Untitled Texas Attorney General Opinion

Honorable John Winters Opinion No. C-530
Commissioner
State Dept. of Public Welfare Re: Various questions concern-
Austin, Texas ing the State Department of
Public Welfare's plan for
implementing the State of
Texas projects authorized
by Senate Bill No. 163, Acts
of the 59th Legislature,
Regular Session, in compll-
ante with the agreements with
the Department of Health,
Education and Welfare as pro-
,vlded in Title V of Publio
Dear Mr. Winters: Law 60-452.
Your recent opinion request reads, in part, as follows:
“The Honorable Robert S. Calvert, Comp-
troller of Public Accounts, has raised some
questions in relation to the validity of some
of the aspects of the programs authorized by
Senate Bill No. 163, Acts of the 59th Legis-
lature, Regular Session, 1965,, in addltlon to
those answered in your Opinion No. C-464 dated
JULY 19, 1965.
"Questions in addition to those answered
iti Opinron C-464 are being raised in reference
to the Department's plan for implementing
the State of Texas projects authorized by
Senate Bill No. 163 in compliance with the
agreements with the Department of Health,
Education, and Welfare as provided for in
Title V.of Public Law 88-452.
"Pursuant to the authority contained in
'the foregoing Federal Laws and State Consti-
tut.lon and Laws, the State Department cf Pub-
lic Welfare has drafted tenatlve proijects
Honorable John Winters, Page 2 - C-530
for the purpose of assisting needy persons to‘,
secure and retain ewloymertt OP to attain and
retain capsbllPty for self-support, or personal
independence. The Department has entered into
tenatlve agreements wfth the Department of :
Health, Education, and Welfare for the purpose ., .-
of implementing these projects. The costs of
such projects wflY be borne by the Government
of the United States and all.funds will be made
avallabie to the State Department of Public Weld
fare through the Department of Health, EUuca-
tion, and Welfare.
“Although the various projects which are
in the formatfve stage will have variable Sunc-
tlons and purposes, the baa+ questions which
are being ralsed at this time will relate to
all of them. For the purpose of illustrating
the general principles Involved In the tenatlve
projects,’ we are using the project which would
involve an agreement between the State Depart-
. ment of Public Welfare and the Board for Texas
State Hospitals and Special Schools.
“The training project would be set up for ‘.
purpose of preparing trainees who are either
recipients of assistance for dependent children ~,
or are persons who dare not currently recipients
of Aid to~Famllles with Dapendent,Children, but
who have dependent children In the family. Under
this tralnl.ng project, the State Department, OS.
Public Welfare would have the eole responsibll-
lty for selectfng the trainees and would have
qualiffed personnel 0r the State Department.oi’
Public Welfare in s.upervisory rolea.
“The trainees, if.. recipients of Aid to -
Families with Dependent ChfIdren, would con-
tinue to receive their assistance grants. In .-
addition thereto they would be paid sums suffl-
clent to make up the difference between the
amount of their assistance grante and the amount
of their needs.
“This supplemental amount would be deter-
mined by the State Department’ of Public Wel-
fare in compliance with rulea and regulations
promulgated by the Department, in compliance
Honorable John Winters, Page 3 -. c-530
with the approved project, and in compliance
with the agreement with the Board for Texas
State Hospitals and Special Schools. This sup-
plemental amount would be paid exclusively out
of the tEconomlc Opportunity Fund - WelSare'
which Is all Federal funds.
"In the case oS the non-recipient, the
entire amount to meet the needs of the family
would -be paid out or the 'Economic Opportunity
Fund - Welfare'. All payments out of the 'Eco-
nomic ,Opportunity Fund - Welfare' for trainee8
on this project would be cointlngent upon the
person being reaponeib$e for the dependent chll-
aren. The training progect Is designed for the
purpose of assisting the parent or other rela-
tive responsible for the dependent children in
becoming self-sustaining through training. This
is the basic principle of Title V oS the Eco-
nomic Opportunity Act.
"Section 502 of Title V, Public Law 88-452
Place8 some limitations upon the projects. These
projects are subject to the lindtations contaln-
ea in Section 409(a) (1) to (6) inclusive, or
such Act (42 U.S.C. 609(a) (I)-t6)).
"Section 409 (a) provides for the formula-
tion and approval cir a State Plan IS awh Plan
Includes:
"'(1) provisions which, In the judgment of -
the Secretary, provide reasonable assurance that --
'l(F) any such relative will, with respect
to the work so performed, be covered under the
State workmen's compensation law or be provided
comparable proteotlon; and r
"Under rules and regulatlons promulgated by
the Secretary ana pureuant to this provision of
the law, the Department may provide 'comparable
protection' in the form of Insurance or a pooled
ma. The Department prefers to provide this
protection in the form of insurance from a
-2527-
.
. .
Honorable John Winters, Page 4 - C-530
private company for the proteotlon of the trainee
who might become ill or Injured on the proJect.
%n addition to the personnel of the State
Department of Publlo Welfare required as stated
above, the Board for Texas State Hospitals and
Special Schools would provide the materials re-
quired In training and would use lts.pereonnel
ror the aotufil supervision OS the trainees on
the prooJeot. It Is anticipated that the project
would be set up lnltlally for a period of one
year 8nd that the period of tralnlng for the
indlvldu8l trainee would range iron nix months to
a ye- depending upon the type of training and
the ruquirementr of the individual.
“It ir also anticipated that in addftlon to
a@wemnts with other State Agonoies tor the im-
pleaent8tlon of projects, the’bepartment say also
enter into a$reeamts with private oonoerns.or
. ;~~~~ala, for the purpose of tealnlng these
.
%ur baslo queetione e+re:
.* “1. Can the State Department or Public Welfam
enter Into 8 contract with a private lnrw-
anoe oomwny for the proteotlon OS the -
trainees on these pzvjeote and pay for in-
owance premiums out of these funds?
Can the Department provfde this proteotlon
through a ‘pooled fundr?
n2. Can the State Department of Public Welfare
pay the parent or other person responsible
for the dependent child or ohildren ln a
family, in addition to the public amlet- -
anoe grant or In lieu of the pub110 8sel8t-
81108 grant, for the pwpore of meet%ng the
need6 or the family uhlle the lndividlul irr
being trained?
“3. Can the State Department of Public Wel-
fare pay the Board for Texae State Hoe-
pltals md Special Schoola, any other
Honorable John Winters, Page 5 - C-530
State Agency, or any private concern, or
individual for the purpose of training
the parent or other person responsible
for the dependent child,or children?
“4 e Can we do all other.things necessary $0
carry out the provisions of this Act?
These Federal funds were deposited In the State Trea8Wy, hence
have become State funds. The State of maa and its agencies are
immune from tort llablllty in the absence of a preexisting statute
authorizing same. Brooks v. State, 68 S.W.2d 534 (Tex.Clv.App.
1934, error ref.); htkins v. State 123 S.W.2d 953 (Tex.Clv.App.
1939, error, diem., Judg. corr&ct)Atate v, 140 Tex: 620,
170 S.W.2d 652 (1943); Fonseca v. State, 29 199 (Tex.Clv.
APP. 1957); Art. III, Sec.44 f th Co Texas8 52 Tex. -
Sur.2d 750, State of Texas, Stc. 4:; 27 Tex. Law Rev. 349. Furthsr-
more, Sections 50 and 51 of Article III of the Constitution of Texrs,
prohibiting the Stats from lending Its credit or granting public
money or thing of value In aid of or to any Individual, a8SoclatlOn,
or corporation, the State and its agencies are held not authorlssd
to carry workmen~s compensation Insurance In performing any function
of govermsnt or administering a portion of government. 52 Tex.Jur.
26 752-754, State of Texas, Sees. 41 and 42. Consequently, Section
59 of Article III of the Constitution of Texas ha@ to be adoptad.ln
order for the Legislature to have the authority to enact workmen's
compensation laws. See Brooks v. State, supra, This section of
Article III now authorizes th Leglslature to paes iruch laws for
~"State employees" as In the ~glslaturetB "Judgment 1s necessary
or required. Pursuant thereto, the Legislature has only adopted
such legislation for University of Texas employees (Art. 8309d,
V.C.S. ), Texas A & M University employees (Art. 83@b), Texas
Technological College employees (Art. 8309f), and Texas Highway
Department employees (Art. 6674s).
However, It is our opinion that your department 1s not pro-
hibited from using these Federal funds to prcvlde for protective
insurance to cover the trainees pursuant to contract with a
private im3urer . We heretofore observed In Attorney Oeneral’s
Opinion C-464, dated July 19, 1965, and addressed to you, at
page 9 as follows:
‘The funds ftir Implementation of the planned
project or program, presently deposlted in the
Treasury of the State of Texae In a ape&al fund
known as the ‘Economic Opportunity Fund - Welfare’,
consist entirely of Federal funds paid to the
State Department of Public Welfare fo; carrying
out the planned projects or programs.
-2529,
Honorable John Winters, Page 6 - C-530
We thlnk the conclusion Is Inescapable that under the lw .
these Federal funds are impressed wlth a trust and that the
State of Texas has enacted an adopting State statute by which
It Is authorized to carry out the purposes of thls public trust
as provided and required by the Federal statute,‘, the Economlo
Opportunity Act.
The Legislature, recognizing the trust nature of the Federal
funds, proceeded to enact House Bill No. 12, Acts of the 59th
.Legislature, Regular Sesslon, 1965 (the General Appropriations
Act for the biennium beginning September 1, 1965 and ending
August 31, 1967), which appropriates the Federal Sun~$sand
stipulates the conditions under which such funds may be expended;
Reference Is made to Article V, Section 27 of said General Appro-
priations Act which provides as folPow8:
“Sec. 27. FEDEFLALFUNDS APPRDPRIATEDFORUSB.
Any funds received by the agencies of the State named
In this Act from the Unlted~states Ciovernmnt are
the amounts thereof and the purporeo Sor which t&y
were made shall be report+ to the Governor and the
&glslatlve Budget Board. (Undsrscoring added for
emphasis.)
It appears clearly that the United State8 Govesmment has
Intended to Impose upon'the states who accept the Federal funds
as transferee of the funds equitable duties (or conditions) to
deaLwIth same SOP the benefit oS the trainees, and the fact
that no formal or technical language wad used, euah a8 %rust'
or ?rustee", Is not controlling. The test OS whether a trust
was created is whether the Federal government, a8 settlor,
manifested an Intention to create.the kind OS relationship
which to lawyers 1s known as a tmrst. Scott on 'Prmsts, Vol. 1,
Seatlon 24, page 147; Bogert, Tmmts and Trustees, Vol. 1,
Section 45,‘pagerr 293, 294; Rertrrtement, Truste, Vol. 1, Chapter
1, Section 2, page 6.
A Sun&mental requisite of a tru8t is the separation of-the
legal estate from the equitable ertate and the beneilcial en-
gymp~ 54 Am.Jur., Trusts~ &otion 35, at page8 46 and 47;
. 0, Charities, Section 4, at page 587.
We are of the opinion that the Federal government, as settler,
Intended to create a trust which would be for a public purpose.
-2530-
.
Honorable John Winters, Page 7- C-530
It Is recognized generally that the state or L)overeign,
as well as public officers, may be a trustee with respect to
matters falling .wlthln Its Sunctlons. 90 C.J.S. 133, %ll8t6,
Sec. 204; 81 C.J.S. 1189, 1191, States, Sec. 154.
In 81 C.J.S. 1146, States, Sea. 132, the general rule is,
recognized that,
“With Respect $0 the handling OS public !'Unda,
the legislature is in a position similar to that
OS a trustee, and the rule of fiduciary law that
a trustee shall not be allowed to advantage’h$n-
self In dealing with trust funds is apporrite.
The .aaptlon 0f.S.B. No. 163 is clear In ” . . . authorle-
lng the State Department OS Pub110 UelSare to acoept and axpend
any Federal money8 allocated to the eaid Depa&sent iOr any
projects or pro@una established to carry out the pux~0808
OS this Act and for admlnlstratlve expen888 and/or sny other
expenses lncl,d8nk to the UlmlNstratlOn OS 8ald pro3ectr or,
ProgPws . . . .
,Section 2 OS the Act provi498 that * . . . uuah funds ahall
bd subject to withdrawalp, upon authorltatlon oi tha Comisrkonor
OS Public Welfare . . . . Ssation 3 ala0 repeat0 this pmvi8Son.
Under the statute no implqaentlng @tats fund6 whatever ill
required, and the Federal fund8 am trust fund8 ulalch are being
held In custody subject to withdrawal only Sor the purpo808
and admlnlstratlon of~the Fed8rU statute.
We have heretofore recognized and held that funds OS S-U,
character are to be impressed with a trlI8t when deposited in 8
special account with the State Triaasurer a8 oU8tOdim, and So
held and expended by state oSS%&als. See Attorney iknerel
Opinions m-565, WW-600, and W=.l32l, and authoritie8~olted.
The State Department of Public UecslSare has been delegated;
in broad and general terms - th8 tWk Of Shap1~ the 8PfNifiOO.
OS the job training progmms cont8mpl&?n3 under Title V OS th@
Economla Opportunity Act OS I*. In tNs rcyud, &atlOn 1 of
Senate Bill 163, full citation supra, provide6 in’pwtr
“Section 6-‘~. (a) The State Department of
Public Welfare Is hereby aa81mst8d as the State
Agency to cooperate with the Feaeru Government
'in the adminfstratfon of the p~vfsiOns of Tfa
Vorth 'E mi opportunity hct or 1304' anaGo?
he pdi8i~%?ckc8Uoh other applicable title8 OS
-253 l-
Honorable John Winters, Page 8 - C-530’
the lEconomlc Opportunity Act of 1964’ a8 a&! now
provided or as may be added thereto from time to
time in the event no other State Agency Is by l+w
designated to cooperate with the Federal Government
In the admlnistratlon of the provisions of such
title or titles as may be added to said Act, and
the Department Is directed to enact and promulgate
such rules and regulations as may be neceeear;Jr to
effect the cooperation as herein outlined and
designated.
“The State Deoartment of Public Welfare is
hereby authorized and directed to take all
necessm and Drover action to admlnlster the
programs contemlated In Title V and such other
applicable titleis of said Act and to cooperate
wlth the proper Departments of the Faderal
Oovernment and with all other Departments of
the state and local governments in the enforcement
and administration of such provisions of the
~Econtnnlc Opportunity Act of 1964’ and any
amendments thereto and/or any other related
Federal Acte enacted for the purpose of carrying
out the provisions of the ‘Economic @pportunlty
Actof 1964’ and any amendments thereto, and
the rules and regulations Issued thereto and in
caapliance therewith, in the manner prescribed
in this Act or as otherwise provided by law.”
(I@haSls added. )
Title V of the Economic Opportunity Act of 1964 authorizes
the federal govcznment to provide the state with funds for the
Job training of . . . persons who are unable to case for
themselves or their families . . .” at Section 501.
Insurance protection is clearly required by Section 502,
Title V of the Economic Opportunity Act as
to federal aid by clear reference therein
to (6) Inclusive of the Social Security Act
(1) to (6) Inclusive; see subsection (1)
There can be no doubt that the legislature, through the
means of leglalatlve adoption by reference throughout Section
6-A of Senate Bill 163, has conferred state authority to so
administer the Federal funds pursuant to Title V of the Econcnnlc
Opportunity Act. Baas v. Albright, 59 S.W.2d 891 (Tex.Civ.App.
1933, error ref.), and Its holding that,
-2532-
. .
Honorable John Winters, Page 9 - C-530
'Aa a method of leglslatlon In order to
avoid unnecessary verbiage express mfCIWN3
may be made-to lawa for the purpose of adoptI*
the provleioris of the law referred to . . . .
Thus, In further answer to your first question, you are advl6ed
that the State Department of Public Welfare can enter into a
contract with a private Insurance company for the protection
of the trainees on these projects and pay for +W%nce premlm
out of these federal funds. You can not provide lneurance pro-
tectlon through a pooled fund because there IS no tItatUtOrg
framework for the administration of such a fund.
In answer to your second and third ques$lone, you are adoind
that euch queatlona are answered In the aifIrEMIVe. With Pet-
erence to your all-lnclu~lve fourth queatlon, ue do not h8~
sufficient information to enable UE to anewer that question under
all of the possible situationa Inherent In It.
Senate Bill 163 and Public Law 88-452, "The Eoonomlc Oppor-
tunity Act of 1964", muet be read together In order to derive
the substantive meaning 8nd operative effect thereof, and quai-
Sled, where applicable, by reference to the Texas CaxMtitution;
particularly Section 51, kFtlcle III thereof, which provides.ln
part: .
I'l'he Legislature shall have no power to
~make any grant or, authorize the making of any
grant of.publia money@ to any individual,
association of Individuala, mqlclpal or other
corporations whatsoever, o . e
However,, the courts have not applied thle conatltutional
provision strictly, but on the other hand, they have held It
inapplicable where a governmental or public purpose for the
160 Tex. 348,
Tex. 1, 75 S.W.
Texas, Sec. 43.
Therefore, In each situation arielng, the test to be
applled 1% that of governmental or public purpose. Although
the statement of the test Is rlmple enough, its.apPllCation Is
made difficult by the app%rent Inability of our courts to 1~
down any definite rule appLicabPe to a31 situations. For
examtile, In Bland v. City of Taylor 37 S.W.26 291 (Tex.Clv.
.App. 1931), aff. 123 Tex. 39, 67 ti.2d 1033, the Court said:
-2533-
Honorable John Winters, Page 10 -. C-530
"What constitutes a public purpoae a8
contradistinguished from a private purpose
for which public funds may be applied has
been repeatedly before the courts of
practically every state In the Union and
the Supreme Court of the United States but
no court has undertaken to lay down with
minute detail an Inexorable rule that
would diatlngulah one from the other.
Obvltnpy no such rulh could be laid down
. . .
Other authorltler have observed:
"Frequently an object presents a double
aepect ln,that It may in some reepect result
ln conferring a benefit upon.the public and
ln other respect8 It may result in conferring
a benefit upon or in paying money to.prlvate
individuals. . . . It is plain that an expendi
ture la not neceesarlly barred, because,.lndi-
vlduals ae’auch may profit, Norris it necesearlly.
valid because of Incidental benefit to the
Allydon Realty
herein cited.
Thus, It Is to be seen that generally the casea, tend to
claaslfy expenditures aa for public or private purpore8 accord-
ze;;8what the courts construe to be their coneequences and
See 81 C.J.S. 1147, et seq., States, Sec. 133. In
Attone; General's Opinion v-1067 (1950), this office said
in part:
"In determining whether an expenditure of
public moneys constitutes a gift or a grant of
public moneys, *the primary question Is whether
the fun&s are used for a "public" or a "private"
purposei The benefits of the State from,an ex-
penditure for a "public .purpoae" is In the nature
of consideration and the funds expended are there-
fore not a gift even though private persons are
benefited therefrom. I"
The Attorney General, In, Opinion WW-1229, had occasion to
consider the question of determination of "public purpose" ex-
pendltureslnvolving the state ~vocatlonal rehabilitation program,
and what was there said 1s~ equally applicable to the situation
presented here:
-2534-
honorable John Winters, Page 11 - C-530
I “In deciding what la a public purpose,
aa opposed to a private purpose, it has been
held that a contribution by a state, or any
aubdlvlalon thereof, by way of taxation or
any’publla moneys, to retirement or dleabllltp
funds or programs ia not a donation for a
‘private purpose. 1 Bedford v. White, 106 Colo.
439, 106 P.2d 469 (1gO) The determination of
what constitute8 a ‘public purpose’ for which a
state may expend moneys has been held to be
primarily a legislative function subject to
review by the courts when abuaed, and the de-
termination of the leglalatlve body of the
matter has been held to be not subject to be
reversed exaept In instance8 where such deter-
mination la ‘palpably and manifestly’ arbitrary
and Incorrect. State ex rel. McClure v.
155 Oh’io st gt, N E m
The Leglslat&re oi this-&ate has
clearly indicated by its adoption of thla
program that It la within the realm of the
‘public purpose’ and it la hard to imagine
that the determlnatlon that the complete
vocational rehabilitation program a8 outlined
la a ‘public Turpoee’ would be h+d by the
courts to b$. Mnlfeetlg Incorrect and
arbitrary. ’
In, testing the validity of the expenditure, the.courts will
look to the charaoter of the use for which the money is expended,
not who receive8 It. 81 C.J.S. 1148, Statea,. Sec. 133. Come-
quently, the parent8 aa well aa the child may receive the money,
as the public character of’ the use may oonelder then entire
femll needs. c 307
P.2d $6 (co1.Dlat.ct. Of ApP. ,19571.
The public purpose of such expenditures as are authorized
by the Economic Opportunity Act of 1964, which is aimed at
poverty from unemployment, has been $adiolally reco !fgg $
the Supreme Court of Texas In Friedman v. American
of New York, 137 Tex. 138, 151 s.w.2d 5-1:
Unemployment alwaye has had, and
always ;iil’have, a very profound influence won
the public welfare, The evils whloh attend it
permeate every part of our social, economic, and
polltlcal structure. Unemployment bears in its
wake va&rency. crimes, reduction in marriage,
deterioration in health, and destruction of family
-2335-
Honorable John Winters, Page 12 : c-530
life. It not only Impaira the health of the
of the youth of th; land It foostere and Qroducee
other eviI13 too numaroua’to mention. This Act
was Intended to lessen those evils. To our mind&
no court ought to say that such a DurpoBe 16 Out-
side OS the admlnlatration of Ctovernment.”
m~har~e aaaea.1
We have also heretofore upheld the constitutionality of
job tralnln of parents of deQendent children in Attorney General’
Opinion CA! 4 (1965).
It ‘le~our opinion that the apeqlflc programs and expendi-
tures of Federal funda lnqulred about do not violate Se&Ion
51 of Art. III o? tha Constitution of Texas.
The Su reme,Court OS Texas, In State v. City-
160 Tex. 348 33l S.W.2d 737 (1960) said ln part, In referring
to Section 5i, Art. III of our Conetltutlon:
The purpose of this section - .
(1
.of the k&ktutlon la ‘to prevent the aQpi1:
cation of pub110 funds to rlvats’purposee .
v, city of 8a liar, 118 Tex. 28, “’
When Texas adopted by statute the.FederaI QrOgmtIt, lncludlng
its etandardq and condltlone, to carry out- the public ,purQose of
carrying out unemployment pollclee nation-wide In BCOQe, it
‘did what ha8 already been upheld In other states aa legally valid
and within the powers of state government for public or govern-
mental puzpoees, 81 c,s.S. 896, Statee, Sea. 7; Masaachusette
v. Mellon, 43 S. Ct. 597, 262 U.S. 447 (1923); Warm v. City of
Clnclnat61, 1 Ohio Supp. 27 Aff. 11 N.E.2d 281 (1 37) NGO
) 377 S W 2d ii!h (1964)* 8tarr v. Na&!lli.efl
hc&ity, D.6. ‘Tenn., 145 Q.‘buQQ. 49U, Aff. 394 . .
.
*
. SUMMARY
-------
The State Department ofPublIc Welfare may enter
into a contract with a private Insurance company for
the protection of the trainees on the project8 and
pay for lneurance premiumsout of the funds appro-
Qrlated under the Economic Opportunity Act of 1964.
Honorable John Winters, Page 13 - C-530
It may pay the parent or other person relrponelble
for the dependent child or children In a family, In
addition to the public aaelstance grant or in lieu
of the public assistance grant, for the purpose of
meeting the needs of the family while the lndlvl-
dual 18 being trained. It may ale0 pay the Board
for Texas State Hospitals and Special Schoole,
any other State Agency, or any private concern,
or individual for the purpose of tralniqthe .-
parent or other pereon responsible for the depend-
ent child or children.
Yours very truly,
WAOOONEA CARR
Attorney Qeneral of Texas
APPIy)VED:
OPINION COMMITTEE
W. V. .Oeppert, Chairman
Bob Flower6
Marietta Payne
Milton Richardson
Arthur Sandlln
H. Orady .Chandler
APPROVED FOR THE ATTUUGY GENERAL
BYz
T. B. Wright
-2537-