                                   The Attorney General of Texas

JIM MAlTOX                                       Narember 13. 1985
Attorney General


Supreme Court Building            Gary E. Miller, M.D.                      Opinion   No.   JU-378
P. 0. Box 12546                   Colluaissioner
Austin. TX. 78711- 2546           Texas Department of Mental Realth         Re:   Whether funds paid to
5121475-2501                         and Mental Retar'dation                a Mental Eealth and Mental
Telex 9101674.1367
                                  P. 0. Box 12668                           Retardation facility for
Telecooier   51214750266
                                  Austin, Texas   78711                     services rendered pursuant
                                                                            to a contract are appro-
714 Jackson. Suits 700                                                      priated to that facility
Dallas. TX. 75202.4506
2141742.6944
                                  Dear Dr. Miller:

4624 Alberta    Ave., Suite 160        You inquire about the proper disposition of funds received by the
El Paso. TX. 799052793            Texas Department elfMental Realth and Mental Retardation [hereinafter
915/5333464
                                  -1     under a wntract with a private entity. You provide the
                                  following background information about the contract:
1001 Texas, Suite 700
Houston, TX. 77002-3111                     State schools for the mentally retarded . . . have
7131223.5686                                an oppol:tunityto assist private, not for profit
                                            service providers in the delivery of community-
                                            based residential services through the use of
806 Broadway, Suite 312
Lubbock, TX. 79401-3479
                                            state anployees to operate or partially operate
8061747.5238                                such services on a contract basis. The private,
                                            not for profit service provider could qualify for
                                            ICF-MR 1:srtification [intermediate care facility
4309 N. Tenth. Suite B
                                            for the mentally      retarded; see 42      U.S.C.
McAllen. TX. 76501-1665
51216824547                                 11396d(c), cd)] and thereby become eligible to
                                            receive reimbursement for such services from the
                                            Federal Government through the Texas Department of
 200 Main Plaza. Suite 400                  Human Resources. The private, not for profit
 San Antonio, TX. 762052797
                                            service provider would, in turn, pay the state
 5121225.4191
                                            school rll or part of such funds as consideration
                                            for the :servicesof the school's employees under
 An Equal Opportunityi                      the provisions of the contract.
 Affirmative Action Employer
                                  You state that the contract will be made under authority of section
                                  2.13, article 5547-202, which provides as follows:

                                               Sec. 2.13.    The Department      may cooperate,
                                            negotiate and contract with         local agencies,
                                            hospitals, private organizations    and foundations,
                                            communilg centers, physicians and   persons to plan,




                                                             p. 1726
Dr. Gary E. ~liller- Page 2   (JM-378)




          develop and provide community-based mental health
          and mental retardation services.

     You do not ask whc:thersection 2.13 authorizes such a contract,
and if it does, vhether  it could constitutionally do so. -See Tex.
Comet. art. III, S51. !!tmask the folloving question:

          Are funds received by a Texas Department of Mental
          Health and Mental Retardation operated facility as
          consideration :for services rendered to a private,
          not for profit entity pursuant to contract re-
          appropriated t,o the facility which provided such
          services? (Emphasis added).

     You cite the follwing    rider to the Appropriations Act as being
relevant to your questim:

             Sec. 27. RRIHBDRSEMENTS AND PAYMENTS. Any
          reimbursements received by an agency of the state
          for authorixd services rendered to any other
          agency of thtz state government, and any private
          sources and aa:{payments to an agency of the state
          save-nt     male in settlement of a claim for
                   are hereby appropriated to the agency of
          damages, --
          the State rrwiving such reimbursements and pay-
          ments for useliuring the fiscal year in which they
          are received.

             The reimbc.rsementsand payments received shall
          be credited by the comptroller to the agency's
          current appropriation items or accounts from which
          the expenditures of like character were originally
          made, or in the case of damage settlements to the
          appropriation,items or accounts    from which repairs
          or replacemerltsare made; provided, however, that
          any refund oi'less than fifty dollars ($50) to an
          institution c'f higher education for postage,
          telephone se.nrice,returned books and materials,
          cylinder   ar.d container       deposits,   insurance
          premium and like items, shall be deposited to the
          current fund account of the institution in the
          State Treamry    and such funds are hereby re-
          appropriated.

 Acts 1985, 69th Leg., cb. 980, art. V. 527, at 7779.

      The payments uni,er the proposed contract are payments from
 private sources subject. to the above Appropriations Act provision.
 The State Funds Reform Act provides that:




                                  p. 1727
Dr. Gary E. Miller - Page 3    (JM-378)




          Fees, fines, pcualties, taxes, charges,     gifts,
          grants, donations, and other funds collected ot
          received by a s'tate agency under law shall be
          deposited in the treasury, credited to a special
          fund or funds, sad subject to appropriation on19
          for the purposes for which they are otherwise
          authorized to be expended or disbursed. A deposit
          shall be made at the earliest possible time that
          the treasury cat accept those funds, but not later
          than the seventh day after the date of receipt.

V.T.C.S. art. 4393-1, 54.(1(,4(a)(former V.T.C.S. art. 4393c reenacted
as part of Treasury Act, Acts 1985, 69th Leg., ch. 240. at 2078,
2104). The funds are to be deposited to the credit of the General
Revenue Fund unless the mco,eyis expressly required to be deposited to
another fund or account. Id. 54.004(b). The Texas Department of
Mental Health and Mental !%etardationis a state agency subject to the
State Funds Reform Act. See Attorney   General Opinion MW-454 (1982).
Funds the department res:zes under the contract are        subject to
article 4393-1, V.T.C.S., a,ndmust be deposited in the treasury within
seven days after the date c'freceipt.

     Rider 27, quoted above, appropriates the payments received by
MIIMR under contract for use during the fiscal year received. The
funds are credited to the agency's appropriation items or accounts
"from which the expendimres of like character were originally
made. . . .'I The funds received under the proposed contract will
constitute reimbursement for services of employees of state schools
for the mentally retarded. The rider appropriates these payments to
the items of appropriation or accounts from which the employees ware
paid.

     The current General Appropriations Act includes the following
items in the appropriation to the Texas Department of Mental Realth
and Mental Retardation:

               STATE SCEOO1.SFOR TRE MRNTALLY RETARDED

                                           For the Years &ding
                                           August 31, August 31,
                                              1986        1987

         1.   Administration Program:        [amounts of appro-
              a. Superinte:ldent(plus        priation items
                     house ,andutilities)    deleted]
              b. Other Administrative
                     and Stn:EfDevelopment
                     Servic2:3

         2.   Auxiliary Seru:LcesProgram



                                  p. 1728
Dr. Gary E. Miller - Pa:ce4   (JM-378)




        3.   Residential !ServlcesProgram

        4.   Utilities (non-transferable)

        5.   Community-Based Residential
             Service Program

        6.   Non-Residential Treatment.
             Education and Rehabilitation
             Services Program

        GRAND TOTAL, STATE SCHOOLS    $246,318,003 $246,318,003


        . . . .

            It is the i:n:entof the Legislature that the above
        appropriated fmds be allocated and expended as nearly
        as practicable by the facilities enumerated below in
        the  amounts spczified for each facility.

        Abilene State !Ichool                [specific amount
        Austin State School                  allocated each
        Brenham State Ikhool                 school deleted]
        Corpus Christi State School
        Denton State School
        Fort Worth State School
        Lubbock State licbool
        Lufkin State S~:bool
        Mexla State School
        Richmond State School
        San Angelo Sta:e School
        San Antonio Stite School
        Travis State S~:hool

        TOTAL                         $246.318.003   $246.318.003



Acts 1985, 69th Leg., c!a.980, at 7536-37.

      The legislature appropriated funds to the state schools as a
 group for the various programs and purposes numbered 1 through 6, and
 it also stated the apprmimate amount of the total appropriation to go
 to each school. The items numbered 1 through 6 are the items of
 appropriation vhich f'und the state schools, including salaries of
 their employees. Art Lcle V, section 27 appropriates funds received
 under the proposed contract to the appropriation item from which
 derive the salaries of employees performing services under the
 contract. -See Tcx. Coast. art. VIII, $6. Therefore. funds received




                                p. 1729
Dr. Gary E. Miller - Page 5     (JM-378)




under such contracts are appropriated to the Department of Mental
Realth and Mental Retardation for the programs of the state schools
described in the Appropriations Act. The rider does not appropriate
these receipts to the state Ischoolwhose employees generated the=.

                               SUMMARY

             The State Funds Reform Act, article 4393-1,
          V.T.C.S., applies to funds received by the Texas
          Department of Ment,alEealth and Kental Retardation
          from a private source. These funds must be placed
          in the treasury. Article    V. section 27 of the
          General Approprjstions Act     appropriates those
          funds to the department's appropriation items from
          vhich the state'flexpenditures under the contract
          were made.




                                           J-A/b
                                               Very truly yours
                                                      .

                                           -
                                               JIM     MATTOX
                                               Attorney General of Texas

MARY KELLER
Executive Assistant Attorney General

ROBERT GRAY
Special Assistant Attorney G,eneral

RICK GILPIN
Chairman, Opinion Committer!

Prepared by Susan L. Garriwm
Assistant Attorney General

APPROVED:
OPIHICN COmITl'EE

Rick Gilpin, Chairman
Colin Carl
Susan Garrison
Tony Gulllory
Jim noellinger
Jennifer Riggs
Nancy Sutton
Sarah Woelk
Bruce Youngblood




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