T~CATTORNEYGENERAI.
                                  OF-XAS
                                  AUHTXN     ~.TEXAS
PRICE  DANIEL
ATTORNEYGENERAL
                                       Feb.    17,    1948


       Hon.   c.   B,   cavness        Opinion       No. V-504.
       State Auditor
       Austin, Texas                   Re:     Specific      questions   respect-
                                               ing the .sppllcabillty        of
                                               regulotlcns      which apply
                                               generally      to State depart-
                                               merits, institutions,        and
                                               agencies,      to the Texas
                                               Employment COavi~lssion, in
                                               anplificrtirn        of &3ptni*n
                                               No. V-427,

       Dear Sir:

                   We refer    to your request       for opinion    on
       several   specific   questions     respecting    the appllca-
       bilitg  of regulations,       which apply generally       to
       State Departments,      institutions      and agencies,    to
       the Texas Employment Commission in amplification
       of Opinion No, V-427.

                   In Opinion No. V-427 this department held
       that the Texas Employment Commission is a State Agency,
       yet with respect    to Federal   funds expended for adminis-
       tration   of the agency the standards     of the Social    Secur-
       ity Administrator    and the United States Employment Serc
       vice of the Department of Labor and the rules and regu-
       lations   adopted by the Commission to meet such standards
       prlmarlly   govern.   Otherwiee,    the general provislans     of
       the laws of this State bre rppllcsble.

                    We can appreciate       fully   your continued      concern
       over the apparent conflict          in 3tate and Federal       laws and
       regulations     which apply to this “State Qency”            financed
       through Federal      appropriations.        It Is a perfect      example
       of the hybrid nature and the Federal             control  which may
       be retained     over e State Agency set up by co-operetlve
       Federal    and State Statutes and financed           by Fsdersl funds.
       As pointed     out In V-427 the terms and conditions             of the
       Federal    Statutes    are recognized      and agreed to by our
       State Sthutes.         Therefore,    there is no alternative         ex-
       cept to give primary authority            to the Federal    laws and
       regulations     applicable     just as the Texas Legislature          has
                                                                          ..   .




Hon. C, Ii, Cavness,     page 2      v-504


done.  In this     connection,    you now present     the   Pollow-
ing questions:

            ‘1. Is it necessary     for the Legislative
      Audit Committee to approve the Texas Employ-
      ment Commission’s    budget for the expenditure
      of Its administration     costs which are paid
      from ‘Federal’   funds?

            “2. Is it necessary     for the Texas Em-
      ployment Commission to purchase       itssupplies,
      equipment,   etc.,    and make its rental   contracts,
      through the State Board of Control,        under the
      same regulations      that apply to other State
      Departments,    Institutions,    and Agencies?”

          We have not found any general         provision     of the
laws of this State which authorizes          the Legislative
Audit Committee to approve any State department’s              bud-
get, nor is there any such provision          in the Texas Unem-
ployment Compensation      Act.    There are several      provisions
in the Departmental      Appropriation    Act concerning      approval
by the Legislative     Audit Committee of the expenditure            of
funds of various     State departments.       It has been suggested
that possibly    such necessity      of the Legislative     Audit Com-
mittee’s  approval    of the Texas Employment Commission’s
budget is implied from a similar         paragraph of the Depart-
mental Appropriation      Act, page 930, which reads:

             “All ,the above items appropriated      for
      administration     to the Texas Unemployment
      Compensation     Commission shall be subject
      to the approval     of the Legislative    Audit
      Committee and none of the funds herein
      provided    shall be spent until     such approval’
      shell   have been obtained,”

           In our opinion   this provision        relative    to the
Texas Employment Commission refers          to the expenditure
of the items appropriated      and not to the preparation
or approval   of a budget.     The  moneys are not granted
In trust by the Federal     Government to the States,           and
thus are not appropriated,      until    a budget has been pre-
pared and adopted in its fins1        form.      In other words,
if the quoted provision     grants any authority           to the
Legialtive   Audit Committee,    such authority         commences
after   the budgetary  proceaa prculiar        to the Texas
wyment       Commission is completely        finished.       Uo
again refer   to Opinion No. V-427 for the construction
.   -



         Mon. C. Ii, Cavness,        page 3        V-504



         placed    upon this     quoted    provision     relative    to expendi-
         tures,

                   Although It Is not witbin the province              of this
         office   te construe     the standards      and programs of the
         various   Federml agencies        involved   heroin,   we rote tkrt
         these standards      mad programs require        the Texas aploy-
         ment Commission to submit for consider&Ion                a budget
         request    setting   forth    in detail    the prepossQ erpemdi-
         tures.   (?'rrt Iv, Vole 1, i3ulde for State bplaymemt
         Security    AdministratIon,       Soctloa   2000)    Amy differ-
         encea are settled       between the Commlasloo and the respoc-
         tlve regional      supervisors      with the final    detormlsrtloe
         of the ureunts necorsary          for the propor a~lmistratlon
         of the State's      acts resting      with the Federal     agencies.
         (Section    2006, supra)       These standords~ will reveal         that
         there are PO provisions         for approval. of the budget by
         any St&e Committee similar            to the Legislative      Audit
         CommIttoe.

                   It is therefore     our eplnloa th8t it is rat
         recoosrry   Per the Leglsl@tive     Audit Coulttoe   to &)-
         prove the Texas Pmpley~ont Cemmlsafo~~h budget for
         the oxpeadlturo    of Its admlmlstratlvs    costs  which &re
         paid frem “Feleral”     fuada.

                    qua. attention     has boem called         to~Flscrl     ID-UC-
          tloa E. S. 501, Sectlen         1290, which in effect           holds t&t
          the State laws, rules,         an& regulations        governing      expebdl-
          tures b$ State agencies shall            control     the expondlturos
          of Fsm+       fusds grsnted      for unerployaoat          and eBplmobt
          eervlco   ramI~lstratlro.        ZIefarencs      la made, houeoor,        to
          Sectlona    1030-33,   ?art IQ,'Volumo          I of Quid& hr.St*te
          Bmplqrent     Socurl*     Admlnlstrrtlqn,         orUc# Is rh 4lrborr-
          t1.B upon Sootion      1290 rorerrsg        to dOQ0.        ?hoae ~lattor
          soctloxr   refer   te a "State       ?ractlco,"     wklch Is u ostab-
        'llsbod    custom or usage, accepted            and ge8ora.llg      ap)llod
          aa an expondlturr      control     la the flrcal        rlrlmlrrtartien
          lr the 8tate Mvorament,          a8 0~1~ one rw0i            th8 Setial
          Security   Board will     use In tstem'inlng~the            neceroltg     Y
          expebdltures     w a State agency.            Whether other faoterb
          give roasob for the Board to devlato               tren tbo Nate
          ?raotlce    is aololr    wltkin    it8 provlrce       to dooile.

                   Inaof&r as the 'procedure       relrtlve  to reatal  CY-
         trusts  la concorned,     we rerer     to Oplnlom No. e-5524,   a
         copy et which we enclose        herewith.     This opl~lor held
         th@t these rostrl     contracts     did not krvs to be U&I
         through the Board or CoBtrel,          and this lplnloa   krr boom
Hon.   C. H. Cavness,      page 4        v-504


incorporated    aa a part of the program of the Employment
Service    of the Department of Labor.               With reference      to
this question     we again refer       to the standards          of the
Federal   agencies     relative     to rental       of premises     and note
that these contracts         must receive       approval    of the respec-
tive regional     offices.       It Is specifically         provided     that
the Bureau of Employment Security has the responsibility
for determining      the reasonableness          and the necessity of
the amounts requested         for rental       space and the regional
office   of the USES will concern            Itself    primarily     wfth the
question    of suitability       of office      space.    (Part IV, Vol. 1,
Guide for State Employment Security                Administration,       Sec-
tion 2510)     The requisites        of these standards          govern,    and
since they require        that the leases        be made otherwise        than
through a State agency aimllar             to the Board of Control,
the conclusion     follows      that the rental        contracts     of the
Texas Employment Commirsion need not be made through the
Board of Control.

          With reference    to the que.stion concerning           the
necessity    of the Texas Employment Commission purchasing
Its supplies,    equipment,    etc.,   through the State Board
of Control,    we refer   to Opinion No. O-3737,wherein It
was held that the Commission did not have to follow                  the
manner snd method of purchasing          supplies   and equipment
through the Board of Control         which is applicable        to other
State departments     when purchases      are made in the manner
and method as required      by the rules,      regulations,       etc.,
of ,the Social   Security   Board.     We have reviewed        this
opinion   and subsequent    federal    regulations     and have not
found any regulat,lon     or law which would alter          the con-
clusion   reached ~therefn.

         After a study of the pertinent          standards,   rules
and regulations)     we have found that at the present         time
all of the interested        Federal   agencies  have designated,
pursuant to their      standards     and rules  and regulations,
the Fiscal   Office    of the Texas Bmployment Commission as
the procurement     officer    who is charged with the responsl-
bility  of purchasing       supplies   and equipment.

           It is true that the Bureau of Employment Securl ty
does have in its standards         and in Its suggested        rules and
regulations     a “suggested    process”     by which the Commission
could under certain       circumstances      deslgnate     the State Board
of Control    as its procurement       officer.      This portion     of ~t.nr
rules   and regulations      and standards      of performance     Issued
by the Bureau of mployment          Security,     referred    to above,
could possibly     be used by the Bureau as a basis for desig-
nating the State Board of Control            a8 its procurement       officer,
.   -




        Hen.   C. H. Cavness,     page 5        v-504



        provided   the State Board of Control  met with all the
        standards   promulgated by the Bureau of Employment
        Set urlty . Whether or not this procedure    is to 'be
        followed,   and, If so, if the standards   have been met,
        13 for the Bureau of Employment Security     to determine,
        and we cannot therefore    say as a matter of lav whether
        or not these purchases    should be handled through the
        Board of Control.

                    The United State3 Employment Service              of the
        Department of Labor has its own separate                laws under
        which to make a separate           determination    as to the method
        to be followed       by the State agency in making these pur-
        chases.     This Federal       agency,   as a bs~sis for Its grant
        of funds to a State,          has what is known as a Plan of
        Operation.       One of the items in this Plan of Operation
        is its fiscal       processes,     of which procurement       of sup-
        plies,    equipment,     etc.,   is a smaller     pert.     We refer
        to Section     22.203 of the Plan of Operation             submitted
        by the Texas Employment Commission to the Secretary                  of
        Labor.     In that section       is found Attorney       General's
        Opinion No. O-3737, which has been adopted by the Sec-
        retary    of Labor end the United States Employment Ser-
        vice as its basis for the approval              of the Texas Agency's
        operation     insofar    as the procurement       of supplies,     equlp-
        ment, etc.,      are concerned.

                   As we have heretofore       peinted   out, these programs
        govern and require       such purchase3     to be made other than
        through the Board of Control,          and we again note that
        whether this procedure         should be changed is within the
        discretion     of ,the Secretary     of Labor acting   through the
        United State3 Employment Service.            As the situation   now
        presents    itself,   it ia not necessery      for the Commission
        to purchase      it3 supplies,    equipment,   etc.,  through the
        Board of Control.


                                      SUMHAFE

                    It is not necessary      for the Legislative
               Audit Committee to approve the Texas Employ-
               men't Commission's    budget for the expenditure
               of its administration      costs which are paid
               from Federal   funds.
Bon.   C. H. Cavness,    page   6       v-504


             At the present   time it Is not necessary
        for the Texas Employment Commission to pur-
        chaee its supplies,     equipment,   etc., and
        make its rental   contracts,    through the State
        Board of Control,    under the s~pae regtilations
        that apply to other State Departments,        Insti-
        tutions,  and Agencies.

                                Yours   very    truly

                                ATTORNEYGEWRAL OF TIiXAS



                                By /?ibA%@ rikL&&
                                                Robert     0. Koch
                                                         Assistant




                           ?iCTIRG       ATTORNEYGENERAL