Hon. David Wade, M.D.,     Commissioner                       Opinion     No.   H-   50
Texas Department of Mental Health and
        Mental Retardation                                    Re:         Whether Department
Box 12668, Capitol Station                                                of Mental Health and
Austin,   Texas 78711                                                     Mental Retardation
                                                                          can use appropriated
                                                                          funds to pay wages for
                                                                          a period of time when
                                                                          it is claimed the em-
                                                                          ployee was unlawfully
                                                                          terminated   etc., and
Dear   Dr.   Wade:                                                        related questions.

       You have requested     the opinion of this office        in answer       to the following
questions:

              “1. Is this Department authorized to use appropriated
              funds to pay back wages to a claimant pursuant to a
              conciliation agreement under Public Law No. 92-261
              or Executive Order 11246 . . . . ?

              “2.  If your answer . . . is in the affirmative,              from
              what source . . . .?

              “3.    If your answer   .   .    . is in the affirmative,
                                                                can
              such wages be paid for any period of time subsequent
              to a rejected offer by this Department  to reemploy
              . . . , promote . . . or employ the individual . . . ?
              In answering  . . . , please consider . . . situations:

                      (a) Where it was agreed that full wages
                      be paid for the period prior to such offer
                      . . , ; or




                                          p.    207
The Honorable     David Wade,     page 2 (H-50)




                     (b) Where it was not agreed that full wages
                     be paid for the period . . . and . . . the
                     claim for such prior wages was preserved;   or

                     (c) Where it was not agreed that full wages
                     be paid for the period . . . and the . . .
                     claim for such prior wages was required to
                     be forfeited as a condition of the offer . . . . ”

       Section   6 of Article   8 of the Texas      Constitution   provides   (in appro-
priate part):

                    “No money shall be drawn from the Treasury    but
             in pursuance of specific appropriations made by law; nor
             shall any appropriation  of money be made for a longer
             term than two years . . . . ”

       There must be a specific appropriation    for the purpose for which
,moneys are to be drawn from the State Treasury.       National Biscuit Co.
v. State, 135 S.W.2d 687 (Tex. 1940) ; State v. Angelina County, 150 S.W.
2d 379 (Tex. 1941); Bullock v. Calvert,   480 S.W.2d 367 (Tex. 1972).     The
purpose for which such payments are sought must be matched against the
purposes for which funds have been appropriated.

       Pursuant to a conciliation   agreement   under Public Law No. 92-261
or an agreement    under Executive    Order 11246, payment of “back wages”
is to be made to a claimant as compensation       for a period of time that the
claimant allegedly was unlawfully terminated,       denied promotion or denied
employment    by the Department because of race, color,       religion, sex or
national origin.   A conciliation  agreement   is a contract.   Funds would be
available only if the contract is one within the power of your Department
to make.   Absent such authority,     any contract made would be void.

       Article 3, Section 44, Texas Constitution,     provides in part, “The
Legislature   . . . shall not . . . grant by appropriation    or otherwise,  any
amount of money out of the Treasury      of the State, to any individual,   on a
claim,   real or pretended,   when the same shall not have been provided for




                                         p.   208
The Honorable        David Wade,   page 3 (H-50)




by pre-existing law . . . , ” Fort Worth Cavalry       Club v. Sheppard,     83 S.W.
2d 660 (Tex. 1935); Bullock v. Calvert,  supra.

       The Equal Employment        Opportunity Commission        (42 U.S. C. Section
2000 e-4),  upon the filing of charges alleging an employer has engaged in
unlawful employment     practices,    shall investigate   the charge,    and, if it
determines   that there is reasonable     cause to believe that the charge is
true, it “shall endeavor to eliminate any such alleged unlawful employment
practice by informal methods of conference,          conciliation,   and persuasion.  ”
42 U.S. C. Section 2000 e-5(b).       We  assume    here  that  the conciliation
agreement   under Public Law No. 92-261 to which you refer would be an
agreement   arrived at under such circumstances.

       That Act defines certain employment      practices   as unlawful (42 U.S. C.
Section 2000 e-2) and creates a civil action which may be pursued after ex-
haustinn of specified administrative     remedies,   including an attempt to
secure a satisfactory  conciliation   agreement    by negotiations  between the
Commission    and the employer    (42 U.S. C. Section 2000 e-5).

        The powers of the Texas Department        of Mental Health and Mental
Retardation are set forth in Article     5547-202,    Vernon’s   Texas Civil Statutes.
The power to enter into such a contract does not appear and there is no pre-
existing law specifically    authorizing  such payments.      Although the Legis-
lature has authorized     some agencies to settle claims in certain situations
(see, for instance Articles     796-802,  828, 835f, 2351 (lo), 6252-19 Section
10, V. T. C. S.), we find no such power vested in the Department of Mental
Health and Mental Retardation.

      The current appropriations    bill allocates  no funds for payment under
such a contract.  The only allocation which possibly could permit such pay-
ment is line item 12 of the appropriation    to the Department of Mental Health
and Mental Retardation,   reading as follows:

              “12.     Other Operating Expenses,     including main-
                       tenance and repairs,    court costs,  $25 per
                       diem for Board members,       capital outlay and
                       all other activities for which no other pro-
                       visions are made (including Legal and Claims
                       Division) but excluding airplane maintenance
                       and operating expenses. ”




                                        p.   209
The Honorable    David Wade,    page 4 (H-50)




Senate Bill No. 1, Third Called Session,     1972, p. 11-8.  Since no pre-
existing law authorizes    the Department to enter the type contract under
discussion,   it is our conclusion that payment thereunder would not con-
stitute an “operating   expense” within the above appropriation.    It is our
opinion that the Department,     by reason of Article 8, Section 6, Texas
Constitution,   is not authorized to use appropriated  funds for payments
under such conciliation    agreements   based on avoidance of “damages.    ”

        We turn now to a discussion     of conciliation   agreements    negotiated
under Executive     Order 11246. Section 202 of it provides for inclusion of
a lengthy provision in government       contracts whereby the contractor        (such
as the Department) agrees not to discriminate          against employees     or
applicants because of race, color,       religion,   sex. or national origin,    and
to comply with certain rules and follow certain practices          therein enumerated
or referred to, for the purpose of encouraging          equal employment     oppor-
tunities.   Section 209 of the Order sets forth sanctions and penalties which
may be imposed upon violation of the non-discrimination            provisions   of the
contract.    Section 209(a) (5) permits cancellation      or suspension of a con-
tract for failure of the contractor    to comply with the non-discrimination
clauses,   but Section 209(b) requires that an attempt to secure compliance
by methods including conciliation     be made before the contract is cancelled
or suspended under subsection      (a)(5).    We assume for purposes of this
part of the discussion   that the conciliation     agreement    under Executive
Order 11246 to which you refer is an agreement           arrived at under such
circumstances.

       The powers of the Texas Department of Mental Health and Mental
Retardation are set forth in Article  5547-202,  Vernon’s Annotated Civil
Statutes.  Section 2.15 thereof provides as follows:

                    “The Department    may negotiate with any agency
             of the United States in order to obtain grants to assist
             in the expansion and improvement     of mental health and
             mental retardation   services in this state. ”

We assume the original contracts under consideration     were negotiated
under Section 2.15 and contain the non-discrimination   clause provided for
in the Executive Order.  If such is the case, then it is apparent that a




                                       p.   210
The Honorable    David Wade,    page 5 (H-50)




renegotiation   under Section 209(b), guaranteeing     future compliance     with
the original provisions    and certain “back pay” concessions       in exchange
for forgiveness    and waiver of any prior violations,     would be within the
power of the Department under Section 2.15, especially          if matching
federal grants of money are involved,      in view of the adoptable language
of Article  3, Section 51a of the Constitution.    We think that under such
an agreement     the Department would be authorized to use appropriated
funds for payments as required by the contracting        federal agency.     Such
payments,    however,   would not be paid as “back wages, ” since they
would not be in payment for services     rendered to the Department.         In-
stead, they should be understood,as     contractual  adjustments      necessary
to secure continued benefits under federal contracts.         Such payments
therefore   should be made from the funds appropriated        in connection
with securing the federal contract for the continuation of which such
concessions    are to be made,

       In answer to your third question it is our opinion that payments,
if made, should be made according to negotiated terms the Department
considers   fair.   In this connection it should be noted that Section 209(b)
of Executive    Order 11246 does not specifically    mention “back pay” con-
cessions,   but merely directs that the contracting     federal agency “shall
make reasonable      efforts within a reasonable   time limitation to secure
compliance    with the contract provision of this Order by methods of
conference,    conciliation,  mediation,   and persuasion   . . . before a
contract shall be cancelled or terminated.       . . .”

                                SUMMARY

                    The Department of Mental Health and Mental
             Retardation is not authorized by pre-existing       law
             to use appropriated   funds to pay “back wages” to
             claimants    under Public Law No. 92-261 pursuant
             to extra-judicial  “conciliation   agreements,   ” but it
             is authorized to adjust its contractual    differences
             with the federal government      pursuant to Executive
             Order 11246, which legal adjustments       may encompass
             arrangements    having   the same practical   effect   as




                                      p. 211
The Honorable   David Wade,   page 6 (H-50)




             “back wages” payments.     Such adjustments   may be
             made upon whatever terms (consistent    with its
             original authority) the Department of Mental Health
             and Mental Retardation   considers just and fair.

                                    Very truly yours,




                              u     Attorney   General   of Texas

APPROfiED:




DAVID M. KENDALL,        Chairman
Opinion Committee




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