                              RNES           GENERAI,
                            OF-XAS




Mr. Frank M. Jackson                   Opinion No. M- 949
Executive Secretary
Teacher Retirement System              Re:    (a) Authority of Board
  of Texas                                    of the Teacher Retirement
314 West 11th Street                          System to grant merit
Austin, Texas 78701                           increase to salaried
                                              employees.

                                              (b) Authority of the
                                              Board to pay certain
                                              insurance premiums for
Dear Mr. Jackson:                             employees.

          In your recent letter you requested the opinion of
this office on the following questions:

          "1. Does the Board of Trustees of the Teacher
     Retirement System have authority to grant merit in-
     creases within a salary group to employees of the
     Teacher Retirement System?

          "2 . Does the Board of Trustees of the Teacher
     Retirement System have authority to pay premiums on
     policies containing group life, health, accident,
     accidental death and dismemberment, disability in-
     come replacement and hospital, surgical and medical
     expense insurance for employees of the Teacher Re-
     tirement System in excess of $12.50 per month per
     full-time employee?"

          Except as the merit increase may be subject to President
Nixon's recent "freeze order" (see Attorney General's Opinion No.
M-942, 1971), we are of the opinion that the Board has authority
to grant a merit increase provided the higher salary does not
exceed the highest salary paid by the State for a position in-
volving similar services.

          The State Position Classification Plan does not govern
salaries of employees of the Teacher Retirement System for
reasons here discussed.

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Mr. Frank M. Jackson, page 2     (M-949)



          Section 2 of Article 6252-11, Vernon's Civil Statutes,
Position Classification Act of 1961, provides in part as follows:

          "Sec. 2. All regular, full-time salaried employ-
     ments within the departments and agencies of the State
     specified in Article III, and the Central Education
     Agency, Deaf and Blind Schools in Article IV, . . .
     of the biennial Appropriations Act, shall conform with
     the Position Classification Plan hereinafter described
     . . . with the exception and deferments hereafter
     provided in this Section.

          "Effective January 1, 1962, all regular, full-time
     salaried employments in executive or administrative
     agencies of the State, regardless of whether their funds
     are kept inside or outside the State Treasury, shall
     also conform with the Position Classification Plan
     hereinafter described and with the salary rates and
     provisions of the General Appropriation Act with the
     exceptions hereinafter provided in this Section.
          II . . .

          "Specifically excepted from the Position Classifi-
     cation Plan hereinafter described are . . . and such
     other positions in the State government as have hereto-
     fore been or as may hereafter be excluded from such
     Position Classification Plan by executive order of the
     Governor or by direction of the Legislature."  (Emphasis
     supplied)

          We are of the opinion that employees of the Teacher
Retirement System have been excluded from the Position Classifi-
ebtf& Plan by direction of the Legislature.

          The Teacher Retirement System is presently governed by
Chapter 3 of the Texas Education Code as amended and codified by
Chapter 405 (Bouse Bill No. 279), Acts of the 62nd Legislature,
Regular Session, 1971.

          Section 3.56 of the Texas Education Code provides, in
summary, that all expenses of the system shall be paid from an
expense account created by the statute. Membership fees are
credited to that account, and a transfer is made to the expense
account from the interest account if needed.



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Mr .   Frank M. Jackson, page 3   (M-949)



          There is no provision in the latest General Appropria-
tion Act for administrative expenses for the Teacher Retirement
System. There is provision in the Appropriation Act for the
State's contribution to match members' contributions, but this
is credited to a special State Contribution Account.

          Further indication of Legislative intent that the
Teacher Retirement System is not to be governed by the Position
Classification Plan is found in Section 3.59(j) of the 'Texas
Education Code, which reads in part as follows:
             II . . . The rate of compensation of all persons
       employed by the State Board of Trustees, as well as
       the amounts necessary for other operations of the
       retirement system, shall be approved by the State
       Board of Trustees, provided they shall be no greater
       than those for similar   services performed for the
       State  of Texas."

          We are of the opinion that the Position Classification
Plan has no application to the Teacher Retirement System. In
reaching this conclusion we have followed the rationale employed
in Attorney General's Opinion No. WW-1095 (1961), WW-1222 (1961),
and WW-1262 (1962). Those opinions held, respectively, that the
Position Classification Plan does not apply to the Finance
Commission, Banking and Savings and Loan Departments, to the
Texas State Board of Plumbing Examiners, or to the Liquidation
Division of the State Board of Insurance.

          Your second question is undoubtedly related to the
provisions of Article V, Section 10, of the General Appropriations
Act passed by the 62nd Legislature.  A part of that Section reads
as follows:

            "Payment by the state from the designated funds on
       any policy or policies shall be limited to twelve dollars
       and fifty cents ($12.50) per month per full-time employee."

          That provision does not apply to the Teacher Retirement
System for the reason that the paragraph in which it is included
provides in part that

            "State departments and agencies covered by this
       Act (Articles I through VI) . . . shall utilize funds
       . . . to pay employee-premiums . . .'I (Emphasis
       supplied)


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Mr. Frank M. Jackson, page 4     (M-949)



          The only appropriation made in the General Appropriation
Act to the Teacher Retirement System is for State contributions
to match members' contributions.  We think this does not bring
the System within the purview of the paragraph in Article V,
Section 10 of the Act relating to employee insurance.

          We think that in paying insurance premiums for its
employees the System will be governed by the provisions of
Articles 3.50 and 3.51 of the Texas Insurance Code and may be
subject to the Presidential Freeze Order or the ruling of the
President's Cost of Living Council, a matter upon which we express
no opinion.

                       SUMMARY

          The Teacher Retirement System of Texas is not
     governed by the Position Classification Plan in
     granting a merit increase in salary.

          Except as the merit increase may be subject to
     President Nixon's recent "freeze order" (Attorney
     General's Opinion No. M-942, 1971), the Teacher
     Retirement System is restricted as to salaries
     paid by a provision of the Texas Education Code
     that the System may not pay more than is paid for
     similar services performed for the State of Texas.

         The provisions of Article V, Section 10, of the
    General Appropriations Act passed by the 62nd Legisla-
    ture, Regular Session, 1971, relating to State contri-
    bution to insurance premiums, do not apply to the Teacher
    Retirement System.

         The Teacher Retirement System is governed in pay-
    ing insurance premiums for its employees by Articles
    3.50 and 3.51 of the Texas Insurance Code and may be
    subject to the Presidential Freeze Order or the ruling
    of the Cost of Living Council, a matter upon which no
    opinion is expressed.        4
                                 Yqi&   very fruly,




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,




    Mr. Frank M. Jackson, page 5      (M-949)



    Prepared by James S. Swearingen
    Assistant Attorney General

    APPROVED:
    I)PINION COMMITTEE

    Bill Craig
    Marietta Payne
    Roland Allen
    Houghton Brownlee

    SAM MCDAiiIEL
    Acting Staff Legal Assistant

    ALF%D WALKUR
    tixecutive Assistant

    NOLA IUITE
    First Assistant




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