Untitled Texas Attorney General Opinion

April 14, 1971
Hon. 0. F. Dent, Chairman Opinion No. M-836
Texas Water Rights Commission
Sam Houston State Office Bldg. Re: Validity of deferred
Austin, Texas compensation and pen-
sion benefits for
certain executive
'employees of the
Dear Judge Dent: Sabine River Authority.
In yourletter, of March 31, 1971, you requeet an opinion
of this office concerning the legal validity of the deferred
compensation and pension plan of the Sabine River Authority
for certain of its executive employees.
According to the-plan, a copy of which you attached to
your letter, the Authority will agree to set aside a special
fund out of which they will pay deferred compensation to
the executives after their retirement, or the Authority may
create this fund by purchasing life insurance on the lives
of the executives in sufficient face amount to provide the
deferred compensation. The problem is whether this plan
contravenes the constitutional provision contained in
Sections 44, 51, 52 and 53 of Article III of the Consti-
tution of Texas against gifts, grants, and gratuities.
We hold that such deferred compensation and pension
plan, does not contravene these constitutional provisions
or any statute of Texas. It is first observed that al-
though there is no appropriation for the contemplated
expenditure, State Treasury funds are not to beg utilized
for the payment of the compensation to the executive
employees of the municipality. Consequently, Article III,
Section 44, Constitution of Texas, requiring a pre-existing
law before any state money may be appropriated, is not
applicable to the situation presented.
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Hon. 0. F. Dent, page 2 (M-836)
Although not paid to the executive immediately and di-
rectly, the funds are paid to a special fund for the ultimate
use and benefit of the executive. The funds to be paid to a
retired executive are not gratuities because he does not get
them unless he works and performs executive services for the
Authority and continues such work for at least five years.
And he ultimately receives~ comoensation onlv in oronortion
to the length of-time he works: Friedman v: American Surety
Co. of New York, 137 Tex. 149, 151 S.W.Zd 570 (1941); Byrd
v. City of Dallas, 118 Tex. 28, 6 S.W.2d 738 (1928); Attorney
General's Opinion No, WW-215 (1957).
The Sabine River Authority (through its Board of Direc-
tors) has the authority and power to employ and fix the com-
pensation for such executives and employees as are necessary
to carry out the functions and duties of a water supply and
control district. Art. XVI, Sec. 59, Tex. Con&.; Art.
8280-133, Sec. 10 and 14 (n), V.C.S. And it has the authority
to enter into such contracts and agreements as are necessary
or convenient to carry out any of the powers granted by
Article 8280-133. See Sec. 14(o) of this Article. Thus,
if the Sabine River Authority decides to employ and com-
pensate certain of its executives in accordance with the
terms of the agreement heretofore outlined, this decision
is within its power and authority.
SUMMARY
------_
The Sabine River Authority has the power
and authority to enter into a deferred
compensation and pension plan with its
executive employees, and such deferred
compensation, not payable out of State
Treasury funds, is not a gift, grant, or
gratuity of public funds within the mean-
ing of Sections 44, 51, 52, or 53 of
Article III of the Constitution of Texas.
Yours very truly,
CRAWFORD C. MARTIN
Attorney? General of Texas
.
by
%2i%&&
NOLA WHITE
First Assistant
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Hon. 0. F. Dent, page 3 (M-836)
Prepared by Richard W. Chote
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
Ralph Rash
John Reeves
Jack Goodman
Joseph Sharpley
MEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
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