                               January 17, 1975




The Honorable Leonard Prewitt                           Opinion No. 498
Executive Secretary
Teacher Retirement System                               Re: Does section 48a of article
  of Texas                                              3 of the Constitution permit the
1001 Trinity Street                                     Legislature to appropriate funds
Austin, Texas 78701                                     to match all or a portion of the
                                                        contributions made to the
                                                        Teacher Retirement System in
                                                        the firm of deposits for out-of-
                                                        state service credit?

Dear Mr.   Prewitt:

        You have asked whether section 48a of article 3 of the Texas Constitution
permits the Legislature to appropriate funds to match all or a portion of the
contributions made to the Teacher Retirement System of Texas in the form of
deposits for out-of-&ate service credit.

        Each member of the teacher retirement system is required by section
3.57 of the Texas Education Code to contribute 6% of his annual compensation
to the retirement fund. However, section 3.02 of the Code defines “annual
compensation” to include only the first $25,000 that a member is paid each year.
Thus, a member is not required to contribute to the fund any portion of his annual
compensation in excess of $25,000.

       In addition,   section 3.26(a)   of the Texas Education Code provides that:

               Any member of the retirement system who has been
               employed as a teacher in any public school system
               maintained in whole or in part by any other state or
               territory of the United States or by the United States
               for the children of United States citizens may purchase
               equivalent membership service credits under this
               retirement system for such teaching.


                                    p. 2243
The Honorable Leonard Prewitt     page 2    (H-498)




A teacher who wishes to purchase the membership credits pays deposits into
the retirement fund as calculated in further provisions of section 3.26.

        Section 3.58 of the Education Code provides that the state “shall contribute
during each year an amount equal to the collective deposits paid by all members
of the retirement system during that same year. ” Since the collective deposits
include the deposits made under section 3.26, it is our opinion that the state is
authorized under section 3. 58 to contribute to the retirement fund during each
year an amount equal to the deposits made in the same year by employees
purchasing credit for out of stateteaching under section 3.26.

        However, as we stated in Attorney General Opinion H-497 (1975), the
maximum amount that the state can contribute to the fund is limited by article 3,
section 48a of the Texas Constitution which provides:

            In addition to the powers given the Legislature
       under Section 48, Article III, it shall have the right
       to levy taxes to establish a fund to provide retire-
       ment, disability and death benefits for persons em-
       ployed in the public schools, colleges and univer-
       sities supported wholly or partly by the state; pro-
       vided that the amount contributed by the state to
       such fund each year shall be equal to the aggregate
       amount required by law to be paid into the fund by
       such employees, and shall not exceed at any time
       six per centum (6%) of the compensation paid each
       such person by the state and/or school districts; . . .

    The second clause of the proviso in section 48a provides that the maximum
amount that the state can contribute to the fund each year is 6% of the compen-
sation paid to participating employees.   Unlike the statute (section 3.02), there
is no constitutional limit on the maximum amount of salary on which matching
contributions can be made by the state.   Therefore, it is our opinion that in
computing the maximum allowable state contribution, the total salaries of all
participating employees may be used. Since some covered employees earn
in excess of $25,000 per year, it is possible that the state is not currently
contributing to the maximum amount allowable under the Constitution.

     We therefore answer your question that within the limits prescribed by
article 3, section 48a of the Texas Constitution, the Legislature may appropriate



                                  p. 2244
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    The Honorable Leonard Prewitt,    page 3 (H-498)




    funds to match all or a portion of the contributions made to the Teacher
    Retirement Ikid under section 3.26 of the Texas Education Code.

                           SUMMARY

               Within the limits prescribed by article 3, section 48a of
           the Texas Constitution, the Legislature may appropriate
           funds to match all or a portion of the contributions made to
           the Teacher Retirement Fund under section 3.26 of the
           Texas Education Code.

                                                 Very truly yours,




                                                 Attorney General of Texas

    APPROVED:




     l2adlLq
    DAVID M. KENDALL,      Firs   Assistant




    C. ROBERT HEATH,       Chairman
    Opinion Committee




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