of the funds appropriated in the biennial General Appropriations Act may be expended for the purpose of purchasing policies of insurance covering claims arising under the Texas Tort Claims Act. See Acts 1985, 69th Leg., art. V, ch. 980, § 56; Attorney General Opinion H-900 (1976). The restriction in article V, section 56, of the Appropriations Act applies only to claims under the Tort Claims Act and does not apply to liability insurance purchased under article 6252-19a, V.T.C.S. Article 6252-19a provides that
[t]he State Departments or Agencies who own and operate motor vehicles, aircraft and motorboats or watercraft of all types and sizes shall have the authority to insure their officers and employees from liability arising out of the use, operation and maintenance of such automobiles, trucks, tractors, power equipment, aircraft and motorboats or watercraft used or which may be used in the operation of such Department or Agency.
There is a distinction between appropriations for claims arising under the Torts Claims Act and those arising under article 6252-19a and the common law. See Attorney General Opinion H-158 (1973). See also Attorney General Opinions M-1257 (1972) (college may pay premiums on liability insurance on college owned vehicles under article 6252-19a); M-1215 (1972) (Parks and Wildlife Department may purchase liability insurance under article 6252-19a since prohibition against use of appropriated funds applied only to insurance coverage purchased under Torts Claims Act); M-521 (1969) (Appropriations Act prohibited purchase of insurance covering liability under Torts Claims Act); M-559 (1970) (Highway Department may purchase liability insurance as provided by article 6252-19a).
However, article 6252-19a permits only the purchase of insurance to cover liability incurred by the operation of a state-owned vehicle. See Attorney General Opinion M-559 (1970). It is our opinion that neither article 6252-19a nor any other statute authorizes the expenditure of appropriated funds to purchase liability insurance covering tort claims that may arise from the operation of the trust property. Since there is no statutory authority for the payment of such premiums by a state university, liability insurance to cover tort claims arising from the university's operation of the trust property may not be purchased with appropriated funds. See Attorney General Opinions
You ask whether the trust property is eligible for exemption from ad valorem property taxes under section 11.11 or any other section of the Tax Code. We conclude that the trust property in question is not taxable.
Article
As now defined by section
It is our opinion that the property in question is held and dedicated by the terms of the trust for the support and benefit of Southwest Texas State University. The Texas Supreme Court has stated that the word "dedicate" clearly means to appropriate and set apart one's private property to some public use. Viscardi v. Pajestka,
You ask about other sections of the Tax Code that may exempt the trust property from ad valorem taxes. Therefore, we mention that section 11.165 provides that farm products, which includes livestock and poultry, in the hands of the producer are exempt from taxation. Also, implements of husbandry used in the production of farm and ranch products are exempt from ad valorem taxation. Tax Code §
Very truly yours,
Jim Mattox Attorney General of Texas
Jack Hightower First Assistant Attorney General
Mary Keller Executive Assistant Attorney General
Rick Gilpin Chairman, Opinion Committee
Prepared by Nancy Sutton Assistant Attorney General
Barrington v. Cokinos , 161 Tex. 136 ( 1960 )
State v. City of Austin , 160 Tex. 348 ( 1960 )
Ford v. Moren , 1979 Tex. App. LEXIS 4470 ( 1979 )
Davis v. City of Lubbock , 160 Tex. 38 ( 1959 )
Parrish v. Looney , 1946 Tex. App. LEXIS 853 ( 1946 )
Smith v. Drake , 1936 Tex. App. LEXIS 506 ( 1936 )