The opinion
- .
Hon. Robert S. Calvert
Comptroller of Public Accounts
Austin, Texas
Opinion No. V-1329.
Re: Authority of the Comptroller
to issue warrants in favor
of the revolving fund used
in connectionwith the Repair
and Warehouse Department of
,Dear Sir: the A. & M. College System.
You have requested an opinion of this of-
fice concerningthe legality of a proposed method of
operation of the Repair and Warehouse Department of
the Agriculturaland MechanicalCollege of Texas.
The specific fact situationhere Involved
and the proposed operation may be summarizedas fol-
lows:
There are five separate branches of the
A. & M. College System located on the campus at Col-
lege Station, each receiving a separate appropria-
tion. The Board of Directors of A. & M. College has
set up one central Repair and Warehouse Department
In an effort to prevent a duplicationof functions
within its system, and as a means of securing more
economical repairs and replacements. The Board es-
tablished a revolving fund to be used to purchase
repair materials,to pay for labor, and to pay the
necessary overhead expenses. Each of the separate
branches Is billed for the actual cost of material
and labor used on a repair job, plus 10% of the la-
bor and 20% of the materials. The percentagesare
the pro rata part of the overhead allocated to each
repair job, and are set at a point which keeps the
Department functioning,but which yields no profit.
The revolving fund is placed in a local
bank. Materials are purchased through the Board of
Hon. Robert S. Calvert, Page 2 (V-1329)
Control, but since purchased out of the revolving
fund placed in a local bank, the Comptrollerhas no
knowledge that the purchases are made through the
Board of Control.
The proposed plan of operation is for the
Repitlrand Warehouse Departmentto bill each of the
separateA. & M. branches for the actual cost of ma-
terial and labor used on a given repair job, plus
10% of the labor and 20% of ,thematerial as overhead.
The responsibleofficer at A. & M. College would
then attach a certificatestating that the material
had been purchased through the Board of Control and
billed at the proper price. The bill and certifi-
cate would then be forwarded to the Board of Control,
and the Board, after satisfyingItself that the ma-
terial charge was correct and that the material had
bean purchased as required by statute,would certify
the same to the Comptroller. The Comptrollerwould
then issue a warrant in favor of the revolving fund,
and charge it against the appropriationof the proper
A. & M. branch.
Based on the above, you have asked the fol-
lowing questions:
(1) Does the Comptrollerhave authority to
issue warrants to reimburse the revolving fund of the
Repair and Warehouse Departm6ntand charge these war-
rants against funds appropriatedfor the operation of
the various parts of the A. & M. Collage System and
from the funds appropriatedto A. & M. College?
(2) Is the proposed method of certification
of the purchase of materials a proper one?
(3) Is it proper for the Repair and Ware-
house Department to charge 10% on labor and 20% on ma-
terials to defray overhead expenses?
There is no general statute setting up the
mechanics for the operation of either warehouse or re-
pair departmentsfor the A. & M. College System. In
the General Provisions of the "Higher Education" sec-
tion of the general appropriationbill, it is provided:
"The said Governln Board fif each
educationallnstitutioxi?Is held strictly
accountableto the Legislature for spend-
ing the appropriationsherein made wisely,
Hon. Robert S. Calvert, Page 3 (V-1329)
economically,and for the best inter-
ests of the several institutionsof
higher learning and the State.” Art.
V, Sec. 15, H.B. 426, Acts 52nd Leg.,
R.& 1951, ch. 499, p. 1228, at pa
.
However, such a policy statement is not sufficient
to allow a warrant to be drawn In favor of a revolv-
ing fund and charged to an appropriationmade for
labor and materials. In deciding that the Comptrol-
ler could not draw a warrant against an appropria-
tion to A. & M. College to reimburse a revolvingfund
used to ay laborers, this office held in Att’y Gen.
Op. o-6962 (1945) that the warrant must be issued in
favor of the person performing the labor, because
the appropriationwas made for that purpose. It was
then stated:
“We note the statement In your let-
ter that the method suggestedby you was
authorized by the Legislature in 1927.
We think, however, that the continuous
failure of the Legislature since t at
time to enact simil r provisions evolv-
ing fund provlsiow.7 in subsequentappro-
priations indicates that it did not want
the practice continued. We think such
action, or rather inaction, on the part
of the Legislature is particularlysig-
nificant in view of the fact that for the
past several years, the departmentalcon-
struction on the part of the Comptroller
has been that payroll warrants must be
made payable to the employees.”
Apparently the Legislature had the above
opinion In mind when it placed the follcnvingriders
in the general appropriationbill for the biennium
ending August 31, 1953:
‘l(e) Appropriationsto the Agricul-
tural and MechanicalCollege of Texas or
any other parts of the Texas Agricultural
and MechanicalCollege System, except
funds appropriatedexclusivelyfor sala-
ries may be used to reimburse any revolv-
ing knd operated for the benefit of one
Hon. Robert S. Calvert, Page 4 (V-1329)
or more parts of said system, such as a
motor pool, a feed supply center, an of-
fice supply or laboratory supply center,
or any other operation of a similar na-
ture establishedby authority of the
Board of Directors of the Agricultural
and Mechanical College of Texas.” (Art.
V, Sec. 4, H.B. 426, Acts 52nd Leg.
R.S. 1951, ch. 499, p. 1228, at p. 1463.)
“Each institutionaffected by this
Section is hereby authorizedto set up a
Revolving Fund to facilitate the payment
of nominal expenses, to pay bills within
cash discount periods, and to pay day and
weekly payroll claims, etc. Disbursements
from the revolving funds are to be reim-
bursed from the respective appropriations
made herein, the State Comptroller being
hereby authorized to make such reimburse-
ments on claims filed with him by the in-
stitutionsunder his regularly prescribed
procedures except that one (1) voucher and
one (1) warrant may cover any number of
claims for this purpose. These reimburse-
ment claims shall meet the same require-
ments as other claims against State appro-
priations,and each Institutionshall pre-
pare such a reimbursementclaim as at the
close of business on the last day of each
month and as many times during each month
as may be expedient in order to make un-
necessary the maintainingof an unreason-
ably large revolving fund.
“The respective governing boards
shall determine, subject to the fp;;zval
of the Legislative Budget Board,
amounts of the revolving funds to be set
up for each institution,and may increase
or decrease the amounts in the same man-
ner if necessary. Such Board shall desig-
nate a depository bank for each revolving
fund, and shall specify the officers and/or
employees to sign checks drawn on each such
J./ This function of the Legislative Budget Board
was declared unconstitutionalin Att’y Gen. Op, V-1254
(1951).
Hon. Robert S. Calvert, Page 5 (V-1329)
fund. The revolving fund for each insti-
tution may be set up from State appro-
priations herein made for General Operat-
ing Expenses, or from local funds on hand
at August 31, 1951. The depository bank
for each revolving fund shall be required
to secure the deposit as provided by law.”
(Art. V, Sec. 31, H.B. 426 Acts 52nd Leg.,
R.S. 1951, ch. 499, p. 1228, at p. 1472.)
The above provisions do not specifically
authorize a revolving fund for a Repair and Ware-
house Department, but the terms used are sufficiently
broad to allow this particularfund to be set up.
These riders clearly give authority to the Comptrol-
ler to Issue a warrant in favor of the revolving fund
instead of the individual or firm that does the work
or furnishes the materials. The warrant may be &arged
against State appropriationsmade from the General
Revenue Fund, except those made exclusivelyfor sala-
ries, or against appropriationsmade from local funds
in the Treasury belonging to A. & M. College or be-
longing to any part of the A. & M. College System.
Thus, the riders make possible the use of a revolving
fund. Further, these riders merely detail the manner
of using the appropriation,are necessarily connected
with and incidentalto the appropriation and are
therefore valid. Att’y Gen. op. v-1254 11951). You
are therefore advised in answer to your first question
that the Comptrollerhas authority to issue warrants
from the proper funds in favor of the revolvingfund.
Before issuing a warrant involving a pur-
chase of materials, the Comptrollermust be satisfied
that the purchases have been properly made. The pro-
cedure proposed here, whereby the Board of Control cer-
tifies that the purchases have been properly made and
the Comptroller receives the certificateprior to ls-
suing a warrant in favor of the revolvingfund, is ade-
quate to assure the Comptrollerthat the purchasing
statutes are being compliedwith. Your second question,
therefore, is answered in the affirmative.
Your third question concerns the method of
charging the overhead expense among the various parts
of the A. & M. System receiving the advantages of the
Repair and ~WarehouseDepartment. In authorizingthe
use of revolving funds for operations such as the one
.
Hon. Robert S. Calvert, Page 6 (V-1329)
in question, the Legislature certainly envisioned
that each benefited member would pay its pro rata
share of the necessary expenses incident to such an
operation. The method of allocation is one to be
left to the discretion of the proper administrative
officials. There is no legal objection to the meth-
od proposed for the allocation of these expenses if
it properly divides the expenses, and we have no
reason to believe that it does not.
The riders In the general appropria-
tion bill for the biennium ending August
31 1953 Grt. v., Sec. 4 Par. (e), and
Adi V. Sec. 31 H.B. 428 Acts 52nd Leg.,
R.S. l&l, ch. 449, p. 1228, at pp. 1463
and l&72), authorizingthe use of revolv-
ing funds by the Texas Agricultural and
MechanicalCollege System are sufficiently
broad to allow the Board of Directors of
the A. & M. College System to set up a Re-
pair and Warehouse Departmentfor the use
of all units of the System. The Comptrol-
ler is authorized to issue warrants against
the funds appropriatedto the various
parts of the System in favor of the revolv-
ing fund. The Comptrollermust be satis-
fied that the purchasing statutes have been
compliedwith prior to issuing a warrant,
and the proposed method whereby the Board
of Control certifies to the Comptroller
that the purchases In question have been
properly made is adequa to assure him of
compliancewith the
Yours very truly,
APPROVED: PRICE DANIEL
Attorney General
C. K. Richards
Trial & Appellate Division
Jesse P. Luton, Jr. BY r, w,$J- &b-U
Reviewing Assistant E. Wa e Thode
Assistant
Charles D. Mathews
First Assistant
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