          THE    ATTORNEY             GENERAL
                      OF    TEXAS
                   Aus~nv. TExAsm37u


                       December 23, 1975



TheSnorableJosephD. Hawkins         c&G.nilnlNo.
                                              n-755
&missioner of Inswmce
stateBoardof&Suratlce               Re: WhetherStateagencies
1110San Jacinto                     may oIxltract
                                               with mutual
e,     Texas 78786                  illmmxecarpaniesfornon-~
                                    assessableimumncepolicies.
l%e Ekmorsble
            Bqmxxl W. Vcwell
CUUlliSSioner
stateDepartment
              of Fublicwelfaze
JohnH.RBaganEiuilding
Austin,T&as  78701
Dear sirs:
     YOUhaverequestedoUrCpilliOIl~        whetheramutualinsurance
caqxmymykeewudedamtrsctsforveriarsnm-smess&leinsmmce
policies.calet3uchcontractwarldbeentereabythe    Department
                                                          of Public
welfareforwi.icaiaswriceswhiletheotherwoulabe forgroup life,
healthandaccicIenti.mmmceundertheTkxa!3R@Jyeesmifonnci?mp
Insurance BenefitsAct. Ins.Code art. 3.50-2,Acts 1975,64thLeg.,
ch. 79, p. 208. lllelsttwmuldbeentereabythe~loyeesRetiranen
Systea. Your questicnsare whethersuchcontractsmay he enteredwithoti
violatingarticle3, sectionsSO-52of the TexasCmstitution.
     In AttorneyGmersl opinionH-365 (1974),
                                          we ruledthatTexasTech
University couldcontractwithnutual insuranceccmpaniesfor grouplife
insurance solongas thepolicyinvolvedwesm-assessable. Wedeter-
minedthatarticle3,~52anditsprovis~thatapoLiticdl
subdivis~aoulanot~astockholderina~~ration,as~ti~
or canpanywere inapplicable,
                           for the Universityms an "azmof the
state"ratherthana@iticalsukdivisicm. ?hus the Universitywas~
cokrolledby article3, sectim 50 and 51,whichprohibitthe "grant
of publicmmeym and tile"lendingof credit."we deteminedthat the
contractinvdvedwculanotviolatethesepmvisions,sinceitwas for a
publicpurpose.




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clueEknwreble
            Jose&D. Hawkins- page 2 (H-755)
?heHonorableRqmmxlW.Vcwell


     wecanperoeiveno meaningful  distinctionbe~yourquestions
am3 that involvedin H-365. The Department of PublicWelfareand the
Dnployees R&iremmtSystanare mt"plitical subdivisions."      Solenv.
waraofFi.rmen,
--                PolicxwnandFireAlm
                           --.-&p+-          ators'Trustees, 308
                                                            --
s.w.2a904        &I. iipp.- San Antomo 1 57, writ ref'd).Article3,
seztian52 is thus ina@icable. In addition,   underour rulinginH-365
thereda     he no violationof article3, sections50 and 51, for the
amtractswoulabe forapublicpurpse. Accordingly,      inouropinion
tberespebive stateagenciesmyenter intomn-assessablecontracts
withmutualinsuranoe   anpanieswithoutviolating  article3, sections
50, 51 or 52 of the TexasCmstitution.
                        SUMMARY
         Stateagenciesmy enterintocmtracts fornon-
         assessableinsuxance
                           policieswith mtual insurance
         anpnies withoutviolatingarticle3, sections50,
         51 or 52.

                                very WY   yours,



                                AttorneyGenexalofTexas




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