         TRE
                        OF         EXAS



                         August 26, 1957


Dr. Henry A. Holle           Opinion No. Ww-241
Commissioner, State
 Department of Health        Re:    Handling of funds received from
Austin, Texas                       the federal government and va-
                                    rious municipalities pursuant to
                                    provisions of House Bill 434,
                                    Acts of 55th Legislature, Regu-
Dear Dr. Holle:                     lar Session, 1957.
          Your request for an opinion, dated August 12, 1957,
concerns the interpretation and execution of the provisi,ons
of House Bill 434, page 235? Acts 55th Legislature, Regular
Session, 1957.
          The Act was designed to enable the State to partici-
pate in and receive grants pursuant to the Federal Rousing Act
of 1954, as amended. The latter Act, and the administrative
rules promulgated pursuant thereto, make federal funds avail-
able to state planning agencies to "facilitate urban planning
for smaller communXties lacking adequate planning resources",
The federal grants in each instance shall not exceed 5C per
centum of the estfmated cost of the work for which made. The
remainder of the aggregate costs must be provided by the state
and may be derived by the latter from "various sources such as
state appropriations,,gifts or contributions of cash or tech-
nical services from afded municipalities". House Bill 434
designates the State Department of Health as the State agency
to receive said federal funds and to contract with reference
thereto,
          In connection with the foregoing, you have propounded
for our consideration the following questions:
          1. May the Department of Health assess each
     particfpattig city a sum9 in addition to the ac-
     tual project costs, sufficient to employ personnel
     needed to effectively administer the program7
          2.  If the funds from the federal government
     and from the applicant-city are deposited in the
     State Treasury, canwarrants against such a special
     account be issued?
Dr. Henry A. Holle, page 2   (~~-241)


          3.  If there is no authority for depositing
     funds from municipalities in the State Treasury
     and withdrawing them, can the funds received from
     the federal government and from the municipalities
     legally be deposited in a local bank and checks
     issued against said account for planning services
     rendered in order to carry out the planning program?
          4.  If either of the above mentioned proced-
     ures are not authorized, will you kindly suggest to
     us, if possible, the procedure for handling these
     funds which will permit us to carry out the intent
     of the provisions of H.B. 4347
          Section 1 of House Bill 434 provides as follows:
          "The State Department of Health is hereby au-
     thorized, upon request of the governing body of any
     municipality having a population of 25,000 or less
     in this State; (a) to arrange planning assistance
     (including surveys, urban renewal plans, technical
     services and other planning work) and to arrange
     for the making of a' study or,report upon any planning
     problem of such municipality, submitted to the State
     Department of Health, providing however that the em-
     ployees of the State Department of Health shall not
     themselves make such surveys, studies or reports. (b)
     to agree with such governing body as to the amount,
     if any, to be paid to the State Department of Heal~th
     for such service, and (c) to apply for and accept
     grants from the Federal Government or other sources
     in connection with any such assistance, study, or re-
     port, and to contract, with respect thereto. The
     regular functions of the Texas State Department of
     Health may be utilized on this program, provided
     that any additional employees shall be paid from
     sources other than General Revenue funds of the State."
          It is noted that the Legislature has not appropriated
any state funds to carry out the provisions of House Bill 434.
Section lb of the Act authorizes the State Department of Health
to agree with the governing body of each participating city as
to the amount, if any, to be paid to the State Department of
Health and Section lc prohibits use of general revenue funds to
employ additional personnel for such service. We think it clear
that the Legislature contemplated that the state's share of the
project costs should be derived from the participating cities
with the single exception that the regular functions of the De-
partment of Health may be utilized.
Dr. Henry A. Holle, page 3   (W-241)


          House Bill 434 authorizes the State Department of
Health and the participating city to agree on the amount to be
paid by the city. The amount agreed upon can doubtless include
not only the state’s pro rata share of the project cost but may
include, if necessary, an additional sum representing the city’s
fair share of the added administrative costs, of a continuing
nature, incurred by the Health Department in administering tl;;?
          This vfew ffnds support in the fact that House Bill
r:
 ;tgig,essly prohibits the use of general revenue funds for
such purposes but indicates that funds derived from other S~LTQB
may be so expended. 'The distribution and assessment of such
costs must, of course, be fairly and equitably made as between
the various cities.
          Your ffrst question is accordfngly answered in t&   af-
firmative.
          Your second question involves the handling and MS-
bursement of the funds received from both the federal government
and the municipalities. A careful analysis of the objects
sought to be attained by House Bill 434 and the Federal Housing
Act of 1954, excludes the idea that such funds should be depos-
ited in the general revenue fund and be subject to payment only
by legislative appropriatfons, We think that such monies may
properly be placed in the hands of the State Treasurer, but not
in the State Treasury, who becomes a custodian or trustee there-
of, disbursing same under the directions of the State Department
of Health in fulfillment of the purposes for which saze were
received. In other words, the funds here provided ari-trust
funds and do not belong to the State in its sovereign capacity,
but are received and are to be expended for a special purpose.
          This view is supported by the Supreme Court of Texas
in the case of Friedman vO American Surety Co. of ?IewYork,
151 S.W.2d 570s In discussing a special fund (Unem>lzy?ent Pom-
pensation Fund) the Court said:
          "The money here involved is not the property
     of the State in any capacity but is a Trust Fund
     to be held out of the State Treasury, but in the
     hands of the State Treasurer as trustee, for the
     benefit of a class of employees. O O O
          "In Manion v. Lockhart, 114 S.W.2d 216, this
     court clearly decided that it is not in violation
     of our constitution to make the State Treasurer
     custodian of a fund that does not belong to the
     State, and does not belong in the State Treasury."
                                                             -        ..
                                                                 -.        __




Dr. Henry A. Holle, page 4   (WW-241)


          See also: Manion v* Lockhart, State Treasurer, 131
Tex. 175, 114 S.W.2d 218; Smith v. Paschal, 1 S.W.2d 1086 (Tex.
Comm.App..);Tatum v. Wheeless, 1.80 Miss. gO0, 178 So. 95; 108
A.L.R. 595.
          In reply to your second question you are advised that
the funds received from both the federal government and the mu-
nicipalities may properly be placed in the hands of the State
Treasurer, but not in the State Treasury, as a trust fund, and
be disbursed therefrom for the purposes for which received.
          In view of our answer to your second question, it be-
comes unnecessary that we answer the last two questions.
                             SUMMARY
          Pursuant to House Bill 434, Acts 55th Legisla-
     ture, Regular Session, 1957, page 235, the State
     Department of Health is authorized to agree with
     each participating municipality as to the latterrs
     pro rata share of the project costs. The amount
     agreed upon may include an additional sum repre-
     senting each city's fair share of the added adminis-
     trative costs, of a continuing nature, incurred by
     the State Department of Health in administering the
     Act.
          The funds received by the State Department of
     Health from both the federal government and the par-
     ticipating municipalities may properly be placed in
     the hands of the State Treasurer, but not in the
     State Treasury, as a trust fund, and be disbursed
     therefrom for the purposes for which received,
                                 Very truly yours,
                                 WILL WILSON
                                 Attorney General of Texas

Lp:jl:wb
APPROVED:                           Lbonard Passmore
                                    Assistant
OPINION COMMITTEE
H. Grady Chandler, Chairman
Mary Rate Wall
W. R. Hemphill
Roger Daily
REVIEWED FOR THE ATTORNEY GENERAL
BY:       Geo. P. Blackburn
