                          The Attorney                General of Texas
                                             September         10,   1979

MARK WHITE
Attorney General


                   Honorable John J. Kavanagh, M.D.                  Opinion No. MW-5 5
                   Commissioner
                   Texas Department   of Mental Health               Re: Authority       of Department    of
                     and Mental Retardation                          Mental      Health      and     Mental
                   Box 12668                                         Retardation     to pay community
                   Austin, Texas 78711                               centers for start-up costs prior to
                                                                     receiving services.

                   Dear Dr. Kavanagh:

                          You ask whether a facility of the Texas Department         of Mental Health
                   and Mental Retardation     is authorized   to contract   with a community    center
                   created pursuant to article X47-203, V.T.C.S., to plan, develop, and provide
                   community-based    residential   services.   Although you have provided us with
                   examples of specific contracts       which illustrate   your inquiry, neither your
                   question nor our answer is specifically        directed   to the details of those
                   contracts.

                          The Texas Department         of Mental Health and Mental Retardation
                   consists   of the Board         of Mental      Health     and Mental         Retardation,
                   commissioners,      staff    members,   and    thirty    facilities,    including     state
                   hospitals.    V.T.C.S. art. 5547-202, § 2.01. All administrative,           rule-making,
                   and decisional      powers granted     by article     5547-202       are vested     in the
                   commissioner,     subject to policies formulated       by the board.        V.T.C.S. art.
                   5547-202, § 2&b).       Section 2.13 of article 5547-202 provides as follows:

                                   The Department      may cooperate,     negotiate     and
                                contract  with local agencies    . . . [and1 community
                                centers . . . to plan, develop and provide community-
                                based mental health and mental retardation      services.

                   Section   2.17(a) provides:

                                    From funds available        to it the Department      is
                                 authorized  to provide       mental   health  and mental
                                 retardation services through the operation of halfway
                                 houses, community     centers,    and other mental health
                                 and mental retardation     services programs.




                                                    P.   173

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Honorable   John J. Kavanagh,   M.D.     -   Page Two      (HW-55)



These provisions authorize the department        to contract with community centers to provide
mental    health    and mental      retardation  services.   Since section     2.llfb) vests  the
department’s     administrative   and decisional powers in the commissioner,     subject to board
policy, agreements      between a facility of the department     and a community      center must
have his approval.     The contract terms must be consistent    with board policy.

       You next ask whether a facility of the Texas Department             of Mental Health and
Mental Retardation    is authorized    to pay the community   center for start-up costs incurred
prior to providing such services to clients as consideration        for the center’s planning and
developing such services.       It is suggested  that payment   in advance of the provision of
services violates article III, section 50 of the Texas Constitution,     which provides:

               The Legislature   shall have no power to give or to lend, or to
            authorize the giving or lending, of the credit of the State in aid of,
            or to any person, amociation      or corporation,     whether municipal or
            otho,,, or to pledge the credit         of the State        in any manner
            whatsoever,     for the payment        of the liabilities,        present   or
            prospective,  of any individual, association      of individuals,   municipal
            or other corporation   whatsoever.

Article III, section 52, a similar constitutional       provision, prohibits the legislature from
authorizing   political subdivisions to lend their credit or grant public money to individuals
or corporations.      In construing this provision, a Texas court stated as follows:

               Many cases could be cited which involve an arrangement        between
            two governmental      entities in which one rendered agreed services to
            the other in exchange for money paid at a different      time than when
            services were rendered,.      . . Two requirements   must be met in such
            a transaction.     (11The purpose for which the obligation or payment
            or transfer     was made must be within the Dower of the entitv
            incurring    the obligation    or making the payment      or transfer   01
            funds.    City of Aransas Pass v. Keeling, ll2 Tex. 339, 247 S.W. 818
            (1923). (2) The political entity that receives      the funds has to be
            obligated (by statute      or contract1 to use the funds for the public
            purpose.     Road District No. 4, Shelby County v. Alred [sic], 123
            Tex. 77, 68 S.W.2d 164 (19341.

State ex rel. Grimes County Taxpayers Association v. Texas Municipal Power Agency, 565
S.W.2d 258, 265 (Tex. Civ. App. -              Houston [lst Dist.1 1978, no writ).       The court
determined      that payments    by four cities to the Texas Municipal     Power Agency were not
grants, donaticns,     or gratuities,  but instead “‘.:ere payments     made for services rendered
and to be rendered.”      Supra at 265. These payments do not violate article 3, section 52 of
the co::stitution.    See also San Antonio River Authority v. Sheooerd, 299 S.W.2d 920 (Tex.
1957) (county could pay tax money to reclamation              authority   to furnish flood control
program over 30-year period); Attorney           General Opinion H-74 (19731 (Blind Commission
may advance to its employees expenses to be incurred).           In our opinion, article III, section




                                               P.   174
Honorable     John J. Kavanagh,      M.D.      -     Page Three       (MW-55)



50 does not prohibit        advance payment           by one governmental     entity    for services   which
another governmental        entity is obligated      to render in the future.

         It is also suggested that the following statute          presents the only instance   in which one
agency      of the state may make an advance payment              to another:

                  All State Agencies    and Institutions are authorized to make
               advance payments to Federal and State Agencies for merchandise
               purchased from such agencies when advance payments will expedite
               the delivery of the merchandise.

V.T.C.S. art. 658a.        In our opinion, this statute     provides an exception    to articles 655
through 658, V.T.C.S., relating to payment for goods and services purchased through the
Board of Control.      These provisions require payment for goods and services only after they
have been inspected       by the recipient    agency and the invoice has been approved by the
Board of Control and the Comptroller.              We believe these provisions and the exception
found in article 658a apply only to services purchased through the Board of Control.               We
find no indication     in sections Z.ll(b) and 2.17(a) of article 5547-202 that the department
 must work through the Board of Control to purchase mental health and mental retardation
services from a community         center.   Article 664-3, V.T.C.S., the State Purchasing Act of
1957, authorizes the Board of Control to contract for “only services of the type heretofore
contracted     for by the State Board of Control. . . .I’ Sec. 3(b).         Cf. Attorney     General
Opinion M-316 (1968) (community            centers  may not make purchases        through Board of
Control).    We do not believe that article 658a, V.T.C.S., bars the department           from paying
start-up   costs prior to receiving mental health or mental retardation           services from the
community     centers.    Any contract    must of course be properly entered into as stated in
answer to your first question.

                                                   SUMMARY

               The Texas Department         of Mental Health and Mental Retardation
               may contract       with community   centers to provide community-based
               residential     services.   The department     may pay the community
               centers     their start-up    costs incurred   prior to providing    such
               services to clients.




                                                         MARK        WHITE
                                                         Attorney    General of Texas

JOHN TV.FAINTER, JR.
First Assistant Attorney General

TED L. HARTLEY
Executive Assistant       Attorney   General




                                                        P.   175

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Honorable    John J. Kavanagh,   M.D.   -   Page Four         (MW-55)




Prepared    by Susan Garrison
Assistant   Attorney General

APPROVED:
OPINION COMMITTEE

C. Robert Heath, Chairman
Martha Allen
David B. Brooks
Susan Garrison
Rick Gilpin
William G Reid
Bruce Youngblood




                                                p.      176




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