Office of the Attorney General
Honorable Homer A. Foerster
Opinion No. MW-338
Re: Disposition of interest on Capitol Complex Area Fund No. 7
Dear Mr. Foerster:
You ask the following question:
May interest earned on the Capitol Complex Area Fund No. 7 be credited to that fund?
Fund No. 7 was established in 1954 through section 51-b(b) of article III of the Texas Constitution. When that constitutional provision was repealed, the fund became subject to the following statutory provision:
The State Building Fund is abolished. Unexpended and unobligated funds in the State Building Fund are transferred to a special fund in the State Treasury. The funds may be used as directed by the legislature to acquire real property in the capitol complex area, purchase personal property for use in buildings, and pay necessary architectural and planning fees incurred in carrying out these purposes.
Acts 1977, 65th Leg., ch. 766, s 3b, at 1915. Article 2543d, V.T.C.S., provides in part:
Interest received on account of time deposits of moneys in funds and accounts in the charge of the State Treasurer shall be allocated as follows: To each constitutional fund there shall be credited the pro rata portion of the interest received due to such fund. The remainder of the interest received, with the exception of that portion required by other statutes to be credited on a pro rata basis to protested tax payments, shall be credited to the General Revenue Fund. The interest received shall be allocated on a monthly basis.
A prior opinion of this office held that article 2543d, V.T.C.S., does not apply to interest on federal funds granted the state for a specific program. See Attorney General Opinion M-468 (1969); see also Attorney General Opinion C-530 (1965). Such Funds are held in trust by the state and are subject to the rule that interest thereon becomes part of principle. Attorney General Opinion M-468 (1969).
Similarly, Attorney General Opinion H-1040 (1977) dealt with a trust fund established by the legislature in the form of insurance contributions which were administered by a trustee for a specific group of beneficiaries. The interest on the insurance contributions was held not subject to article 2543d, V.T.C.S.
The request letter suggests that the interest on any restricted fund becomes part of that fund and cites Attorney General Opinion C-610 (1966) as authority for that proposition. This opinion considered whether state colleges and universities could supplement salaries from non-appropriated funds which the payor had resticted to certain purposes. Attorney General Opinion C-610 characterized these funds as testamentary trusts and concluded that, in the event no provision was made directing distribution of income, the interest income become part of the fund. Although the term 'restricted fund' was used in this opinion, it described a fund restricted by the conditions of a testamentary trust. Thus, although C-610 was written before the enactment of article 2543d, V.T.C.S., its treatment of the fund in question as a trust fund is consistent with the trust fund theory relied upon by subsequent opinions which interpret article 2543d, V.T.C.S. See Attorney General Opinions H-1040 (1977); M-468 (1969).
The Capitol Complex Area Fund No. 7 does not consist of federal funds which may only be spent for specific, limited purposes. It consists of state funds which may be spent at the legislature's direction for a number of purposes. This fund fails to fit the trust fund mold; hence interest earned on it is to be credited to the General Revenue Fund as required by article 2543d, V.T.C.S.
Interest earned on the Capitol Complex Area Fund No. 7 may not be credited to that fund but must be credited to the General Revenue Fund as required by article 2543d, V.T.C.S.
Very truly yours,
Attorney General of Texas
John W. Fainter, Jr.
First Assistant Attorney General
Richard E. Gary III
Executive Assistant Attorney General
Prepared by Susan L. Garrison
Assistant Attorney General