 The Attorney                 General of Texas
                         May 29, 1981




Honorable John A. Traeger                     Opinion No.    ~~-347
Chairman
Committee on Intergovernmental                Re: Whether Interlocal Cooperation
  Relations                                   Act allows local governments
Texas State Senate                            to enter into interlocal contracts
Austin, Texas 787ll                           to provide all forms of insurance

Dear Senator Traeger:

          You ask two questions regarding the Interlocal Cooperation        Act,
article    4413(32c), V.T.C.S. Your first question is as follows:

               Under the Interlocal       Cooperation   Act, do ‘local
               governments,’ acting together, have the statutory
               authority   to purchase insurance        to cover the
               governmental functions and services covered under
               section 3(2) of the Interlocal Cooperation Act?

       The Interlocal Cooperation Act permits local governments to contract
for the nerformance of governmental services. Local government is defined
as follows:

               a county; a home rule city or a city, village, or town
               organized under the general laws of this state; a
               special district; a school district; a junior college
               district;  any other legally constituted        political
               subdivision of the State of Texas or any adjoining
               state; or a combination of political subdivisions.

sec. 3(l).

          Governmental   functions and services is defined as follows:

               all or part of any function or service included within
               the following general areas:      police protection and
               detention services; fire protection; streets, roads, and
               drainage;    public   health     and    welfare;    Parks;
               recreation; library services; museum services; waste
               disposal;   planning;    engineering;     administrative
               functions; and such other governmental           functions
               which are of mutual concern to the contracting
               parties. (Emphasis added).

See. 3(2).

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Honorable John A. Traeger   - Page Two     @a+3471




The term administrative functions includes purchasing. Sec. 3(3). The contracts may
be “for the performance of any governmental functions or services which all parties to
the contract are legally authorized to perform. . . .” Sec. 4(b).

       Since the statute expressly authorizes interlocal contracts for the purpose of
purchasing, we believe that local governments may contract together to purchase an
insurance contract covering risks which each party to the contract has independent
authority to insure against.

        We cannot, however, say that each kind of local government has authority to
insure against risks arising out of all governmental functions and services listed in
section 3(2). The Texas Tort Claims Act authorizes political subdivisions to purchase
insurance to protect against claims brought thereunder.       V.T.C.S. art. 6252-19, S9.
Article 3.51-2(a), V.T.C.S., Insurance Code, authorizes        political subdivisions to
purchase group life, health, and accident insurance to cover employees.          See also
V.T.C.S. art. 1937 (county must purchase errors and omissions policy for count-
Where, however, no statute authorizes a political subdivision to purchase a particular
kind of insurance, the decision as to the authority to do so has always been made on a
case-by-case basis. See, e.g., Attorney General Opinions H-1300 (1978) (county may
purchase a nonassessable policy from a recipriocal insurance exchange); H-958 (19771
(county may purchase insurance coverage for reserve deputy sheriffs limited to risk of
loss for medical expenses voluntarily assumed under article IlI, section .52e of the
Texas Constitution); H-70 (1973) (school district may purchase insurance to indemnify
district against litigation expenses and damages where district is not immune).

       We therefore, cannot conclude that each local government could contract under
article 44l3(32c), V.T.C.S., to purchase jointly with another political subdivision
insurance to cover risks arising out of the enumerated governmental functions and
services. Where, however, a statute or other law clearly provides that a county, for
example, may purchase a particular kind of insurance, then it may purchase it jointly
with another county under the Interlocal Cooperation Act.

     Your second question is as follows:

           Under the, Interlocal Cooperation Act, do ‘local governments’
            have the statutory authority to form self-insurance pools as
           they have done in the workers’ compensation and health fields
           to cover risks inherent in providing governmental functions and
           services?

       Self Insurance is a function of local governments if they do not purchase
insurance.    See V.T.C.S. arts. 6252-19, 6252-19b; Attorney General Opinion H-887
(19761. We have      local governments may contract to form self insurance pools to
cover risks which each member is authorized to protect against. We express no opinion
as to how such an insurance pool should be structured, and how obligations may be
allocated among the members. See Attorney General Opinion H-1300 (1978). Nor can
we state that each local government        may join a pool to insure against each
governmental function &fined in section 3(2), in the absence of additional facts. Any
agreement must of course be consistent with constitutional provisions.




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Honorable John A. Traeger     - Page Three   (Rw-347)




                                     SUMMARY

               Under the Interlocal Cooperation Act, local governments
           may act together to purchase insurance and form self insurance
           pools to cover governmental functions and services which each
           contracting   local government has statutory   or other legal
           authority to insure.




                                                    MARK     WHITE
                                                    Attorney General of Texas

JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY III
Executive Assistant Attorney General

Prepared by Susan L. Garrison
Assistant Attorney General

APPROVED:
OPINION COMMlTTEE

Susan L. Garrison, Chairman
James Allison
Rick Gilpin
Jim Moellinger




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