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                   THEATTOIZNEYGENEEZAL
                            OFT'EXAS




                               November 6, 1963


        Honorable John H. Winters                Opinion No. c-172
        Conunlssloner
        State Department of Public               Re:   Whether the State Depart-
          Welfare                                      ment of Public Welfare is
        Austin, Texas                                  authorized to continue
                                                       their agreements with the
                                                       Federal Government as re-
        Dear Mr. Winters:                              gards the Merit System.
                   Your opinion request states that the State Department
        of Public Welfare, hereinafter      referred   to as the Department,
        receives  substantial  grants-in-aid     necessary to its operation
        from the Federal Government.      As a condition    of qualifying  for
        such grants, ,agreements are made with the Federal Government which
        include the requirement that the Merit System of Personnel Adminis-
        tration be followed by the Department.         You state that:
                   "Over a period of years the State Depart-
             ment of Public Welfare has officially     operated
             under a Merit System of Personnel Administration
             as required by Titles I, IV, Section 3 of V, X,
             and XIV of the Federal Social Security Act
             as authorized by Section 4, Subsection      (1Oj %!'
             the Public Welfare Act of 1941, as amended, being
             House Bill No. 611, Acts of the 47th Legislature,
             Regular Session,   1941, and being codified    as Arti-
             cle 695~, Vernon's civil   Statutes."
                     Your request states that under the above Merit System
        salary increases      are based on written satisfactory    evaluation    of
        work performed and are not automatic , and therefore        in principle
        are similar to the Merit Salary Increases provisions          in Article    V,
        Section 1, Subsection L of House Bill 86, Acts of the 58th Legis-
        lature,    1963.   However, the provisions     of these two plans are not
        identical,    particularly    as to the length of time requlred between
        merit increases,      the initial  date that such merit can be recognized,
        and the number of employees eligible        for such recognition.



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Hon. John Ii. Winters,      Page 2 (C- 172 )


           Article V, Section 1 of House Bill 86 states that,
except where otherwl .se speclfically.provided,     expenditures    for
employees* salaries   in classified     positions shall be governed
bye and be in conformity with the provisions      of such Section.
However, within the provisions      of House Bill 86 relating    to
the Department, the following      appears at page 111-186:
            “Salary adjustments and merit system in-
      creases shall be governed by agreements with
      the Federal Government provided,   however, that
      such agreements do not exceed the provisions
      in this Act governing the operation’of   the
      State Employees Classlflcation   Plan.”
            You therefore     ask our opinion   concerning   the following
question:
             “DO the Statutes and the Appropriation    Act
      permit a Salary Classification      Plan under the
      Merit System Rule with a beginning step for each
      position    not above Step 1 of the State Salary
      Classification    Schedule and for Intermedlate
      steps to which employees may be advanced at
      stated intervals     as may be agreed by the State
      Department of Public Welfare and the Federal
      Agencyso     long as the maximum salary paid does
      not exceed the maximum for the group to which
      the employee Is assigned as provided in the
      State Classification     Salary Schedule under the
      State Salary Classification     Plan?”
          The use of the Merit System by the Department was
first authorized in 1941 when the Le islature  enacted Article
695c which provides at Section 4 (10 7 that the Department shall:
            “(10)   Have authority to establish    by rule
      and regulation   a Merit System for persons em-
      ployed by the State Department of Public Welfare
      in the administration    of this Act; and shall pro-
      vide by rule and regulation     for the proper operation
      and maintenance of such Merit System on the basis
      of efficiency   and fitness;   and may provide for the
      continuance in effect    of any and all actions here-
      tofore taken in pursuance of the purposes of this
      subsection.    The State Department is empowered and
      authorized to adopt regulations     that may be necessary



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        Hon. John H. Winters,   page   3   (C472   )


             to conform to the Federal Social Security Act
             approved March 14, 1935, as emended, and shall
             have the power and authority to provide for the
             maintenance of a Merit System in conjunction
             with any Merit System applicable  to any other
             State agency or agencies operating under the
             said Social Security Act as amended.
                  "The Social Security Board shall exercise
             no authority with respect to the selection,   ten-
             ure of ,office, and compensation of any individual
             employed in accordance with such methods."
                  After some twenty years of operation by the Department
        under the Merit System Rule, the Legislature     a ain acknowledged
        such in the !Position   Classification  Act of'19 %1, ",codified    as
        Article 6252-11,   Vernon's Civil Statutes,  which recites      in Sec-
        tion 5 that:
                   !I
                     . . .
                   "The preceding two paragraphs of this
             Section,    however, shall not be construed as
             abrogating    statutory authorizations   for cer-
             tain State agencies to operate under employee
             merit systems as a condition      for qualifying
             for Federal grants-in-aid;     and all such merit
             systems as have been or may hereafter       be agreed
             to by the respective    State agencies and agencies
             of the U.S. Government shall be in full force
             and effect,    subject only to the applicable     laws
             of this State."
                    In addition,  it is also observed that while the Depart-
        ment is covered by the classification     of employees, Its employees
        are not fully within the salary schedule accompanying such clas-
        sification.    In nearly every instance maximum salaries    are no high-
        er than an amount equal to Step 3 of the Salary Schedule, and. there-
        fore starting    salaries usually fall below that prescribed   by Step
        1. The only counterbalance      to these deficiencies  is the Merit
        System which allows for the continued and regular recognition       of
        meritorious   service.
                   A consideration   of all of the foregoing     factors   leads
        us to the conclusion    that the Legislature    was well aware that the
        Department's operation is substantially      affected   by agreements with
        the Federal Government, and that it recognized        the condition    of a
        Merit System in order to qualify for such grants-in-aid.


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Hon. John H. Winters,   page 4 (C-172    )


           Further, in viewing the Classification   System broadly
as a plan to place all State employees of a same class on an equal
basis as far as possible , we are unable to perceive how the contin-
uation of the agreements with the Federal Government will violate
this principle  with the fact in mind that the Department is already
at a comparative disadvantage salary-wise.
          Therefore,  in consideration of all of these factors,
it is our opinion that the Department's agreement as set forth
in the question presented is authorized and that a continuation
of the Merit System is authorized.
                        SUMMARY
           Agreements between the State Department of
     Public Welfare and the Federal Government, as
     regards the Merit System , are authorized   so long
     as beginning salaries    do not exceed Step 1 and
     maximum salaries    do not exceed Step 7 of the
     Salary Classification    Schedule.
                                Very truly    yours,
                                WAGGONER CARR
                                Attorney General



pp:mkh                                Assistant
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Pat Bailey
Paul Robertson
Nicholas Irsfeld
George Gray
APPROVEDFOR THE ATTORNEY
                       GENERAL
BY: Stanton Stone




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