Hon. Jess M. Irwin, Jr.             Opinion No. M- 944
Commlssloner
Texas Rehabilitation Commission     Re:   May the Texas Rehabllita-
1301 West 38th Street                     tion Commission deposit
Austin, Texas 78705                       finds received from local
                                          agencies under a federal
                                          establishment grant in a
Dear Mr.   rwin:                          local depositor: .~
          In your letter requesting an opinion from this office,
you submit the following facts:
          'The Texas Rehabilitation Commission Is
     authorized to sponsor various local rehabllita-
     tlon agencies for the purpose of obtaining Federal
     funds to be used for initial staffing, equipping,
     or remodeling or expansion of buildings used as
     rehabilitation facilities. Generally, the local
     rehabilitation agency applying through the Com-
     mission for grant funds will be a state school,
     hospital, Goodwill Industries, or similar organlza-
     tion. Grant funds are provided by the U. S. Depart-
     ment of Health, Education and Welfare on an 80$-
     20% basis with 20$ of the funds being provided by
     the local agency.
          "Durlnc FY 70-71 the Commission had establlsh-
     ment grant implementation in the amount of $987,214.
     If all grant funds are fully utilized this will re-
     sult In 20$, or $197,442 being contributed by the
     local agencies. Grant funds are expended on the
     basis of monthly reports from the grantee, there-
     fore, the use of the funds Is spread over the entire
     fiscal year or longer. Thus, there is a possibility
     of earning a considerable sum of interest if deposit
     of the funds from the local agencies is authorized
     to be deposited In local depositories. The sole
     purpose of placing such funds in local depositories
     is to earn Interest to be used in the rehabilitation
     program of the Commission."


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Hon. Jess Irwin, page 2         (M-944)



In addition, you have also advised us that grant funds provided
to the Texas Rehabilitation Commission by the United States
Department of Health, Education and Welfare are deposited In the
State Treasury. With regard to these facts you ask the following
question:
          "May the Texas Rehabilitation Commission
     deposit funds received from local agencies
     under a Federal establishment grant in a local
     depository?"
          Section 6 of Artfle XVI of the Constitution of Texas,
as adopted by the electorate in 1956, provides, In part, as follows:
          "(b) State agencies charged with the
     responsibility of providing services to those
     who are blind, crippled, or otherwise physically
     or mentally handicapped may accept money from
     private or federal sources, designated by the
     private or federal source as money to be used
     in and establishing and equipping facilities
     for assisting those who are blind, crippled,
     or otherwise physically or mentally handicapped
     in becoming gainfully employed, in rehabilitating
     and restoring the handicapped, and in providing
     other services determined by the state agency to
     be essential for the better care and treatment of
     the handicapped. Money accepted under this sub-
     section 1s state money. State agencies may spend
     money accepted under this subsection, and no other
     money, for‘specific programs and projects to be
     conducted by local level or other priv&te, non-
     sectarian associations, groups, and nonprofit
     organizations, in establishing and equioplng
     facilities for assisting those who are blind,
     crippled, or otherwise physically or mentally
     handicapped in becoming gainfully employed, in
     rehabilitating and restoring the handicapped, and
     in providing other services determined by the
     state agency to be essential for the better care
     or treatment of the handicapped.
          "The state agencies may deposit money ac-
     cepted under this subsection either in the state
     treasury or in other secure depositories. . . .(l
     (Emphasis ours)


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Hon. Jess Irwin, page 3        (M-944)



          This constitutional provision authorizes state
agencies charged with responslbillty for providing services
to those physically or mentally handicapped to spend money
accepted under the provlslons of Section 6 of Article XVI
for specific grograms and projects. Such programs may be
conducted by   . . . local level or other private, non-
secta$ian associations, groups, and nonprofit organizations
       in providing services determined by the state agency
to'bd essential for the better care or treatment of the hand-
icapped. Attorney General's Opinion M-91 (1967).
          Pursuant to the provisions of Section 6 of Article
XVI of the Texas Constitution, the Texas Rehabilitation Com-
mission was created by the Legislature In 1969 by the enact-
ment of Senate Bill 110, Acts 6lst Legislature, Regular
Session, chapter 40, page 103 (Article 26751 . Vernon's Civil
Statutes). Sec. 10 of this Article 267~1 reads as follows:
          "Sec. 10. The state treasurer is hereby
     authorized to receive all monies appropriated
     by Congress and allotted to Texas for carrying
     out the purposes of this Act or agreements,
     arranaements. or olans authorized therebv; and
     to make disbursements therefrom upon the-certifi-
     cation of the Commissioner. All ubllc monies
     available to the agency shall be eoosited, ad-
     ministered, and disbursed in the same manner and
     under the same conditions and requirements as
     provided by law for other public funds in the
     state treasury. The State Auditor shall regularly
     audit all accounts established by the Commission
     In local depositories, to assure that non- ubllc
     funds made available to the CommissionTTi.i&-
     -or     bequest, by local organizations desiring
     to participate in projects for the handicapped
     authorized In Subsection (b) of Section 6 of
     Article XVI of the Texas Constitution, or by
     endowment, are expended in a manner consistent
     with the purposes of this Act, and the Commission
     shall comply with such reporting procedures as
     the State Auditor might prescribe for the Com-
     mission's acceptance, hoi;ding,investment and
     use of non-public funds.   (Emphasis ours)
          'Under the express provisions of Section 6(b) of Article
XVI money received by the Texas Rehabilitation Commission f$om
private and federal sources is declared to be "state money.    In

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Hon. Jess Irwin, page 4          (M-944)




the case of Lower Colorado River Authority v. Chemical Dank &
Trust Co., 185 S.W.2d 4bl (Tex.Clv.App. 1945) ffi    d 144 T
n        S.W.2d 48 (1945), It was held that fu8ndsz:Tlected zii
deposited by the Lower Colorado River Authority, an agency of the
State, to be used only for a public purpose and subject to expendi-
ture by the authority only for such purpose were without doubt
public funds. On the basis of the holding in this case, It Is our
opinion that money received by the Texas Rehabilitation Commission
from local governmental agencies and other State agencies for the
purpose authorized by Section 6(b), Article XVI of the Texas Con-
stitution, and Article 26752 also would be 'state money." Also
under this Section, the TextisRehabilitation Commission has the
option of depositing such money in the State Treasury or some other
secure depository.
          The provisions of Sec. 10, Article 26751 , classifies
funds available to the Texas Rehabllitatlon Commission as public
and non-public funds. In construing the provisions of this Sec-
tion 10 and taking into consideration the express provisions of
Section 6, Article XVI of the Texas Constitution, we conclude
that money available to the Texas Rehabilitation Commission which
is deposited in the State Treasury shall be handled, administered
and disbursed in accordance with the provisions of the "State
Depository Act" (Articles 2525-2529d, Vernon's Civil Statutes.)
We also hold that money which the agency places in a local deposi-
tory Is subject to a regular audit by the State Auditor. Moreover,
the agency is selecting a local depository for funds available to
It must comply with the provisions of Article 2529c, Vernon's Civil
Statutes, which provides, In part, as follows:
          "Section 1. The selection and qualification
     of depositories for the deposit of public funds
     of all agencies and political subdivisions of the
     state shall be In accord with the laws now In
     effect and hereinafter enacted pertaining thereto.

          "Sec.2.   . . .
          "A bank shall not be disqualified from bidding
     and becoming the depository for any agency or oolitical
     subdivision of the state by reason of having one or
     more officers, directors or stockholders of said bank
     who individually or collectively own or have a bene-
     ficial Interest in not more than 10 percent of the
     bank's outstanding capital stock, and at the same



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Hon. Jess Irwin, page 5             (M-944)




     time serves as a member of the board, commission,
     or other body charged by law with the duty of
     selecting the depository of such state agency
     or political subdivision; provided, however, that
     said bank must be selected as the depository by a
     majority vote of the members of the board, commls-
     sion, or other body of such agency or political
     subdivision and no member thereof who is an officer,
     director or stockholder of the bank shall vote or
     participate In the proceedings. . . .'
          You are advised, in answer to your question, that the
Texas Rehabilitation Commission is authorized to deposit funds
received from local agencies under a federal establishment grant
in a local depository.
                      SUMMARY
          The Texas Rehabilitation Commission Is au-
     thorized to deposit funds received from local
     agencies under a federal establishment
     a local depository. Art. XVI, Sec. 6(by:a::xin
     Const., Art. 26751 , Sec. l,G+V.C .S.

                              Very truly your;;,




Prepared by Ivan R. Williams, Jr.
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
Ed Esquivel
Austin C. Dray, Jr.
Jack Goodman
Ray McGregor
NOLA WHITE
First Assistant
ALFRED WALKER
Executive Assistant
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