Honorable Everett    L.    Anschutz        Opinion No.    M-979
Executive Secretary
Employees    Retirement    System          Re:   Whether Presidential      Execu-
        of Texas                                 tive Order No. 11615, dated
Capitol Station                                  August 15, 1971, freezing
Austin,  Texas 78711                             prices,   wages,  etc.,   prohi-
                                                 bits implementation     of S. B.
                                                 531, 62nd Leg.,    R.S.,     1971,
                                                 as it related to benefits and
                                                 funding increases    paid from
                                                 and into the trust funds ad-
                                                 ministered   by the State Em-
                                                 ployees Retirement      System
Dear Mr.   Anschutz:                             of Texas.

         We acknowledge     receipt   of your opinion   request   in which you ask
the following questions:

                 “1.   Senate Bill 531, 62nd Legislature,      Regular
        Session,   provides for an increase     in all retirement  an-
        nuities,  effective September     1, 1971, for persons pre-
        viously retired and those whb will; retire thereafter.
        Does this Presidential     Executive Order prohibit the im-
        plementation    of these increases?

                 “2. We conclude from your Opinion M-919 that
        the amount available for participation    in insurance pre-
        miums for retirees    is related to the availability  of funds
        for payment of such premiums      for active employees.
        Such premiums    for retired employees     are made part of
        the benefit increases   provided in Senate Bill 531, 62nd
        Legislature,   Regular Session.    Does the Presidential
        Order prohibit the payment of such premiums?



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                “3.  Senate Bill 531, 62nd Legislature,  Regular
       Session,   provides that both the employee contribution
       and the State matching rate under the Retirement     Act
       shall be increased to 6 percent of compensation     effective
       September    1, 1971.  (The current rate is 5 percent. )
       Does this Presidential    Executive Order prohibit imple-
       mentation of the 6 percent contribution and matching rate?

                “4.  Senate Bill 531, 62nd Legislature,    Regular
       Session,   provides that certain previous State service
       which had been waived or with respect to which contribu-
       tions had been refunded may be established      only upon
       payment of a 5 percent penalty interest from date of
       waiver or refund.    (The current penalty interest rate is
       2 l/2 percent. ) Does this Presidential    Executive Order
       prohibit implementation    of the 5 percent penalty interest
       rate? ”

        While it is the policy of this office not to pass upon questions
arising under the federal law, particularly     in the absence of a ruling
or interpretation   by the federal agency charged with its administration
and enforcement,     yet in this instance you have secured a federal ruling
and interpretation   by the agency concerned and you now await only the
opinion of this office advising you as to whether in our opinion you may
properly act in accordance      therewith.  You have furnished us with a copy
of your request for a ruling from the Office of Emergency      Preparedness
and also a copy of the letter ruling addressed to you under date of Octo-
ber 12, 1971, from the Executive Office of the President,      Office of
Emergency     Preparedness,     Washington,  D. C., from which we quote in
part as follows:

                  “Paragraph   501(d) of Economic     Stabilization
       Circular     No. 2 provides:

                         ‘Previously  planned increases in pension
                  benefits for those retired before the freeze or
                  those about to retire are allowed, but unplanned
                  increases   are not allowed.  For example,   a
                  scheduled increase in pensions which is planned
                  for October 15 may also receive this increase.   ’



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               “Therefore,    it appears from the information
       provided that the retirement     annuity increases pro-
       vided for in Senate Bill 531 may be paid both to those
       who retired before the freeze and those about to re-
       tire during the freeze.

               “Paragraph  502(e)         of Economic   Stabilization
       Circular No. 3 provides:

                       ‘An increase in an employer’s  contribu-
                tion can be made to a pension fund to finance
                a benefit increase which   was granted and be-
                came effective before August 15. ’

                “Paragraph  504(l)        of Economic   Stabilization
       Circular   No. 15 provides:

                        ‘An employer may increase       contributions
                to a pension fund during the freeze,      if that in-
                crease is used to fund benefit increases       that
                were effective or declared prior to August 15.
                This is true regardless     of when increased     bene-
                fits are to go into effect.    Employers    may not
                increase pension contributions      to finance bene-
                fit increases  announced during the freeze.

                        ‘Employers   may p:ay increased   benefits
                schedules to go into effect during the freeze to
                all retired employees    eligible to receive the in-
                crease,    including employees   who retire during
                the freeze.     However,  after August   15, employers
                may not make new benefits increases        to go into
                effect during the freeze. ’

                “In line with the above guidance from the Cost of
        Living Council,   it appears that the freeze does not pre-
        clude the payment of increased    contributions of the type
        you inquired about.




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Honorable   Everett   L.   Anschutz,      page 4   (M-979)



                “In response to your last question interest
        rates are not covered by the freeze.    However,   the
        President has requested that in the spirit of the freeze,
        they not be increased. I’

         We published Attorney General Opinion No. M-942 (1971),          in
which we concluded that President Nixon’s recent Executive          Order pro-
vided for stabilization    of prices,  rents, wages and salaries   was valid
and applicable to the State of Texas.       Executive Orders are held to have
the force and effect of statutes enacted by Congress.        Farkas v. Texas
Instruments,   375 F. 2d 629, 632, cert. den.,       389 U.S. 977 (C.A.   5th,
1967. ) Likewise,     the federal regulations   and rulings of the federal agencies
charged with enforcement       of the law will be followed by our courts unless
clearly wrong.     42 Am: Jur. 392, Statutes,     Sec. 78, pp. 398-400,   Sec. 79.

       Your questions arise out of the definition            in Paragraph   501(B)   of
the Wage and Salary Guidelines which states:

                 “For purposes      of the regulation,   wage, salary,
        or other form of compensation         includes all forms of
        remuneration     to an employee by an employer for per-
         sonal services    including,   but not limited to, premium
        overtime   rate payments,       night shift, year-end,  and
        other bonus payments,        incentive payments,     commis-
         sions, vacation and holiday payments,         employer con-
        tributions to or payments of insurance or welfare bene-
        fits or pension funds or annuities;        and payments in
        kind.   (Underlining    for emphasis.    )

         The definition set forth in Paragraph    501(B),   as interpreted    and
clarified by the issuance of Economic    Stabilization    Circular    No. ‘s 2, 3,
and 15 quoted above, is applicable to Senate Bill ,531, 62nd Legislature,
Regular Session,     1971, and we agree with such ruling or interpretation
as above set out.     You are advised, therefore,    that all four of your questions
should be answered in the negative and that all provisions         of Senate Bill 531
related to your questions may be fully implemented         on and after the effective
dates prescribed    therein.




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Honorable    Everett   L.    Anschuts,    page 5   (M-979)



                                         SUMMARY

                  The provisions     of Senate Bill 531, 62nd Legislature,
         Regular Session,       1971, as they relate to the benefits and
         funding increases      paid from and into the trust funds ad-
         ministered    by the State Employees      Retirement  System of
         Texas constitute a “Previously       planned increases    in pension
         benefits    .   ” within the meaning of Economic       Stabilization
         Circulars   No. ‘s 2, 3, and 15, and therefore,      Senate Bill
         531 may be fully implemented        on and after the effective dates
         prescribed    therein.

                 The increase   in retirement    annuities for retirees
         both before and after September      1, 1971, may be allowed,
         and the payment of insurance premiums         for retired em-
         ployees is not prohibited.    The  Presidential   Freeze Order
         does not prohibit state payment of the six percent contri-
         bution and matching rate under the Retirement         Act nor im-
         plementation  of the five percent penalty interest rate in-
         crease as to those claiming prior state service previously
         waived or for which contributions      had been refunded.




                                                   ey General   of Texas

Prepared    by Kerns Taylor
Assistant   Attorney General

APPROVED:
OPINION COMMITTEE

W. E.   Allen,   Acting     Chairman

Rex White
James McCoy
Ray McGregor
John Banks


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Honorable    Everett    L.   Anschutz,     page 6   (M-979)




SAM MCDANIEL
Staff Legal Assistant

ALFRED      WALKER               .’
Executive   Assistant

NOLA WHITE
First Assistant




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