                               The Attorney General of Texas
                                                      March 11,      1982
RK WHITE
orney General

                            Gary E. Miller,  M.D.                                     Opinion      No. MN-454
rem Court Bullding          commissioner
 .Box 12548                 Texas Department of Mental              Health             Re:   Application  of House Bill
tin. TX. 76711. 2546
                                and Mental Retardation                                 No. 1623 to funds held by the
475.2501
I 910/874.1367              P. 0. Box 12668                                            Texas   Department    of  Mental
copier 5121475-0266         Austin,   Texas  78711                                     Health and Mental Retardation

                            Dear Dr.   Miller:
’ MaIn St., sulle 1400
as,TX. 75201.4709
742.6944                           You have requested     our opinion   regarding    the application     of House
                            Bill    No.  1623,   recently    enacted   by the Sixty-seventh         Legislature.
                            That statute,     to be codified    as article    4394c.   V.T.C.S..    provides,    in
4 Alberta Ave.. Suile 160   pertinent   part:
‘aso.TX. 79905.2793
‘533-3464
                                         All fees,    fines,   penalties.     taxes,    charges,      gifts,
                                         grants,    donations,     and other      funds     collected        or
0 Dallas Ave., Sulle 202                 received     by a state         agency    as    authorized          or
ISIon. TX. 77002.6966
                                         required    by law shall       be deposited        in the state
‘650.0666
                                         treasury,    credited   to a special       fund or funds,         and
                                         subject   to appropriation       only for the purposes            for
 Broadway. Suite 312                     which they are otherwise         authorized      to be expended
bck.TX.   79401-3479                     or disbursed.       Deposit    shall   be made within          seven
!747-5236
                                         days after     the date of receipt.

0 N.Tenth. Sulte S          Section    2 of   House    Bill   No.    1623 defines        “state    agency”      as:
%-I.TX.   76501.1665
)MJ2-4547                                . ..any     department,           commission,         board,       office,
                                         Institution,          or    other      agency       that     is    in     the
                                         executive         branch        of      state       government,           has
 MaIn Plim.. suite 400
Ihlonio,  TX. 76205.2797                 authority       that     is not limited            to a geographical
1225.4191                                portion      of    the     state,      and was created              by the
                                         constitution        or a statute          of this state,          but does
                                         not include        an institution          of higher       education       as
h.1   Opporlunllyr
,rm411vaAclion Employer                  defined      in Section        61.003,      Texas Education           Code,
                                         as amended,          and does         not     include      the     Banking
                                         Department         of      Texas,       the      Savings        and     Loan
                                         Department        of     Texas,       and      the    Office       of     the
                                         Consumer       Credit       Commissioner,           whose      funds      are
                                         subject      to the budgetary             control      of the Finance
                                         Commission       of Texas by virtue                of existing         laws,
                                         and does not include               the Credit        Union Department
i
Dr.   Gary E. Miller        - Page 2          (MW-454)




            of Texas whose funds              are subject  to the budgetary
            control of the Credit              Union Cowmission  of Texas.

Section   3(b)   of   the    bill   states,        however,   that   the    act   does   not   apply
to:

                   (1)    funds, pledged  to the payment                   of .,bonds,
            notes,     or   other   debts   if the   funds                   are   not
            otherwise     required   to be deposited    in                 the state
            treasury;

                    (2)    funds held          in trust       or escrow  for  the
            benefit     of any person          or entity      other than a state
            agency;

                  (3)    funds        set apart out of earnings    derived
             from investment         of funds held in trust    for others,
             as administrative          expenses of the trustee   agency;

                     (4)  funds,     grants,    donations,     and proceeds
             from funds,     grants,    and donations,      given   in trust
             to the Texas State Library          and Archives     Commission
             f.or the establishment        and macntenance      of regional
             historical    resource     depositories      and libraries     in
             accordance    with Section       2A, Chapter      503, Acts of
             the 62nd Legislature,           Regular   Session,     1971.   as
             amended     (Article      5442b.     Vernon’s     Texas    Civil
             Statutes);    or

                     (5)   the deposit   of funds for state     agencies
             subject     to   review   under    the Texas    Sunset   Act
             (Article    5429k, Vernon’s     Texas Civil  Statutes)    for
             1981, which shall       be determined    by each agency’s
             enabling    statute.

Acts 1981, 67th Leg..       ch. 835, at 3189-90.     Your question                       is whether
any of    six  kinds   of funds maintained      by the Department                         of Mental
Health   and Mental      Retardation  are   excepted   by  section                        3(b) from
required   deposit   in the state treasury.

       Although     articles    3179 and 3179a. .V.T.C.S.,       provide     that funds
received    by the institutions         under the supervision      of the Department
of Mental Health and Mental Retardation              shall  be placed      in the state
treasury.     these provisions       do not apply where there       is later     or more
specific      statutory      authority     for  holding    funds     outside     of  the
treasury.       See Porwood v. City of Taylor,         214 S.W.2d 282 (Tex. 1948);
Cole v. Stazex          rel.  Cobolini,   170 S.W. 1036 (Tex.     1914).




                                              p.    1573
                                             (Mw-454)
I

    Dr.   Gary E. Miller     - Page    3




           You first    inquire   about the “patient  benefit   fund” maintained     at
    each facility      of the department.     This fund consists     of the interest
    accruing    on the personal     funds of inmates of which the department     acts
    as trustee.      Section    1 of article 3183~. V.T.C.S..   provides:

                        Section      1.   The superintendent           of any State
                 institution       under the jurisdiction             of the Board
                 for Texas State Hospitals           and Special         Schools   may
                 deposit     any funds of inmates in his possession                 in
                 any bank in the State,          or in bonds or obligations
                 of the United States of America or for the payment
                 of which the faith and credit            of the United States
                 are pledged,        and for the purposes           of deposit      or
                 investment       only,    may mingle        the     funds      of any
                 inmate      with    the funds     of    other      inmates.       The
                 superintendent          may   deposit        the      interest     or
                 increment       accruing    on such       funds      in a special
                 fund,     to be designated         the     ‘Benefit       Fund,’   of
                 which he shall         be the trustee.        He may expend the
                 moneys      in any such fund          for     the     education    or
                 entertainment        of the inmates        of the institution,
                 or for the actual         expense of maintaining            the fund
                 at the institution.

    To the extent      that the benefit     fund may be expended        “for     the education
    or entertainment         of the inmates,”     it is a fund “held         in tNSt...      for
    the benefit      of any person     or entity      other    than a state        agency” and
    therefore     exempt under section      3(b)(2)    of House Bill      No. 1623.       To the
    extent    that it may be expended “for          the actual     expense     of maintaining
    the fund at the institution,”          it is a fund “set apart out of earnings
    derived     from     investment   of   funds     held    in   trust     for     others,    as
    administrative        expenses  of the trustee       agency”    and thus exempt under
    section    3(b) (3).

          You next ask about “sheltered         workshop funds.”         The department is
    authorized    by section    2.17(b)(2)     of article      5547-202,     V.T.C.S.,   “to
    contract   with individuals      or public    or private      entities     for the sale
    of goods    and services     produced    or made available           by the sheltered
    workshop programs.”      That statute     further    provides,      in pertinent   part:

                         (3)     An operating     fund may be established            for
                 each        sheltered        workshop       operated        by      the
                 Department.          and any money derived,            from    gifts,
                 grants.       and      donations    received       for     sheltered
                 workshop      purposes      and all    proceeds     from the sale
                 of sheltered          workshop goods and services           shall     be
                 deposited        in the operating        fund.      Any operating
                 fund shall         be maintained      in a national         or state
                 bank which          is a member of        the Federal         Deposit




                                               p.   1574
Dr.   Gary E. Miller      - Page 4          (Mw-454)




            Insurance          Corporation.          Money in the operating
            funds may          only     be expended       in the operation          of
            sheltered         workshops      for the purchase          of supplies.
            materials,           services,        and    equipment;         for   the
            payment of          salaries     and wages to participants            and
            employees;           for     the    construction,          maintenance,
            repair,           and     ,renovation        of      facilities       and
            equipment;             and     for      the      establishment        and
            maintenance           of a petty       cash     fund not to exceed
            $100.

V.T.C.S.     art.   5547-202,    52.17(b)(3).      Although     the statute    recites     a
limited    number of purposes         for which   sheltered     workshop funds may be
expended,      all   of    them are essentially       purposes     of the department.
Since    sheltered      workshop   funds are not “held        in trust   or escrow      for
the benefit       of any person     or entity   other    than a state     agency,”     they
are not excepted         from deposit    in the state    treasury.

      “Occupational   therapy   funds”             are   recognized      by article      3174b-3,
V.T.C.S..   which provides.   in part:

                    Section      1.      The    Board      for     Texas     State
             Hospitals       and     Special       Schools         may    furnish
             equipment,       materials.       and     merchandise        at   any
             institution      under    the control        and management of
             said Board for occupational             therapy programs.         The
             finished      goods    and products         produced       in these
             programs may be sold,          and the proceeds         thereof    may
             be placed     in the patients’       benefit      fund, patients’
             trust    fund, or a revolving          fund for their        further
             use;    or the patient        may purchase         from the state
             the material        to be used        and keep        the finished
             product.

                    . . . .

                    Sec.    3.   The Board is authorized      to accept
             donations      in money or materials       to be used in
             these     programs     and  mati use     and   expend   the
             donations     in the manner requested     by the donor,  if
             not contrary      to the policy  of the Board for Texas
             State Hospitals      and Special  Schools.

To the extent          that    occupational     therapy    funds    are placed      In the
patients’      benefit      fund   or patients’      trust    fund,    they    assume     the
character      of those      funds and are thus exempt under section               3(b)     of
House     Bill    No.     1623.      To    the  extent,     however,     that    they     are
transferred      to a “revolving         fund for their    further    use,”   they   become
merely’operating         funds of the department         and thus not excepted          from




                                             p.   1575
    Dr.   Gary E. Miller     - Page    5     (Mu-454)




    deposit.     Amounts donated   to the occupational     therapy  fund must be
    used “in    the manner requested    by the donor.”      If the donor directs
    that money be used “for    the benefit  of any person or entity    other than
    a state    agency,”   it need not be deposited       in the state    treasury;
    otherwise,    it is not exempt from deposit   therein.

            The “unemployment ‘trust         fund” is established        by section    55 of
    article      V of the current     General Appropriations        Act.   Acts 1981, 67th
    Leg.,     ch. 875, at 3820.       Heads of state agencies         are directed   thereby
    to reimburse         the comptroller      for unemployment      compensation    benefits
    paid on behalf          of their   particular      agency.   There is no indication
    that     these    funds are set aside         “for    the benefit    of any person       or
    entity     other    than a state    agency,”     and thus,  they are not exempt from
    deposit      under House Bill No. 1623.

             You also   ask about     “merchandise        canteen   coupon   funds.”      which   you
    state:

                  . ..are     maintained      at many facilities       to hold money
                  in trust        for    clients    who are unable         to handle
                  their      own funds.         Such clients      use a system in
                  which trust fund money is used to purchase                   coupons
                  which      are    then used to purchase            canteen    items.
                  The canteen         then turns     the coupons      into   the fund
                  for     reimbursement.          The clients      can also     obtain
                  reimbursement          in    cash    for   their     coupons     upon
                  furlough       or discharge       or if it is determined           at
                  any time that the client            can handle his own money.
                  The money held in this             fund is used for no other
                  purpose.

I   From the circumstances         described,   it appears  that this    fund is used
    merely    as a conduit      for money derived     from an individual     patient’s
1   trust   fund.      To the extent     that these funds retain   the character       of
    patient     trust    funds,  we believe    they are excepted    from deposit       by
    section    3(b)(2)    of House Bill No. 1623.

           Your final    inquiry    is directed    to proceeds  derived   from estates.
    If a legal     instrument    directs   that funds be used specifically      “for  the
    benefit    of any person        or entity    other   than a state    agency.”    such
    proceeds    are exempt under section        3(b)(2).    If It does not do so, the
    money is not exempted.          As we said in Attorney     General Opinion MW-363
    (1981):

                   . ..no particular      words are necessary       to create   a
                   trust....      So long     as the parties        intend   that
                   particular     property    be held     for the benefit      of
                   others,     a court     of  equity   will   affix     to that
                   intent    the character    of a trust.




                                              p.   1576
Dr.   Gary E. Miller      - Page 6         (MI?-454)




                                          SUMMARY

                     “Patient        benefit      funds”         and     “merchandise
             canteen       coupon funds” are excepted                 from required
             deposit       in the state       treasury        under the terms of
             section        3(b)    of   House Bill           No.     1623,     of   the
             Sixty-seventh           Legislature,          to      be    codif ied     as
             article         4394c.
             funds” and “unemployment
                                        V.T.C.S.
                                                     trust
                                                           “Sheltered’
                                                                funds”
                                                                              workshop
                                                                           are not so
                                                                                                I
             excepted.         “Occupational       therapy        funds” are exempt
             only     if they are placed            in the patients’            benefit
             fund
             derived
                        or    the    patients’
                           from estates
                                                       trust       fund.
                                             are exempt if the appropriate
                                                                               Proceeds     /
             legal      instrument      directs       that     the funds be used
             specifically         “for    the benefit           of any person          or
             entity      other than a state agency.”




                                                         Attorney      General     of   Texas

JOHN W. FAINTER, JR.
First Assistant Attorney            General

RICHARD E. GRAY III
Executive Assistant         Attorney      General

Prepared    by Rick Gilpin
Assistant    Attorney General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison,         Chairman
Jon Bible
Roxanne Caperton
Rick Gilpin
Patricia   Hinojosa
Jim Moellinger




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