                      THE   ATTORNEY    GENERAL
                               OF TEXAS

                              August 25, 1988

JIM MATF~x
ATTORNEY   ORNERAI.




   Honorable Jim Hightower          Opinion No. JR-946
   Commissioner of Agriculture
   P. 0. Box 12847                 Re:    Authority of the legisla-
   Austin, Texas 78711             ture to transfer funds from the
                                   Produce Recovery    Fund   Board
                                   into the General Revenue    Fund
                                    (RQ-1377)

    Dear Mr. Hightower:

         An act of the 69th Legislature provided for the trans-
    fer of $337,348 from the Produce Recovery Fund  (hereinafter
    "the fund") to the General Revenue Fund at the end of the
    1986-1987 fiscal year. Acts 1986; 69th Leg., 3d C.S., ch.
    16 (hereinafter "S.B. 6"). You ask whether the legislature
    had authority to make such transfer.

         The Produce Recovery Fund is a "special trust         fund"
    established by Acts 1977, 65th Legislature, chapter 386 (now
    chapter 103 of the Agriculture Code) for the payment          of
    claims against commission merchants and retailers      licensed
    by the Department of Agriculture to "handleV* vegetables     and
    citrus fruit under chapters   101 and 102 of the code.       The
    fund provisions replaced a prior requirement that licensees
    be bonded.     The fund    *   maintained   "with the      state
    treasurer" and "administeizd    by the department,       without
    appropriation."    License renewal   fees and late license
    renewal fees under sections lp1.008 and 102.008, fees levied
    against licensees specifically   for the fund under section
    103.001, and fifty percent of penalties         assessed   under
    sections 101.020, 102.021 and 103.013, go into the -fund.
    Interest earned on such money stays in the fund.         Section
    103.002(e).   Section 103.009 provides that  if  the department
    pays from the fund a claim against a licensee, the licensee
    shall reimburse the fund on a schedule to be determined       by
    rule of the department.   Section 103.002(d) provides that no




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Honorable Jim Hightower - Page 2    (JR-946)




more than ten percent of the fund may be
                                            eYended
year for administration of the claims process.              in   any

     According to information given in your request,    the
$337,348 dollars transferred  from the fund by S.B. 6 was
part-of  an approximate  $525,000 surplus remaining in the
fund at the end of the 1986-1987 fiscal year.       Section
103.008 provides in subsection (e):

           Payments from the fund during    a fiscal
        year may not exceed the amount of money
        deposited into the fund during that fiscal
        year, except that surplus funds remaining  at
        the end of each fiscal year are available for
        the payment of claims during any succeeding
        year.

     Section 1 of Senate Bill 6, however, provided in part
that "this    Act supersedes'  any law    restricting  the
expenditure of [the transferred   funds] to a particular
purpose."

      The Produce Recovery   Fund is not a Qconstitutional
fund," and is thus not subject to the provision of Texas
Constitution article VIII, section 7 that "[t]he legislature
shall not have power to borrow, or in any manner divert from
its purpose, any special   fund that may, or ought to, come
into  the Treasury." Gulf Ins. Co. v. James, 185 S.W.Zd  966
 (Tex. 1945); Brazes   River Conservation   and Reclamation
pistrict v. McGraw, 91 S.W.2d 665 (Tex. 1936).

     Your request  letter and the letter we have received
from the Comptroller*s    office in connection    with your
request both suggest that resolution of the question whether
the Produce Recovery Fund is in fact a "trust fund" should
be dispositive of your question as to the propriety of the
Legislature's diversion of the $337,348 from the fund to the
General Revenue Fund.

     However, as   Attorney   General    Opinion   JM-539    (~1986)
stated:

        [E]ven in the case of a statutory trust fund,
        the Texas Supreme Court has ruled that, so



     1. You do not ask, and we do not address, any question
as to the constitutionality of the Produce Recovery Fund.




                               p. 4773
    Honorable Jim Hightower - Page 3   (JM-946)

C




           lona as no vested     riaht is imnaired. an
           amendment that serves to alter or reduce a
           benefit  heretofore   aranted bv statute is
           mssible.       (Emphasis added.)

         CL v of Dallas v. Tram     101 S.W.2d 1009 (Tex. 1937).
    Es&&     Woods v. Reu   I 218 A.W.2d 437 (Tex. 1949): Board
    g
    Pension Board of the Pension Svstem for the Citv of Houston,
    449 S.W.2d 33 (Tex. 1970); Devon v. Citv of San Antonio, 443
    S.W.2d 598 (Tex. Civ. App. - Waco 1969, writ ref'd); and
    Attorney General Letter Advisory No. 5 (1973).

         Clearly, no vested  rights will have been impaired by
    the S.B. 6 diversion unless and until the fund is actually
    depleted, and then only to the extent that the fund's
    depletion and consequent insufficiency for meeting claims6iz
    attributable to the diversion of fund moneys by S.B.       .
    Your request  letter indicates, however, that the fund is
    still viable, having a balance of approximately $141,600  as
    of Warch 8, 1988, the date of your request.

         Neither  your request nor the comptroller's  letter
    discuss whether  any vested rights have been or will be
    impaired by the S.B. 6 diversion.

         Given the highly speculative   nature of any argument
    that actual claimants* rights might eventually be impaired
    by virtue of the S.B. 6 transfer, we decline to hypothesize
    circumstances under which such impairments might occur or to
    rule whether the S.B. 6 transfer was unlawful as a result of
    such at present only potential impairments of vested rights.

         You also ask:

               If the legislature does have the authority
            to make such a transfer,    and the Fund is
            depleted, what is the Board's responsibility
            as to the awarding of payment on valid
            claims?




         2. h'ven apart from the operation  of S.B. 6, there is
    no guarantee under the statutory scheme of chapter 103 that
    the fund will not be depleted.  See the discussion below of
    your second question.




                                 p. 4774
Honorable Jim Hightower - Page 4    (JM-946)




     The board you refer to is the Produce Recovery   Board,
which has the duty of advising the department       on "all
matters relating to the fund" and of conducting hearings  on
disputed claims. Sections 103.003 et sea.

     We have    difficulty   discerning   any lesml    issues
presented by your second question.    Particularly under the
circumstances assumed by your question,     that the S.B. 6
transfer was lawful -- i.e. that no vested rights have been
or will be impaired -- we do not believe that the board's
legal "responsibilities@' are altered by virtue of the S.B. 6
transfer.

     Even apart from the operation of S.B. 6, there is no
guarantee under the statutory scheme of chapter 103 that the
fund will not be depleted.   Your request letter   ind,icates,
for example, that for the fiscal year    1987-1988 up to the
date of your letter (March 1, 1988) $47‘422.75 had come into
the fund while $99,396.05 had been paid out. It is obvious
that such a revenue shortfall vis a vis expenditures is not
the result of the diversion of funds under S.B. 6, but is a
result, rather, of the statutory scheme of chapter 103 which
makes no provision  to assure that the fund has sufficient
revenues to meet claims and administrative expenses.

         The Department of Agriculture  acting on the advice  of
the board appears to have broad rule making authority      under
section 103.004 for confronting. such cash flow difficulties
by    reducing the amounts paid out in claims under      section
103.008.      The latter section generally only sets ceilings on
such payouts on claims. Amounts or percentages of claims to
be paid out could, we think, be reduced by administrative
rule.

     Also, the department may seek, via its rule making
authority under section 103.009 and perhaps by more diligent
efforts generally,  to increase the amounts     obtained  in
reimbursements under that section.

     Whether appropriations should be made to replenish  the
fund if depleted is of course a matter within the purview of
the legislature.



             The transfer   of   $337,348  from  the
        Produce Recovery Fund to the General Revenue
        Fund by  operation  of Senate Bill 6, 3rd
        Called Session, 69th legislature, was lawful
        so long as it did not impair any vested




                               p. 4775
Honorable Jim Hightower - Pag.e 5 :UM-946)




        rights.    The  transfer might      result   in
        impairment   of vested    rights of     certain
        claimants,   if  the transfer      results   in
        depletion of the Produce Recovery Fund such
        that their claims cannot be paid. That any
        vested rights will be-impaired is, however,
        only a hypothetical    possibility   since the
        fund is at present still viable.

           S.B. 6 did not alter      the legal respons-
        ibility of the Produce       Recovery  Board in
        administering the fund.

           Whether appropriations should be made to
        replenish the fund if depleted, is of course
        a matter within the purview of the legisla-
        ture.




                                     JIM     MATTOX
                                     Attorney General of Texas

MARYEELLER
First Assistant Attorney General

Lou MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAELEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by William Walker
Assistant Attorney General




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