                                           KEN PAXTON
                                      ATTORNEY GENERAL OF TEXAS



                                               April 29, 2015



The Honorable Jane Nelson                                Opinion No. KP-0015
Chair, Committee on Finance
Texas State Senate                                       Re: Constitutionality of section 54.341 of the
Post Office Box 12068                                    Education Code, the Hazlewood Act
Austin, Texas 78711-2068                                 (RQ-0009-KP)

Dear Senator Nelson:

         You ask for an opinion addressing the constitutionality of section 54.341 of the Education
Code, commonly referred to as the Hazlewood Act. 1 Section 54.341 requires the governing boards
of institutions of higher education to exempt certain veterans of the United States Armed Forces
from paying tuition and fees,

                 provided the person seeking the exemption currently resides in this
                 state and entered the service at a location in this state, declared this
                 state as the person's home of record in the manner provided by the
                 applicable military or other service, or would have been determined
                 to be a resident of this state for purposes of Subchapter Bat the time
                 the person entered the service.

TEX. EDUC. CODE ANN. § 54.341(a) (West Supp. 2014). You ask specifically about the
requirement that veterans receiving the exemption have "entered the service in Texas," and we
limit this opinion to addressing that so-called "fixed-point residency requirement." Request Letter
at 1.

        As you note, a prior opinion by former Attorney General Dan Morales addressed "whether
a court would find that the state has a legitimate interest in" distinguishing between veterans who
resided in Texas at the time they entered service and those who did not. Tex. Att'y Gen. Op. No.
DM-468 (1998) at 8. Opinion DM-468, which was issued 17 years ago and has since gone
unheeded by the state entities administering the Hazlewood Act, reached a conclusion without the
benefit of an adversarial process to fully explore what legitimate state interests the fixed-point
residency requirement of the Hazlewood Act serves. See id.; cf Tex. Att'y Gen. Op Nos. GA-
0670 (2008) at 5 (declining to reach a definitive legal conclusion when rational-basis scrutiny was


           1
            See Letter from Honorable Jane Nelson, Chair, Senate Comm. on Finance, to Honorable Ken Paxton, Tex.
 Att'y Gen. at I (Feb. 10, 2015), https://www.texasattomeygeneral.gov/opinion/request-for-opinion-rqs ("Request
 Letter").
The Honorable Jane Nelson - Page 2          (KP-0015)



required), MW-421 (1982) at 2-3 (same). Dismissing all of the proffered state interests without
discussion or analysis, DM-468 opined that "a court would conclude that the statutory
classification is unconstitutional." Tex. Att'y Gen. Op. No. DM-468 (1998) at 1, 8. ·

        As you are likely also aware, in January a federal district court addressed the
constitutionality of the fixed-point residency requirement and determined that in order for it to be
constitutional under the Equal Protection Clause, it must withstand rational basis review, meaning
it "must rationally further a legitimate state purpose." Harris v. Cantu, No. H-14-1312, 2015 WL
338938, at *6 (S.D. Tex. Jan. 26, 2015). Relying in part on DM-468, the court concluded that the
fixed-point residency requirement was not "rationally related to any legitimate state interest." Id.
at *8. Harris v. Cantu currently is on appeal before the United States Court of Appeals for the
Fifth Circuit. Harris v. Cantu, No. 15-20105 (5th Cir. filed Feb. 23, 2015). The question you raise
is therefore not finally resolved by the courts.

         While we agree with both DM-468 and the federal district court that the classification
created by the Hazlewood Act must rationally further a legitimate state purpose, we disagree with
the conclusion that the fixed-point residency requirement is not doing so. In concluding that the
fixed-point residency requirement cannot withstand rational basis review, DM-468 and the federal
district court relied on previous United States Supreme Court opinions that addressed challenges
under the Equal Protection Clause to other statutes with residency requirements. See Att '.Y Gen. of
New Yorkv. Soto-Lopez, 476 U.S. 898 (1986); Hooper v. Bernalillo Cnty. Assessor, 472 U.S. 612
(1985); Zobel v. Williams, 457 U.S. 55 (1982). The residency requirements and underlying statutes
addressed in those three opinions, however, are distinguishable from the requirement at issue here.
Soto-Lopez addressed a New York statute that gave preferences in civil service employment
opportunities to veterans who lived in the state at the time they entered military service. Soto-
Lopez, 4 76 U.S. at 899. Hooper involved a New Mexico tax exemption given to Vietnam veterans
who resided in the state prior to May 8, 1976. Hooper, 472 U.S. at 616-17. Zobel addressed an
Alaska law that gave an annual oil-income dividend to the state's residents, the amount of which
was determined by the number of years a given individual had resided in the state. Zobel, 457
U.S. at 57.

        Not one of these cases addressed a fixed-point residency requirement in the context of
providing an education benefit like that conveyed through the Hazlewood Act. Furthermore, in
each of these cases, the statutes addressed rewarded prior conduct and did not serve a state interest
by creating incentives for future conduct. See Soto-Lopez, 476 U.S. at 913 (Burger C.J.,
concurring) ("the preference is granted only retrospectively following definitive action by the
legislature"); Hooper, 472 U.S. at 619 ("The legislature set this eligibility date long after the
triggering event occurred ... and cannot plausibly encourage veterans to move to the State by
passing such retroactive legislation."); Zobel, 457 U.S. at 62 ("Assuming, arguendo, that granting
increased dividend benefits for each year of continued Alaska residence might" create an incentive
to remain in the state, "the State's interest is not in any way served by granting greater dividends
to persons for their residency during the 21 years prior to the enactment.").

        Conversely, the benefit provided through the Hazlewood Act creates an ongoing incentive
for current Texas high school students to graduate and enlist in the armed services. TEX. EDUC.
CODE ANN. § 54.341(a)(4)(F-G) (West Supp. 2014) (offering the exemption to individuals who
The Honorable Jane Nelson - Page 3            (KP-0015)



serve in active duty during "the national emergency by reason of certain terrorist attacks that began
on September 11, 2001" or "any future national emergency declared in accordance with federal
law"). The vast opportunities and skills acquired through military service benefit both the
individual veterans and the states in which they return to live and work after their service. Texas
therefore has an interest in encouraging enlistment by its current residents, who are those most
likely to return to the state as veterans.

        In addition, with finite resources available for education benefits like those provided
through the Hazlewood Act, the State has an interest in allocating those resources in a manner that
achieves the highest return possible. By limiting the financial benefit to only those individuals
who resided in Texas at the time they entered the service, the State is providing the benefit to those
veterans who are most likely to have strong ties to Texas and to remain in Texas after graduation.
In doing so, Texas thereby increases the likelihood that it will receive the economic benefit from
its investment of funds, which it would be less able to do ifthe benefit was provided to all veterans.
Thus, the Legislature is rationally furthering legitimate state purposes by providing the Hazlewood
benefit to only those individuals who resided in Texas at the time they entered the service. The
underlying interests served by the fixed-point residency requirement in the Hazlewood Act differ
from those addressed in Soto-Lopez, Hooper, and Zobel, such that the analysis in those cases
should not be considered controlling here.

        On appeal to the Fifth Circuit, the State will have the opportunity to articulate all reasons
why using the fixed-point residency requirement rationally furthers legitimate state purposes, and
the court will provide further clarification on this area of law. Until it does, or until the United
States Supreme Court finally resolves this issue, we must caution you that the status of the law
regarding the Hazlewood Act's fixed-point residency requirement is in flux. While we cannot
predict with certainty how the federal courts will ultimately resolve this issue, we believe that the
Hazlewood Act's provision of benefits to only those individuals who resided in Texas at the time
they entered the service rationally furthers a legitimate state interest, should withstand rational
basis review, and should therefore be held constitutional under the Equal Protection Clause of the
Constitution.
The Honorable Jane Nelson - Page 4         (KP-0015)



                                     SUMMARY

                      While we cannot predict with certainty how the federal
              courts will ultimately resolve this issue, we believe that the
              Hazlewood Act's provision of benefits to only those individuals
              who resided in Texas at the time they entered the service rationally
              furthers a legitimate state interest, should withstand rational basis
              review, and should therefore be held constitutional under the Equal
              Protection Clause of the United States Constitution.

                                            Very truly yours,




                                            KEN PAXTON
                                            Attorney General of Texas



CHARLES E. ROY
First Assistant Attorney General

BRANTLEY STARR
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee
Assistant Attorney General
