Untitled Texas Attorney General Opinion ( 1972 )

THF, ATTORNEY GENERAL
OF TEXAS
Honorable Robert E. Johnson Opinion No. M-1243
Executive Director
Texas Legislative Council Re: Upon return to the Ford
P. 0. Box 12128, Capitol Station Foundation of the unex-
Austin, Texas 78711 pended balance of a grant
should the interest earned
on the deposits be returned
with the principal or re-
tained by the grantee, the
Dear Mr. Johnson: Texas Legislative Council?
In your recent opinion request, you provided us with
the following information:
“In 1964 the Legislative Council received
a grant of $88,000 from the Ford Foundation for
partial support of a legislative intern program.
The program is now terminated and the Ford Founda-
tion has asked for a refund of the unexpended
balance of the grant.
“The balance in the internship account at
this time is $10,183.21, consisting of $7,621.02
remainder of the original grant and $2,562.29
earned interest on deposits.
“It is our intent to refund the grant balance
to the foundation. Our question is, should the
full amount of $10,183.21 be forwarded to the
Ford Foundation or should the interest earned on
deposits be considered an administrative earning
and retained by the Council? If so, would it be
proper to deposit the interest earned to the General
Revenue Fund?”
According to Black’s Law Dictionary, “grant” means “to
bestow; to confer; upon someone other than the person or entity
which makes the grant.”
Under the terms of the Ford Foundation’s grant to the
Texas Legislative Council “grant funds will be returned to the
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Hon. Robert E. Johnson, page 2 (M-1243)
Foundation if these funds are not expended or committed for the
purposes of the grant and within the period stated.”
We view this grant as a gift which could have been ex-
pended in its entirety during the five-year period of the grant.
The funds were given to the Legislative Council for the use and
benefit of the Council in its legislative internship program
and were deposited to the Council in a private account in a local
bank. We do not find that this grant created a trust or that the
Council acted as trustees of these funds, but rather the Council
was the beneficiary of the grant and the interest derived from
time deposits became the property of the beneficiary and did not,
as in a trust, accrue to the principal.
Return of the unexpended grant funds plus interest
earned on the funds is more than is required by the terms of the
grant. Return of the unexpended funds and interest could be
looked upon as an “investment” which is prohibited in grants
of this type because such grants must be made for “charitable”
purposes under the Tax Reform Act of 1969. Therefore we hold
that only the unexpended balance of the grant funds, without the
interest, should be returned to the Ford Foundation.
Article 2543d, Section 1, Vernon’s Civil Statutes,
provides :
“Section 1. 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.”
We are of the opinion that the interest earned on the
grant funds should be deposited to the credit of the General Revenue
Fund because the interest actually belongs to the State, although
the State Treasurer was onlv constructivelv and not directlv
“in charge” of the account which earned the interest, under’the
holding in Boyett v. Calvert, 467 S.W.2d 205, 209 (Tex.Civ.App.
1971, reh.den.).
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Hon. Robert E. Johnson, page 3 (M-1243)
SUMMARY
The unexpended balance of the Ford Founda-
tion grant must be returned to the Foundation.
The interest earned on the grant funds must be
deposited to the General Revenue Fund under
Article 2543d, Vernon's Civil Statutes.
eneral of Texas
Prepared by Linda Neeley
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
James Maxwell
Jim Swearingen
Lewis Jones
Linward Shivers
SAMUEL D. MCDANIEL
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
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