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Purchase

Policies and
Procedures
Guide
July 2004

Carole Keeton Strayhorn


Texas Comptroller
State of Texas
Purchase Policies and Procedures Guide

COMPTROLLER OF PUBLIC ACCOUNTS


Publication #96-427
111 East 17th Street
Austin, Texas 78774-0100

This manual contains an introduction, index, and ten chapters named as follows:
• Chapter 1 – General Provisions
• Chapter 2 – Restricted Expenditures
• Chapter 3 – Expenditures Relating to State Officers and Employees
• Chapter 4 – Expenditures Relating to Legal Proceedings
• Chapter 5 – Expenditures Under Particular Contracts
• Chapter 6 – Miscellaneous Expenditures or Requirements
• Chapter 7 – Provisions Relating Only to Institutions or
Agencies of Higher Education
• Chapter 8 – Fiscal Matters
• Chapter 9 – Reference Information
• Chapter 10 – Comptroller Object Codes

The Comptroller of Public Accounts is an equal opportunity employer and does not discriminate
on the basis of race, color, religion, sex, national origin, age, or disability in employment or in the
provision of any services, programs, or activities.
In compliance with the Americans with Disabilities Act, this document may be requested in
alternative formats by calling 512-463-4850 in Austin, or by fax at 512-475-0378.
From a Telecommunications Device for the Deaf (TDD) call toll free at 1-800-248-4099, or call via
1-800-RELAY-TX. In Austin, the local TDD number is 512-463-4621.
Questions, comments, and requests for extra copies should be submitted in writing to Fiscal
Management, Information Support, 111 East 17th Street, Austin, Texas 78774-0100; fax number
512-475-0378.

Revised July 2004

Ken Welch
Director of Fiscal Management
Table of Contents

Introduction ............................................................................................................................... 1

Chapter 1 – General Provisions .................................................................................... 3

§�1.002 Definitions ........................................................................................................................ 3

§�1.004 Comptroller, statutory authority of ............................................................................... 6

§�1.006 State agencies, responsibilities of .................................................................................. 9

A. Statutory authority for purchases............................................................................ 9

B. Erroneous processing of vouchers..........................................................................11

C. Fiscal responsibility of payments ...........................................................................11

D. State agency completion and review of vouchers..................................................12

E. Retention requirements concerning supporting documentation.......................12

Chapter 2 – Restricted Expenditures ........................................................................14

§�2.002 Advance payments .........................................................................................................14

§�2.004 Alcohol .............................................................................................................................15

A. Constit utional prohibition .......................................................................................15

B. Statutory prohibition.................................................................................................15

§�2.006 Audits of state agencies .................................................................................................16

§�2.008 Beef or product consisting substantially of beef, purchase of imported...................17

§�2.010 Charitable organizations...............................................................................................18

§�2.012 Child support delinquents .............................................................................................18

§�2.014 Christmas cards .............................................................................................................19

§�2.016 Deposits to secure performance of contracts ...............................................................20

§�2.018 Drug testing.....................................................................................................................20

A. General discussion...................................................................................................20

B. Mandatory drug testing programs that test without individualized

suspicion....................................................................................................................21

C. Other mandatory drug testing programs ..............................................................23

D. Voluntary drug testing of state employees and prospective state employees....24

E. Federally -required drug testing of state employees..............................................25

F. Mandatory drug testing of prospective state employees ......................................26

§�2.020 Facilities management services...................................................................................27

§�2.022 Food and equipment related to food preparation or storage......................................27

A. General discussion...................................................................................................27

B. Department of Agriculture......................................................................................28

State of Texas Purchase Policies and Procedures Guide July 2004 i


§�2.024 Indebted to the state, persons........................................................................................28

A. Definitions .................................................................................................................28

B. Prohibited payments by the Comptroller because of certain loan defaults........29

C. Prohibited payments by state agencies because of certain loan defaults...........30

D. Prohibited payments by the Comptroller because of an indebtedness to the

state or a tax delinquency ........................................................................................30

E. Prohibited payments by a state agency because of an indebtedness to the

state or a tax delinquency ........................................................................................31

F. Child support delinquencies ...................................................................................32

G. Contracting with persons who have a debt or delinquency.................................33

§�2.026 Judgments and settlements ..........................................................................................33

A. General discussion...................................................................................................33

B. Appropriation to the Comptroller to pay certain judgments and

settlements ................................................................................................................35

C. Appropriations to other state agencies to pay judgments and settlements.......36

D. Settlements of causes of action arising under the Texas Tort Claims Act........36

§�2.028 Law enforcement agencies............................................................................................36

§�2.030 Legislators .......................................................................................................................37

§�2.032 Lobbying ...........................................................................................................................37

A. Definitions .................................................................................................................37

B. Employees or contractors who are also lobbyists ..................................................38

C. Membership dues to organizations that pay salaries of lobbyists.......................38

D. Influencing elections or achieving political purposes.........................................39

E. Influencing the passage or defeat of a legislative measure ................................40

F. State agencies that administer statewide retirement plans ...............................40

G. Exception for funds received from the federal government ................................40

H. Requirements of the General Appropriations Act ...............................................40

§�2.034 Mail, interagency ...........................................................................................................41

§�2.036 Membership fees paid to a chamber of commerce .....................................................41

§�2.038 Nonresident bidders, contract awards to.....................................................................41

§�2.040 Office space ......................................................................................................................42

A. Leased office space....................................................................................................42

B. Consolidation of leased space to state-owned space .............................................43

§�2.042 Paper supplies and filing cabinets, legal size .............................................................43

§�2.044 Penalties ..........................................................................................................................44

A. Prohibition .................................................................................................................44

B. Late charges versus penalties.................................................................................44

§�2.046 Plants ...............................................................................................................................44

A. Indoor plants.............................................................................................................44

B. Xeriscaping ...............................................................................................................45

State of Texas Purchase Policies and Procedures Guide July 2004 ii


§�2.048 Polygraph testing............................................................................................................46

A. Mandatory polygraph testing programs................................................................46

B. Voluntary polygraph testing programs.................................................................46

C. Department of Public Safety of the State of Texas .................................................47

§�2.050 Publications.....................................................................................................................47

A. Requirements of Chapter 2113, Government Code...............................................47

B. Requirements of Chapter 441, Government Code.................................................49

§�2.052 Publicity of individuals or state agencies.....................................................................50

A. Government Code restrictions and authorizations ..............................................50

B. General restrictions on state agencies promoting and advertising

themselves .................................................................................................................51

C. Implied statutory authority to inform the public about its functions.................52

§�2.054 Requests for proposals or specifications, payments to persons who helped

prepare.............................................................................................................................52

§�2.056 Research projects ...........................................................................................................52

A. General Provisions ...................................................................................................52

§�2.058 State-federal relations ....................................................................................................53

§�2.060 State money or property, giving away or misusing....................................................53

A. General discussion...................................................................................................53

B. Criminal law .............................................................................................................54

§�2.062 Telephone emergency service fees and surcharge.....................................................54

A. Fees and surcharge imposed under Chapter 771, Health and Safety Code ......54

B. Fees imposed under Chapter 772, Health and Safety Code .................................55

C. Fees charged by a home-rule municipality ...........................................................56

Chapter 3 – Expenditures Relating to State Officers

and Employees ......................................................................................................................57

§�3.002 Awards to employees......................................................................................................57

§�3.004 Bonds, surety...................................................................................................................58

A. State Employee Bonding Act....................................................................................58

B. Report about bonded employees...............................................................................62

§�3.006 Employee assistance programs ....................................................................................62

A. Constitutionality .......................................................................................................62

B. Statutory authority....................................................................................................63

§�3.008 Employment discrimination .........................................................................................64

A. Definitions .................................................................................................................64

B. Training after employment discrimination complaints filed.............................64

C. Routine training .......................................................................................................64

§�3.010 Flowers, floral arrangements, and plants..................................................................65

State of Texas Purchase Policies and Procedures Guide July 2004 iii
§�3.012 Funeral expenses ...........................................................................................................65

§�3.014 Grievants, representatives of ........................................................................................65

§�3.016 Health fitness activities, education, and programs ...................................................65

§�3.018 Incidental benefits to state officers or employees, expenditures that provide.........66

§�3.020 Licensing fees and occupation taxes ............................................................................67

§�3.022 Meals for certain employees, volunteers, students, and interns.............................68

A. General discussion...................................................................................................68

B. Department of Aging and Disability Services .......................................................68

C. Texas Youth Commission .......................................................................................68

D. Texas Department of Criminal Justice .................................................................68

§�3.024 Moving expenses.............................................................................................................69

A. Definitions .................................................................................................................69

B. General discussion...................................................................................................69

C. State employees of facilities being closed or undergoing a reduction in force ..70

D. Department of Public Safety of the State of Texas .................................................71

E. Texas Department of Transportation.....................................................................71

F Texas Water Development Board............................................................................72

G. Texas Commission on Environmental Quality ....................................................72

§�3.026 Notary license fees and bond fees .................................................................................73

A. General Provisions ...................................................................................................73

§�3.028 Personal property of employees, damage or destruction of .......................................73

A. General discussion...................................................................................................73

B. Section 659.061, Government Code .........................................................................74

§�3.030 Physical and psychological examinations or treatments ..........................................75

A. General discussion...................................................................................................75

B. Accident and injury prevention..............................................................................75

C. Employees with duties that expose them to unavoidable dangers......................76

D. Aircraft pilots............................................................................................................76

E. Peace officers .............................................................................................................76

F. Exposure of certain state employees to contagious diseases ...............................77

G. Workers’ compensation claimants ........................................................................78

H. Texas Department of Criminal Justice .................................................................78

I . Texas Building and Procurement Commission...................................................78

J. Department of State Health Services......................................................................79

K. Certain institutions of higher education ...............................................................79

L. Texas Youth Commission .......................................................................................80

§�3.032 Reimbursement for State Calls on a Personal Cellular Phone ................................80

§�3.034 State motor vehicles, use of............................................................................................81

A. General discussion...................................................................................................81

B. Department of Public Safety of the State of Texas .................................................82

State of Texas Purchase Policies and Procedures Guide July 2004 iv


§�3.036 Survivors of certain employees .....................................................................................82

§�3.038 Training and education programs...............................................................................83

A. State Employees Training Act.................................................................................83

B. Restrictions on certain training .............................................................................84

Chapter 4 – Expenditures Relating to Legal Proceedings ..........................87

§�4.002 Abstracts of judgment ....................................................................................................87

§�4.004 Alternative dispute resolution ......................................................................................87

A. Governmental Dispute Resolution Act ..................................................................87

B. Chapter 151, Civil Practice and Remedies Code...................................................90

C. Chapter 154, Civil Practice and Remedies Code...................................................90

§�4.006 Attorney’s fees.................................................................................................................91

A. Groundless proceedings or actions against small businesses ...........................91

B. Uniform Declaratory Judgments Act ....................................................................92

C. Frivolous causes of action asserted by state agencies ..........................................92

D. Discrimination because of race, religion, color, sex, or national origin ...........93

E. Indemnification of public servants ........................................................................94

F. Violation of religious freedom.................................................................................95

G. Private Real Property Rights Preservation Act ....................................................96

H. Prompt payment law ................................................................................................97

I . Child abuse or neglect..............................................................................................98

J. General statute authorizing recovery of attorney’s fees ......................................98

K. Attorney’s fees ordered by the State Office of Administrative Hearings ...........98

L. Administrative Procedure Act................................................................................98

§�4.008 Attorneys, retention or employment of ........................................................................99

A. Requirements of the Texas constitution ................................................................99

B. Requirements of general law ..................................................................................99

C. Requirements of the General Appropriations Act .............................................100

D. Contingent fee contracts for legal services ..........................................................102

E. Centers for technology development and transfer..............................................105

§�4.010 Condemnation proceedings.........................................................................................106

§�4.012 Court costs .....................................................................................................................107

§�4.014 Litigation revenues or financial benefits ...................................................................107

§�4.016 State Purchasing and General Services Act, applicability of..................................108

§�4.018 Witness fees and expenses ..........................................................................................108

A. Witnesses in administrative hearings or proceedings......................................108

B. Witnesses in civil court proceedings ....................................................................110

C. Witnesses in criminal proceedings......................................................................111

D. Expert witnesses in any proceeding .....................................................................114

E. Witness fees and expenses incurred in federal court ........................................114

State of Texas Purchase Policies and Procedures Guide July 2004 v


Chapter 5 – Expenditures Under Particular Contracts.................................116

§�5.002 Automated information systems ................................................................................116

§�5.004 Construction projects ...................................................................................................117

§�5.006 Consulting services ......................................................................................................119

A. Definitions ...............................................................................................................119

B. Applicability of this section....................................................................................120

C. Necessity for consulting services ..........................................................................122

D. Selection of consultants..........................................................................................122

E. Notice of intent to employ a consultant ................................................................123

F. Publication in the Texas Register before entering into a major consulting

services contract .....................................................................................................123

G. Publication and notification after entering into a consulting services

contract ....................................................................................................................124

H. Renewals, extensions, or amendments of consulting services contracts .......124

I . Consulting services provided by former state employees ..................................126

J. Dividing contracts...................................................................................................127

K. Reporting of financial interests ............................................................................127

L. Archives...................................................................................................................127

M. Actions by state agencies on recommendations from consultants ..................127

N. Emergency procurements of consulting services...............................................127

O. Mixed contracts.......................................................................................................128

P. Competitive bidding................................................................................................128

Q. Procurement of consulting services by the Texas Building and

Procurement Commission ....................................................................................128

R. Consequences of non-compliance.........................................................................128

§�5.008 Contract claims against the state, resolving ............................................................136

§�5.010 Contractor oversight.....................................................................................................138

§�5.012 Contracts that extend beyond the life of appropriations ..........................................139

A. General discussion.................................................................................................139

B. Certain leases of space...........................................................................................140

§�5.014 Contract workforce .......................................................................................................141

§�5.016 County clerks ................................................................................................................141

§�5.018 Debt collection................................................................................................................142

§�5.020 Historically underutilized businesses .......................................................................143

§�5.022 Interagency contracts ..................................................................................................144

A. Requirements for the contracts.............................................................................144

B. Reimbursements ....................................................................................................145

C. Exception for institutions of higher education....................................................145

§�5.024 Professional services....................................................................................................146

A. Professional Services Procurement Act ..............................................................146

B. Contracts with former or retired employees .......................................................147

State of Texas Purchase Policies and Procedures Guide July 2004 vi


§�5.026 State employees, contracting with former (generally) .............................................148

A. Definitions ...............................................................................................................148

B. Prohibition of contracts ..........................................................................................148

§�5.028 State employees, contracting with retired .................................................................149

A. Definitions ...............................................................................................................149

B. Prohibition of contracts ..........................................................................................149

C. Special provision for institutions of higher education .......................................150

§�5.030 State officers and employees, contracting under Chapter 572, Government

Code, with former .........................................................................................................150

A. Definitions ...............................................................................................................150

B. Prohibition ...............................................................................................................152

C. Limitations and exceptions ...................................................................................152

§�5.032 United Mexican States, contracts or agreements with............................................152

A. General Discussion ................................................................................................152

B. Texas Department of Transportation...................................................................154

C hapter 6 – Miscellaneous Expenditures or Requirements ....................155

§�6.002 Aircraft ..........................................................................................................................155

A. Definitions ...............................................................................................................155

B. Custody, control, and lease of aircraft .................................................................155

C. Operation and maintenance of aircraft ...............................................................156

D. Replacement of state-owned aircraft ....................................................................156

E. Use of aircraft by all state agencies ......................................................................156

F. Priority on use of aircraft.......................................................................................157

G. Permissible uses of aircraft...................................................................................157

H. Interagency Contract .............................................................................................158

I . Texas Department of Criminal Justice ...............................................................158

J. The University of Texas System Administration ...............................................158

K. Texas Commission on Environmental Quality ..................................................158

L. Texas State Technical College...............................................................................159

M. Department of Public Safety of the State of Texas ...............................................159

N. The University of Texas Medical Branch at Galveston......................................159

§�6.004 Assignments of payments from the state ..................................................................160

A. Definitions ...............................................................................................................160

B. Authority to assign .................................................................................................160

C. Prohibited payments by the Comptroller to assignees because of certain

loan defaults ............................................................................................................160

D. Prohibited payments by state agencies to assignees because of certain loan

defaults.....................................................................................................................162

E. Prohibited payments by the Comptroller to assignees because of an

indebtedness to the state or a tax delinquency ....................................................163

F. Prohibited payments by state agencies to assignees because of an

indebtedness to the state or a tax delinquency ....................................................164

G. Child support delinquencies .................................................................................166

State of Texas Purchase Policies and Procedures Guide July 2004 vii
§�6.006 Bank fees and charges .................................................................................................166

§�6.008 Cancellation fees and similar charges......................................................................167

§�6.010 Contaminated property, preference for products of facilities on formerly ............167

§�6.012 Disabilities, purchases of products and services provided by persons with..........168

A. Chapter 122, Human Resources Code .................................................................168

B. State Purchasing and General Services Act .......................................................168

§�6.014 Deaf or hearing impaired, interpreters for the ........................................................168

§�6.016 Discounts .......................................................................................................................169

§�6.018 Economically depressed or blighted areas, preference for goods and services

from 170

§�6.020 Electrical items .............................................................................................................170

§�6.022 Energy-saving devices, measures, or products ........................................................171

A. Chapter 447, Government Code ............................................................................171

B. State Purchasing and General Services Act .......................................................171

C. Section 2113.301, Government Code .....................................................................173

D. Education Code authorization for institutions of higher education .................173

§�6.024 Entertainment...............................................................................................................175

§�6.026 Federal funds ................................................................................................................175

A. General discussion.................................................................................................175

B. Acceptance of federal funds by the Comptroller .................................................176

§�6.028 Federal government, purchases from the.................................................................176

§�6.030 Fee rate increases .........................................................................................................177

§�6.032 Gifts to state agencies and institutions of higher education ...................................177

A. Requirements of Chapter 575, Government Code...............................................177

B. Requirements of Chapter 2255, Government Code.............................................177

C. Attorney general opinions .....................................................................................178

D. Deposits of gifts or donations of money ................................................................178

E. Acceptance of gifts by the commissioner of the General Land Office ..............179

F. Solicitation and acceptance of gifts by the Office of the Governor.....................179

G. Gifts of real property...............................................................................................179

H. Requirements of the General Appropriations Act .............................................179

§�6.034 Grants ............................................................................................................................180

A. General discussion.................................................................................................180

B. Requirements of the General Appropriations Act .............................................180

§�6.036 Honoraria and speaking fees ......................................................................................180

§�6.038 Information Resources, Department of.....................................................................181

§�6.040 Information resources projects ..................................................................................182

A. Reporting to the Legislative Budget Board ..........................................................182

B. Review and approval requirements of the General Appropriations Act .........182

State of Texas Purchase Policies and Procedures Guide July 2004 viii
§�6.042 Insurance ......................................................................................................................183

A. Insurance as part of compensation .....................................................................183

B. Liability insurance .................................................................................................183

C. Foster grandparent programs ..............................................................................198

D. Buildings and contents insurance .......................................................................198

E. Insurance on property other than buildings and contents ...............................200

F. Workers’ compensation insurance ......................................................................203

G. Volunteers ...............................................................................................................203

H. Purchasing insurance with federal funds..........................................................204

I . Insurance purchased under a lease agreement ................................................205

J. Medical malpractice insurance............................................................................206

K. Veterinary malpractice insurance ......................................................................207

L. Texas Economic Development and Tourism Office ............................................207

M. Centers established under Chapter 153, Education Code..................................208

§�6.044 Interagency transaction vouchers .............................................................................208

§�6.046 Interlocal Cooperation Act ..........................................................................................208

§�6.048 Intra-agency payments................................................................................................211

§�6.050 Investments...................................................................................................................211

A. General discussion.................................................................................................211

B. Public Funds Investment Act ...............................................................................212

§�6.052 Leasehold improvements.............................................................................................214

§�6.054 Local government, grants to or contracts with units of...........................................215

§�6.056 Mail 215

§�6.058 Membership fees paid to non-professional organizations .......................................216

§�6.060 Membership fees paid to professional organizations ...............................................216

A. Constitutional requirements.................................................................................216

B. Statutory requirements..........................................................................................217

§�6.062 Miscellaneous claims ..................................................................................................218

§�6.064 Motor oil and automotive lubricants ..........................................................................218

§�6.066 Notices published in newspapers ...............................................................................219

A. Definitions ...............................................................................................................219

B. Applicability of this section....................................................................................219

C. General Requirements...........................................................................................219

D. Requirements for notices published in certain counties bordering the Red

River .........................................................................................................................220

§�6.068 Peer assistance programs ...........................................................................................221

A. Definitions ...............................................................................................................221

B. Peer assistance programs operated by licensing or disciplinary authorities.221


C. Peer assistance programs operated by professional associations ....................222

D. Peer assistance programs administered by other state agencies.....................222

E. Comparison with employee assistance programs .............................................222

§�6.070 Pharmaceuticals ..........................................................................................................223

State of Texas Purchase Policies and Procedures Guide July 2004 ix


§�6.072 Postage, mailing services, and post office box rentals .............................................223

§�6.074 Prison-made goods .......................................................................................................224

A. Subchapter B, Chapter 497, Government Code...................................................224

B. Provision in the General Appropriations Act .....................................................225

§�6.076 Prompt payment law ....................................................................................................226

A. Definitions.................................................................................................................226

B. Payment deadline for contracts executed after June 30, 1986, but before

September�1, 1987 ....................................................................................................227

C. Payment deadline for contracts executed after August 31, 1987.......................227

D. Interest liability, computation, and payment .....................................................227

E. Disputes between state agencies and vendors.....................................................229

F. Example of how to calculate interest....................................................................229

G. Exemptions..............................................................................................................230

H. Waiver ......................................................................................................................230

§�6.078 Property transfers, interagency..................................................................................231

§�6.080 Real property .................................................................................................................231

A. Purchases of real property by state agencies ......................................................231

B. Purchases of real property by the governor.........................................................231

C. Purchases of real property by the Texas Building and Procurement

Commission ............................................................................................................232

D. Acquisition of historic structures.........................................................................232

E. Leasing space for state agencies and institutions of higher education ...........233

F. Purchases of real property held in trust..............................................................235

§�6.082 Recycled, remanufactured, and environmentally sensitive products...................236

A. Requirements of the State Purchasing and General Services Act ...................236

B. Requirements of the Solid Waste Disposal Act ...................................................237

§�6.084 Refunds..........................................................................................................................238

A. Requirements of general law ................................................................................238

B. Requirements of the General Appropriations Act .............................................238

§�6.086 Residences, personal....................................................................................................239

A. General discussion.................................................................................................239

B. Texas Department of Transportation...................................................................239

C. Department of State Health Services....................................................................240

D. Department of Aging and Disability Services .....................................................240

E. Health and human services agencies..................................................................240

F. Texas State Technical College...............................................................................240

G. State agencies of higher education .......................................................................240

H. Adjutant General’s Department ..........................................................................241

I . Texas Department of Criminal Justice ...............................................................241

J. Texas Youth Commission .....................................................................................241

K. Texas Building and Procurement Commission.................................................241

L. Parks and Wildlife Department ............................................................................242

M. Texas Historical Commission...............................................................................242

State of Texas Purchase Policies and Procedures Guide July 2004 x


§�6.088 Retainage .......................................................................................................................242

A. Accrual and payment of interest on retainage ...................................................242

B. Appropriation year determination.......................................................................243

§�6.090 Seminars, conferences, and group examinations sponsored by state

agencies .........................................................................................................................244

A. Authority to sponsor and charge fees ..................................................................244

B. Required use of state-owned or state-occupied facilities....................................244

C. Secretary of State .....................................................................................................245

§�6.092 State property: damaged, lost, or stolen.....................................................................245

§�6.094 Statutes of limitation ....................................................................................................246

§�6.096 Taxes and fees assessed by governmental entities...................................................246

A. Taxes and fees assessed by the United States, another state, or this state......246

B. Taxes and fees assessed by a political subdivision of this state ........................247

C. Federal excise tax on communications services ................................................247

D. Taxes imposed under the Limited Sales, Excise, and Use Tax Act .................247

E. Taxes imposed under the Municipal Sales and Use Tax Act ...........................248

F. Taxes imposed under the County Sales and Use Tax Act .................................248

G. Sales and use taxes imposed to support county health services.......................248

H. Sales and use taxes imposed for landfills and criminal detention centers.....248

I . Sales and use taxes imposed to maintain municipal streets ............................249

J. Texas emissions reduction plan surcharges......................................................249

K. Sales and use taxes imposed on the sale, use, or rental of a motor vehicle ....249

L. Sales and use taxes imposed by certain hospital districts.................................249

M. Sales and use taxes imposed emergency services districts under Chapter

775, Health & Safety Code.......................................................................................250

N. Sales and use taxes imposed by emergency services districts under

Chapter 776, Health & Safety Code .......................................................................250

O. Sales and use taxes imposed by certain library districts...................................250

P. Sales and use taxes imposed by municipalities or counties concerning

sports and community venues ..............................................................................250

Q. Sales and use taxes imposed by certain venue districts ....................................251

R. Sales and use taxes imposed by certain municipal development districts......251

S. Sales and use taxes imposed by certain county development districts ............251

T. Sales and use taxes imposed by certain county assistance districts................251

U. Sales and use taxes imposed by certain rapid transit authorities....................252

V. Sales and use taxes imposed by certain regional transportation authorities.252


W. Sales and use taxes imposed by certain mass transit departments.................252

X. Sales and use taxes imposed by certain mass transit authorities....................252

Y . Sales and use taxes levied under the Development Corporation Act of 1979...253

§�6.098 Telecommunications....................................................................................................253

A. Definitions ...............................................................................................................253

B. Telecommunications services...............................................................................253

C. Unlisted telephone numbers .................................................................................255

State of Texas Purchase Policies and Procedures Guide July 2004 xi


§�6.100 Texas and United States products, materials, and services, preference for ........255

A. Definitions ...............................................................................................................255

B. Purchases of goods .................................................................................................256

C. Purchases of vegetation for landscaping .............................................................256

D. Purchases of services .............................................................................................256

E. Purchases of vehicles .............................................................................................257

F. Reports to the Legislative Budget Board ..............................................................257

§�6.102 Utility services...............................................................................................................257

A. Prohibition against gas utilities requiring advance payments ........................257

B. Prohibition against water utilities requiring advance payments.....................258

C. Prohibition against gas utility rates including certain assessments ..............258

D. Prohibition against water utility rates including certain assessments ..........258

E. Late payments to gas utilities................................................................................259

F. Late payments to water utilities............................................................................259

G. Late payments to telecommunications utilities ..................................................259

H. Utility billing audits ...............................................................................................259

I . Texas universal service fund ................................................................................260

§�6.104 Vehicles, passenger .....................................................................................................260

A. Wheelbase and horsepower limitations ...............................................................260

B. Alternative fuels .....................................................................................................261

C. Commuting to and from work ..............................................................................262

D. Fuel-saving technologies .......................................................................................263

§�6.106 Volunteer programs and awards...............................................................................264

A. Chapter 2109, Government Code ..........................................................................264

B. Chapter 2113, Government Code ..........................................................................265

§�6.108 Voucher approval and certification ...........................................................................266

A. Definitions ...............................................................................................................266

B. Introduction ............................................................................................................267

C. Combined approval and certification of payment and USPS documents ........267

D. Fact findings concerning the electronic approval of payment and USPS

documents ...............................................................................................................268

E. General requirements ...........................................................................................268

F. Who may not approve payment and USPS documents ......................................269

G. Who may approve payment and USPS documents.............................................269

H. Who may designate individuals to approve payment and USPS documents ..270

I . How to authorize individuals to designate other individuals to approve

payment and USPS documents.............................................................................270

J. How to revoke authorizations of individuals to designate other individuals

to approve payment and USPS documents ..........................................................272

K. How to designate individuals to approve payment and USPS documents.......273

L. How to revoke designations of individuals to approve payment and USPS

documents ...............................................................................................................274

State of Texas Purchase Policies and Procedures Guide July 2004 xii
M. Signature card requirements................................................................................278

N. Limitations adopted by state agencies concerning approval and

designation authority .............................................................................................278

O. Signature card and notification forms adopted by the Comptroller.................278

P. How electronic approvals of payment and USPS documents are provided .....279

Q. Non-electronic approvals of paper payment documents....................................282

R. Non-electronic approvals of payment documents submitted to USAS

electronically and of USPS documents.................................................................282

S. Multiple approvals of payment and USPS documents.......................................284

§�6.110 Voucher approval by oversight agencies ...................................................................284

§�6.112 Vouchers, internal approval of...................................................................................284

§�6.114 Vouchers, resubmittal of.............................................................................................284

Chapter 7 – Provisions Relating Only to Institutions or Agencies

of Higher Education ...........................................................................................................285

§�7.002 Advanced research program ......................................................................................285

§�7.004 Advanced technology program ...................................................................................285

§�7.006 Alumni organizations or activities ............................................................................286

§�7.008 Auxiliary enterprises...................................................................................................286

A. Supporting auxiliary enterprises .........................................................................286

B. Purchases from auxiliary enterprises.................................................................286

§�7.010 Commencement ceremonies ......................................................................................286

§�7.012 Ethics policies................................................................................................................286

§�7.014 Health care for indigent persons ................................................................................287

§�7.016 Higher education funds ...............................................................................................287

§�7.018 Intercollegiate athletics ...............................................................................................287

§�7.020 Museums.......................................................................................................................288

§�7.022 Research development fund ........................................................................................288

§�7.024 Scholarships..................................................................................................................288

A. Texas Public Educational Grants Program ........................................................288

B. Use of “scholarships” appropriations ..................................................................289

C. Reports to the Comptroller and the Texas Higher Education

Coordinating Board ................................................................................................289

§�7.026 Service departments .....................................................................................................289

§�7.028 Technology workforce development programs .........................................................290

§�7.030 Television stations ........................................................................................................290

§�7.032 Training for members of governing boards ..............................................................291

State of Texas Purchase Policies and Procedures Guide July 2004 xiii
Chapter 8 – Fiscal Matters ............................................................................................292

Chapter 8 – Fiscal Matters.........................................................................................................292

§�8.002 Annual reports .............................................................................................................292

§�8.004 Appropriations..............................................................................................................293

A. Money kept in the state treasury...........................................................................293

B. Money kept outside the state treasury..................................................................293

C. Appropriations........................................................................................................293

§�8.006 Appropriation year determination.............................................................................295

A. General discussion.................................................................................................295

B. Appropriation year determination for different types of purchases ................295

C. Exceptions to the appropriation year determination procedures .....................297

§�8.008 Encumbrances of appropriations ...............................................................................299

§�8.010 Excess obligations .........................................................................................................300

§�8.012 Petty cash accounts ......................................................................................................301

Chapter 9 – Reference Information ........................................................................302

§�9.002 Accounting policy statements.....................................................................................302

§�9.004 Texas Building and Procurement Commission document types...........................303

Chapter 10 – Comptroller Object Codes ...........................................................304

§�10.002 Definitions .....................................................................................................................304

§�10.004 Comptroller object codes (by type of item purchased)...............................................304

Index .......................................................................................................................................... i.1

State of Texas Purchase Policies and Procedures Guide July 2004 xiv
Introduction
The Claims Division of the Texas Comptroller of Public Accounts pays the bills of most

state agencies by issuing warrants or initiating electronic funds transfers. State law

authorizes the division to pay the bill of a state agency only after the division has

received and processed the appropriate voucher from the agency.

The Claims Division audits purchase vouchers for compliance with certain provisions of

the constitutions, statutes, and rules of Texas and the United States. The State of Texas

Purchase Policies and Procedures Guide’s brief discussion of those provisions should

help state agencies ensure that their vouchers comply.

Of course, the guide discusses only a small minority of the legal issues that a state

agency will encounter during its operations. The vast majority of them are outside the

guide’s scope.

With certain exceptions, the guide discusses Texas statutory law as it existed on

January 1, 2004. The guide discusses federal statutory law as it existed on December

19, 2003.1. The guide discusses federal regulations as they existed on January 21,

2004.2. The guide discusses Texas administrative rules that are in effect on July 31,

2003. The guide covers judicial decisions that were issued through November 15, 2003.

The guide covers attorney general opinions that were issued through January 26, 2004.

Whenever the guide says that the information presented applies only to an event that

occurs after a specified date, the guide is not necessarily implying that the law

governing events on or before that date is different. A state agency should consult the

prior law to determine its applicability to those events.

The guide contains many citations to statutes, administrative rules, judicial decisions,

and attorney general opinions. The cited authorities should be consulted for more

detailed information about the topics discussed in the guide.

The guide does not unilaterally resolve ambiguities in the law because state agencies need
to be aware of them when planning their purchases and payments. If a legal ambiguity has
not been eliminated through attorney general or judicial decision, the ambiguity is reflected
in the guide. If a legal ambiguity has been reduced or eliminated through attorney general
or judicial decision, that decision is discussed or cited in the guide.
The guide represents merely the Claims Division’s opinion and does not constitute

official legal advice. A state agency should consult the attorney general, internal legal

counsel, or other appropriate counsel whenever the agency needs that advice.

The Claims Division audits purchase vouchers for legal compliance and to ensure their
proper completion. The guide should be a state agency’s primary reference whenever the
agency needs information about completing a voucher. The agency is free, however, to
direct questions about the guide and other purchase voucher issues to the Expenditure
Research and Assistance section of the Claims Division at Internet e-mail address
claims.division@cpa.state.tx.us, at 512-475-0966, or at 1-800-531-5441, extension 5-0966.
This edition of the guide is effective until superceded by the Comptroller, legislative

action, judicial decision, attorney general opinion, or rulemaking.

1
Through Public Law No. 108-198, which was approved by the President of the United States on December 19,
2003 (with a gap of Pub. L. No. 108-173).
2
Through the January 21, 2004, issue of the Federal Register.

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2 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 1 – General Provisions
§�1.002 Definitions
Unless otherwise noted in the guide:

APPROPRIATION YEAR has the same meaning as “fiscal year.”

ATTORNEY GENERAL means the attorney general of Texas.

ATTORNEY GENERAL OPINION means the Attorney General’s formal, written


interpretation of the constitutions, statutes, and judicial decisions of Texas and the
United States. The Attorney General issues an opinion only upon request of an
authorized person or entity.

CAPITAL ASSETS are real or personal property that have an estimated life of
greater than one year. Capital assets may or may not be capitalized for financial
reporting purposes.

CAPITALIZED ASSETS are capital assets that have a value equal to or greater than
the capitalization threshold established for that asset type. Capitalized assets
are reported in an agency’s annual financial report.

COMPTROLLER means the Texas Comptroller of Public Accounts.

COMPTROLLER OBJECT CODE means a four-digit code used to indicate the


specific USAS accounts being affected by a transaction. This code is the source
for the annual report to the governor required by TEX. GOV’T CODE ANN.
§ 403.013 (Vernon Supp. 2004).

CONSUMABLE means a good that perishes with use and that, under usual
circumstances, will be entirely used during the fiscal year in which it is
purchased. For example, postage is a consumable.

CURRENT DOCUMENT NUMBER means the number assigned to a purchase


voucher by the state agency submitting the voucher for payment. The
Comptroller uses the number for voucher tracking purposes.

DELIVERY DATE means the date on which a state agency receives a good or
service.

EXTENDED WARRANTY means a written guarantee of the quality and integrity of


a good and of the responsibility of the manufacturer or seller for the repair or
replacement of defective parts. Maintenance provided under an extended
warranty is performed on an as-needed basis. Maintenance performed under a
maintenance contract is performed periodically. Costs of extended warranties
and/or maintenance agreements that can be separately identified from the cost of
the equipment should not be capitalized.

FISCAL YEAR means the state’s accounting year that begins on September 1st
and ends the following August 31st.

State of Texas Purchase Policies and Procedures Guide July 2004 3


Chapter 1 – General Provisions

GENERAL APPROPRIATIONS ACT (GAA) means the act passed by the Legislature
each biennium that appropriates money for the support of the judicial, executive,
and legislative branches of state government. The GAA authorizes and prescribes
conditions, limitations, and procedures for allocating and expending appropriated
funds. The GAA for the 2004-05 fiscal biennium may be found at Appropriations –
General Act, 78th Leg., R.S., ch. 1330, 2003 Tex. Gen. Laws 5023-5993.

GOVERNOR means the governor of Texas.

GUIDE means this edition of the State of Texas Purchase Policies and Procedures
Guide.

INCLUDE is a term of enlargement and not of limitation or exclusive enumeration.


The use of the term in the guide does not create a presumption that components
not expressed are excluded.3

MAINTENANCE CONTRACT means a contract between a state agency and another


person or entity for the maintenance of the agency’s property or equipment. Costs
of extended warranties and/or maintenance agreements that can be separately
identified from the cost of the equipment should not be capitalized.

MAY NOT is a prohibition. The term does not mean “might not” or its equivalents.

PAYEE means an individual or entity that receives a payment from the state.

PETTY CASH ACCOUNT means a set amount of money held by a state agency
outside the state treasury that is used by the agency in compliance with
Subchapter K, Chapter 403, Government Code, for making small purchases of
goods and services and for similar purposes.

PURCHASE VOUCHER means the Comptroller-approved accounting document that a


state agency must use to request a payment to an individual or entity. A purchase
voucher may not be used to pay salary or wages to a state officer or employee or to
reimburse the travel expenses incurred by a state officer or employee.

SECRETARY OF STATE means the secretary of state of Texas.

SECTION means a numeric division of the guide that is indicated by the “§” (section)
symbol.

SIGNATURE CARD means a postcard-sized document that a state agency submits


to the Comptroller’s Claims Division to identify the signature of each individual
who is authorized to approve the agency’s vouchers.

STATE AGENCY means a unit of state government unless specifically defined


differently in a section of the guide.

STATE AUDITOR means the state auditor of Texas.

SUBDIVISION means a numeric division of the guide that is indicated by a


cardinal number, e.g., “1.”

3
See Op. Tex. Att'y Gen. No. JC-502 (2002).

4 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 1 – General Provisions

SUBSECTION means an alphabetic division of the guide that is indicated by a capital


letter.

TEXAS IDENTIFICATION NUMBER means the 14-digit number that the Comptroller
assigns to each recipient of a payment from the state. Digits 12-14 are mailing
designators.

TEXAS REGISTER means the legal publication issued by the secretary of state. The
publication contains administrative rules, notices of meetings, and other
information that state agencies are required or authorized by law to disseminate
to the public.

USAS means the Uniform Statewide Accounting System.

VOUCHER has the same meaning as “payment document” under USAS unless
the guide specifically says otherwise.

State of Texas Purchase Policies and Procedures Guide July 2004 5


Chapter 1 – General Provisions

§�1.004 Comptroller, statutory authority of


Most of the Comptroller’s statutory authority about the format and processing of

purchase vouchers comes from the following statutes.

TEX. GOV’T CODE ANN. §�403.011(a)(3)-(4), (7), (12), (17) (Vernon Supp. 2004). This
statute requires the Comptroller to:
• supervise, as the sole accounting officer of the state, the state’s fiscal concerns
and manage those concerns as required by law; and
• prescribe the forms on which all accounts presented to the Comptroller for
settlement not otherwise provided for by law must be made; and
• prescribe forms or electronic formats of the same class, kind, and purpose so
that they are uniform in size, arrangement, matter, and form; and
• audit claims against the state the payment of which is provided for by law,
unless the audit is otherwise specially provided for; and
• draw warrants on the treasury for payment of all money required by law to be
paid from the treasury on warrants drawn by the Comptroller.
TEX. GOV’T CODE ANN. §�403.015 (VERNON 1998). This statute authorizes the
Comptroller to provide for the orderly and economical use of the Comptroller’s electronic
computing and data processing equipment. The Comptroller may prescribe and revise
claim forms, registers, warrants, and other documents submitted in support of payroll
or other claims. In addition, the statute authorizes the Comptroller to improve the flow
of data between state agencies by prescribing and revising procedures, techniques, and
formats for electronic data transmission.
TEX. GOV’T CODE ANN. §�403.016 (VERNON SUPP. 2004). This statute requires the
Comptroller to establish and operate an electronic funds transfer system so that certain
payments can be made electronically.
TEX. GOV’T CODE ANN. §�403.031(a) (Vernon 1998). This statute requires the
Comptroller to maintain accounts and information as necessary to show the purposes
for which expenditures are made. The statute also requires the Comptroller to provide
proper accounting controls to protect state finances.
TEX. GOV’T CODE ANN. § 403.054 (VERNON SUPP. 2004). This statute authorizes the
Comptroller to issue a replacement warrant in place of an original warrant drawn on
the state treasury if the state agency on whose behalf the Comptroller issued the
original warrant notifies the Comptroller that:
• the original warrant has been lost, destroyed or stolen; or
• the original warrant has not been received; or
• the payee’s endorsement on the original warrant has been forged.
The Comptroller is required to adopt rules4 and forms about replacement warrants.
TEX. GOV’T CODE ANN. § 403.055 (Vernon Supp. 2004). This statute generally
prohibits the Comptroller from issuing a warrant or initiating an electronic funds
transfer to a person who has been properly reported to the Comptroller under Section
403.055 as being indebted to the state or having a tax delinquency.

4
The rules are located at 34 TEX. ADMIN. CODE §�5.140 (2003).

6 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 1 – General Provisions

Section 403.055 also prohibits the Comptroller from issuing a warrant or initiating an
electronic funds transfer to the person’s assignee if the assignment became effective
after the person became indebted to the state or incurred a tax delinquency.
TEX. GOV’T CODE ANN. §�403.0551 (Vernon Supp. 2004). This statute generally
authorizes the Comptroller to deduct the amount of a person’s indebtedness to the state
or tax delinquency from any amount the state owes the person or the person’s successor.
TEX. GOV’T CODE ANN. § 403.0552 (Vernon Supp. 2004). This statute generally
authorizes or requires the Comptroller to prepare and retain a warrant that certain
statutes prohibit the Comptroller from issuing. In addition, Section 403.0552 generally
authorizes or requires the Comptroller to prepare a warrant to make a payment that
certain statutes prohibit the Comptroller from initiating by electronic funds transfer.
TEX. GOV’T CODE ANN. §�403.071 (Vernon 1998). This statute prohibits the
Comptroller from preparing a warrant unless a properly audited claim, verified as to
correctness by the agency submitting the claim, is presented to the warrant clerk. A
claim may not be paid from an appropriation unless the claim is presented to the
Comptroller for payment not later than two years after the end of the fiscal year for
which the appropriation was made. A claim, however, may be presented not later than
four years after the end of the fiscal year for which the appropriation from which the
claim is to be paid was made if the appropriation relates to new construction contracts,
or to repair and remodeling projects that exceed the amount of $20,000, including
furniture and other equipment, architects’ and engineering fees, and other costs related
to the contracts or projects.
The statute authorizes the Comptroller to enter into a written contract with a state agency
for the Comptroller to audit claims presented by the agency after the Comptroller has
prepared warrants or initiated electronic funds transfers to pay the claims. The
Comptroller may establish requirements and adopt rules concerning the time that the
agency must retain documentation in its files to enable the audit.
A person commits an offense if the person knowingly makes a false certificate on a
claim against the state for the purpose of authenticating the claim. An offense under
this section is punishable by imprisonment for not less than two or more than five
years.
TEX. GOV’T CODE ANN. §�403.078 (Vernon 1998). This statute requires all claims and
accounts against the state to be submitted on the forms or in compliance with the
method and format that the Comptroller prescribes. The claims and accounts must be
prepared to provide for entering on the claim or account, for use by the Comptroller, the
following:
• authorization of the head of the office or other individual responsible for the
expenditure; and
• the appropriation against which the disbursement is to be charged; and
• information required by the Comptroller’s rules; and
• proof that the claim or account was presented to the state within the period of
limitation provided by TEX. CIV. PRAC. & REM. CODE ANN. §�16.051 (Vernon
1997), or other applicable statute; and
• other appropriate matters.

State of Texas Purchase Policies and Procedures Guide July 2004 7


Chapter 1 – General Provisions

TEX. GOV’T CODE ANN. §�403.079 (Vernon 1998). This statute authorizes the
Comptroller to use generally recognized sampling techniques to audit claims against the
state if the techniques would be cost-effective and would promote greater efficiency in
paying claims.
TEX. GOV’T CODE ANN. §§ 2103.001-2103.0035, 2103.031-2103.064 (Vernon 2000), §
2103.004 (Vernon Supp. 2004), § 2103.031-2103.063, 2103.064(A) (VERNON 2000).
These statutes authorize a state agency5 to expend appropriated funds, except for
appropriated local funds, only on warrants issued or electronic funds transfers (EFT)
initiated by the Comptroller. The statutes also authorize a state agency to expend any
unappropriated funds that must be expended through the Comptroller only on warrants
issued or EFTs initiated by the Comptroller. The statutes prohibit the Comptroller from
issuing a warrant or initiating an EFT until:
• the state agency from whose appropriated or unappropriated funds the warrant
or EFT is payable has submitted a voucher to the Comptroller; and
• the state agency has approved the voucher in compliance with these statutes;
and
• the Comptroller has audited and approved the voucher as required by law.
These statutes also state the requirements for the approval of vouchers by state
agencies.
TEX. GOV’T CODE ANN. §§�2155.321-2155.327, 2155.382(b) (Vernon 2000). These
statutes are part of the State Purchasing and General Services Act. They specify some
of the procedures that the Comptroller and the Texas Building and Procurement
Commission must follow when auditing purchase vouchers. Section�2155.327 says that
an interagency purchase or transaction must be accomplished on a special voucher or
electronically as prescribed by the Comptroller. Section 2155.382(b) requires the
Comptroller to issue a warrant not later than the eighth day after receiving necessary
information about the payment unless it is not due until a later date and the state’s
cash flow would be maximized by delaying it.
TEX. GOV’T CODE ANN. §�2155.382(d) (Vernon 2000). This statute is part of the State
Purchasing and General Services Act. The statute authorizes the Comptroller to allow or
require a state agency6 to schedule payments that the Comptroller will make to a vendor.
The statute requires the Comptroller to prescribe the circumstances under which advance
scheduling of payments is allowed or required. The statute also requires the Comptroller to
require advance scheduling of payments when it is advantageous to the state.

5
For this purpose, “state agency” means a department, board, commission, committee, council, agency, office, or
other entity in the executive, legislative, or judicial branch of state government, the jurisdiction of which is not
limited to a geographical portion of the state. TEX. GOV’T CODE ANN. §�2103.001 (Vernon 2000). The term includes
an institution of higher education, as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004). Id.
6
For this purpose, “state agency” means: (1) a department, commission, board, office, or other agency in the
executive branch of state government created by the state constitution or a state statute; or (2) the Supreme
Court, the Court of Criminal Appeals, a Court of Appeals, or the Texas Judicial Council; or (3) a university
system or an institution of higher education as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004),
except a public junior college. State Purchasing and General Services Act, TEX. TEX. GOV’T CODE ANN. §
2151.002(2) (Vernon Supp. 2004).

8 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 1 – General Provisions

TEX. GOV’T CODE ANN. § 2251.026(b)-(c), (e)-(j) (Vernon Supp. 2004). These statutes are
in the chapter of the Government Code that is commonly known as the “prompt payment
law.” The Comptroller is required to issue a warrant or initiate an electronic funds transfer
(EFT) to pay any interest that a state agency7 must pay to a vendor8 under the prompt
payment law if the Comptroller is responsible for issuing a warrant or initiating an EFT to
pay the principal amount on behalf of the agency. The Comptroller is required to determine
the amount of interest that accrues on an overdue payment if the Comptroller is responsible
for issuing a warrant or initiating an EFT to pay the principal amount on behalf of the
agency. The Comptroller is required to submit the interest payment with the net amount
due for the goods or services. The Comptroller is prohibited from requiring a vendor to
request payment of the interest before the Comptroller pays it. The Comptroller may require
a state agency to submit any information the Comptroller determines necessary to
administer and comply with the Comptroller’s responsibilities under the prompt payment
law. The information must be submitted at the time and in the manner required by the
Comptroller. No interest accrues or may be paid under the prompt payment law if the total
amount of interest that would have accrued is $5 or less and the payment is made from the
institutional funds of an institution of higher education as defined by TEX. EDUC. CODE ANN.
§ 61.003 (Vernon Supp. 2004). The Comptroller may require a state agency to change its
accounting systems or procedure as the Comptroller determines necessary to administer and
comply with the Comptroller’s responsibilities under the prompt payment law. Any changes
must conform with the Comptroller’s requirements. The Comptroller may establish policies
and adopt rules to administer the preceding requirements.9

§�1.006 State agencies, responsibilities of


A. Statutory authority for purchases

A state agency may purchase a good or service only if the agency has specific or

implied statutory authority for the purchase. A state agency has implied statutory

authority only if the purchase is necessary for the agency to fulfill its specific

statutory duties. A state agency is responsible for determining whether the agency

has implied statutory authority. “The mere absence in Texas law of a prohibition on
doing some act does not in itself furnish authority to perform that act.”10
A state agency should determine whether it has the statutory authority to
purchase a good or service before entering into a purchase contract. This
is very important because a state agency that does not have the statutory
authority to purchase a good or service may not pay for it, even if the
vendor has provided the good or service without actual knowledge of the
agency’s lack of authority.

7
For this purpose, “state agency” means: (1) a board, commission, department, office, or other agency in the
executive branch of state government that is created by the constitution or a statute of this state, including a
river authority and an institution of higher education as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon
Supp. 2004); or (2) the Legislature or a legislative agency; or (3) the Supreme Court, the Court of Criminal
Appeals, a Court of Appeals, a state judicial agency, or the State Bar of Texas. TEX. GOV’T CODE ANN. §
2251.001(8) (Vernon Supp. 2004).
8
For this purpose, “vendor” means a person who supplies goods or a service to a governmental entity or
another person directed by the entity. TEX. GOV’T CODE ANN. § 2251.001(10) (Vernon Supp. 2004). The term
does not include a state agency, except for Texas Correctional Industries. Id. The term includes an officer or
employee of a state agency when acting in a private capacity to supplies goods or a service. Id.
9
For more information about the prompt payment law, see Chapter 6: Prompt payment law.
10
Op. Tex. Att’y Gen. No. JC-332 (2001).

State of Texas Purchase Policies and Procedures Guide July 2004 9


Chapter 1 – General Provisions

The officers and employees of a state agency are responsible for determining the
statutory authority for a payment before the agency submits a purchase voucher to
the Comptroller requesting the payment. During a pre-payment or a post-payment
audit, the Comptroller will request a state agency to cite the relevant statutory
authority for a payment unless the authority is obvious.
The Comptroller will occasionally process a purchase voucher that does not contain a
necessary citation of the relevant statutory authority. This does not, however,
obligate the Comptroller to process all subsequent vouchers for the same type of
purchase without the citation.
Sources for this subsection: Tex. Const. art. III, §�44; Golden v. Employers
Ins., 981 F.Supp. 467, 474 (S.D. Tex. 1997); City of Austin v. Southwestern Bell
Tel. Co., 92 S.W.3d 434, 441 (Tex. 2002); PUC of Texas v. City Pub. Serv. Bd. of
San Antonio, 53 S.W.3d 310, 315-6 (Tex., 2001); Public Utility Commission v.
GTE-Southwest, Inc., 901 S.W.2d 401, 417 (Tex. 1995); State v. Public Util.
Comm’n, 883 S.W.2d 190, 194 (Tex. 1994); Central Education Agency v. Upshur
County Comm’rs Court, 731 S.W.2d 559, 561 (Tex. 1987); Sherman v. Public
Utility Com., 643 S.W.2d 681, 686 (Tex. 1983); Bullock v. Calvert, 480 S.W.2d
367, 372 (Tex. 1972); State v. Jackson, 376 S.W.2d 341, 344 (Tex. 1964); Stauffer
v. City of San Antonio, 162 Tex. 13, 344 S.W.2d 158, 160 (1961); State v.
Ragland Clinic-Hospital, 138 Tex. 393, 159 S.W.2d 105, 107 (1942); Tex.
Advocates Supporting Kids with Disabilities/Tex. Educ. Agency v. Tex. Educ.
Agency, 112 S.W.3d 234, 238, 241 (Tex. App.—Austin 2003, no pet.); PUC of
Tex. v. Southwestern Bell Tel. Co., 112 S.W.3d 221, 226 (Tex. App.—Austin
2003, pet. filed); Patient Advocates of Tex. v. Tex. Workers’ Comp. Comm’n, 80
S.W.3d 66, 76 (Tex. App.—Austin 2002, pet. granted); State v. Exiga, 71 S.W.3d
429, 433 (Tex. App.—Corpus Christi 2002, no pet.); Eldercare Props., Inc. v.
Tex. Dep’t of Human Servs., 63 S.W.3d 551, 558 (Tex. App.—Austin 2001, pet.
denied); Reliant Energy v. P.U.C. of Tex., 62 S.W.3d 833, 837 (Tex.
App.—Austin 2001, no pet.); American Honda Motor Co. v. Texas DOT – Motor
Vehicle Div., 47 S.W.3d 614, 624 (Tex. App.—Austin 2001, pet. denied);
Sportscoach Corp. of Am., Inc. v. Eastex Camper Sales, Inc., 31 S.W.3d 730,
734 (Tex. App.—Austin 2000, no pet.); Ford Motor Co. v. Motor Vehicle Bd. of
the Texas DOT, 21 S.W.3d 744, 757 (Tex. App.—Austin 2000, pet. denied);
David McDavid Nissan v. Subaru of Am., 10 S.W.3d 56, 64 (Tex. App.—Dallas
1999), aff’d in part and rev’d in part, 84 S.W.3d 212 (Tex. 2002); GTE
Southwest, Inc. v. PUC, 10 S.W.3d 7, 12 (Tex. App.—Austin 1999, no pet.);
Trevino v. Transportation Ins. Co., 1 S.W.3d 294, 295 (Tex. App.—Corpus
Christi 1999, no pet.); 6th & Neches v. Aldridge, 992 S.W.2d 684, 687 (Tex.
App.—Austin 1999, pet. denied); McDaniel v. Texas Natural Resource
Conservation Comm’n, 982 S.W.2d 650, 651 (Tex. App.—Austin 1998, pet.
denied); Texas Parks & Wildlife Dep’t v. Callaway, 971 S.W.2d 145, 148-9 (Tex.
App.—Austin 1998, no pet.); State v. Montgomery, 957 S.W.2d 581, 583 (Tex.
App.—Houston [14th Dist.] 1997, pet. ref’d); Montgomery v. Blue Cross & Blue
Shield, 923 S.W.2d 147, 150 (Tex. App.— Austin 1996, writ denied); Hunter
Indus. Facilities v. Texas Natural Resource Conservation Comm’n, 910
S.W.2d 96, 105 (Tex. App.—Austin 1995, writ denied); Cole v. Texas Army Nat’l
Guard, 909 S.W.2d 535, 539 (Tex. App.—Austin 1995, writ denied); Employees
Retirement Sys. v. Foy, 896 S.W.2d 314, 317 (Tex. App.—Austin 1995, writ
denied); Brushy Creek Mun. Util. Dist. v. Texas Water Comm’n, 887 S.W.2d 68,
70 (Tex. App.—Austin 1994, writ denied); Texas Utils. Elec. Co. v. Public Util.
Comm’n, 881 S.W.2d 387, 393 (Tex. App.—Austin 1994, aff’d, 935 S.W.2d 109
(Tex. 1996); City of Alvin v. Public Util. Comm’n, 876 S.W.2d 346, 361 (Tex.

10 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 1 – General Provisions

App.—Austin 1993); Kawasaki Motors Corp. v. Texas Motor Vehicle Comm’n,


855 S.W.2d 792, 798 (Tex. App.—Austin 1993, no writ); Texas Dep’t of Human
Services v. ARA Living Centers, Inc., 833 S.W.2d 689, 694, 696 (Tex.
App.—Austin 1992, writ denied); Texas Dep’t of Human Services v. Christian
Care Centers, Inc., 826 S.W.2d 715, 719 (Tex. App.—Austin 1992, writ denied);
Denton County Electric Coop., Inc. v. Public Utility Com., 818 S.W.2d 490,
492-3 (Tex. App.—Texarkana 1991, writ denied); General Land Office v.
Rutherford Oil Corp., 802 S.W.2d 65, 69 (Tex. App.—Austin 1990), aff’d sub
nom, State v. Flag-Redfern Oil Co., 852 S.W.2d 480 (Tex. 1993); Cypress-
Fairbanks Independent School Dist. v. Texas Educ. Agency, 797 S.W.2d 336,
340 (Tex. App.—Austin 1990), rev’d on other grounds, 830 S.W.2d 88 (Tex.
1992); Texas State Bd. of Law Examiners v. Malloy, 793 S.W.2d 753, 759 (Tex.
App.—Austin 1990, writ denied); Central Education Agency v. Sellhorn, 781
S.W.2d 716, 718 (Tex. App.—Austin 1989, writ denied); Sexton v. Mount Olivet
Cemetery Association, 720 S.W.2d 129, 137-8 (Tex. App.—Austin 1986, writ
ref’d n.r.e.); Public Utility Com. v. Houston Lighting & Power Co., 715 S.W.2d
98, 102 (Tex. App.—Austin 1986), aff’d in part and rev’d in part, 748 S.W.2d
439 (Tex. 1987); Thomas, Richardson, Runden & Co. v. State, 683 S.W.2d 100,
101 (Tex. App.—Tyler 1984, writ ref’d n.r.e.); General Tel. Co. v. Public Utility
Com., 628 S.W.2d 832, 839 (Tex. App.—Austin 1982, writ ref’d n.r.e.); Railroad
Com. of Texas v. Atchison, T. & S. F. R. Co., 609 S.W.2d 641, 643 (Tex. Civ.
App.—Austin 1980, writ ref’d n.r.e.); Southern Pacific Transp. Co. v. Railroad
Com. of Texas, 592 S.W.2d 74, 77 (Tex. Civ. App.—Austin 1979, writ ref’d
n.r.e.); Martinez v. Texas Employment Com., 570 S.W.2d 28, 31 (Tex. Civ.
App.—Corpus Christi 1978, no writ); Charton Corp. v. Brockette, 534 S.W.2d
401, 405 (Tex. Civ. App.—Corpus Christi 1976, writ ref’d n.r.e.); Nueces
County Water Control and Improv. Dist. v. Texas Water Rights Com., 481
S.W.2d 924, 929 (Tex. Civ. App.—Austin 1972, writ ref’d n.r.e.); State v. Steck,
236 S.W.2d 866, 868-9 (Tex. Civ. App.—Austin 1951, writ ref’d); Railroad Com.
of Texas v. Red Arrow Freight Lines, Inc., 96 S.W.2d 735, 738 (Tex. Civ.
App.—Austin 1936, writ ref’d); State v. Perlstein, 79 S.W.2d 143, 146-7 (Tex.
Civ. App.—Austin 1934, writ dism’d); State v. Haldeman, 163 S.W. 1020, 1021-2
(Tex. Civ. App.—Austin 1913, writ ref’d); Op. Tex. Att’y Gen. Nos. GA-22
(2003), JC-583 (2002), JC-573 (2002), JC-566 (2002), JC-561 (2002), JC-559
(2002), JC-550 (2002), JC-539 (2002), JC-512 (2002), JC-495 (2002), JC-449
(2002), JC-441 (2001), JC-418 (2001), JC-416 (2001), JC-332 (2001), JC-324
(2001), JC-244 (2000), JC-189 (2000), JC-146 (1999), JC-132 (1999), JC-59 (1999),
JC-20 (1999), JM-1181 (1990), JM-1102 (1989), JM-971 (1988), JM-969 (1988),
JM-903 (1988), JM-872 (1988), JM-822 (1987), JM-618 (1987), JM-256 (1984),
JM-188 (1984), JM-93 (1983), MW-532 (1982), MW-482 (1982), MW-131 (1980),
MW-64 (1979), MW-42 (1979), H-1272 (1978), H-1199 (1978), H-1093 (1977),
H-1065 (1977), H-949 (1977), H-928 (1977); Tex. Att’y Gen. LO-93-12 (1993),
LO-93-7 (1993); Article IX, Section 4.06 of the General Appropriations Act.

B. Erroneous processing of vouchers


The Comptroller’s processing of a purchase voucher in error does not obligate the
Comptroller to process all similar, subsequent vouchers. Each voucher must stand on
its own because an improper type of payment is not made proper by the fact that it
was made one or more times. Therefore, a state agency should not assume that the
processing of a particular voucher indicates the Comptroller’s decision to process all
similar, subsequent vouchers.

State of Texas Purchase Policies and Procedures Guide July 2004 11


Chapter 1 – General Provisions

C. Fiscal responsibility of payments


The Legislature intends for state agencies to exercise their legal authority in a
fiscally responsible manner. Therefore, the Comptroller occasionally will question
the fiscal responsibility of a payment even though the payment is technically legal.
Source for this subsection: 34 TEX. ADMIN. CODE §�5.51(c)(1)(D), (2), (e)(1) (2003).

D. State agency completion and review of vouchers


A state agency is responsible for reviewing each purchase voucher for accuracy and
completeness before the agency submits the voucher to the Comptroller’s Claims
Division for processing.
A state agency must comply with the following requirements concerning its

vouchers.

• A purchase and the resulting payment for that purchase must be made in
accordance with the Texas and United States constitutions, applicable statutes
and regulations, and the Comptroller’s rules.
• The Comptroller may require a state agency to make available to the
Comptroller proper supporting documentation to support the legality and fiscal
responsibility of any payment that results from a purchase voucher if the
payment is made out of the agency’s funds. The types of documentation that the
Comptroller may require are not limited to the documentation specified in the
guide. The Comptroller may require the documentation to be made available
during a pre-payment audit, a post-payment audit, or at any other time.
• If required by the Comptroller, a citation of the relevant statutory authority
must be listed in the supporting documentation unless the authority for the
purchase is obvious. The Comptroller may ask a state agency to cite the
relevant statutory authority when necessary to audit a voucher.
• A state officer or employee may not submit a purchase voucher to the
Comptroller if the officer or employee has any doubts about the legality,
propriety, or fiscal responsibility of any payment that would result from the
voucher. The officer or employee may not rely on the Comptroller’s audit to
prevent a questionable payment from being made or to reverse an invalid
payment after it has occurred.
• If a state agency’s voucher is subject to payment review by the Texas
Building and Procurement Commission (TBPC), then the agency must
submit the voucher in the correct document type to ensure a pre-payment
or a post-payment review by TBPC.

When a state agency is required to provide a statement, the agency may not make
the statement unless it is true. The required statements are not boilerplate or pro
forma. They are vital to supporting the legality of payments.
Source for this subsection: 34 TEX. ADMIN. CODE §�5.51(c)(1)(B), (2), (4),
(e)(1)-(2) (2003).

12 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 1 – General Provisions

E. Retention requirements concerning supporting documentation


The supporting documentation for a purchase voucher must be maintained in a state
agency’s files at least until the end of the second fiscal year after the fiscal year in
which the voucher is processed by USAS. If the agency fails to maintain the
documentation, then the Comptroller’s post-payment audit will show the voucher as
unsubstantiated.
The type of documentation that is needed to support the legality and fiscal
responsibility of a payment will depend on the nature of the claim paid. Purchase
orders, requisitions, contracts, invoices, receipts, and receiving reports are examples
of typically needed documentation.
Voucher requirements listed in this guide are not intended to be all inclusive, but
are the minimum requirements. A state agency should retain in its files all
pertinent information related to the agency’s purchases, and have that information
available to the Comptroller during a pre-payment or a post-payment audit.
Sources for this subsection: TEX. GOV’T CODE ANN. §�403.071(h) (Vernon 1998);
34 TEX. ADMIN. CODE §�5.51(e)(3), (5)(A) (2003).

State of Texas Purchase Policies and Procedures Guide July 2004 13


Chapter 2 – Restricted Expenditures
§�2.002 Advance payments
With certain exceptions, a state agency may not pay for goods or services before their

delivery to the agency. The exceptions to this policy are as follows:

• A state agency may pay rent for leased space a maximum of seven days before
the payment due date.
• A state agency may pay the cost of a periodical subscription a maximum of six
weeks before it begins.
• The Comptroller will process a purchase voucher for the purchase of real
property anytime during the seven days before the closing date if the agency
submitting the voucher agrees to deliver the warrant to the seller not earlier
than the closing date.
• A state agency may pay in advance the entire cost of a maintenance contract.
• A state agency may make an advance payment to a federal agency or another
state agency for goods purchased from the agency if the advance payment will
expedite the delivery of the goods.
• A state agency may make an advance payment if significant cost savings would
result from making the payment in advance.
• A state agency may make an advance payment to a vendor who is selling
specialized or proprietary goods or services to the agency if the vendor requires
the payment to be made in advance.
• A state agency may pay tuition directly to an institution of higher education
not earlier than the 42nd day before the class begins. A state agency, however,
may not reimburse a state employee for tuition before the class begins.
• An institution of higher education may pay for books and other published
library materials before receiving them if reasonably necessary for the efficient
operation of the institution’s libraries.
• The Texas Building and Procurement Commission (TBPC) may make an
advance payment of rent for a distribution center, an office space, or another
facility that is required to accomplish TBPC’s functions under Subchapter G of
Chapter 2175, Government Code.8
The Education Code specifically prohibits the expenditure of money in the higher

education fund to pay for goods or services before their delivery. Of the preceding

exceptions, only the exception concerning books and other published library materials

applies to the higher education fund prohibition.

A state agency that needs to make an advance payment for a reason not listed above may
do so only if the agency determines before making the payment that making the payment
in advance is necessary and would serve a proper public purpose.
The Comptroller may request additional information to justify any advance payment,

including an advance payment that would be made under the circumstances listed

above.

8
That subchapter is entitled “FEDERAL SURPLUS PROPERTY.”

14 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 2 – Restricted Expenditures

A state agency that makes an advance payment to a vendor is responsible for ensuring
that the vendor provides the good or service to the agency. The agency is responsible for
pursuing appropriate legal remedies to recover the payment if the vendor fails to
provide the good or service.
A state agency that needs assistance in determining whether an advance payment may
be made should contact the Expenditure Research and Assistance section of the
Comptroller’s Claims Division.
Sources: TEX. EDUC. CODE ANN. §�62.021(a) (Vernon Supp. 2004); TEX. GOV’T CODE
ANN. §�2113.001(2) (Vernon Supp. 2004); State Purchasing and General Services
Act, TEX. GOV’T CODE ANN. §§�2155.383, 2155.386, 2175.368(2) (Vernon 2000). See
Act of May 27, 2001, 77th Leg., R.S., ch. 1422, §�1.18(a)-(b), (d), 2001 Tex. Sess.
Law Serv. 4735, 4739 (Vernon) (establishing the dates on which the Texas
Building and Procurement Commission is created and the General Services
Commission is abolished). Op. Tex. Att’y Gen. No.�MW-55 (1979).
Cross references: Chapter 6: Utility services; Chapter 8: Appropriation year
determination.

USAS Purchase Voucher Requirements

A state agency must retain in its files documentation that explains the necessity and proper
public purpose of an advance payment. Upon request, the agency must make the
documentation available to the Comptroller during a pre-payment or a post-payment audit.

§�2.004 Alcohol
A. Constitutional prohibition
State moneys may not be used to purchase alcohol or alcoholic beverages for
personal consumption or entertainment. This prohibition applies regardless of the
source for the moneys used to purchase the alcohol or beverages.
Sources for this subsection: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI, §�6(a).
B. Statutory prohibition
In this subsection:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
A state agency may not use appropriated money to purchase an alcoholic beverage
except for authorized law enforcement purposes.
A state agency may not use appropriated money to compensate an officer or
employee who uses alcoholic beverages on active duty.

State of Texas Purchase Policies and Procedures Guide July 2004 15


Chapter 2 – Restricted Expenditures

The restrictions described in this subsection do not affect the authority of an


institution of higher education to collect, account for, and control local funds and
institutional funds in the manner authorized by Subchapter A of Chapter 51,
Education Code.
The restrictions described in this subsection apply only to an expenditure made after
August 31, 1999.
Sources for this subsection: TEX. GOV’T CODE ANN. §�2113.001 (Vernon Supp. 2004),
§§�2113.012, 2113.101 (Vernon 2000); Act of May 29, 1999, 76th Leg., R.S., ch. 1498,
§§�9-10, 1999 Tex. Gen. Laws 5153, 5163.

USAS Purchase Voucher Requirements


1. Upon request, a state agency must make available to the Comptroller, during a

pre-payment or a post-payment audit, documentation that shows whether the alcohol or

alcoholic beverage was used for personal consumption or entertainment.

2. If alcohol or an alcoholic beverage was not used for personal consumption or

entertainment, then a state agency must state the statutory authority for the purchase

and the proper public purpose served by the purchase.

§�2.006 Audits of state agencies


In this section:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a university system or an institution of higher education as defined by Tex.
Educ. Code Ann. §�61.003 (Vernon Supp. 2004), 9 except that a public junior
college is excluded from the meaning of the term.
Except as otherwise described in this section, a state agency may not use appropriated money
to contract with a person to audit the financial records or accounts of the agency.
The prohibition described in the preceding paragraph does not apply to an audit authorized by:
• Chapter 466, Government Code, which pertains to the state lottery; or
• Chapter 2306, Government Code, which pertains to the Texas Department of
Housing and Community Affairs; or
• Chapter 361, Transportation Code, which pertains to the Texas Turnpike
Authority Division of the Texas Department of Transportation.
The prohibition described above does not apply to a contract with the state auditor.

9
Id.

16 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 2 – Restricted Expenditures

A state agency may use appropriated money to finance a supplemental audit of payments
received from the government of the United States if the audit is required as a condition of
receipt of the money and an amount for the audit is provided by the federal grant,
allocation, aid, or other payment.
The restrictions described in this section do not affect the authority of an institution of
higher education to collect, account for, and control local funds and institutional funds in
the manner authorized by Subchapter A of Chapter 51, Education Code.
The information provided in this section applies only to an expenditure made after
August 31, 1999.
Sources: TEX. GOV’T CODE ANN. §�2113.001 (Vernon Supp. 2004),
§�2113.102(a)-(b), (d) (Vernon 2000); Act of May 29, 1999, 76th Leg., R.S.,
ch. 1498, §§�9-10, 1999 Tex. Gen. Laws 5153, 5163; Op. Tex. Att’y Gen.
Nos. MW-192 (1980), H-1063 (1977), M-1199 (1972).

USAS Purchase Voucher Requirements


1. Upon request, a state agency must make available to the comptroller, during a
pre-payment or a post-payment audit, documentation that shows the type of audit
performed.
2. A state agency that submits a purchase voucher to pay for a supplemental audit
required by the United States, the supporting documentation for the payment must
state that fact and whether federal funds were used to make the payment.

§�2.008 Beef or product consisting substantially of beef,


purchase of imported
In this section:
• “Product consisting substantially of beef” means a meat food product that
either consists of at least five percent beef or has visible beef of any quantity.
• “State agency” means an agency, department, board, or commission of the state
or a state eleemosynary, educational, rehabilitative, correctional, or custodial
facility.
A state agency may not purchase beef or a product consisting substantially of beef that
has been imported from outside the United States. The Texas Department of Health is
required to enforce the preceding sentence.
A purchasing official of a state agency shall require an affidavit or certification by the
vendor that the beef or beef product purchased is not imported from outside the United
States. Attached to the affidavit or certification must be an affidavit or certification from
each previous buyer or seller of the beef product sold to the agency stating that each beef
product was derived exclusively from domestic beef. If the beef product is canned, then the
attached affidavit or certification from the packer or manufacturer of the beef product
asserting that the product was derived exclusively from domestic beef constitutes
compliance with the preceding sentence. The vendor affidavit or certification must include a
statement that the beef product sold and delivered is that to which the affidavit or
certification refers. The vendor affidavit or certification may be contained within a signed
bid under circumstances where a bid is required.

State of Texas Purchase Policies and Procedures Guide July 2004 17


Chapter 2 – Restricted Expenditures

A state agency that purchases beef or a beef product shall keep records to produce upon
demand for at least two years from date of purchase. The records must indicate the
following for each purchase and delivery:
• the common or usual name and amount of each beef product; and
• the date of purchase and the date of delivery; and
• the name of the vendor; and
• the product certification.
Sources: TEX. AGRIC. CODE ANN. §§�150.011(2), 150.012(a)-(b) (Vernon Supp. 2004);
25 TEX. ADMIN. CODE §§�229.31(1), 229.32 (2003). See, generally, Op. Tex. Att’y Gen.
No. JC-531 (2002).

§�2.010 Charitable organizations


A state agency may not provide money, a good, or a service to a charitable organization
unless:
• the agency has specific or implied statutory authority to provide it; and
• providing it would serve a proper public purpose; and
• the agency would receive adequate consideration for it; and
• the agency adopts adequate controls to ensure that the public purpose is achieved.
It is unlikely that a state agency would be able to show compliance with the preceding
conditions.
Sources: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI, §�6(a); Op. Tex. Att’y
Gen. Nos. JM-431 (1986), H-1189 (1978), M-661 (1970), O-7197 (1946), O-5563
(1943), O-1001 (1939). But see Tex. Att’y Gen. ORD-660 (1999) (questioning
whether the adequate consideration test merely duplicates the public
purpose test). See also Op. Tex. Att’y Gen. Nos. JC-244 (2000) (addressing the
transfer of state funds to a private, nonprofit organization), JC-146 (1999)
(addressing the transfer of state funds to a private endowment).

§�2.012 Child support delinquents


A child support obligor who is more than 30 days delinquent in paying child support is
not eligible to:
• receive payments from state funds under a contract to provide property,
materials, or services; or
• receive a state-funded grant or loan.
In this paragraph, “child support delinquent” means a child support obligor who is more
than 30 days delinquent in paying child support. A business entity in which a child support
delinquent is a sole proprietor, partner, shareholder, or owner with an ownership interest
of at least 25 percent is ineligible to:
• receive payments from state funds under a contract to provide property,
materials, or services; or
• receive a state-funded grant or loan.

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Chapter 2 – Restricted Expenditures

A child support obligor who is more than six months delinquent in paying child support

is ineligible to receive student financial assistance paid directly to the obligor by the

comptroller unless the obligor submits to the comptroller:

• a sworn affidavit from the obligor or obligee stating that the obligor is current
on the obligor’s child support payments; and
• a written statement from the obligor stating that the obligor has made a request
to the Title IV-D agency10 to correct the errors in the obligor’s payment record.11
A child support obligor or business entity that is ineligible to receive payments remains
ineligible until:
• all arrearages have been paid; or
• the obligor is in compliance with a written repayment agreement or court order
as to any existing delinquency or
• the court of continuing jurisdiction over the child support order has granted the
obligor an exemption from the ineligibility as part of a court-supervised effort
to improve earnings and child support payments.
An individual’s or sole proprietor’s bid or application for a contract, grant, or loan paid

from state funds must include the name and social security number of the individual or

sole proprietor.

A business entity’s bid or application for a contract, grant, or loan paid from state funds
must include the name and social security number of each partner, shareholder, or
owner with an ownership interest of at least 25 percent of the entity.
A state agency may accept a bid that does not include the information required by the

two preceding paragraphs if the agency collects the information before the contract,

grant, or loan is executed.

A contract, bid, or application that is subject to the requirements of TEX. FAM. CODE ANN.
§�231.006 (Vernon 2002) must include the following statement:
Under Section 231.006, Family Code, the vendor or applicant certifies
that the individual or business entity named in the contract, bid, or
application is not ineligible to receive the specified grant, loan, or
payment and acknowledges that this contract may be terminated and
payment may be withheld if this certification is inaccurate.
Sources: TEX. FAM. CODE ANN. §�231.302(c)(2)-(3) (Vernon 2002) §�231.006(a)-(b),
(d), (j) (Vernon Supp. 2004); Op. Tex. Att’y Gen. No. DM-379 (1996).

§�2.014 Christmas cards


A state agency may not purchase and mail Christmas cards unless the agency receives

an adequate benefit or quid pro quo.

Sources: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI, §�6(a); Op. Tex. Att’y Gen.
No. MW-36 (1979). See Ethics Advisory Opinion No. 190 (1994).

10
The “office of the attorney general” is the state’s Title IV-D agency. TEX. FAM. CODE ANN. §�231.001
(Vernon 2002).
11
This ineligibility applies only to student financial assistance paid after August 31, 2003. Act of May 26, 2003,
78th Leg., R.S., ch. 437, §�2(b), 2003 Tex. Gen. Laws 1684, 1684.

State of Texas Purchase Policies and Procedures Guide July 2004 19


Chapter 2 – Restricted Expenditures

§�2.016 Deposits to secure performance of contracts


In this section, “deposit” means money paid by a state agency to a person or entity to
secure the agency’s proper performance of a contract with the person or entity. A
deposit ordinarily is forfeited to the holder of the deposit if the agency does not properly
fulfill its contractual obligations.
A state agency may pay a deposit to an entity or person if the payment is necessary to
prevent harm to the state.

USAS Purchase Voucher Requirements

A state agency that pays a deposit must retain in its files documentation showing how the
payment is necessary to prevent harm to the state. Upon request, the agency must make this
documentation available to the Comptroller, during a pre-payment or a post-payment audit.

§�2.018 Drug testing


A. General discussion
A state agency may not make an expenditure under a drug testing program of any kind
unless:
• the program does not violate the prohibition against unreasonable searches in
the Fourth Amendment to the United States Constitution; and
• the program does not violate the privacy rights of employees under the Texas
Constitution; and
• the agency has specific or implied statutory authority for the program.
Drug testing programs must be evaluated for compliance with the preceding
requirements on a program-by-program basis. The fact that a particular drug testing
program complies with those requirements does not necessarily mean that similar drug
testing programs comply.
The facts of each program are important. The following is a partial list of the factual
questions that must be answered before evaluating a state agency’s drug testing program
for compliance with the United States and Texas constitutions.
• Are all employees or only employees who hold sensitive positions subject to
drug testing? If all employees are subject to drug testing, is the purpose of the
testing more than a general interest in work force integrity? If only employees
who hold sensitive positions are subject to drug testing, what is the nature of
those positions?
• How are the employees who are subject to drug testing selected for testing? Is
every employee tested? Are employees selected for testing on a statistically
random basis? Are employees selected for testing because there is individualized
suspicion to believe that the employees have been using illegal drugs? Are
employees selected for testing only when a particular type of incident occurs, such
as an accident that threatens property or life?
• Does the drug testing program try to deter illegal drug use by employees while
off duty? If so, has the state agency that sponsors the program found that
employees’ illegal, off duty drug use adversely affects their job performance?

20 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 2 – Restricted Expenditures

• Is drug testing performed through blood samples, urine samples, or breath


analysis? If the testing is performed through urine samples, how intrusive is
the method for collecting the samples?
• Is it legal for the results of a positive drug test to be submitted to law
enforcement authorities? If so, does the agency intend to submit the results to
law enforcement authorities?
• Do the employees who are subject to drug testing have reasonable expectations
of privacy that have been diminished because of the nature of their job duties?
• Does the agency have a compelling governmental objective for drug testing? Is
the objective something other than law enforcement? If the agency has a
compelling governmental objective, can the objective be achieved by a less
intrusive, more reasonable means? Does the objective have a direct relationship
to the employees who would be subject to drug testing?
• If an employee is selected for drug testing, must the employee submit to the
testing as a term or condition of employment or is the testing voluntary?
The attorney general has said that his formal opinion process cannot determine
whether a particular drug testing program complies with all legal requirements. This
is because the determination requires the resolution of numerous fact questions. The
attorney general recommends that a state agency make formal findings about whether
a proposed drug testing program complies with United States and Texas constitutional
requirements before implementing the program.
Sources for this subsection: Chandler v. Miller, Governor of Georgia,
117 S.Ct. 1295 (1997); Vernonia School District 47J v. Acton, 515 U.S. 646
(1995); National Treasury Employees Union v. Von Raab, 489 U.S. 656 (1989);
Skinner v. Railway Labor Executives Ass’n, 489 U.S. 602 (1989); Texas State
Employees Union v. Texas Dep’t of Mental Health & Mental Retardation, 746
S.W.2d 203 (Tex. 1987); Op. Tex. Att’y Gen. Nos. DM-121 (1992), JM-1274 (1990).
See Ferguson v. City of Charleston, 532 U.S. 67 (2001).

B. Mandatory drug testing programs that test without individualized suspicion


The information provided in this subsection applies to a drug testing program if:
• the program selects a state employee for testing on a random or across-the-board
basis; and
• the program selects a state employee for testing without regard to whether
there is individualized suspicion that the employee has been using illegal
drugs; and
• the program selects a state employee for testing without regard to whether an
incident or event, such as alleged criminal activity, an accident, or a complaint
filed by a member of the public, has occurred; and
• the employees selected for testing must submit to testing as a term or condition
of employment.

1. Texas constitution’s requirements


The attorney general ruled in 1990 that the Texas constitutional right to privacy
prohibits a state agency from drug testing an employee unless:
• the intrusion into the employee’s privacy is warranted by a compelling
governmental objective; and
• the objective cannot be achieved by a less intrusive, more reasonable means.

State of Texas Purchase Policies and Procedures Guide July 2004 21


Chapter 2 – Restricted Expenditures

A governmental objective must be very serious before it is a “compelling


governmental objective.” For example, the Texas Supreme Court ruled that the
Texas Department of Mental Health and Mental Retardation (MHMR) did not
have a compelling governmental objective for requiring its employees to submit
to polygraph examinations even though the objective was to assist MHMR
administrators in investigating four types of serious situations:
• patient abuse or neglect; and
• conduct endangering the health or safety of patients or other employees; and
• theft or other criminal activity; and
• use of drugs or alcohol.
Sources for this subdivision: Texas State Employees Union v. Texas Dep’t of Mental
Health & Mental Retardation, 746 S.W.2d 203 (Tex. 1987); Op. Tex. Att’y Gen. No.
JM-1274 (1990).

2. United States constitution’s requirements


The United States Supreme Court has ruled that government-required drug testing
by urinalysis or blood analysis is a search under the Fourth Amendment to the
United States constitution. The Fourth Amendment prohibits unreasonable
searches. Drug testing via urinalysis or blood analysis without a warrant, probable
cause, or individualized suspicion is a reasonable search and does not violate the
Fourth Amendment only if:
• the testing serves special governmental needs beyond the normal need for law
enforcement; and
• it is impractical to require the warrant, probable cause, or individualized
suspicion after balancing the government’s interests against the infringement
on individual’s reasonable privacy expectations.
Many different factual questions must be answered before balancing the
government’s interests against the infringement on individual’s reasonable privacy
expectations. Some of those factual questions are listed in Subsection (A).
The preceding requirements must be satisfied for each type of employee who is
subject to testing under a drug testing program. The federal courts have upheld
portions and struck-down other portions of a drug testing program because the
program failed to distinguish between different types of employees.
At least two federal courts of appeals have held that it is more difficult to
support the reasonableness of a drug testing program under the Fourth
Amendment if the program provides for drug testing without regard to whether
there is individualized suspicion of illegal drug use.
The attorney general has said that a drug testing program which requires state
employees to submit to drug testing without individualized suspicion and
without regard to the types of jobs they hold would violate the Fourth
Amendment. Other drug testing programs must be evaluated by the sponsoring
state agencies on a program-by-program basis.

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Sources for this subdivision: Chandler v. Miller, Governor of Georgia,

117 S.Ct. 1295 (1997); Vernonia School District 47J v. Acton, 515 U.S. 646

(1995); National Treasury Employees Union v. Von Raab, 489 U.S. 656 (1989);

Skinner v. Railway Labor Executives Ass’n, 109 S.Ct. 1402 (1989);

Aubrey v. School Bd. of Lafayette Parish, 148 F.3d 559, 562 (5th Cir. 1998);

United Teachers of New Orleans v. Orleans Parish Sch. Bd., 142 F.3d 853,

856-7 (5th Cir. 1998); Wilcher v. Wilmington, 139 F.3d 366 (3rd Cir. 1998);

National Treasury Employees Union v. Yeutter, 918 F.2d 968 (D.C. Cir. 1990);

Bluestein v. Skinner, 908 F.2d 451, 456-7 (9th Cir. 1990), cert. denied, 111

S.Ct. 954 (1991); Taylor v. O’Grady, 888 F.2d 1189, 1199 (7th Cir. 1989);

National Federation of Federal Employees v. Cheney, 884 F.2d 603, 608-9

(D.C. Cir. 1989), cert. denied, 110 S.Ct. 864 (1990); Harmon v. Thornburgh,
878 F.2d 484, 489, 492 (D.C. Cir. 1989), cert. denied, 493 U.S. 1056 (1990); Op.
Tex. Att’y Gen. No. DM-121 (1992).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only when a state agency’s drug
testing program is subject to the requirements described in this subsection.
1. The agency must retain documentation in its files that cites the statutory authority for
the drug testing program. In addition, the documentation must contain the following
statement:
The invasion of privacy caused by these drug tests is warranted by a compelling
governmental objective. The objective is ________________________. The objective
cannot be achieved by a less intrusive, more reasonable means.
The drug tests serve special governmental needs beyond the normal need for law
enforcement. The special governmental needs are ______________________. After
balancing the agency’s interests against the infringement on employee’s reasonable
privacy expectations, the agency has determined it is impractical to require a
warrant, probable cause, or individualized suspicion before the drug tests occur.
2. Upon request, the agency must make the documentation available to the Comptroller
during a pre-payment or a post-payment audit.

C. Other mandatory drug testing programs


The information provided in this subsection applies to a drug testing program if:
• the program is not subject to the requirements described in Subsection (B) or
(E); and
• the employees selected for drug testing are required to submit to testing as a
term or condition of employment.

1. Texas constitution’s requirements


The attorney general has not yet ruled on the Texas constitutionality of these
drug testing programs. It is likely, however, that the Texas constitutional
requirements described in Subsection (B)(1) of this section apply to these
programs.

2. United States constitution’s requirements


The United States constitution’s requirements as described in Subsection (B)(2)
apply to these drug testing programs.

State of Texas Purchase Policies and Procedures Guide July 2004 23


Chapter 2 – Restricted Expenditures

Sources for this subdivision: AFGE v. Roberts, 9 F.3d 1464, 1466

(9th Cir. 1993); AFGE, Local 2391 v. Martin, 969 F.2d 788, 792-3 (9th Cir. 1992);

National Treasury Employees Union v. Yeutter, 918 F.2d 968, 974-5

(D.C. Cir. 1990).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply only when a state agency’s drug
testing program is subject to the requirements described in this subsection.

1. The agency must retain documentation in its files that cites the statutory authority for
the drug testing program. In addition, the documentation must contain the following
statement:
The invasion of privacy caused by these drug tests is warranted by a compelling
governmental objective. The objective is ________________________________. The
objective cannot be achieved by a less intrusive, more reasonable means.
The drug tests serve special governmental needs beyond the normal need for
law enforcement. The special governmental needs are ______________________.
After balancing the agency’s interests against the infringement on employee’s
reasonable privacy expectations, the agency has determined it is impractical to
require a warrant or probable cause before the drug tests occur.

2. Upon request, the agency must make the documentation available to the Comptroller
during a pre-payment or a post-payment audit.

D. Voluntary drug testing of state employees and prospective state employees


The information provided in this subsection applies to a voluntary drug testing
program of state employees or prospective state employees, or both. The information
applies regardless of whether the program selects persons for testing based on
individualized suspicion. A drug testing program is voluntary only when the agency
that sponsors the program does not make any term or condition of employment
dependent on a state employee’s or prospective state employee’s willingness to
submit to drug testing.
A state agency may make an expenditure under a voluntary drug testing program if
the agency has specific or implied statutory authority for the expenditure.

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply only when a state agency’s drug
testing program is subject to the requirements described in this subsection.
1. The agency must retain documentation in its files that cites the statutory authority for
the drug testing program. In addition, the documentation must contain the following
statement:
The drug testing program for which this voucher requests a payment does not
require any state employee or prospective state employee to submit to drug
testing as a term or condition of employment.
2. Upon request, the agency must make the documentation available to the Comptroller
during a pre-payment or a post-payment audit.

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Chapter 2 – Restricted Expenditures

E. Federally-required drug testing of state employees


1. General discussion
The Drug-Free Workplace Act of 1988 (DFWA) does not require a state agency to
sponsor any type of drug testing program for its state employees. Therefore,
DFWA may not be cited as the federal law that requires a state agency to sponsor
any type of drug testing program.
Other federal laws or federal regulations might require a state agency to sponsor a
drug testing program. The requirement could be imposed in either of two ways:
(1)�as a precondition for the agency or the state to receive federal funds or other
benefits; or (2) as a mandatory obligation, irrespective of whether the agency or
state receives federal funds or other benefits. In the first situation, the agency
could comply with the federal law or regulation only if the Texas Legislature has
specifically or impliedly authorized the agency to comply. In the second situation,
the agency would be required to comply with the federal law or regulation
regardless of whether the Texas Legislature has authorized the agency to comply.
Sources for this subdivision: Drug-Free Workplace Act of 1988, 41 U.S.C.S.
§�702 (Law. Co-op. LEXIS through Pub. L. No. 108-98, approved December 19, 2003
(with a gap of Pub. L. No.�108-173)); Santiago v. Greyhound Lines, Inc., 956 F.Supp.
144, 152 (N.D. N.Y. 1997); Parker v. Atlanta Gas Light Co., 818 F.Supp. 345, 347
(S.D. Ga. 1993); Mares v. Conagra Poultry Co., 773 F.Supp. 248, 254 (D. Colo. 1991),
aff’d, 971 F.2d 492 (10th Cir. 1992).

2. United States constitution’s requirements


The United States constitution’s requirements as described in Subsection (B)(2)
of this section apply to these drug testing programs if the programs require
employees to submit to drug testing as a term or condition of employment.
Sources for this subdivision: Skinner v. Railway Labor Executives Ass’n, 109
S.Ct. 1402, 1412 (1989); Bluestein v. Skinner, 908 F.2d 451, 455 (9th Cir. 1990),
cert. denied 111 S.Ct. 954 (1991).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only when a state agency’s drug
testing program is subject to the requirements described in this subsection.
1. If the agency must have Texas statutory authority to comply with a federal law that
requires the agency to sponsor a drug testing program, then the agency must retain
documentation in its files that cites the authority.
2. The agency must retain documentation in its files that cites the federal law or
regulation that requires the agency to sponsor the drug testing program.
3. The agency must retain documentation in its files that contains the following statement.
The drug testing program for which this voucher requests a payment is required
by federal law and does not contain any requirements or features that federal
law does not require.

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Chapter 2 – Restricted Expenditures

4. If the drug testing program requires state employees to submit to drug testing as a term or
condition of employment, then the agency must retain documentation in its files that
contains the following additional statement.
The drug tests serve special governmental needs beyond the normal need for law
enforcement. The special governmental needs are ______________________. After
balancing the agency’s interests against the infringement on employee’s
reasonable privacy expectations, the agency has determined it is impractical to
require a warrant or probable cause before the drug tests occur.
5. Upon request, the agency must make the documentation available to the Comptroller
during a pre-payment or a post-payment audit.

F. Mandatory drug testing of prospective state employees


The information provided in this subsection applies to a drug testing program if the program
selects prospective state employees for drug testing and the program requires them to
submit to testing as a prerequisite to hiring. Subsection (D) applies instead of this
subsection if the testing is voluntary.
1. Texas constitution’s requirements
Neither the courts nor the attorney general has ruled on the Texas constitutionality of drug
testing programs that provide for the testing of prospective state employees. It is likely,
however, that the requirements described in Subsection (B)(1) apply to these programs.
2. United States constitution’s requirements
The United States constitution’s requirements as described in Subsection (B)(2)
probably apply to these drug testing programs.
The attorney general has indicated that it would be easier to support the reasonableness
under the Fourth Amendment of a mandatory drug testing program that applies to
prospective state employees than a mandatory drug testing program that applies to
current state employees.
Source for this subdivision: Op. Tex. Att’y Gen. No. DM-121 (1992).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply only when a state agency’s drug
testing program is subject to the requirements described in this subsection.
1. The agency must retain documentation in its files that cites the statutory authority for the
drug testing program. In addition, the documentation must contain the following statement:
The invasion of privacy caused by these drug tests is warranted by a compelling
governmental objective. The objective is _____________________________. The
objective cannot be achieved by a less intrusive, more reasonable means.
The drug tests serve special governmental needs beyond the normal need for law
enforcement. The special governmental needs are ______________________. After
balancing the agency’s interests against the infringement on prospective employee’s
reasonable privacy expectations, the agency has determined it is impractical to
require a warrant or probable cause before the drug tests occur.
2. Upon request, the agency must make the documentation available to the Comptroller
during a pre-payment or a post-payment audit.
Cross references for this section: Chapter 2: Polygraph testing; Chapter 3:
Physical and psychological examinations or treatments.

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§�2.020 Facilities management services


In this section:
• “Facilities management services” means any state agency facilities
management service that is not unique to carrying out a program of the
agency. The term includes services related to facilities construction, facilities
management, general building and grounds maintenance, cabling, and
facility reconfiguration.
• “State agency” means:
• a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
• the supreme court, the court of criminal appeals, a court of appeals, or the
Texas Judicial Council; or
• a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004) except a public
junior college.
Notwithstanding any law, the Texas Building and Procurement Commission (TBPC)
is required to provide facilities management services in relation to all state agency
facilities in Travis County or a county adjacent to Travis County. TBPC’s duty does
not apply to:
• a military facility; or
• a facility owned or operated by an institution of higher education, the Texas
Department of Criminal Justice, the Texas Youth Commission, or the Texas
Department of Transportation; or
• the Capitol, including the Capitol Extension, the General Land Office building,
the Bob Bullock Texas State History Museum, and any museum located on the
Capitol grounds; or
• a facility determined by TBPC to be completely residential; or
• a regional or field office of a state agency; or
• a facility located within or on state park property.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§§�2151.002(2), 2165.007 (Vernon Supp. 2004).

§�2.022 Food and equipment related to food preparation or storage


A. General discussion
The attorney general has said that the Texas constitution prohibits a state agency
from purchasing food, coffee, cream, sugar, and similar items that employees of or
visitors to the agency would consume.
The attorney general also has said, however, that a state agency may purchase
equipment and supplies related to the preparation or storage of food, coffee, cream,
sugar, and similar items. Examples include refrigerators, ranges, sinks, coffee
makers, cups, soap, and dish towels.
Sources for this subsection: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI, §�6(a);
Op. Tex. Att’y Gen. No. C-557 (1965).

State of Texas Purchase Policies and Procedures Guide July 2004 27


Chapter 2 – Restricted Expenditures

USAS Purchase Voucher Requirements

1. When a state agency purchases equipment related to food preparation or storage, the
agency must document how the purchase is necessary to the accomplishment of a public
purpose that is related to the agency’s legal authority or duties. The agency must retain
that documentation in its files and, upon request, make the documentation available to
the Comptroller during a pre-payment or a post-payment audit.

2. This voucher requirement applies when a state agency purchases food for individuals
who are not employees of or visitors to the agency. The agency must retain in its files
documentation of how the purchase is necessary to the accomplishment of a public
purpose that is related to the agency’s legal authority or duties. The agency must
make this documentation available to the Comptroller during a pre-payment or a
post-payment audit.

B. Department of Agriculture
State statutory law says that the Department of Agriculture may use the funds
received under Chapter 46, Agriculture Code, to purchase food or refreshments at
“Go Texan” promotional events. Not more than $5,000 in those funds per fiscal year,
however, may be used for that purpose.
Sources for this subsection: TEX. AGRIC. CODE ANN. §�46.009(a) (Vernon Supp. 2004).

See TEX. AGRIC. CODE ANN. §§�46.001, 46.003, 46.005 (Vernon Supp. 2004)

(description of the “Go Texan Partner Program”).

Cross reference for this section: Chapter 6: Entertainment.

§�2.024 Indebted to the state, persons


A. Definitions
In this section:
• “Compensation” means base salary or wages, longevity pay, hazardous duty pay,
benefit replacement pay, or an emolument provided in lieu of base salary or wages.
• “EFT” means an electronic funds transfer.
• “Payment law” means:
• TEX. EDUC. CODE ANN. §�57.48 (Vernon Supp. 2004); or
• TEX. FAM. CODE ANN. §�231.007 (Vernon Supp. 2004; or
• TEX. GOV’T CODE ANN. §�403.055 (Vernon Supp. 2004); or
• any similar law that prohibits the comptroller from issuing a warrant or
initiating an electronic funds transfer.
• “Person” includes an individual, a corporation, an organization, a
government or governmental subdivision or agency, a business trust, an
estate, a trust, a partnership, an association, and any other legal entity.
• “State agency” means a board, commission, council, committee, department,
office, agency, or other governmental entity in the executive, legislative, or
judicial branch of state government. The term includes an institution of higher
education as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004),
other than a public junior or community college.

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• “State officer or employee” means an officer or employee of a state agency.


• “Tax delinquency” means a delinquency in payment of either a tax to the
state or a tax that the Comptroller administers or collects.
• “TGSLC” means the Texas Guaranteed Student Loan Corporation.
Sources for this subsection: TEX. EDUC. CODE ANN. §§�57.48(k), 57.482(e)

(Vernon Supp. 2004); TEX. FAM. CODE ANN. §�231.007(k) (Vernon 2002);

Code Construction Act, TEX. GOV’T CODE ANN. §�311.005(2) (Vernon 1998);

TEX. GOV’T CODE ANN. §§�403.055(l), 2107.008(k), 2252.903(e)(2)-(3) (Vernon Supp. 2004).

B. Prohibited payments by the Comptroller because of certain loan defaults


The Comptroller, as a ministerial duty, may not issue a warrant or initiate an EFT
to a person if TGSLC has properly reported the person to the Comptroller as being
in default on a loan guaranteed under Chapter 57, Education Code.
Whenever the Comptroller is prohibited from issuing a warrant or initiating an EFT
to a person, the Comptroller also is prohibited from issuing a warrant or initiating
an EFT to:
• the person’s estate; or
• the distributees of the person’s estate; or
• the person’s surviving spouse.
The prohibitions described above do not apply when the Comptroller issues a

warrant or initiates an EFT to pay:

• the compensation of a state officer or employee; or


• the remuneration of an individual if the remuneration is being paid by a
private person through a state agency.
The Comptroller is not prohibited from issuing a warrant or initiating an EFT to a
person properly reported to the Comptroller as being in default on a loan guaranteed
under Chapter 57, Education Code, if TGSLC subsequently and properly reports to
the Comptroller that:
• the person is complying with an installment payment agreement or similar
agreement to eliminate the default, unless TGSLC subsequently and properly
reports to the Comptroller that the person no longer is complying with the
agreement; or
• the person’s default is being eliminated by deductions of money from the
person’s compensation under the garnishment provisions of 20 U.S.C.S.
§�1095a (Law. Co-op. LEXIS through Pub. L. No. 108-98, approved
December 19, 2003 (with a gap of Pub. L. No. 108-173)), unless TGSLC
subsequently and properly reports to the Comptroller that the default is no
longer being eliminated by the deductions; or
• the person’s default has been eliminated; or
• the report of default was prohibited by TEX. EDUC. CODE ANN. §�57.48(g)
(Vernon Supp. 2004)12 or was otherwise erroneous.

12
This statute prohibits TGSLC from reporting a person to the Comptroller as being in default on a loan

guaranteed under Chapter 57, Education Code, unless TGSLC first provides the person an opportunity to

exercise any due process or other constitutional or statutory protection that must be accommodated before

TGSLC may begin a collection action or procedure. The statute specifically prohibits the Comptroller from

investigating or determining whether TGSLC has complied with this prohibition.

State of Texas Purchase Policies and Procedures Guide July 2004 29


Chapter 2 – Restricted Expenditures

The prohibitions described at the beginning of this subsection do not apply if:
• the warrant or EFT would result in a payment being made in whole or in part
with money paid to the state by the United States; and
• the state agency that administers the money certifies to the Comptroller that
federal law either requires the payment to be made or conditions the state’s
receipt of the money on the payment being made.
Source for this subsection: TEX. EDUC. CODE ANN. §�57.48(b), (d)-(h)
(Vernon Supp. 2004).

C. Prohibited payments by state agencies because of certain loan defaults


The information provided in this subsection applies to a payment only if the
Comptroller is not responsible under TEX. GOV’T CODE ANN. §§�404.046, 404.069
(Vernon Supp. 2004), §�2103.003 (Vernon 2000) for issuing a warrant or initiating an
EFT to make the payment.
A state agency, as a ministerial duty, may not use funds inside or outside the

state treasury to pay a person if TEX. EDUC. CODE ANN. §�57.48 (Vernon Supp.

2004) prohibits the Comptroller from issuing a warrant or initiating an EFT to

the person.

Whenever a state agency is prohibited from making a payment to a person, the

agency also is prohibited from paying any part of that payment to:

• the person’s estate; or


• the distributees of the person’s estate; or
• the person’s surviving spouse.
The Comptroller may not reimburse a state agency for a payment that the
Comptroller determines was made in violation of the prohibitions described above.
Source for this subsection: TEX. EDUC. CODE ANN. §�57.482 (Vernon Supp. 2004).

D. Prohibited payments by the Comptroller because of an indebtedness to the


state or a tax delinquency
The Comptroller, as a ministerial duty, may not issue a warrant or initiate an EFT to a
person if a state agency has properly reported the person to the Comptroller as:
• being indebted to the state; or
• having a tax delinquency.
Whenever the Comptroller is prohibited from issuing a warrant or initiating an EFT
to a person, the Comptroller also is prohibited from issuing a warrant or initiating
an EFT to:
• the person’s estate; or
• the distributees of the person’s estate; or
• the person’s surviving spouse.
The prohibitions described above do not apply when the Comptroller issues a

warrant or initiates an EFT to pay the:

• compensation of a state officer or employee; or


• remuneration of an individual if the remuneration is being paid by a private
person through a state agency.

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Chapter 2 – Restricted Expenditures

The Comptroller is not prohibited from issuing a warrant or initiating an EFT to a

person properly reported to the Comptroller as being indebted to the state or

having a tax delinquency if the state agency responsible for collecting the person’s

debt or delinquency subsequently and properly reports to the Comptroller that:

• the person is complying with an installment payment agreement or similar


agreement to pay or eliminate the debt or delinquency, unless the agency
subsequently and properly reports to the Comptroller that the person no longer
is complying with the agreement; or
• the person’s debt or delinquency as been paid or otherwise eliminated; or
• the report of indebtedness or delinquency was prohibited by TEX. GOV’T CODE ANN.
§�403.055(g) (Vernon Supp. 2004)13 or was otherwise erroneous.
The prohibitions described at the beginning of this subsection do not apply if:
• the warrant or EFT would result in a payment being made in whole or in part
with money paid to the state by the United States; and
• the state agency that administers the money certifies to the Comptroller that
federal law either requires the payment to be made or conditions the state’s
receipt of the money on the payment being made.
Source for this subsection: TEX. GOV’T CODE ANN. §�403.055(a), (c)-(e), (g), (i)
(Vernon Supp. 2004).

E. Prohibited payments by a state agency because of an indebtedness to the


state or a tax delinquency
The information provided in this subsection applies to a payment only if the
Comptroller is not responsible under TEX. GOV’T CODE ANN. §§�404.046, 404.069
(Vernon Supp. 2004), §�2103.003 (Vernon 2000) for issuing a warrant or initiating an
EFT to make the payment.
A state agency, as a ministerial duty, may not use funds inside or outside the state

treasury to pay a person if:

• TEX. GOV’T CODE ANN. §�403.055 (Vernon Supp. 2004) prohibits the
Comptroller from issuing a warrant or initiating an EFT to the person; or
• (a) the person is indebted to the state or has a tax delinquency; and
(b)�the agency is responsible for collecting that indebtedness or
delinquency; and (c) Section 403.055, Government Code, does not
prohibit the Comptroller from issuing a warrant or initiating an EFT to
the person.14

13
This statute prohibits a state agency from reporting a person to the Comptroller as being indebted to the
state or having a tax delinquency unless the agency first provides the person an opportunity to exercise any
due process or other constitutional or statutory protection that must be accommodated before the agency or
the state may begin a collection action or procedure. The statute specifically prohibits the Comptroller from
investigating or determining whether the agency has complied with this prohibition.
14
The agency, however, may not refuse to make the payment before the agency has provided the person

with an opportunity to exercise any due process or other constitutional or statutory protection that

must be accommodated before the agency or the state may begin a collection action or procedure.

TEX. GOV’T CODE ANN. §�2107.008(j) (Vernon Supp. 2004).

State of Texas Purchase Policies and Procedures Guide July 2004 31


Chapter 2 – Restricted Expenditures

Whenever a state agency is prohibited from making a payment to a person, the


agency also is prohibited from paying any part of that payment to:
• the person’s estate; or
• the distributees of the person’s estate; or
• the person’s surviving spouse.
The prohibition described in the second bullet at the beginning of this subsection
does not apply when a state agency pays:
• the compensation of a state officer or employee; or
• the remuneration of an individual if the remuneration is being paid by a
private person through the agency.
A state agency is not prohibited from paying a person who is subject to the second
bullet at the beginning of this subsection if the agency determines that the person
is complying with an installment payment agreement or similar agreement
between the agency and that person to eliminate the debt or delinquency.
The prohibition described in the second bullet at the beginning of this subsection
does not apply to a payment by a state agency if:
• the payment would be made in whole or in part with money paid to the state by
the United States; and
• the agency determines that federal law either requires the payment to be made
or conditions the state’s receipt of the money on the payment being made.
The Comptroller may not reimburse a state agency for a payment that the
Comptroller determines was made in violation of the prohibitions described above.
Source for this subsection: TEX. GOV’T CODE ANN. §�2107.008(a), (c)-(h), (j)
(Vernon Supp. 2004).

F. Child support delinquencies


A person who is obligated to pay child support in a case for which the Office of the
Attorney General15 is providing services under Chapter 231, Family Code, and who
does not pay the support is “indebted to the state” if the office has properly reported
the person to the Comptroller. This means that the prohibitions described in
Subsections (D) and (E) apply to any warrants, EFTs, or payments that would be
issued, initiated, or made to the person. There is one exception. The exemptions
described in Subsections (D) and (E) about payments of compensation and
remuneration do not apply.
The Comptroller or a state agency may rely on a representation by the Office of the
Attorney General that:
• a person is indebted to the state because of a child support delinquency; or
• a person who was indebted to the state because of a child support delinquency
has eliminated the debt.
Source for this subsection: TEX. FAM. CODE ANN. §�231.007(a), (f), (i)-(j)
(Vernon 2002).

15
The “Office of the Attorney General” is the state’s Title IV-D agency. TEX. FAM. CODE ANN. §�231.001

(Vernon 2002).

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G. Contracting with persons who have a debt or delinquency


In this subsection:
• “Debt or delinquency” means a debt, tax delinquency, student loan
delinquency, or child support delinquency that results in a payment law
prohibiting the comptroller from issuing a warrant or initiating an electronic
funds transfer.
• “Written contract” does not include a contract the payments for which must
be made through the comptroller’s issuance of warrants or initiation of
electronic funds transfers under TEX. GOV’T CODE ANN. §§�404.046, 404.069
(Vernon Supp. 2004), §�2103.003 (Vernon 2000).16
A state agency shall determine whether a payment law prohibits the comptroller
from issuing a warrant or initiating an electronic funds transfer to a person before
the agency enters into a written contract with that person. The agency shall make
this determination not earlier than the seventh day before and not later than the
date of entering into the contract.
If a state agency determines that a payment law prohibits the comptroller from
issuing a warrant or initiating an electronic funds transfer to a person, then the
agency may enter into a written contract with that person only if:
• the contract requires the agency’s payments under the contract to be applied
directly toward eliminating the person’s debt or delinquency; and
• the requirement described in the preceding bullet specifically applies to any
debt or delinquency, regardless of when it arises.
The comptroller may determine the order in which a person’s multiple types of debts or
delinquencies are reduced or eliminated under the statute described in this subsection.
Source for this subsection: TEX. GOV’T CODE ANN. §�2252.903(a)-(c), (e)(1), (4)
(Vernon Supp. 2004).
Cross reference for this section: Chapter 6: Assignments of payments from
the state.

§�2.026 Judgments and settlements


A. General discussion
This paragraph (and the two bullets that follow) does not apply to a cause of action
arising under Chapter 105, Civil Practice and Remedies Code. This paragraph (and
the two bullets that follow) applies only if the attorney general prosecuted or
defended a judgment or settlement obtained against the state or a state agency. The
funds appropriated by the General Appropriations Act (GAA) may be expended to
pay a judgment or settlement if:
• the expenditure complies with Article IX, Section 6.24 of the GAA; or
• an item of appropriation specifically provides that the funds appropriated by
that item may be used to pay the judgment.17
16
This definition applies only to a written contract that is entered into after August 31, 2003. A written
contract that is entered into before September 1, 2003, is governed by the law in effect on the date the
contract is entered into, and the former law is continued in effect for that purpose. Act of May 29, 2003, 78th
Leg., R.S., ch.�1310, §�122(g), 2003 Tex. Gen. Laws 4748, 4795.
17
The source law for this bullet does not mention a settlement.

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Chapter 2 – Restricted Expenditures

This paragraph (and the seven bullets that follow) applies only to a case where the
judgment of the trial court was entered or a settlement agreement was entered into after
August 31, 1995. The funds appropriated by the GAA may be used to pay a settlement or
judgment against the state for a cause of action brought in federal court or a Texas state
court under specific statutory authority if:
• the payment is approved by the governor; and
• the payment is approved by the attorney general according to the second
paragraph following this paragraph; and
• in the case of a judgment, the judgment is rendered in a federal or Texas
state court for which an appeal or rehearing, or an application therefore, is
not pending and for which the time limitations for appeal or rehearing have
expired; and
• the payment of a settlement or judgment does not exceed $250,000; and
• the payment of a settlement or judgment would not cause the total amount of
payments made by the payer agency for that fiscal year to exceed 10 percent
of the total amount of funds available for expenditure by that agency for that
year; and
• the payee executes a complete release from any and all related claims and
causes against the state; and
• in the case of a judgment, the payment would constitute a full satisfaction of
the judgment.
The GAA says that a state agency shall report a claim for property damage to the
attorney general not later than the second working day after the date the agency
receives the claim. The GAA also says that a state agency shall prepare a voucher to
pay a claim not later than the tenth working day after the date an agreement to settle
the claim has been reached.
This paragraph applies only if the attorney general prosecuted or defended a
judgment or settlement. The payment of a judgment or settlement is subject to the
attorney general’s approval as to form, content, and amount. The funds appropriated
by the GAA may not be used to pay the judgment or settlement unless the attorney
general certifies that it is a legally enforceable obligation of the state. This
paragraph applies to all appropriated funds, regardless of whether the funds are in
or outside the state treasury.
When the state auditor determines that a state agency has paid a judgment or settlement
without obtaining the attorney general’s prior approval, the state auditor may certify this
determination to the Comptroller. The Comptroller may then withhold all appropriations
for administrative expenses to the agency until the Legislative Audit Committee notifies
the Comptroller that the agency’s non-compliance has been reviewed and necessary
recommendations or changes made.

Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §�105.004
(Vernon 1997); Article IX, Section 6.24(a)-(d), (f) of the General Appropriations Act.

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Chapter 2 – Restricted Expenditures

B. Appropriation to the Comptroller to pay certain judgments and settlements


The Legislature has appropriated funds to the Comptroller to pay certain judgments
and settlements. The judgments and settlements that may be paid with this
appropriation are:
• eligible medical malpractice claims in conformance with Chapter 59, Education
Code; and
• judgments and settlements against state agencies that are payable under the
Texas Tort Claims Act, Chapter 101, Civil Practice and Remedies Code; and
• judgments and settlements against state agencies that are payable under
Chapter 104, Civil Practice and Remedies Code, including indemnification
for criminal prosecutions; and
• judgments issued and settlements approved by federal courts.
The funds used to pay a judgment or settlement described in any of the four preceding
bullets shall be paid out by the Comptroller on vouchers prepared, verified, and signed by
the attorney general’s office.
The payment of a judgment or settlement against a state agency under the Texas Tort
Claims Act shall be from special funds or local funds of the involved agency or
institution to the extent the funds are available, and then from the general revenue
fund. The Comptroller shall maintain records about the amounts paid from the general
revenue fund and shall require the agency to reimburse that fund as special funds or
local funds become available.
The payment of a judgment or settlement against a state agency under Chapter 104,
Civil Practice and Remedies Code, shall be from special funds or local funds of the
involved agency or institution to the extent the funds are available, and then from
the general revenue fund. The Comptroller shall maintain records about the
amounts paid from the general revenue fund and shall require the agency to
reimburse that fund as special funds or local funds become available.
The payment of a judgment issued or settlement approved by a federal court shall be from
special funds or local funds of the involved agency or institution to the extent the funds are
available, and then from the general revenue fund. The Comptroller shall maintain
records about the amounts paid from the general revenue fund and shall require the
agency to reimburse that fund as special funds or local funds become available.
Source for this subsection: Strategy A.1.5 in the appropriations to fiscal
programs–Comptroller of Public Accounts in the General Appropriations Act.

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only to this subsection.
1. A purchase voucher submitted to pay a settlement or judgment under Chapter 101 or
104, Civil Practice and Remedies Code, must be drawn by the attorney general and
approved by the governor’s office.
2. A purchase voucher submitted to pay a settlement or judgment in federal court must be
drawn by the attorney general’s office and approved by the governor’s office.
3. A purchase voucher submitted to pay an eligible medical malpractice claim under
Chapter 59, Education Code, claim, judgment, or settlement described in this
subsection must be prepared, verified, and signed by the attorney general’s office and
approved by the governor’s office.
4. Comptroller object code 7225, 7226, or 7229 must be used.

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C. Appropriations to other state agencies to pay judgments and settlements


As described in Subsection (A), a state agency may not use funds appropriated by the
GAA to pay a judgment or settlement unless the GAA specifically provides for the
payment.

USAS Purchase Voucher Requirements


During a pre-payment or a post-payment audit, the comptroller may require a state agency
that pays a judgment or settlement from funds appropriated to the agency by the GAA
must:
a. cite in the supporting documentation the provision in the GAA that authorizes the
payment; and
b. comply with any restrictions imposed by the GAA on payments of judgments or
settlements; and
c. make available to the Comptroller upon request a copy of the attorney general’s
certification that the judgment or settlement is a legally enforceable obligation of the state.

D. Settlements of causes of action arising under the Texas Tort Claims Act
In this subsection, “governmental unit” means this state and all the several agencies
of government that collectively constitute the government of this state. The term
includes other agencies bearing different designations and all departments, bureaus,
boards, commissions, offices, agencies, councils, and courts.
A governmental unit may not settle and compromise a cause of action arising under
the Texas Tort Claims Act (TTCA) unless the governor determines that the
compromise is in the best interests of the unit. The preceding sentence does not
apply to a governmental unit that has acquired insurance under the TTCA.
Sources for this subsection: Texas Tort Claims Act,TEX. CIV. PRAC. & REM.
CODE ANN. §�101.001(3)(A) (Vernon Supp. 2004), §�101.105 (Vernon 1997).

§�2.028 Law enforcement agencies


No funds appropriated by the General Appropriations Act (GAA) may be granted to a law
enforcement agency that is regulated under Chapter 1701, Occupations Code, unless:
• the agency is in compliance with all rules developed by the Commission on Law

Enforcement Officer Standards and Education (CLEOSE) under that chapter; or

• CLEOSE certifies that the agency is in the process of achieving compliance with

those rules.

None of the preceding in this section applies to an entity or appropriation in Article�X


of the GAA.
Sources: Article IX, Section 6.20 and Article X, Section 2(a) of the General
Appropriations Act.

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§�2.030 Legislators
A state agency may not enter into or perform a contract if:
• a legislator or a former legislator is directly or indirectly interested in the contract;
and
• the contract was authorized by any law passed during the term for which the
legislator or former legislator was elected; and
• the contract is entered into while the legislator or former legislator held office.
An appropriation that is used to fund a contract is one type of authorizing law for the
purpose of the preceding prohibition.
A contract is illegal, void, and unenforceable if a state agency enters into the contract in
violation of the prohibitions described in this section. No payments may be made under
the contract, even if the payments would be made after a legislator has left office.
Sources: TEX. CONST. art. III, §§�18, 44, 51; Damon v. Cornett, 781 S.W.2d 597,
599 (Tex. 1989); Op. Tex. Att’y Gen. Nos. JM-847 (1988), JM-782 (1987), JM-162
(1984), H-696 (1975), M-801 (1971), M-625 (1970), O-1519 (1939), 2411 (1922);
Tex. Att’y Gen. LO-95-33 (1995), LO-89-72 (1989). See Washington v. Walker
County, 708 S.W.2d 493, 496 (Tex. App.—Houston [1st Dist.] 1986, no writ).
Cross reference: Chapter 6: Honoraria and speaking fees.

§�2.032 Lobbying
A. Definitions
In this section:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law. The term
includes money received from the federal government if the money is
appropriated by the Legislature.
• “Institution of higher education” and “university system” have the
meanings assigned by TEX. EDUC. CODE ANN. §�61.003
(Vernon Supp. 2004).
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government, created under the constitution or a statute, with
statewide authority; or
– an institution of higher education or a university system; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a regional planning commission, council of governments, or similar regional
planning agency created under Chapter 391, Local Government Code; or
– a local workforce development board created under Subchapter F of Chapter
2308, Government Code; or
– a community center created under Subchapter A of Chapter 534, Health and
Safety Code.

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Chapter 2 – Restricted Expenditures

• “State employee” means an individual who is employed by a state agency.


The term does not include an elected official or an individual appointed to office
by the governor or another officer.
• “State officer” means an individual appointed to office by the governor or
another officer.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�556.001, 556.002(a)
(Vernon Supp. 2004); Op. Tex. Att’y Gen. No. JC-161 (1999).

B. Employees or contractors who are also lobbyists


A state agency may not use appropriated money to employ a person who is required by
Chapter 305, Government Code, to register as a lobbyist if the person would be employed
as a regular full-time or part-time or contract employee. Except for an institution of
higher education, a state agency may not use any money under its control to employ or
contract with an individual who is required by Chapter 305, Government Code, to register
as a lobbyist.
A state agency that violates the prohibition described in the preceding paragraph

is subject to a reduction of amounts appropriated for administration by the

General Appropriations Act for the biennium following the biennium in which the

violation occurs. The reduction may be any amount not exceeding $100,000 for

each violation.

A state agency may not use appropriated money to compensate a state officer or

employee who violates a prohibition described in this subsection.

Sources for this subsection: TEX. GOV’T CODE ANN. §§�556.005(a), (c), 556.008
(Vernon Supp. 2004).

C. Membership dues to organizations that pay salaries of lobbyists


A state agency may not use appropriated money to pay, on behalf of the agency or an
officer or employee of the agency, membership dues to an organization that pays
part or all of the salary of a person who is required by Chapter 305, Government
Code, to register as a lobbyist.
This prohibition does not:
• extend to the payment of reasonable dues to an organization that represents
student interests before the Legislature or the Congress of the United States
from that portion of mandatory student service fees that is allocated to the
student government organization at an institution of higher education; or
• apply to the payment by a state agency of membership fees under Chapter 81,
Government Code.
A state agency may not use appropriated money to compensate a state officer or

employee who violates this prohibition.

Sources for this subsection: TEX. GOV’T CODE ANN. §§�556.002(b), 556.005(b),
556.008 (Vernon Supp. 2004).

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D. Influencing elections or achieving political purposes


A state employee has the rights of freedom of association and political
participation guaranteed by the Texas and United States constitutions except as
described in this subsection.
A state agency may not use money under its control, including appropriated money,
to finance or otherwise support the candidacy of a person for an office in the
legislative, executive, or judicial branch of state government or of the government of
the United States. This prohibition extends to the direct or indirect employment of
a person to perform an action described in the preceding sentence. A state agency
may not use appropriated money to compensate a state officer or employee who
violates this prohibition.
A state officer or employee may not use a state-owned or state-leased motor
vehicle for a purpose described in the preceding paragraph. A state agency may
not use appropriated money to compensate a state officer or employee who
violates this prohibition.
A state officer or employee may not use official authority or influence to interfere
with or affect the result of an election or nomination of a candidate or to achieve
any other political purpose. A state officer or employee may not permit the use of a
program administered by the state agency of which the person is an officer or
employee to interfere with or affect the result of an election or nomination of a
candidate or to achieve any other political purpose. A state agency may not use
appropriated money to compensate a state officer or employee who violates this
prohibition. For the purposes of this paragraph, a state officer or employee does not
interfere with or affect the results of an election or nomination if the individual’s
conduct is permitted by a law relating to the individual’s office or employment and
is not otherwise unlawful.
A state employee may not coerce, attempt to coerce, command, restrict, attempt to
restrict, or prevent the payment, loan, or contribution of any thing of value to a
person or political organization for a political purpose.
A state employee who violates a prohibition in the preceding two paragraphs is
subject to immediate termination of employment. A state agency may not use
appropriated money to compensate a state officer or employee who is subject to
termination.
The prohibitions described in this subsection do not prohibit the payment of
reasonable dues to an organization that represents student interests before the
Legislature or the Congress of the United States from that portion of mandatory
student service fees that is allocated to the student government organization at an
institution of higher education. A mandatory student service fee may not be used to
influence the outcome of an election.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�556.002(b), 556.003,
556.004, 556.007, 556.008 (Vernon Supp. 2004). See, generally, Op. Tex. Att’y
Gen. No. MW-323 (1981).

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Chapter 2 – Restricted Expenditures

E. Influencing the passage or defeat of a legislative measure


A state agency may not use appropriated money to attempt to influence the passage
or defeat of a legislative measure. This prohibition does not apply to a state officer or
employee using state resources to provide public information or to provide
information responsive to a request. A state agency may not use appropriated money
to compensate a state officer or employee who violates the prohibition described in
this paragraph.
A state employee who causes an employee to be discharged, demoted, or otherwise
discriminated against for providing information in accordance with the second
sentence in the first paragraph of this subsection is subject to immediate
termination of employment. A state agency may not use appropriated money to
compensate a state officer or employee who is subject to termination under the
preceding sentence.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�556.006-556.008
(Vernon Supp. 2004). See Op. Tex. Att’y Gen. No. M-828 (1971). See also
Graves & Houtchens v. Diamond Hill Independent School Dist., 243 S.W. 638,
639 (Tex. Civ. App.—Fort Worth 1922, no writ).

F. State agencies that administer statewide retirement plans


A state agency administering a statewide retirement plan may contract to receive
assistance or advice regarding the qualified tax status of the plan or on other federal
matters affecting the administration of the agency or its programs if the contractor
is not required by Chapter 305, Government Code, to register as a lobbyist.
A state agency may not use appropriated money to compensate a state officer or
employee who violates the preceding paragraph.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�556.005(d), 556.008
(Vernon Supp. 2004).

G. Exception for funds received from the federal government


Unless there is a clear manifestation of congressional intent that the
requirements and prohibitions described in this section do not apply to particular
funds received from the federal government, those requirements and prohibitions
apply to the funds.
Source for this subsection: Op. Tex. Att’y Gen. No. JC-161 (1999).

H. Requirements of the General Appropriations Act


The GAA says that the funds appropriated by the GAA may not be expended except
in compliance with the requirements and prohibitions described in this section,
regardless of the source or character of the moneys.
Source for this subsection: Article IX, Section 4.05 of the General
Appropriations Act.
Cross references for this section: Chapter 2: Membership fees paid to a chamber
of commerce; Chapter 6: Membership fees paid to professional organizations;
Chapter 6: Membership fees paid to non-professional organizations.

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§�2.034 Mail, interagency


In this section, “state agency” means:
• a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state statute;
or
• the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or the
Texas Judicial Council; or
• a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior college.
A state agency, the Legislature, or a legislative branch agency that is located in Travis
County may not use the United States Postal Service to deliver interagency mail or
packages to another state agency, the Legislature, or a legislative branch agency if the
recipient also is located in Travis County. The preceding sentence does not apply if state or
federal law requires the United States Postal Service to be used.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2151.002(2) (Vernon Supp. 2004), §�2176.052 (Vernon 2000).
Cross reference: Chapter 6: Mail.

§�2.036 Membership fees paid to a chamber of commerce


A state agency may not join a chamber of commerce. A state agency may, however,
contract with a chamber of commerce for it to provide services to the agency if the
agency has specific or implied statutory authority for the contract.
Sources: Op. Tex. Att’y Gen. Nos. DM-29 (1991), JM-716 (1987),

JM-516 (1986), H-397 (1974).

Cross references: Chapter 2: Lobbying; Chapter 6: Membership fees paid to


professional organizations; Chapter 6: Membership fees paid to non-professional
organizations.

USAS Purchase Voucher Requirements

1. Upon request, a state agency must make available to the Comptroller, during a
pre-payment or a post-payment audit, documentation that shows the services the
agency has been receiving from the chamber of commerce.

2. Comptroller object code 7201 must be used.

§�2.038 Nonresident bidders, contract awards to


In this section:
• “Governmental contract” means a contract awarded by a governmental
entity for general construction, an improvement, a service, or a public works
project or for a purchase of supplies, materials, or equipment.

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Chapter 2 – Restricted Expenditures

• “Governmental entity” means:


– the state; or
– a board, commission, department, office, or other agency in the executive
branch of state government, including an institution of higher education as
defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004); or
– the Legislature or a legislative agency; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, the
State Bar of Texas, or another judicial agency having statewide jurisdiction.
• “Nonresident bidder” refers to a person who is not a resident.
• “Resident bidder” refers to a person whose principal place of business is in
this state, including a contractor whose ultimate parent company or majority
owner has its principal place of business in this state.
A governmental entity may not award a governmental contract to a nonresident bidder
unless the nonresident underbids the lowest bid submitted by a responsible resident
bidder by an amount that is not less than the amount by which a resident bidder would
be required to underbid the nonresident bidder to obtain a comparable contract in the
state in which the nonresident’s principal place of business is located.
The preceding paragraph does not apply to a contract involving federal funds.
Sources: TEX. GOV’T CODE ANN. §§�2252.001(1), (2)(A), (D)-(F), (3), (4),
2252.002 (Vernon 2000), §�2252.004 (Verno0n Supp. 2004). See Op. Tex. Att’y Gen.
Nos. JM-712 (1987), JM-696 (1987), JM-616 (1987), JM-484 (1986).

§�2.040 Office space


A. Leased office space
The General Appropriations Act (GAA) says that the funds appropriated by the GAA
may not be expended for leased office or building space for operations that are moved
into newly constructed, purchased, expanded, or renovated state-owned facilities
funded from Texas Public Finance Authority revenue bonds.
If an agency obtains a lease at a rate lower than existing lease amounts subsequent to
passage of the GAA, then the comptroller is required to reduce funds appropriated to
each affected agency by an amount equal to the lease costs that would have been
incurred for the remainder of the 2004-05 fiscal biennium, as determined by the
comptroller. If obtaining the reduced lease rate requires the agency to move its
location, then the comptroller shall reduce the agency’s appropriations “less costs the
agency incurs for moving the agency’s tenant finish-out expenses as defined by the
Texas Building and Procurement Commission.
The preceding paragraph does not apply to an entity or appropriation in Article X of
the GAA.
Sources for this subsection: Article IX, Sections 11.05 and 11.06(b) and
Article X, Section 2(a) of the General Appropriations Act.

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B. Consolidation of leased space to state-owned space


If an agency moves from leased space to state-owned space after passage of the GAA,
the Comptroller is required to reduce the amount of funds appropriated to each
affected agency. The amount of the reduction is equal to the lease costs that would
have been incurred for the remainder of the biennium had the agency remained in
leased space, less the costs the agency incurs for moving and the agency’s tenant
finish-out expenses as defined by the Texas Building and Procurement Commission.
The preceding paragraph does not apply to an entity or appropriation in Article X of
the GAA.
Sources for this subsection: Article IX, Section 11.06(a) and Article X,
Section 2(a) of the General Appropriations Act.
Cross reference for this section: Chapter 8: Appropriation year determination.

§�2.042 Paper supplies and filing cabinets, legal size


In this section, “state agency” means a board, commission, department, institution,
office, or other agency that is in the executive branch of state government. The term
includes an institution of higher education as defined by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004).
A state agency may not purchase forms, bond paper, stationery, pads, or similar paper
supplies that exceed 8 1/2 inches by 11 inches in size unless the items:
• are perforated or otherwise designed to produce completed documents that do
not exceed 8 1/2 inches by 11 inches; or
• are used for a document prepared on a form developed by a national
organization for use by a state or a form designed to be compatible with that
document; or
• are used for the preparation of a document required by the federal
government; or
• are used to maintain an accounting or bookkeeping record; or
• are used for preparation of a financial report; or
• are used for a budget document; a nontext computer report or document; a chart,
graph, table, or map; a diploma; artwork; or an architectural or engineering draft
or document; or
• are used for enlarging small print materials for a person with a visual
impairment; or
• are purchased for a resale purpose; or
• are used for the protection and preservation of a historically valuable
document; or
• are fan-fold paper designed for use in computer peripheral devices.
A state agency may not purchase a filing cabinet that is designed to store completed
documents that exceed 8 1/2 inches by 11 inches in size.
Sources: TEX. GOV’T CODE ANN. §�2051.021 (Vernon 2000); Op. Tex. Att’y Gen.
No. JM-488 (1986).

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Chapter 2 – Restricted Expenditures

USAS Purchase Voucher Requirements

1. When a state agency purchases paper supplies that exceed 8 1/2 inches by 11 inches
in size, the agency, upon request, must make available to the Comptroller, during a
pre-payment or a post-payment audit, documentation that shows which exception to
the legal prohibition against purchasing those supplies applies.

2. When a state agency purchases a filing cabinet, the agency, upon request, must make
available to the Comptroller, during a pre-payment or a post-payment audit,
documentation that shows whether the cabinet is designed to store completed
documents that exceed 8 1/2 inches by 11 inches in size.

§�2.044 Penalties
A. Prohibition
A state agency may not use state funds, appropriated or otherwise, to pay a
penalty to any person or entity unless a valid federal law or regulation requires
the payment.

B. Late charges versus penalties


For the purposes of the Texas constitution, a late charge must be distinguished from
a penalty.
A late charge is not a penalty if the charge reasonably relates to the costs incurred
by a person or entity because a state agency was late in making a payment. In
contrast, a late charge is a penalty if the charge does not reasonably relate to the
costs incurred by a person or entity because a state agency was late in making a
payment.
Cross references for this subsection: Chapter 6: Utility services;
Chapter 6: Prompt payment law.
Sources for this section: TEX. CONST. art. III, §§�44, 51; art. VIII, §�3; art. XVI,
§�6(a); Op. Tex. Att’y Gen. No. H-1289 (1978).

§�2.046 Plants
A. Indoor plants
In this subsection:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in
the judicial branch of state government with statewide authority, or a
Court of Appeals; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except that a
public junior college is excluded from the meaning of the term.

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A state agency may not use appropriated money to purchase, lease, or maintain a
live or artificial indoor plant unless:
• the agency is an institution of higher education; and
• the plant is used for educational or research purposes.
The restrictions described in this subsection do not affect the authority of an

institution of higher education to collect, account for, and control local funds and

institutional funds in the manner authorized by Subchapter A of Chapter 51,

Education Code.

The restrictions described in this subsection apply only to an expenditure made after
August 31, 1999.
Sources for this subsection: TEX. GOV’T CODE ANN. §�2113.001 (Vernon Supp. 2004),
§�2113.105 (Vernon 2000); Act of May 29, 1999, 76th Leg., R.S., ch. 1498, §§�9-10, 1999
Tex. Gen. Laws 5153, 5163; Act of May 29, 1999, 76th Leg., R.S., ch. 1498, §§�9-10, 1999
Tex. Gen. Laws 5153, 5163.

B. Xeriscaping
In the next paragraph, “xeriscape” means a landscaping method that maximizes
the conservation of water by using plants that are appropriate to the site and
efficient water-use techniques. The term includes:
• planning and design; and
• appropriate choice of plants; and
• soil analysis; and
• soil improvement using compost; and
• efficient and appropriate irrigation; and
• practical use of turf; and
• appropriate use of mulches; and
• proper maintenance.
The Texas Building and Procurement Commission (TBPC) by rule shall adopt
guidelines for the required use of xeriscape on state property associated with the
construction of a new state building, structure, or facility that begins on or after
January 1, 1994, including a project exempt from Chapter 2166, Government Code,
because of the State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2166.003 (Vernon 2000). The guidelines must contain the elements listed in the State
Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2166.404(b)
(Vernon 2000).
TBPC shall develop a five-year program for phasing in the use of xeriscape on state
property associated with a state-owned building, structure, or facility on which
construction began before January 1, 1994.
Sources for this subsection: State Purchasing and General Services Act,

TEX. GOV’T CODE ANN. §§�2166.404(a)-(b), (d), 2166.405 (Vernon 2000).

See Act of May 27, 2001, 77th Leg., R.S., ch. 1422, §�1.18(a)-(b), (d),

2001 Tex. Sess. Law Serv. 4735, 4739 (Vernon) (establishing the dates on which

the Texas Building and Procurement Commission is created and the General

Services Commission is abolished).

State of Texas Purchase Policies and Procedures Guide July 2004 45


Chapter 2 – Restricted Expenditures

USAS Purchase Voucher Requirements


1. If a state agency’s purchase voucher includes the purchase or rental of an indoor plant,
then the agency, upon request, must make available to the Comptroller, during a
pre-payment or a post-payment audit, documentation that shows how the plant was, is,
or will be used.
2. If a state agency’s purchase voucher includes the purchase of goods or services to maintain
an indoor plant, the agency, upon request, must make available to the Comptroller,
during a pre-payment or a post-payment audit, documentation that shows how the plant
was, is, or will be used.

§�2.048 Polygraph testing


A. Mandatory polygraph testing programs
The information provided in this subsection applies to a polygraph testing program
if the employees selected for testing must submit to testing as a term or condition
of employment.
The Texas Supreme Court has ruled that the Texas constitutional right to privacy
prohibits a state agency from polygraph testing an employee unless:
• the intrusion into the employee’s privacy is warranted by a compelling
governmental objective; and
• the objective cannot be achieved by a less intrusive, more reasonable means.
A governmental objective must be very serious before it is a “compelling

governmental objective.” For example, the Court ruled that the Department of

Mental Health and Mental Retardation (MHMR) did not have a compelling

governmental objective for requiring its employees to submit to polygraph

examinations even though the objective was to assist MHMR administrators in

investigating four types of serious situations:

• patient abuse or neglect; and


• conduct endangering the health or safety of patients or other employees; and
• theft or other criminal activity; and
• use of drugs or alcohol.
Sources for this subsection: Texas State Employees Union v. Texas Dep’t of
Mental Health & Mental Retardation, 746 S.W.2d 203 (Tex. 1987); Op. Tex. Att’y
Gen. No. JM-1274 (1990).

B. Voluntary polygraph testing programs


The information provided in this subsection applies to a polygraph testing program if
the state agency that sponsors the program does not make any term or condition of
employment dependent on an employee’s willingness to submit to polygraph testing.
A state agency may make an expenditure under a voluntary polygraph testing program
if the agency has specific or implied statutory authority for the expenditure.

46 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 2 – Restricted Expenditures

C. Department of Public Safety of the State of Texas


The General Appropriations Act (GAA) says that the funds appropriated by the GAA
may not be expended for polygraph testing of a commissioned law enforcement
officer of the Department of Public Safety of the State of Texas unless requested by
the officer.
Source for this subsection: Rider 22 in the appropriations to the Department
of Public Safety in the General Appropriations Act.

USAS Purchase Voucher Requirements


1. Upon request, a state agency that pays for polygraph testing must make available to
the comptroller, during a pre-payment or a post-payment audit, documentation that
shows how the requirements described in this section have been satisfied.
2. Comptroller object code 7299 must be used.

§�2.050 Publications
A. Requirements of Chapter 2113, Government Code
In this subsection:
• “Appointed officer” has the meaning assigned by TEX. GOV’T CODE ANN.
§�572.002 (Vernon Supp. 2004).
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except that a public
junior college is excluded from the meaning of the term.
A state agency may not use appropriated money to publish a periodical or other
publication the cost of which is not reimbursed through revenue attributable to its
publication and sale if the publication is:
• intended for use by the general public; and
• generally informational, promotional, or educational; and
• not essential to the achievement of a statutory objective of the agency.

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Chapter 2 – Restricted Expenditures

The prohibition described above does not apply to:


• Texas Highways magazine; or
• Texas Parks and Wildlife magazine; or
• publications of the Department of State Health Services; or
• annual reports and other materials that are required by law and the content of
which includes only topics provided by law; or
• compilations of statutes or rules; or
• newsletters; or
• attorney general opinions, advisories, and decisions; or
• Comptroller opinions, revenue forecasts, and fiscal analyses.
A state agency may not use appropriated money to publish a publication that
prominently displays the name or picture of a person holding an office elected statewide
or an appointed officer. This prohibition does not apply to the official state travel map
published by the Texas Department of Transportation. The name or picture of a person
is “prominently displayed” if it is readily noticeable or stands out. A state agency which
distributes a publication that includes a person’s photograph or displays the name of a
person in large type or on a repetitive basis must retain a copy of the publication in the
agency’s files.
A state agency may not use appropriated money to publish a publication on
enamel-coated, cast-coated, or dull-coated printing stock or that contains an average
of more than one picture for each two pages of the publication unless the agency
imposes a fee for the publication in an amount that recovers the cost of publication.
This prohibition does not apply to:
• a publication designed to promote tourism or economic development; or
• a publication of the Texas School for the Deaf or the Texas School for the Blind
and Visually Impaired; or
• a publication of the Texas Incentive and Productivity Commission; or
• the publication of a brochure regarding approved foods under the federal
special supplemental food program for women, infants, and children
administered by the Department of State Health Services; or
• a publication of an institution of higher education.
A state agency that uses an appropriation to publish a free periodical quarterly or
less frequently shall insert annually in an issue of the periodical a notice that
anyone wishing to continue receiving the periodical must so request in writing. A
state agency that uses an appropriation to publish a free periodical more frequently
than quarterly shall insert the notice annually in three consecutive issues of the
periodical. The agency may provide future issues of the periodical only to persons
who have requested it.
A state agency of which the executive head is an elected officer may not use appropriated
money to publish a publication relating to the activities or legal responsibilities of the
agency within the 120-day period preceding the date of an election at which the office
held by the executive head will be filled.
The restrictions described in this subsection do not affect the authority of an institution
of higher education to collect, account for, and control local funds and institutional funds
in the manner authorized by Subchapter A of Chapter 51, Education Code.

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Chapter 2 – Restricted Expenditures

The restrictions described in this subsection apply only to an expenditure made after
August 31, 1999.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�2113.001, 2113.107
(Vernon Supp. 2004), Act of May 29, 1999, 76th Leg., R.S., ch. 1498,
§§�9-10, 1999 Tex. Gen. Laws 5153, 5163. See Article IX, Section 6.16 of the
General Appropriations Act.
Cross reference for this subsection: Chapter 2: Publicity of individuals.

B. Requirements of Chapter 441, Government Code


In this subsection:
• “Institution of higher education” has the meaning assigned by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “State agency” means a state office, officer, department, division, bureau,
board, commission, legislative committee, authority, institution, substate
planning bureau, university system, institution of higher education, or a
subdivision of one of those entities.
• “State publication”:
– means information in any format that:
• is produced by the authority of or at the total or partial expense of a
state agency or is required to be distributed under law by the agency;
and
• is publicly distributed outside the agency by or for the agency; and
– does not include information the distribution of which is limited to:
• contractors with or grantees of the agency; or
• persons within the agency or within other government agencies; or
• members of the public under a request made under the public
information law, Chapter 552, Government Code.
Unless the state librarian exempts a state publication from Subchapter G of
Chapter�441, Government Code, the publication shall clearly reflect the date that it
is produced or initially distributed by a state agency. The date must appear in a
conspicuous location at or near the beginning of the publication.
If a state agency’s printing is done by contract, an account for the printing may not
be approved and a warrant may not be issued unless the agency first furnishes to
the Texas Building and Procurement Commission:
• a receipt from the state librarian for the publication; or
• a written waiver from the state librarian exempting the publication from
Subchapter G of Chapter 441, Government Code.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�441.101(3), (4), 441.103(e),
441.105, 441.106 (Vernon 1998); Code Construction Act, TEX. GOV’T CODE ANN.
§�311.005(2) (Vernon 1998). See State Purchasing and General Services Act,
TEX. GOV’T CODE ANN. §�2151.003 (Vernon Supp. 2004) (a statutory reference to the
State Purchasing and General Services Commission means the Texas Building
and Procurement Commission (TBPC)); Act of May 27, 2001, 77th Leg., R.S.,
ch. 1422, §�1.18(a)-(b), 2001 Tex. Sess. Law Serv. 4735, 4739 (Vernon) (establishing
the dates on which TBPC is created and the General Services Commission is
abolished).

State of Texas Purchase Policies and Procedures Guide July 2004 49


Chapter 2 – Restricted Expenditures

USAS Purchase Voucher Requirements


1. If items one through three in the first sentence of paragraph one of Subsection�(A)
exist and none of the eight exceptions in paragraph one of Subsection (A) apply, then
a state agency must maintain documentation in its files about whether the cost of the
publication is being totally reimbursed through revenue attributable to its
publication or sale.
2. When a state agency pays for the printing of a publication, the agency must retain an
original of the item in the agency’s files and, upon request, make the original available
to the Comptroller during a pre-payment or a post-payment audit. Examples of
publications include brochures, newsletters, and pamphlets.
3. Comptroller object code 7218 must be used for the printing of publications.

§�2.052 Publicity of individuals or state agencies


A. Government Code restrictions and authorizations
In this subsection:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
A state agency may not use appropriated money to publicize or direct attention to an
individual officer or employee of state government.
The attorney general has said that this prohibition is intended to prevent the intentional
publicizing or directing of attention to officials and employees. Therefore, the inclusion of
names in an agency publication merely to facilitate the reader’s understanding of a story is
permissible.
The Comptroller will question, however, an agency’s use of appropriated funds to pay for
a publication or advertisement that contains the picture of a state official or employee.
More scrutiny will occur when a publication or advertisement contains the picture of a
statewide elected official.
A state agency may not use appropriated money to:
• maintain a publicity department or office; or
• employ an individual who has the title or duties of a public relations or press
agent; or
• pay a public relations agent or business.

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Chapter 2 – Restricted Expenditures

When the executive head of a state agency considers it necessary or in the public
interest, the executive head may issue through agency channels oral or written
information relating to the activities or legal responsibilities of the agency. The
information must be issued in the name of the state agency and include the name of
the individual authorized to issue the information.
An institution of higher education may operate a news and information service for
the benefit of the public if the operation has been authorized and approved by the
institution’s governing body.
The limitations described above do not prohibit the use of appropriated money for
publicity functions authorized under Chapter 204, Transportation Code.
The restrictions described in this subsection do not affect the authority of an
institution of higher education to collect, account for, and control local funds and
institutional funds in the manner authorized by Subchapter A of Chapter 51,
Education Code.
The information provided in this subsection applies only to an expenditure made
after August 31, 1999.
Sources for this subsection: TEX. GOV’T CODE ANN. §�2113.001
(Vernon Supp. 2004),§�2113.011 (Vernon 2000); Act of May 29, 1999, 76th Leg.,
R.S., ch. 1498, §§�9-10, 1999 Tex. Gen. Laws 5153, 5163; Op. Tex. Att’y Gen. Nos.
JC-350 (2001), MW-323 (1981).
Cross reference for this subsection: Chapter 2: Publications.

USAS Purchase Voucher Requirements

1. A state agency that uses funds appropriated by the GAA to pay for a publication or
advertisement must retain in its files an original of the item. Upon request, the agency
must make the original available to the Comptroller during a pre-payment or a
post-payment audit. The preceding two sentences do not apply to an entity or
appropriation in Article X of the GAA.
2. Comptroller object code 7218 must be used for the printing of a publication.
3. Comptroller object code 7273 must be used for other printing services.
4. Comptroller object code 7281 must be used for advertising services.

B. General restrictions on state agencies promoting and advertising


themselves
A state agency may not engage in an advertising or public relations campaign
regarding the agency unless the agency has specific statutory authority to do so. For
this purpose, “advertising or public relations campaign” would include any activity
the objective of which is to provide the agency with statewide or nationwide
recognition or exposure.
Source for this subsection: Op. Tex. Att’y Gen. No. JC-350 (2001).

State of Texas Purchase Policies and Procedures Guide July 2004 51


Chapter 2 – Restricted Expenditures

C. Implied statutory authority to inform the public about its functions


A state agency has implied statutory authority, as an incident to its regulatory
functions, to inform the public about those functions. The agency may enter into
contracts for goods and services as necessary to exercise this authority. Unless the
agency has specific statutory authority to do so, the agency may not fund a nonprofit
corporation to inform the public about the agency’s regulatory functions.
Sources for this subsection: Op. Tex. Att’y Gen. No. H-1272 (1978).
See Op. Tex. Att’y Gen. No. M-1138 (1972) (upholding a state agency’s purchase of
bumper stickers as part of the agency’s environmental education program).

§�2.054 Requests for proposals or specifications, payments to


persons who helped prepare
In this section:
• “Person” includes an individual, a corporation, an organization, a government or
governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or the
Texas Judicial Council; or
– a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior
college.
A state agency may not accept a bid or award a contract that includes proposed
financial participation by a person who received compensation from the agency to
participate in preparing the specifications or request for proposals on which the bid or
contract is based.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§§�2151.002(2), 2155.004(a) (Vernon Supp. 2004); Code Construction Act, TEX. GOV’T
CODE ANN. §�311.005(2) (Vernon 1998).

§�2.056 Research projects


A. General Provisions
A state agency may not expend any funds appropriated by the General Appropriations Act
(GAA) for research projects of any type until the agency has adopted and filed with the
Legislative Budget Board a policy that clearly establishes and protects the property rights
of the state concerning any patentable product, process, or idea that might result from the
research.
To avoid duplication of effort, a state agency other than an institution of higher education
may not expend any funds appropriated by the GAA to conduct or support policy research
on subjects within the statutory jurisdiction of another agency without providing prior
written notification to the latter agency concerning the researching agency’s work plan and
coordination of resources.

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Chapter 2 – Restricted Expenditures

The preceding two paragraphs do not apply to an entity or appropriation in Article X of


the GAA.
Sources: Article IX, Section 6.25 and Article X, Section 2(a) of the General
Appropriations Act.

§�2.058 State-federal relations


A state agency may not expend funds appropriated by the General Appropriations Act
(GAA) to carry on functions for which funds have been appropriated to the Office of
State-Federal Relations (OSFR) except when a valid interagency contract has been
entered into between the agency and OSFR.
Before traveling to Washington, D.C., personnel of a state agency shall inform OSFR
about the timing and purpose of the trip and provide the name of a person who may be
contacted for additional information.
The preceding two paragraphs do not apply to an entity or appropriation in Article X
of the GAA.
Sources: Article IX, Section 6.21 and Article X, Section 2(a) of the General
Appropriations Act. See, generally, Interagency Cooperation Act, TEX.
GOV’T CODE ANN. §§�771.001-771.010 (Vernon 1994 & Supp. 2004).

§�2.060 State money or property, giving away or misusing


A. General discussion
Various sections of the Texas constitution prohibit the giving away of the state’s
money or property or the use of state money or property for private purposes.
In addition, a Texas statute requires that state property be used only for state
purposes. A person may not entrust state property to a state officer or employee or
to any other person if the property is not to be used for those purposes.
When the Comptroller considers necessary, the Comptroller will ask a state agency
to show how a proposed expenditure does not violate the prohibitions and
requirements described in the preceding two paragraphs.
Sources for this subsection: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI,
§�6(a); TEX. GOV’T CODE ANN. §�2203.004 (Vernon 2000). Byrd v. City of Dallas,
118 Tex. 28, 6 S.W.2d 738, 740 (1928). See Tex. Att’y Gen. LO-96-136 (1996)
(concluding that the analogous constitutional provision that prohibits
counties from giving away county money or things of value has no
de minimis exception).

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Chapter 2 – Restricted Expenditures

B. Criminal law
In this subsection:
• “Misuse” means to deal with property contrary to:
– an agreement under which the public servant holds the property; or
– a contract of employment or oath of office of a public servant; or
– a law, including provisions of the General Appropriations Act specifically
relating to government property, that prescribes the manner of custody or
disposition of the property; or
– a limited purpose for which the property is delivered or received.
• “Public servant” means a person elected, selected, appointed, employed, or
otherwise designated as one of the following, even if the person has not yet
qualified for office or assumed the person’s duties:
– an officer, employee, or agent of government; or
– a juror or grand juror; or
– an arbitrator, referee, or other person who is authorized by law or private
written agreement to hear or determine a cause or controversy; or
– an attorney at law or notary public when participating in the performance of a
governmental function; or
– a candidate for nomination or election to public office; or
– a person who is performing a governmental function under a claim of right
although the person is not legally qualified to do so.
Criminal penalties are possible when a public servant intentionally or knowingly

misuses government property, services, personnel, or any other thing of value

belonging to the government that has come into the public servant’s custody or

possession because of the public servant’s office or employment.

Sources for this subsection: TEX. PEN. CODE ANN. §§�1.07(41), 39.01(2), 39.02(a)(2),
(c) (Vernon 2003).

§�2.062 Telephone emergency service fees and surcharge


A. Fees and surcharge imposed under Chapter 771, Health and Safety Code
A state agency may not pay:
• the 9-1-1 emergency service fee imposed on local exchange access lines or
equivalent local exchange access lines under TEX. HEALTH & SAFETY CODE
ANN. §�771.071 (Vernon 2003); or
• the 9-1-1 emergency service fee imposed on wireless telecommunications
connections under TEX. HEALTH & SAFETY CODE ANN. §�771.0711 (Vernon
2003); or
• the 9-1-1 equalization surcharge imposed on intrastate long-distance services
under TEX. HEALTH & SAFETY CODE ANN. §�771.072 (Vernon 2003).
State law prohibits the preceding fees and surcharge from being imposed on or

collected from the state.

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Chapter 2 – Restricted Expenditures

Some telecommunications companies separately state a “poison control surcharge” on the


invoices that they send to state agencies. This surcharge is a misnomer because it is
merely a portion of the 9-1-1 equalization surcharge imposed under Section 771.072,
Health & Safety Code. The poison control surcharge may not be paid by a state agency
because, like its parent 9-1-1 equalization surcharge, it may not be imposed on or
collected from the state.
Sources for this subsection: TEX. HEALTH & SAFETY CODE ANN.
§§�771.072(e), 771.074 (Vernon 2003). See TEX. HEALTH & SAFETY CODE ANN.
§�777.009(a) (Vernon 2003) (grants awarded by the Commission on State
Emergency Communications and the Department of State Health Services to
poison control centers); 1 TEX. ADMIN. CODE §§�255.1, 255.7(a) (2003).

B. Fees imposed under Chapter 772, Health and Safety Code


1. 9-1-1 Emergency Number Act
This subdivision applies only to an emergency communication district that was
created before January 1, 1988, and that is located in a county with a population of
more than 3.3 million and in certain areas adjacent to that county.
The district may impose a 9-1-1 emergency service fee on each person that is
provided local exchange access lines, or the equivalent, in the district. A state
agency may not pay the fee, however, because state law prohibits the fee from
being imposed on or collected from the state.
Sources for this subdivision: TEX. HEALTH & SAFETY CODE ANN. §�771.074 (Vernon
2003); 9-1-1 Emergency Number Act, TEX. HEALTH & SAFETY CODE ANN. §§�772.104,
772.105, 772.114(a) (Vernon 2003). See TEX. HEALTH & SAFETY CODE ANN.
§�772.001(17) (Vernon 2003) (definition of “service user”).

2. Emergency Communication District Act


This subdivision applies only to an emergency communication district that was created
before January 1, 1988, and that is located in a county with a population of more than
860,000.
The district may impose a 9-1-1 emergency service fee on each person that is
provided local exchange access lines, or the equivalent, in the district. A state
agency may not pay the fee, however, because state law prohibits the fee from
being imposed on or collected from the state.
Sources for this subdivision: TEX. HEALTH & SAFETY CODE ANN. §�771.074
(Vernon 2003); Emergency Communication District Act, TEX. HEALTH & SAFETY CODE
ANN. §§�772.204, 772.214(a) (Vernon 2003). See TEX. HEALTH & SAFETY CODE ANN.
§�772.001(17) (Vernon 2003) (definition of “service user”).

3. Emergency Telephone Number Act

This subdivision applies only to:

• an emergency communication district that was created before January�1, 1988,


and that is located in a county with a population of more than 20,000 or in a
group of two or more contiguous counties each with a population of 20,000 or
more; or
• an emergency communication district consisting of a public agency or group of
public agencies that withdraws from participation in a regional plan under
TEX. HEALTH & SAFETY CODE ANN. §�771.058(d) (Vernon 2003).

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Chapter 2 – Restricted Expenditures

The district may impose a 9-1-1 emergency service fee on each person that is
provided local exchange access lines, or the equivalent, in the district. A state
agency may not pay the fee, however, because state law prohibits the fee from
being imposed on or collected from the state.
Sources for this subdivision: TEX. HEALTH & SAFETY CODE ANN. §�771.074
(Vernon 2003); Emergency Telephone Number Act, TEX. HEALTH & SAFETY CODE
ANN. §§�772.304(a), §�772.305, 772.314(a) (Vernon 2003). See TEX. HEALTH & SAFETY
CODE ANN. §�772.001(17) (Vernon 2003) (definition of “service user”).

4. Service fees imposed in certain unincorporated areas


This subdivision applies only to a county having a population of more than 1.5
million in which an emergency communication district has not been created
under the 9-1-1 Emergency Number Act, which is discussed in Subdivision�(1) of
this subsection.
A county may impose a service fee on local exchange telephone service customers in
the unincorporated areas of the county that receive 9-1-1 service. A state agency may
not pay the fee, however, because state law prohibits the fee from being imposed on or
collected from the state.
Sources for this subdivision: TEX. HEALTH & SAFETY CODE ANN. §§�771.074,
§�772.402, 772.403(a) (Vernon 2003).

C. Fees charged by a home-rule municipality


A state agency may not pay a fee charged by a home-rule municipality. State law

prohibits the fee from being imposed on or collected from the state.

Source for this subsection: TEX. HEALTH & SAFETY CODE ANN. §�771.074
(Vernon 2003).

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Chapter 3 – Expenditures Relating to
State Officers and Employees

§�3.002 Awards to employees


In this section:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except that a public
junior college is excluded from the meaning of the term.
A state agency may use appropriated money to purchase service awards, safety awards,
or other similar awards to be presented to its employees for professional achievement or
outstanding service under policies adopted by the agency. A member of an advisory board
or other advisory or consultative body is not an employee for purposes of this section.
There are two limitations on a state agency’s authority to give awards to its employees.
• The awards may be given only to employees who are still employed by the agency.
• The awards may not cost more than $100 for an individual employee.
A savings bond that costs not more than $100 may be purchased as an award for an
employee even though at maturity the bond will be worth more than that amount.
The restrictions described in this section do not affect the authority of an institution of
higher education to collect, account for, and control local funds and institutional funds
in the manner authorized by Subchapter A of Chapter 51, Education Code.
The restrictions described in this section apply only to an expenditure made after
August 31, 1999.
Sources: TEX. GOV’T CODE ANN. §�2113.001, §�2113.201(b) (Vernon Supp. 2006);
Act of May 29, 1999, 76th Leg., R.S., ch. 1498, §�9, 1999 Tex. Gen. Laws 5153, 5163;
Tex. Att’y Gen. LO-96-132 (1996); Op. Tex. Att’y Gen. No. WW-790 (1960).
See, generally, Tex. Att’y Gen. LO-89-87 (1989), LO-88-123 (1988).
Cross reference: Chapter 6: Volunteer programs and awards.

USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation that shows whether the award
was provided to a state employee who was employed by the agency at the time the
employee received the award. Upon request, the documentation must be made available
to the Comptroller during a pre-payment or a post-payment audit.
2. Comptroller object code 7211 must be used.

State of Texas Purchase Policies and Procedures Guide February 2008 57


Chapter 3 – Expenditures Relating to State Officers and Employees

§�3.004 Bonds, surety


A. State Employee Bonding Act
1. Definitions

In this subsection:

• “Blanket position bond” means a faithful performance blanket position bond


or an honesty blanket position bond. 18
• “Bond” means an agreement obligating an insurance company, as surety, to
pay within certain limits a loss caused by a:
– dishonest act of an officer or employee of a state agency; or
– failure of an officer or employee of a state agency to faithfully perform a duty
of the officer’s or employee’s office or position.19
• “Faithful performance blanket position bond” means a bond that covers
all positions in a state agency and is conditioned on the faithful performance of
the officers’ and employees’ duties.20
• “Honesty blanket position bond” means a bond that covers all positions in a
state agency for a specific amount for each position.21
• “Position schedule honesty bond” means a bond that covers, for a specific
amount for each position, the honesty of an employee of a state agency who
occupies and performs the duties of a position listed in a schedule attached to the
bond.22
• “Specific excess indemnity” means additional bond coverage that exceeds the
coverage specified in a blanket position bond or position schedule honesty bond.23
• “State agency” means a state department, commission, board, institution,
court, or institution of higher education.
• “Surety bond” means any bond, including a bond for a notary public under
TEX. GOV’T CODE ANN. §�406.010 (Vernon Supp. 2004), that obligates a surety
to pay within certain limits a loss caused by a:
– dishonest act of an officer or employee of a state agency; or
– failure of an officer or employee of a state agency to faithfully perform a duty
of the officer’s or employee’s office or position. 24

Sources for this subdivision: State Employee Bonding Act, TEX. GOV’T CODE ANN.
§�653.003 (Vernon 1994); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�1.11,
2001 Tex. Gen. Laws 2226, 2231-2 (codified effective September 1, 2002, as an
amendment to TEX. GOV’T CODE ANN. §�653.003); Section 3.01(a) of Chapter 1017,
2001 Tex. Gen. Laws at 2233.

18
This definition expired September 1, 2002, because the terms used in the definition (faithful performance

blanket position bond and honesty blanket position bond) expired on that date. Act of May 27, 2001,

77th Leg., R.S., ch. 1017, §§ 1.11, 3.01(a), 2001 Tex. Gen. Laws 2226, 2231-3.

19
This definition expired September 1, 2002. Id.
20
This definition expired September 1, 2002. Id.
21
This definition expired September 1, 2002. Id.
22
This definition expired September 1, 2002. Id.
23
This definition expired September 1, 2002. Id.
24
This definition took effect September 1, 2002. Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §§ 1.11, 3.01(a),

2001 Tex. Gen. Laws 2226, 2231-3.

58 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 3 – Expenditures Relating to State Officers and Employees

2. Discussion of the law that was in effect through August 31, 2002
This subdivision’s discussion of the law that was in effect through
August 31, 2002, applies to payments made under an agreement to purchase a
surety bond entered into by a state agency before September 1, 2002, even if
the payments are made on or after that date.25
The intent of the Legislature in enacting the State Employee Bonding Act
(the “Act”) is to prescribe:
• uniform standards for the bonding of officers and employees of state
agencies to provide protection against loss; and
• a uniform bond to cover those officers and employees.
The Act authorizes a state agency to purchase certain kinds of bonds. Any bond
purchased under the Act must be on a form approved by the commissioner of
insurance. The bond may be purchased only from an insurance company
authorized to act as surety in this state.
The head of a state agency may not contract for coverage of the same office or
position under more than one type of bond, other than for specific excess indemnity.
Any bond purchased under the Act must be written in triplicate originals. One
original must be filed with the secretary of state and another original must be
filed with the Comptroller. The remaining original must be kept by the agency
covered by the bond.
The state, as beneficiary, shall pay the premiums on bonds purchased under the
Act from:
• money of a state agency that is outside the state treasury and that may be used
by the agency for operational expenses of the agency; or
• money appropriated by the Legislature for that purpose; or
• money appropriated by the Legislature to a state agency that may be used for:
– administration or administration expenses; or
– operation expense; or
– general operation expense; or
– maintenance; or
– miscellaneous expense; or
– contingencies.
The Act repealed all laws in effect in 1959 that authorized or required a state
agency to purchase faithful performance bonds, faithful performance blanket
position bonds, position schedule honesty bonds, or honesty blanket position bonds.
a. Position schedule honesty bonds
The head of a state agency may contract for a position schedule honesty
bond if:
• the bond will not cover all the agency’s officers and employees; and
• fewer than eleven of the agency’s offices or positions will be covered by
the bond.

25
The definitions of “surety bond” and “state agency” in subdivision (1) of this subsection do not apply
directly to this paragraph.

State of Texas Purchase Policies and Procedures Guide July 2004 59


Chapter 3 – Expenditures Relating to State Officers and Employees

b. Blanket position bonds


The head of a state agency may contract for a blanket position bond when
all the officers or employees of the agency will be covered by the bond and
the agency has at least three offices or positions. The bond may not
provide more than $10,000 in coverage for any particular officer or
employee.
The Comptroller may contract for a faithful performance blanket position
bond.
c. Specific excess indemnity coverage
The head of a state agency may contract for specific excess indemnity
coverage in addition to a blanket position bond.
The Comptroller may contract for specific excess indemnity coverage in addition
to an honesty blanket position bond or to a position schedule honesty bond.
d. Limitation on coverage amount
The head of a state agency shall determine the necessary amount of bond
coverage for the agency within the maximum bond coverage limit
specified in the next paragraph.
The maximum bond coverage on a state officer or employee, including
specific excess indemnity coverage, may not exceed $10,000 unless the
state auditor recommends and approves specific excess indemnity
coverage of more than $10,000 as necessary to protect the state.

Sources for this subdivision: Act of May 4, 1993, 73rd Leg., R.S., ch. 268,
§�1, 1993 Tex. Gen. Laws 583, 688-90 (formerly codified at TEX. GOV’T CODE ANN.
§§�653.002, 653.004-653.005), amended by Act of May 27, 2001, 77th Leg., R.S.,
ch. 1017, §§�1.10, 1.12-1.13, 2001 Tex. Gen. Laws 2226, 2231-2 (effective
September 1, 2002); State Employee Bonding Act, TEX. GOV’T CODE ANN.
§§�653.001, 653.006-653.008 (Vernon 1994), §�653.009 (Vernon Supp. 2004),
§�653.011 (Vernon 1994); TEX. INS. CODE ANN. §�31.007 (Vernon 2002)
(a reference in law to the State Board of Insurance often means the
commissioner of insurance); Act of May 27, 2001, 77th Leg., R.S., ch. 1017,
§�3.01(e), 2001 Gen. Laws 2226, 2233; State Employee Bonding Act, 56th Leg.,
R.S., ch. 383, §�8, 1959 Tex. Gen. Laws 855, 857. See Act of May 28, 1993,
73rd Leg., R.S., ch. 685, §�1.23(b)-(d), 1993 Tex. Gen. Laws 2559, 2572-2573
(transferring certain authority from the State Board of Insurance to the
commissioner of insurance).

3. Discussion of the law that took effect September 1, 2002


This subdivision discusses the law that took effect September 1, 2002. This
discussion applies to payments made only under an agreement to purchase a
surety bond entered into by a state agency on or after that date.26
The intent of the Legislature in enacting the State Employee Bonding Act (the “Act”)
is to limit the purchase of surety bonds by state agencies so that the state, to the
greatest extent practicable, is self-insured for that purpose. The Act does not affect
the purchase by a state agency of any form of insurance other than a surety bond.

26
The definitions of “surety bond” and “state agency” in subdivision (1) of this subsection do not apply directly to this
paragraph.

60 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 3 – Expenditures Relating to State Officers and Employees

Notwithstanding any law that authorizes or requires a state officer or employee


to obtain a surety bond, a state agency may purchase a surety bond for a state
officer or employee only if:
• required by the constitution of the state or by federal law or regulation; or
• required by court order; or
• approved by the State Office of Risk Management (SORM).
SORM may approve the purchase of a surety bond if:
• SORM finds that the surety bond is warranted by a substantial or unusual risk
of loss; or
• SORM otherwise determines that the purchase of a surety bond is necessary to
protect the interest of the state.
Any bond purchased under the Act must be on a form approved by the
commissioner of insurance. The bond may be purchased only from an insurance
company authorized to act as surety in this state.
Any bond purchased under the Act must be written in triplicate originals. One
original must be filed with the secretary of state and another original must be
filed with the comptroller. The remaining original must be kept by the agency
covered by the bond.
The state, as beneficiary, shall pay the premiums on bonds purchased under the Act
from:
• money of a state agency that is outside the state treasury and that may be used
by the agency for operational expenses of the agency; or
• money appropriated by the Legislature for that purpose; or
• money appropriated by the Legislature to a state agency that may be used for:
– administration or administration expenses; or

– operation expense; or

– general operation expense; or


– maintenance; or
– miscellaneous expense; or
– contingencies.
SORM shall determine the necessary scope and amount of bond coverage for a
state agency unless the amount is determined by the constitution of this state,
federal law or regulation, or court order.
The Act repealed all laws in effect in 1959 that authorized or required a state agency
to purchase faithful performance bonds, faithful performance blanket position bonds,
position schedule honesty bonds, or honesty blanket position bonds.
Sources for this subdivision: State Employee Bonding Act, TEX. GOV’T CODE ANN.
§§�653.002, 653.004-653.005 (Vernon Supp. 2004), §§�653.007-653.008 (Vernon 1994),
§�653.009 (Vernon Supp. 2004); TEX. INS. CODE ANN. §�31.007 (Vernon 2002)
(a reference in law to the State Board of Insurance often means the
commissioner of insurance); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(e)
2001 Tex. Gen. Laws 2227, 2233; State Employee Bonding Act, 56th Leg., R.S.,
ch. 383, §�8, 1959 Tex. Gen. Laws 855, 857. See Act of May 28, 1993, 73rd Leg., R.S.,
ch. 685, §�1.23(b)-(d), 1993 Tex. Gen. Laws 2559, 2572-2573 (transferring certain
authority from the State Board of Insurance to the commissioner of insurance).

State of Texas Purchase Policies and Procedures Guide July 2004 61


Chapter 3 – Expenditures Relating to State Officers and Employees

B. Report about bonded employees


In this subsection, “state agency” has the meaning assigned by TEX. GOV’T CODE
ANN. §�403.013(a) (Vernon Supp. 2004).
The annual report submitted by a state agency to the governor, the Comptroller, the
state auditor, the Legislative Reference Library, and the Legislative Budget Board
must include a list of all bonded employees showing the name, job title, amount of
the surety bond, and name of the surety company for each employee.
Sources for this subsection: TEX. GOV’T CODE ANN. §�2101.001 (Vernon 2000),
§�2101.0115(a), (c)(1) (Vernon Supp. 2004).

USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation that provides the following
information: the type of bond purchased, the value of the bond, the name of the person
covered, and the position held by that person. Upon request, the agency must make this
documentation available to the Comptroller during a pre-payment or a post-payment audit.
2. Comptroller object code 7205 must be used. If approval is required by the state auditor or the
State Office of Risk Management, however, Comptroller object code 7217 must be used.

§�3.006 Employee assistance programs


A state agency may expend public funds for an employee assistance program only if:
• the program is constitutional; and
• the agency has specific or implied statutory authority to sponsor the program.

A. Constitutionality
An employee assistance program is constitutional if it:
• constitutes compensation to the employees who are eligible to participate in
the program; or
• the program benefits the state.
Only an institution of higher education may justify the constitutionality of an employee
assistance program by saying that the program constitutes compensation to state
employees. Institutions of higher education have substantial discretion to determine the
amount and types of compensation for their employees. Other state agencies are limited
to the amount and types of compensation specifically provided by law. No law specifically
authorizes any state agency to sponsor an employee assistance program as part of
employee compensation.
Any state agency may justify the constitutionality of an employee assistance program as
benefiting the state if:
• the agency determines that the program would serve a valid governmental
purpose; and
• the agency determines that the state will receive adequate consideration for
the expenditures made under the program; and
• the agency implements controls to ensure that the valid governmental purpose
is achieved.
Sources for this subsection: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI,
§�6(a). But see Tex. Att’y Gen. ORD-660 (1999) (questioning whether the
adequate consideration test merely duplicates the public purpose test).

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Chapter 3 – Expenditures Relating to State Officers and Employees

B. Statutory authority
1. Specific statutory authority
No state law specifically authorizes any state agency to sponsor an employee
assistance program.
Nevertheless, the specific authorization in the State Employees Health
Fitness and Education Act of 1983 for state agencies to sponsor health fitness
programs would authorize certain features of an employee assistance
program. For example, if an employee assistance program provides
counseling, physical activities, educational programs, or anything else that
promotes the physical and mental well-being of state administrators and
employees, the Act probably would provide authority for the program. In this
paragraph, “state agency” means a department, institution, commission, or
other agency of the state.

2. Implied statutory authority


A state agency has implied statutory authority to sponsor an employee
assistance program only if the sponsorship is necessary for the agency to
fulfill its specific statutory duties. The Comptroller will accept a state
agency’s reasonable argument that it has implied statutory authority to
sponsor a program.
Sources for this subsection: State Employees Health Fitness and Education
Act of 1983, TEX. GOV’T CODE ANN. §§�664.001-664.006 (Vernon 1994).
Cross references for this section: Chapter 3: Health fitness activities,
education, and programs; Chapter 6: Peer assistance programs.

USAS Purchase Voucher Requirements

1. A state agency must retain in its files documentation that shows the statutory
authority for its employee assistance program, how the program is constitutional,
and the services provided under the program. Upon request, the documentation
must be made available to the Comptroller during a pre-payment or a
post-payment audit.

2. If the State Employees Health Fitness and Education Act of 1983 is cited as the
statutory authority for an employee assistance program, then a state agency must
retain in its files a copy of the written approvals of the program from the Department
of State Health Services and the governor or the governor’s designee. Upon request,
the agency must make the copy available to the Comptroller during a pre-payment or
a post-payment audit.

3. Comptroller object code 7253 must be used.

State of Texas Purchase Policies and Procedures Guide July 2004 63


Chapter 3 – Expenditures Relating to State Officers and Employees

§�3.008 Employment discrimination


A. Definitions
In this section:
• “Employee” means an individual employed by an employer, including an
individual subject to the civil service laws of this state, except that the term
does not include an individual elected to public office in this state.
• “Employer” means an individual elected to public office in this state, a state
agency, or a state instrumentality.
• “State agency” means:
– a board, commission, committee, council, department, institution, office, or
agency in the executive branch of state government having statewide
jurisdiction; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, the
State Bar of Texas, or another judicial agency having statewide jurisdiction;
or
– an institution of higher education as defined by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004).
Source for this subsection: TEX. LAB. CODE ANN. §�21.002(7), (8)(C)-(D), (14)
(Vernon Supp. 2004).

B. Training after employment discrimination complaints filed


The requirements described in this subsection apply only to a state agency that

receives at least three complaints of employment discrimination in a fiscal year

(other than complaints determined to be without merit).

A state agency shall provide a comprehensive equal employment opportunity


training program to appropriate supervisory and managerial employees. The
training must be provided by the Texas Workforce Commission Civil Rights Division
(TWCCRD) or another entity or person approved by TWCCRD, including a state
agency. The agency providing the program shall either pay the cost of attending the
program or reimburse TWCCRD or the agency providing the program through an
interagency contract.
Source for this subsection: TEX. LAB. CODE ANN. §�21.556(a)-(b), (e)
(Vernon Supp. 2004).

C. Routine training
Each state agency shall provide to employees of the agency an employment
discrimination training program that complies with the requirements described in
this subsection.
The program must provide the employee with information regarding the agency’s
policies and procedures relating to employment discrimination, including
employment discrimination involving sexual harassment.
Each employee shall attend the program not later than the 30th day after the date
the employee is hired by the agency and shall attend supplemental training every
two years.
Source for this subsection: TEX. LAB. CODE ANN. §�21.010(a)-(c)
(Vernon Supp. 2004).

64 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 3 – Expenditures Relating to State Officers and Employees

§�3.010 Flowers, floral arrangements, and plants


A state agency may not purchase flowers, floral arrangements, or plants for a state
officer or employee or for the friends or family of a state officer or employee.
Sources: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI, §�6; Op. Tex. Att’y Gen.
Nos. JM-391 (1985), O-6481 (1939).

§�3.012 Funeral expenses


A state agency may not pay the funeral expenses of a deceased state officer or employee
unless the agency has specific statutory authority to do so.
The Government Code authorizes a state agency to spend appropriated funds to pay for
the funeral expenses of an employee under the jurisdiction and control of the agency if
the employee is killed while performing a necessary governmental function assigned to
the employee. A state agency may not make a payment, however, unless the agency has
a specific appropriation for that purpose.
Sources: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI, §�6; TEX. GOV’T CODE
ANN. §�659.061 (Vernon 1994); Op. Tex. Att’y Gen. No. O-714 (1939). See Rider 17
in the appropriations to the Department of Public Safety in the General
Appropriations Act.

USAS Purchase Voucher Requirements

A state agency must retain in its files documentation that provides a copy of the invoice
from the vendor providing the service, along with proof of the specific statutory authority
and the specific appropriation to pay for the funeral expenses of a deceased officer or
employee. The agency also must retain the invoices for the expenses. The agency must make
the documentation or invoices available to the Comptroller during a pre-payment or a
post-payment audit.

§�3.014 Grievants, representatives of


The General Appropriations Act (GAA) says that none of the funds appropriated by the
GAA may be used to pay expenses for salary, travel, or per diem of a public employee
who represents a grievant in the presentation of grievances concerning wages, hours of
work, or conditions of work. A state employee may, however, take annual leave,
compensatory leave, or leave without pay to engage in this activity, subject to any
procedures established by the employee’s agency of employment.
The preceding paragraph does not apply to an entity or appropriation in Article X of the GAA.
Sources: Article IX, Section 6.25 and Article X, Section 2(a) of the General
Appropriations Act.

§�3.016 Health fitness activities, education, and programs


Subject to the limitations discussed below, the State Employees Health Fitness and
Education Act of 1983 specifically authorizes a state agency to use available public funds for
health fitness education and activities and other costs related to health fitness. The Act also
specifically authorizes a state agency to use available facilities for health fitness programs.

State of Texas Purchase Policies and Procedures Guide July 2004 65


Chapter 3 – Expenditures Relating to State Officers and Employees

A state agency may not implement a health fitness program unless the agency has
developed a plan. The plan must address the purpose, nature, duration, costs,
participants in, and expected results of the program. The Department of State Health
Services must provide written approval of the plan before the agency may implement
the program. The department’s approval is required regardless of whether the program
requires the expenditure of public funds. If the program requires the expenditure of
public funds, then the agency may not implement the program until the governor or the
governor’s designee has provided written approval of the plan. The governor’s designee
currently is the Governor’s Office of Budget and Planning.
Sources: State Employees Health Fitness and Education Act of 1983, TEX.
GOV’T CODE ANN. §§�664.001-664.006 (Vernon 1994); Tex. Gov. Exec. Order No.
GWB-00-3, 25 TEX. REG. 2723 (2000). See 25 TEX. ADMIN. CODE §§�1.61-1.62 (2003).

USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation that cites the statutory authority
for the agency’s health fitness program and provides a clear and complete description
of the services provided under the program. Upon request, the documentation must be
made available to the Comptroller during a pre-payment or a post-payment audit.
2. A state agency that cites the State Employees Health Fitness and Education Act of 1983
as the statutory authority for an employee assistance program must retain in its files a
copy of the written approvals of the program from the Department of State Health
Services and the governor or the governor’s designee.

§�3.018 Incidental benefits to state officers or employees,


expenditures that provide
An expenditure by a state agency that has the potential to benefit a state officer or
employee in a personal way is not necessarily unconstitutional. If the expenditure serves
a valid governmental purpose and the state receives adequate consideration for the
expenditure, then it may be made even though it personally benefits the officer or
employee. The state agency making the expenditure must implement controls to ensure
that the valid governmental purpose is achieved.
It is the responsibility of the state agency making an expenditure to determine whether
the expenditure satisfies the preceding requirements. This determination is subject to
judicial review.
Sources: Barrington v. Cokinos, 161 Tex. 122, 338 S.W.2d 133, 140, 142 (1960);
State v. City of Austin, 160 Tex. 348, 331 S.W.2d 737, 742 (1960); Byrd v. City of
Dallas, 118 Tex. 28, 6 S.W.2d 738, 740 (1928); Graves v. Morales, 923 S.W.2d 754,
757 (Tex. App.—Austin 1996, writ denied); Brazoria County v. Perry, 537
S.W.2d 89, 91 (Tex. Civ. App.—Houston [1st Dist.] 1976, no writ); Harris County
v. Dowlearn, 489 S.W.2d 140, 144 (Tex. Civ. App.—Houston [14th Dist.] 1972,
writ ref’d n.r.e.); City of Beaumont v. Priddie, 65 S.W.2d 434, 440
(Tex. Civ. App.—Austin 1933) judgment of lower courts reversed and cause
dismissed as moot, Texas & N.O.R. Co. v. Priddie, 127 Tex. 629,
95 S.W.2d 1290 (1936). But see Tex. Att’y Gen. ORD-660 (1999) (questioning
whether the adequate consideration test merely duplicates the public
purpose test). See also Op. Tex. Att’y Gen. Nos. GA-78 (2003), GA-77 (2003),
JC-244 (2000), JC-146 (1999) (both opinions addressing the constitutionality of
a state expenditure that incidentally benefits a private interest).

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Chapter 3 – Expenditures Relating to State Officers and Employees

§�3.020 Licensing fees and occupation taxes


A state agency may pay a licensing fee or an occupation tax for an officer or employee of
the agency if:
• the agency determines that the payment would be directly and substantially
related to the agency’s governmental functions; and
• the agency determines that the agency would receive an adequate return for
the payment.
A state agency may consider the following factors, among others, when determining
whether the agency would be receiving an adequate return:
• whether the employee in question works full-time or part-time; and
• whether the employee uses the employee’s professional credentials in working
outside the confines of the employee’s state employment; and
• whether the professional credentials are required or merely useful in
performing the employee’s state duties.
None of the preceding factors, when considered alone, is determinative.
A state agency may pay a licensing fee or an occupation tax for one employee or group of
employees and not others if the agency has a rational basis for distinguishing among
the employees.
A state agency is not required to pay a licensing fee or an occupation tax for an
employee even though the agency may pay the fee or tax.
Sources: Graves v. Morales, 923 S.W.2d 754, 757 (Tex. App.—Austin 1996,
writ denied) (discusses only occupation taxes); Op. Tex. Att’y Gen.
No. JM-1063 (1989); Tex. Att’y Gen. LO-88-79 (1988).

USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation that shows:
a. how the payment is directly and substantially related to the state agency’s
governmental functions; and
b. how the state agency is receiving an adequate return on the payment.
2. Upon request, this documentation must be made available to the Comptroller during a
pre-payment or a post-payment audit.
3. Comptroller object code 7210 must be used.

State of Texas Purchase Policies and Procedures Guide July 2004 67


Chapter 3 – Expenditures Relating to State Officers and Employees

§�3.022 Meals for certain employees, volunteers, students,


and interns
A. General discussion
In this section, “state agency” means a state agency that provides
institution-based services. The term includes27 the Texas Department of Criminal
Justice, the Department of Aging and Disability Services, the Texas Youth
Commission, the Texas School for the Blind and Visually Impaired, and the Texas
School for the Deaf.
The General Appropriations Act (GAA) says that a state agency may provide meals
to employees working in institutional settings. The agency may charge a fee at costs
established by the agency that does not exceed the direct and indirect costs of
preparation.
Source for this subsection: Article IX, Section 11.01 of the General
Appropriations Act.

B. Department of Aging and Disability Services


The General Appropriations Act says that the Department of Aging and Disability
Services may provide free meals to employees who are required to eat meals with clients.
Source for this subsection: Rider 42 in the appropriations to the Department
of Mental Health and Mental Retardation in the General Appropriations Act.

C. Texas Youth Commission


The GAA says that any facility under the jurisdiction of the Texas Youth Commission
(TYC) may provide free meals for food service personnel or volunteer workers. In
addition, any facility under TYC’s jurisdiction may furnish meals in exchange for
services rendered by interns, chaplains in training, and student nurses.
Source for this subsection: Rider 10(b) in the appropriations to the Youth
Commission in the General Appropriations Act.

D. Texas Department of Criminal Justice


The GAA says the following. An employee of the Texas Department of Criminal Justice
(TDCJ) who is assigned to work inside a correctional facility may receive not more than
two free meals per shift. An employee of TDCJ who resides in an employee dormitory
may receive not more than three free meals per day. The funds appropriated by the
GAA may be used to provide meals to other employees of TDCJ only if TDCJ charges at
least $1 per meal.
Source for this subsection: Rider 10 in the appropriations to the Department
of Criminal Justice in the General Appropriations Act.

USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation that shows the statutory
authority for providing meals to the individuals listed in this section. Upon request,
this documentation must be made available to the Comptroller during a
pre-payment or a post-payment audit.
2. Comptroller object code 7315 must be used.

27
The definition of “include” in Section 1.002 does not apply here.

68 July 2004 State of Texas Purchase Policies and Procedures Guide


Chapter 3 – Expenditures Relating to State Officers and Employees

§�3.024 Moving expenses


A. Definitions
In this section:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except that a public junior
college is excluded from the meaning of the term.
Source for this subsection: TEX. GOV’T CODE ANN. §�2113.001 (Vernon Supp. 2004).

B. General discussion
This subsection does not apply to a state employee if Subsection (C) applies to the
employee.
A state agency may use appropriated money to pay the reasonable and necessary
expenses incurred in moving the household property for a state employee if:
• the employee is being reassigned from one designated headquarters to another
designated headquarters of that agency; and
• the agency determines that the best interests of the state will be served by the
reassignment; and
• the distance between the current and future designated headquarters is at
least 25 miles.
A state agency may pay or reimburse the following costs if the agency determines
that they are reasonable and necessary and if the costs are otherwise payable:
• loss of a deposit because of the breaking of a lease; and
• lease payments that become immediately due because of the breaking of a lease;
and
• expenses incurred while looking for a new residence.
A transaction fee or sales commission for the sale of real property may not be paid or
reimbursed under the statutes described in this subsection.
A state agency shall use state-owned equipment for the move if the equipment is
available to the agency. If the equipment is unavailable, the agency may pay for the
services of a commercial transportation company or for self-service vehicles to make
the move. The agency may directly pay a commercial transportation company or the
owner of a self-service vehicle instead of reimbursing a state employee.
A state employee who transfers from one designated headquarters to another
because the employee is transferring from one state agency to another state agency
does not qualify for moving expense reimbursements from either agency.

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Chapter 3 – Expenditures Relating to State Officers and Employees

A state employee is entitled to be reimbursed for reasonable and necessary expenses


incurred in traveling by personally owned or leased motor vehicle for a move described
in this subsection. The reimbursement must be paid at the rate provided by the GAA for
business-related travel by a state employee.
A state agency may pay for or reimburse a state employee for storage expenses
incurred if the employee is required to live in state-owned housing and the housing
is not available when the agency requires the move to be made.
Reimbursement or payment of an expense described in this subsection is

conditioned on the submission to the Comptroller of receipts or invoices showing

the applicable charges.

The restrictions described in this subsection do not affect the authority of an

institution of higher education to collect, account for, and control local funds and

institutional funds in the manner authorized by Subchapter A of Chapter 51,

Education Code.

The information provided in this subsection applies only to an expenditure made

after August 31, 1999.

Sources for this subsection: TEX. GOV’T CODE ANN. §�2113.204(a)(1), (b)-(f)
(Vernon 2000); Act of May 29, 1999, 76th Leg., R.S., ch. 1498, §§�9-10,
1999 Tex. Gen. Laws 5153, 5163.
C. State employees of facilities being closed or undergoing a reduction in force
A state agency may use appropriated money to pay the reasonable and necessary
expenses incurred in moving the household property for a state employee if:
• the employee is employed at a facility that is being closed or is undergoing a
reduction in force; and
• the employee accepts a position with the agency at another designated
headquarters that is at least 25 miles from the facility being closed or
undergoing a reduction in force.
A state agency may pay or reimburse the following costs if the agency determines
that they are reasonable and necessary and if the costs are otherwise payable:
• loss of a deposit because of the breaking of a lease; and
• lease payments that become immediately due because of the breaking of a
lease; and
• expenses incurred while looking for a new residence.
A transaction fee or sales commission for the sale of real property may not be paid or
reimbursed under the statutes described in this subsection.
A state agency shall use state-owned equipment for the move if the equipment is
available to the agency. If the equipment is unavailable, the agency may pay for the
services of a commercial transportation company or for self-service vehicles to make
the move. The agency may directly pay a commercial transportation company or the
owner of a self-service vehicle instead of reimbursing a state employee.
A state employee is entitled to be reimbursed for reasonable and necessary expenses
incurred in traveling by personally owned or leased motor vehicle for a move described
in this subsection. The reimbursement must be paid at the rate provided by the GAA for
business-related travel by a state employee.

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A state agency may pay for or reimburse a state employee for storage expenses
incurred if the employee is required to live in state-owned housing and the housing
is not available when the agency requires the move to be made.
Reimbursement or payment of an expense described in this subsection is

conditioned on the submission to the Comptroller of receipts or invoices showing

the applicable charges.

The restrictions described in this subsection do not affect the authority of an

institution of higher education to collect, account for, and control local funds and

institutional funds in the manner authorized by Subchapter A of Chapter 51,

Education Code.

The information provided in this subsection applies only to an expenditure made

after August 31, 1999.

Sources for this subsection: TEX. GOV’T CODE ANN. §�2113.204(a)(2), (b)-(f)
(Vernon 2000); Act of May 29, 1999, 76th Leg., R.S., ch. 1498, §§�9-10,
1999 Tex. Gen. Laws 5153, 5163.

D. Department of Public Safety of the State of Texas


A rider in the appropriations for the Department of Public Safety of the State of
Texas (DPS) says that DPS may use funds appropriated by the GAA to pay the
reasonable, necessary, and resulting costs of moving the household goods and effects
of a commissioned peace officer if:
• the officer is employed by DPS; and
• the officer is transferred from one designated headquarters to another; and
• DPS determines that the transfer is in the best interests of the state.
The rider says that it applies notwithstanding any other provision of the GAA.
Source for this subsection: Rider 19 in the appropriations to the Department
of Public Safety in the General Appropriations Act.

E. Texas Department of Transportation


The Texas Department of Transportation (TxDOT) may reimburse a transferred
employee for expenses or costs relating to selling existing housing and to purchasing and
financing comparable replacement housing if TxDOT’s executive director determines
that the transfer will enhance TxDOT’s ability to accomplish its goals and missions.
Subject to the limitations discussed in this subsection, an expense or cost relating to
the selling of existing housing or the leasing, purchasing, or financing of comparable
replacement housing is reimbursable if the expense or cost is:
• a commission or fee due to a broker or real estate agent; or
• incurred as a purchaser to obtain a home loan, including loan application fees,
credit report fees, and mortgage points; or
• an origination fee, title insurance, a recording fee, or any other closing cost
required to be paid by the employee; or
• necessary to establish telephone, gas, or electric service, not including any
refundable deposit; or
• a travel expense incurred while looking for a new residence, reimbursed at the
standard mileage rate, for travel to and from the new designated headquarters.

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TxDOT may not under TEX. TRANSP. CODE ANN. §�201.406 (Vernon 1999):
• provide reimbursement for more than five employees per fiscal year; or
• pay a sum of more than $15,000 to any employee; or
• purchase or pay any part of the purchase price of any employee’s home; or
• provide reimbursement for the purchase or financing of a house if the employee
did not own and occupy existing housing at the time of the transfer; or
• provide reimbursement when the distance between the two designated
headquarters of a transferred employee is less than 25 miles.
TxDOT may pay the reasonable, necessary, and resulting costs of moving the

household goods and effects of a transferred employee if:

• TxDOT’s executive director determines that the transfer will enhance TxDOT’s
ability to accomplish its goals and missions; and
• the distance between the two designated headquarters of a transferred
employee is at least 25 miles.
The authority discussed in this subsection is in addition to any authority granted by
other law.
Source for this subsection: TEX. TRANSP. CODE ANN. §�201.406 (Vernon 1999).

F. Texas Water Development Board


If provided by legislative appropriation, the Texas Water Development Board
(TWDB) may pay the cost of transporting and delivering the household goods and
effects of an employee who is transferred by the TWDB executive administrator
from one permanent station to another when, in the judgment of the executive
administrator, the transfer will serve the best interest of the state.
Sources for this subsection: TEX. WATER CODE ANN. §§�6.001(1)-(2), 6.193
(Vernon 2000).

G. Texas Commission on Environmental Quality


If provided by legislative appropriation, the Texas Commission on Environmental
Quality (TCEQ) may pay the cost of transporting and delivering the household goods
and effects of an employee transferred by the TCEQ executive director from one
permanent station to another when, in the judgment of the executive director, the
transfer will serve the best interests of the state.
Sources for this subsection: TEX. WATER CODE ANN. §§�5.001(2)-(3), 5.232
(Vernon 2000); Act of May 28, 2001, 77th Leg., R.S., ch. 965, §�18.01(b),
2001 Tex. Gen. Laws 1933, 1985 (a reference in law to the Texas Natural
Resource Conservation Commission is a reference to the Texas Commission
on Environmental Quality).

USAS Purchase Voucher Requirements

1. When a state agency reimburses a state employee for moving costs, the reimbursement
must be paid on a purchase voucher. For this purpose, “moving costs” does not include
meals, lodging, mileage, or transportation by rented or public conveyance, which must
be paid or reimbursed on a travel voucher.

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2. When a state agency directly pays a commercial transportation company or owner of a


self-service vehicle, the payment must be made on a purchase voucher. Upon request,
official receipts must be made available to the Comptroller during a pre-payment or a
post-payment audit.

3. A state agency must retain in its files documentation that:


a. explains whether a state-owned vehicle was available if a commercial
transportation company or a self-service vehicle was used; and
b. states the designated headquarters from which the employee is being transferred
and the designated headquarters to which the employee is being transferred.

4. Upon request, the agency must make the documentation available to the Comptroller
during a pre-payment or a post-payment audit.

5. Comptroller object code 7071 must be used if a commercial transportation company or


self-service vehicle is used to move the household goods and effects of a state employee.

§�3.026 Notary license fees and bond fees


A state agency may pay a notary license fee or notary bond fee for an employee of the
agency if providing notary services is part of the employee’s official duties.
Source: Op. Tex. Att’y Gen. No. MW-251 (1980).

USAS Purchase Voucher Requirements

1. A state agency must retain in its files documentation that states whether the employee
for whom the notary license fees or notary bond fees are paid provides notary services
as part of the employee’s official duties. Upon request, the agency must make the
documentation available to the Comptroller during a pre-payment or a post-payment
audit.

2. Comptroller object code 7205 must be used for the payment of a notary bond fee.
Comptroller object code 7210 must be used for the payment of a notary license fee.
Comptroller object code 7334 must be used for the purchase of a notary stamp or a
notary record book.

§�3.028 Personal property of employees, damage or destruction of


A. General discussion
A state agency may expend public funds to repair or replace the personal property of
a state employee if:
• the property was damaged or destroyed while the employee was working for
the agency; and
• the damage or destruction was not caused by an intentional or negligent act of
the employee; and

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Chapter 3 – Expenditures Relating to State Officers and Employees

• the damage or destruction is attributable to the agency, either because the


agency caused the damage or destruction or because an employee of the agency
caused the damage or destruction while properly performing the employee’s
duties for the agency; and
• the agency has specific or implied statutory authority for the expenditure; and
• the agency has an appropriation for the expenditure.
Sources for this subsection: TEX. CONST. art. III, §§�44, 51; art. VIII, §§�3, 6; art.
XVI, §�6(a).

B. Section 659.061, Government Code


TEX. GOV’T CODE ANN. §�659.061 (Vernon 1994) says that a state agency may spend
appropriated funds to pay for drugs and medical, hospital, laboratory, and funeral
expenses of an employee under the jurisdiction and control of the agency:
• who is injured or killed while engaged in the performance of a necessary
governmental function assigned to the employee; or
• whose duties require the employee to be exposed to unavoidable dangers
peculiar to the performance of a necessary governmental function.
This authorization is in addition to any other benefits of employment provided by law.
The attorney general has said that Section 659.061 authorizes the legislature to

appropriate funds to pay for the repair or replacement of employees’ personal

property if it is medically-related, such as eyeglasses.

A state agency may not, however, make an expenditure under Section 659.061
unless it has a specific appropriation for that purpose. The following agencies have a
specific appropriation:
• the Department of Aging and Disability Services (limited to $500 per employee
per incident for the repair or replacement of medically prescribed equipment
that is damaged or destroyed in the course and scope of employment); and
• the Department of State Health Services (limited to $500 per employee per
incident for the repair or replacement of medically prescribed equipment that
is damaged or destroyed in the course and scope of employment); and
• the Texas Youth Commission (limited to paying necessary medical expenses,
including the cost of broken eyeglasses and other health aids); and
• the Texas School for the Blind and Visually Impaired (limited to medically
prescribed equipment like eyeglasses and a hearing aid); and
• the Texas School for the Deaf (limited to medically prescribed equipment like
eyeglasses and a hearing aid); and
• the Department of Public Safety of the State of Texas.
Sources for this subsection: TEX. GOV’T CODE ANN. §�659.061 (Vernon 1994);
Op. Tex. Att’y Gen. No. C-706 (1966); Article II, Section 2 of the General
Appropriations Act (Special Provisions Relating to All Health and Human Services
Agencies); Rider 17 in the appropriations to the Department of Public Safety in the
General Appropriations Act; Rider 8 in the appropriations to the Youth Commission
in the General Appropriations Act; Rider 1 in the Special Provisions for the Texas
School for the Blind and Visually Impaired and Texas School for the Deaf in Article
III of the General Appropriations Act.
Cross reference for this section: Chapter 3: Funeral expenses.

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USAS Purchase Voucher Requirements

A state agency must retain in its files documentation that shows how the requirements
described in this section have been satisfied. Upon request, the documentation must be
made available to the Comptroller during a pre-payment or a post-payment audit.

§�3.030 Physical and psychological examinations or treatments


A. General discussion
A state agency may pay for a physical or psychological examination of an employee of the
agency if:
• the payment does not constitute a grant of public money to private individuals
for private purposes; and
• the agency has specific or implied statutory authority to make the payment.
There is no state law that authorizes all state agencies to pay for the physical and
psychological examinations of their employees. Therefore, every time a state agency
wants to pay for a physical or psychological examination, the agency must research
state statutes to determine whether the Legislature has specifically or impliedly
authorized the agency to do so.
The remainder of this section briefly discusses some of the statutes that could be
interpreted as specifically or impliedly authorizing certain state agencies to pay for
physical and psychological examinations. The discussion is not intended to be
exhaustive.

B. Accident and injury prevention


In this subsection, “state agency” means a board, commission, department, office,
or other agency in the executive, judicial, or legislative branch of state government
that has at least five employees, was created by the constitution or a statute of this
state, and has authority not limited to a specific geographical portion of the state.
The State Office of Risk Management (SORM) is required to administer guidelines
adopted by the Risk Management Board for a comprehensive risk management
program applicable to all state agencies to reduce property and liability losses,
including workers’ compensation losses. The executive director of SORM is required
to prepare for adoption by the board and enforce reasonable rules for the prevention
of accidents and injuries.
SORM has adopted by rule the regulations of the Occupational Safety and Health
Administration (OSHA) that are published in Title 29, Parts 1910 and 1926 of the
Code of Federal Regulations.
OSHA regulations require certain employers to provide for periodic physical
examinations of employees:
• who are or may be exposed to hazardous substances or health hazards at or
above the permissible exposure limits or, if there is no permissible exposure
limit, above the published exposure levels for these substances, without regard
to the use of respirators, for at least 30 days a year; or
• who wear a respirator for at least 30 days a year or as required by 29 C.F.R.
§�1910.134 (LEXIS through the January 21, 2004, issue of the Federal
Register); or
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Chapter 3 – Expenditures Relating to State Officers and Employees

• who are injured, become ill, or develop signs or symptoms because of possible
overexposure involving hazardous substances or health hazards from an
emergency response or hazardous waste operation; or
• who are expected to handle and control actual or potential leaks or spills of
hazardous substances requiring possible close approach to the substance, i.e.,
HAZMAT employees.
A state agency should consult 29 C.F.R. §�1910.120(f)(3) (LEXIS through the
January 21, 2004, issue of the Federal Register) for important information about the
required frequency and other matters relating to the physical examinations.
A state agency may pay for any periodic physical examination of an employee that
OSHA regulations require.
Sources for this subsection: TEX. LAB. CODE ANN. §§�412.001(4), 412.011(b)(4),
412.041(j)(2) (Vernon Supp. 2004); 28 TEX. ADMIN. CODE §�251.402 (2003);
29 C.F.R. §�1910.120(a)(1), (3), (f), (q)(9) (LEXIS through the January 21, 2004,
issue of the Federal Register). But see 25 TEX. REG. 4197 (2000) (public notice
of the Risk Management Board’s decision to allow Section 251.402 of Title 28
of the Texas Administrative Code to “expire by operation of law”).

C. Employees with duties that expose them to unavoidable dangers


A state agency may pay for the periodic physical examinations of employees whose
job duties expose them to unavoidable dangers if the agency has a specific
appropriation for that purpose.
Source for this subsection: TEX. GOV’T CODE ANN. §�659.061 (Vernon 1994).

D. Aircraft pilots
The information provided in this subsection applies only to a state agency that has
the statutory authority to employ an aircraft pilot.
A state agency has implied statutory authority to pay for the physical or
psychological examination of an aircraft pilot if the agency determines that the
payment is necessary to protect the health and safety of the pilot or the officers and
employees who travel on state aircraft.

E. Peace officers
1. Pre-licensing physical and psychological examinations
In this subsection, “peace officer” means a person elected, employed, or
appointed as a peace officer under TEX. CODE CRIM. PROC. ANN. art. 2.12
(Vernon Supp. 2004) or other law.
A person may not appoint a person to serve as a peace officer unless the person
appointed holds an appropriate license issued by the Commission on Law
Enforcement Officer Standards and Education (CLEOSE). CLEOSE may not
issue a license to a person as a peace officer unless the person is examined by:
• a licensed psychologist or by a psychiatrist who declares in writing that the
person is in satisfactory psychological and emotional health to serve as a peace
officer; and
• a licensed physician who declares in writing that the person does not show any
trace of drug dependency or illegal drug use after a physical examination, blood
test, or other medical test.

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An agency hiring a person for whom a license as a peace officer is sought shall
select the examining psychologist or psychiatrist and the examining physician.
The agency may pay the fee of the psychologist, psychiatrist, or physician if:
• the agency has specific or implied statutory authority to employ peace
officers; and
• the agency has specific or implied statutory authority to make the payment.
Sources for this subdivision: TEX. OCC. CODE ANN. §§�1701.001(4), 1701.301,
1701.306(a)-(b) (Vernon 2002).

2. Post-licensing physical and psychological examinations


There is no specific statutory requirement for a person who is licensed to serve as
a peace officer to submit to subsequent psychological or physical examinations.
Nevertheless, a state agency has implied statutory authority to pay for a
post-licensing physical or psychological examination of a peace officer if the
payment is necessary for the agency to fulfill a specific statutory duty.
F. Exposure of certain state employees to contagious diseases
In this subsection, “public safety employee” means a peace officer, a fire fighter,
or an emergency medical services employee of the state.
A public safety employee who is exposed to a contagious disease is entitled to

reimbursement from the employee’s employer for reasonable medical expenses

incurred in treatment for the prevention of the disease if:

• the disease is not an “ordinary disease of life” as that term is used in the
context of a workers’ compensation claim; and
• the exposure to the disease occurs during the course of the employment; and
• the employee requires preventative medical treatment because of exposure to
the disease.
A public safety employee who is entitled to reimbursement of medical expenses

under the statutes described in this subsection also is entitled to choose the

physician to provide the treatment.

A certified fire fighter or other governmental employee who operates an ambulance


or responds to emergency medical calls is entitled to preventative immunization for
any disease to which the fire fighter or employee may be exposed in performing
official duties. The fire fighter or employee and the immediate family of the fire
fighter or employee also are entitled to vaccination for a contagious disease to which
the fire fighter or employee is exposed during the course of employment. A state
agency may satisfy the requirements described in this paragraph by:
• providing the vaccination or immunization without charge; or
• reimbursing the fire fighter or employee for necessary and reasonable expenses
incurred for the vaccination or immunization.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�607.001-607.004
(Vernon 1994).

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Chapter 3 – Expenditures Relating to State Officers and Employees

G. Workers’ compensation claimants


The information provided in this subsection applies only to a state employee who
sustains an injury after December 31, 1991. See Op. Tex. Att’y Gen. No. DM-189
(1992) for a discussion of the law that applies to a state employee who sustains an
injury before January 1, 1992.
The state must pay the cost of any examination to which the Texas Workers’
Compensation Commission (TWCC) requires a state employee to submit under LAB.
CODE ANN. §�408.004(b) (Vernon Supp. 2004). If the employee elects to have a doctor
of the employee’s choice present at the examination, then the state must pay the
doctor’s fee as fixed by TWCC.
Sources for this subsection: TEX. LAB. CODE ANN. §§�408.004(c)-(d), 501.001(5),
501.002(a)(6) (Vernon Supp. 2004), §§�501.022, 502.001(2), 502.002(a)(6),
503.001(2), 503.002(a)(6) (Vernon 1996).

H. Texas Department of Criminal Justice


In this subsection, “hazardous position” means a position for which the regular
and normal duties inherently involve the risk or peril of bodily injury or harm.
The General Appropriations Act (GAA) says that the Texas Department of Criminal
Justice (TDCJ) may expend funds appropriated by the GAA to provide medical
attention and hospitalization by correctional medical staff and correctional hospital
facilities for an employee injured while performing the duties of a hazardous
position if the cost of treating the injury is not reimbursed by workers’ compensation
or the state group insurance program.
The GAA says that TDCJ may expend funds appropriated by the GAA to pay a
necessary medical expense of an employee injured while performing the duties of a
hazardous position if the expense is not reimbursed by workers’ compensation or the
state group insurance program.
The GAA says that TDCJ may expend funds appropriated by the GAA for a medical
test or procedure on an employee that is required by federal or state law or
regulation if the test or procedure is required as a result of the employee’s job
assignment or when considered necessary because of potential or existing litigation.
Source for this subsection: Rider 17 in the appropriations to the Department
of Criminal Justice in the General Appropriations Act.

I. Texas Building and Procurement Commission


The GAA says that the Texas Building and Procurement Commission (TBPC) may
expend funds appropriated by the GAA to pay for the medical testing of an employee
or prospective employee that works in a high risk environment area, such as
asbestos removal or a sewage system. The funds may not be expended:
• before TBPC’s executive director has approved the testing; or
• for testing that is not for the safety of the employee or the public.
The GAA also says that TBPC may expend funds appropriated by the GAA for
immunizations that are required of an employee at risk in the performance of the
employee’s duties in a high risk environment area.

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Sources for this subsection: Rider 9 in the appropriations to the Texas


Building and Procurement Commission (TBPC) in the General
Appropriations Act. See State Purchasing and General Services Act, TEX.
GOV’T CODE ANN. §�2151.003 (Vernon Supp. 2004) (a statutory reference to the
General Services Commission (GSC) means TBPC); Act of May 27, 2001,
77th Leg., R.S., ch. 1422, §�1.18(a)-(b), (d), 2001 Tex. Sess. Law Serv. 4735, 4739
(Vernon) (establishing the dates on which TBPC is created and GSC is
abolished and transferring unspent appropriations from GSC to TBPC).

J. Department of State Health Services


The GAA says that the Department of State Health Services may expend funds

appropriated by the GAA to pay for any immunization that is required of an

employee at risk in the performance of the employee’s duties.

Source for this subsection: Rider 20 in the appropriations to the Department


of Health in the General Appropriations Act.

K. Certain institutions of higher education


1. The University of Texas System

In this subdivision:

• “Employee” means a person employed in the service of the system under an


appointment or oral or written express contract for hire whose name appears
on the system’s payroll.
• “Institution” means an institution of higher education or agency under the
direction of the board of regents of The University of Texas System.
An institution shall designate a convenient number of licensed practicing
physicians to perform physical examinations of individuals employed or to be
employed by the institution to determine if an individual is physically fit to be
classified as an employee.
Sources for this subdivision: TEX. LAB. CODE ANN. §§�503.001(2)-(3), 503.064(a)
(Vernon 1996).

2. The Texas A & M University System

In this subdivision:

• “Employee” means a person employed in the service of an institution whose


name appears on the institution’s payroll.
• “Institution” means an institution of higher education or agency under the direction
or governance of the board of regents of The Texas A & M University System.
An institution may require that an individual may not be certified as an employee
of the institution under Chapter 502, Labor Code, until the individual submits to a
physical examination and been certified by the examining physician or
chiropractor to be physically fit to perform the duties and services to which the
individual is to be assigned.
Sources for this subdivision: TEX. LAB. CODE ANN. §§�502.001(2)-(3), 502.064(b)
(Vernon 1996).

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3. Texas State Technical College System


The board of regents of the Texas State Technical College System may provide
workers’ compensation insurance for its employees in compliance with Chapter
502, Labor Code. If the board provides the insurance, the board may pay for the
pre-employment physical examinations of its employees in the same way that an
agency or institution under the direction or governance of the board of regents of
The Texas A & M University System may.
Source for this subdivision: TEX. EDUC. CODE ANN. §�135.58 (Vernon 2002).
Cross reference for this section: Chapter 2: Drug testing.

L. Texas Youth Commission


In this subsection, “hazardous position” means a position for which the regular
and normal duties inherently involve the risk or peril of bodily injury or harm.
The GAA says that the Texas Youth Commission (TYC) may expend funds
appropriated by the GAA to provide medical attention by medical staff and infirmaries
at TYC facilities for an employee injured while performing the duties of a hazardous
position if the cost of treating the injury is not reimbursed by workers’ compensation
or the state group insurance program.
The GAA also says that TYC may expend funds appropriated by the GAA for a
medical test or procedure on an employee that is required by federal or state law or
regulation if the test or procedure is required as a result of the employee’s job
assignment or when considered necessary because of potential or existing litigation.
Source for this subsection: Rider 8 in the appropriations for the Youth
Commission in the General Appropriations Act.

USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation that cites the statutory authority
for the agency’s payment of physical or psychological examinations and states how the
payment of those examinations serves a proper public purpose.
2. Upon request, the agency must make the documentation available to the Comptroller
during a pre-payment or a post-payment audit.
3. Comptroller object code 7248 must be used.

§�3.032 Reimbursement for state calls on a personal cellular phone


A state agency may reimburse the reasonable and necessary expenses incurred through
an employee’s cellular phone for state business. To reimburse an employee for cell
phone use various procedures must be established; the agency must have an established
written policy that outlines how cellular phone charges will be reimbursed and the
agency must verify that the cellular phone charges were business related.
The written policy will clearly outline the methodology used by the agency to calculate
reimbursement of cellular phone charges. Examples of an outline of the methodology
include: a flat reimbursement rate per minute for all cellular phone charges, such as .07
cents per minute; or prorating the total charges (less features), surcharges, and taxes
and reimbursing the portion spent for business purposes. A state agency can only
reimburse up to the actual cost of the service.

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Chapter 3 – Expenditures Relating to State Officers and Employees

Reimbursements for additional charges or features such as call waiting or caller


identification are not allowed. A state agency is not responsible for reimbursing
equipment charges due to plan initiation, or through lost, stolen or damaged equipment.
Reimbursement may be requested in a purchase voucher or a travel voucher if the
employee was traveling at the time the cell phone expenses were incurred. For any
reimbursement, the cellular phone bill, including a list of itemized calls must be
attached to the voucher and retained by the agency. The calls being reimbursed must
be clearly noted on the phone bill itself.

§�3.034 State motor vehicles, use of


A. General discussion
In this subsection:
• “Appropriated money” means money appropriated by the Legislature
through the General Appropriations Act (GAA) or other law.
• “State agency” means:
– a department, commission, board, office, or other entity in the executive
branch of state government; or
– the Supreme Court, the Court of Criminal Appeals, another entity in the
judicial branch of state government with statewide authority, or a Court of
Appeals; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
Except as described in this paragraph, an officer or employee may not use a state-owned
or state-leased motor vehicle except on official state business. The administrative head of
a state agency may authorize an officer or employee to use a state-owned or state-leased
motor vehicle to commute to and from work when the administrative head determines
that the use may be necessary to ensure that vital agency functions are performed. The
name and job title of each authorized individual, and the reasons for the authorization,
must be included in the annual report required by TEX. GOV’T CODE ANN. §�2101.0115
(Vernon Supp. 2004).
A state agency may not use appropriated money to compensate an individual who
violates the preceding paragraph.
The restrictions described in this subsection do not affect the authority of an
institution of higher education to collect, account for, and control local funds and
institutional funds in the manner authorized by Subchapter A of Chapter 51,
Education Code.
The restrictions described in this subsection apply only to an expenditure made after
August 31, 1999.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�2113.001, 2113.013
(Vernon Supp. 2004); Act of May 29, 1999, 76th Leg., R.S., ch. 1498, §§�9-10, 1999
Tex. Gen. Laws 5153, 5163.

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Chapter 3 – Expenditures Relating to State Officers and Employees

B. Department of Public Safety of the State of Texas


The GAA says that notwithstanding the provisions of Article IX of the GAA, the
Department of Public Safety of the State of Texas may certify not more than 15
exceptions to the prohibition related to use of a state car for commuting to and
from work.
Source for this subsection: Rider 5 in the appropriations to the Department of
Public Safety in the General Appropriations Act.

§�3.036 Survivors of certain employees


In this section, “covered employee” means:
• an individual elected, appointed, or employed as a peace officer by the state
or a political subdivision of the state under TEX. CODE CRIM. PROC. ANN.
art. 2.12 (Vernon Supp. 2004) or other law; or
• a paid probation officer appointed by the director of a community
supervision and corrections department who has the duties set out in
TEX. GOV’T CODE ANN. §�76.002 (Vernon 1998) and the qualifications set out
in TEX. GOV’T CODE ANN. §�76.005 (Vernon 1998) or who was appointed in
accordance with prior law; or
• a parole officer employed by the Pardons and Paroles Division of the Texas
Department of Criminal Justice who has the duties set out in TEX. GOV’T
CODE ANN. §�508.001 (Vernon Supp. 2004) and the qualifications set out in
TEX. GOV’T CODE ANN. §�508.113 (Vernon 1998) or in prior law; or
• a paid jailer; or
• a member of an organized police reserve or auxiliary unit who regularly
assists peace officers in enforcing criminal laws; or
• a member of the class of employees of the Institutional Division or the State
Jail Division of the Texas Department of Criminal Justice (TDCJ) formally
designated as custodial personnel under TEX. GOV’T CODE ANN. §�615.006
(Vernon 1994) by the Texas Board of Criminal Justice or its predecessor in
function; or
• a jailer or guard of a county jail who is appointed by the sheriff and who
performs a security, custodial, or supervisory function over the admittance,
confinement, or discharge of prisoners and who is certified by the Commission
on Law Enforcement Officer Standards and Education; or
• a juvenile correctional employee of the Texas Youth Commission; or
• an employee of the maximum security unit of the Department of Aging and
Disability Services (TDMHMR); or
• an employee of TDMHMR who performs on-site services for TDCJ; or
• an individual who is employed by the state or a political or legal subdivision
and is subject to certification by the Texas Commission on Fire Protection; or
• an individual employed by the state or a political or legal subdivision whose
principal duties are aircraft crash and rescue fire fighting; or
• a member of an organized volunteer fire-fighting unit that renders fire-fighting
services without remuneration and conducts a minimum of two drills each
month, each two hours long; or

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Chapter 3 – Expenditures Relating to State Officers and Employees

• an individual who: (1) performs emergency medical services or operates an


ambulance; and (2) is employed by a political subdivision of the state or is an
emergency medical services volunteer as defined by TEX. HEALTH & SAFETY
CODE ANN. §�773.003(13) (Vernon 2003); and (3) is qualified as an emergency
care attendant or at a higher level of training under any of the following
statutes: TEX. HEALTH & SAFETY CODE ANN. §�773.046 (Vernon Supp. 2004),
§§�773.047-773.0495 (Vernon 2003); or
• an individual who is employed or formally designated as a chaplain for:
• an organized volunteer fire-fighting unit or other fire department of this state
or of a political subdivision of this state;
• a law enforcement agency of this state or of a political subdivision of this
state; or
• TDCJ.
The Employees Retirement System of Texas is required to pay assistance to certain

survivors of a covered employee who died in the course of the employee’s duty as a

result of exposure to a risk that is inherent in the duty or to which the public is not

customarily exposed.

The following sentence applies to an individual employed by the state or a political or

legal subdivision who is subject to certification by the Texas Commission on Fire

Protection (TCFP) or whose principal duties are aircraft crash and rescue fire fighting.

The individual is considered to have died as a result of a personal injury sustained in

the line of duty in the individual’s position as described by Section 615.003, Government

Code, if the individual died while actually performing an activity that the individual

was certified to perform by TCFP, without regard to whether the individual was

actually performing the activity during the individual’s compensable hours at work.

Sources: TEX. CONST. art. III, §�51-d; TEX. GOV’T CODE ANN. §§�615.003(1),
28 29
(11)-(14) , 615.021(c) , 615.042 (Vernon Supp. 2004). See TEX. GOV’T CODE ANN.
§§�615.021(a), 615.022, 615.0225, 615.023(b) (Vernon Supp. 2004); 34 TEX. ADMIN.
CODE §�75.1 (2003).

§�3.038 Training and education programs


A. State Employees Training Act
In this subsection, “state agency” means a department, agency, or institution of
this state, including an institution of higher education as defined by TEX. EDUC.
CODE ANN. §�61.003 (Vernon Supp. 2004).
A state agency may use public funds to provide training and education for its
administrators and employees. The training or education must relate to the current
or prospective duties of the administrator or employee.

28
Section 615.003(12), Government Code, was amended in 2003. For applicability of the amendments, see Act of
June 1, 2003, 78th Leg., R.S., ch. 1111, §�44(e), 2003 Tex. Gen. Laws 3178, 3187-8.
Section 615.003(14), Government Code, was amended in 2003. For applicability of the amendments, see Act of
May 31, 2003, 78th Leg., R.S., ch. 842, §�7(a), 2003 Tex. Gen. Laws 2633, 2636.
29
Section 615.021(c), Government Code, was amended in 2003. For applicability of the amendments, see Id. at
§�7(b), 2003 Tex. Gen. Laws at 2636.

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Chapter 3 – Expenditures Relating to State Officers and Employees

A state agency’s training and education program may include:


• preparing for technological and legal developments; and
• increasing work capabilities; and
• increasing the number of qualified employees in areas designated by
institutions of higher education as having an acute faculty shortage; and
• increasing the competence of state employees.
A state agency may spend public funds as appropriate to pay the salary, tuition and other
fees, travel and living expenses, training stipend, expense of training materials, and other
necessary expenses of an instructor, student, or other participant in a training or education
program.
A state agency may contract with another state, local, or federal department, agency, or
institution (including a state-supported college or university) to train or educate its
administrators and employees. In addition, the agency may conduct a training or
education program jointly with another state, local, or federal department, agency, or
institution (including a state-supported college or university).
Each state agency is required to adopt rules concerning the eligibility of its administrators
and employees for training and education supported by the agency and the obligations
assumed by them on receiving the training and education.
Sources for this subsection: State Employees Training Act, TEX. GOV’T CODE
ANN. §§�656.041-656.044, 656.046-656.047, 656.048(a), 656.049 (Vernon 1994).

B. Restrictions on certain training


In this subsection:
• “State agency” means:
– a department, commission, board, office, or other agency that: (1) is in the
executive branch of state government; and (2) has authority that is not
limited to a geographical portion of the state; and (3) was created by the
Texas Constitution or a statute of this state; or
– a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), other than a public junior
college.
• “State employee” means an individual, other than a state officer, who is
employed by:
– a state agency; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or the
Texas Judicial Council; or
– either house of the Legislature or a legislative agency, council, or committee,
including the Legislative Budget Board (LBB), the Texas Legislative Council,
the state auditor, and the Legislative Reference Library.
• “State officer” means an “elected officer,” an “appointed officer,” a “salaried
appointed officer,” an “appointed officer of a major state agency,” or the
“executive head of a state agency,” as those terms are defined in TEX. GOV’T
CODE ANN. §§�572.002(1), (4)-(5), (9), 572.003(b)-(c) (Vernon Supp. 2004).

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Chapter 3 – Expenditures Relating to State Officers and Employees

• “Training” means instruction, teaching, or other education received by a state


employee that is not normally received by other state employees and that is
designed to enhance the ability of the employee to perform the employee’s job.
The term includes a course of study at an institution of higher education or a
private or independent institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), if the employing state agency
spends money to assist the state employee to meet the expense of the course of
study or pays salary to the employee to undertake the course of study as an
assigned duty. The term does not include training required by either state or
federal law or that is determined necessary by the agency and offered to all
employees of the agency performing similar jobs.
Before a state agency spends any money on training for a state employee, the agency
must adopt a policy governing the training of employees that requires training to
relate to an employee’s duties following the training. The policy must be in addition
to the rules required by the State Employees Training Act, TEX. GOV’T CODE ANN.
§�656.048(a) (Vernon 1994). The policy must have been adopted not later than
September 15, 1999.
The policy must include a requirement concerning a state employee who receives
training that is paid for by a state agency and who does not perform the employee’s
regular duties for at least three months during the training period as a result of the
training. The policy must require the employee to:
• work for the agency following the training for at least one month for each
month of the training period; or
• pay the agency for all the costs associated with the training that were paid
during the training period, including any amounts of the employee’s salary
that were paid that were not accounted for as paid vacation or compensatory
leave.
A state employee shall agree in writing to comply with the policy described above
before the employee receives training if the training will be paid for by a state agency
and the employee will not be performing the employee’s regular duties for at least
three months during the training. By order adopted in a public meeting, the governing
body of a state agency may waive the requirements described in the
immediately-preceding two bullets if the body finds that waiver is in the best interest
of the agency or is warranted because of an extreme personal hardship suffered by the
employee.
Each state agency shall prepare and submit an annual report to the LBB detailing the
amount of money expended by the agency in the preceding fiscal year for training.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�572.002(10)(A)-(B),
(11)-(12), 656.101-656.103, 656.105 (Vernon Supp. 2004); Act of May 28, 1999,
76th Leg., R.S., ch. 1178, §�3(b), 1999 Tex. Gen. Laws 4101, 4102.
Cross references for this section: Chapter 2: Advance payments; Chapter 7:
Training for members of governing boards.

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USAS Purchase Voucher Requirements

1. A state agency must retain in its files:


a. documentation that cites the relevant statutory authority; and
b. documentation of post-training employment that shows compliance with
the requirements described in Subsection (B).

2. Upon request, the agency must make the preceding items available to the
Comptroller during a pre-payment or a post-payment audit.

3. A payment from one state agency to another state agency for training or education
must be made on an interagency transaction voucher if the funds used to make the
payment are in the state treasury and will be deposited in the state treasury by the
receiving agency.

4. Comptroller object code 7202 must be used for a payment of tuition to an institution
of higher education. Comptroller object code 7203 must be used for the payment of a
registration fee for a conference or seminar. Comptroller object code 7243 must be
used for educational services, including professionally conducted training.

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Chapter 4 – Expenditures Relating to Legal Proceedings
§�4.002 Abstracts of judgment
An abstract of judgment is a document usually prepared and certified by the clerk of the

court in which the judgment is rendered. It contains certain information about the

judgment, such as the amount of the judgment and the names of the plaintiff and

defendant. When filed in a county’s real property records, an abstract of judgment

constitutes a lien on all real property owned or subsequently purchased by the person

against whom the judgment was obtained if the judgment is not dormant.

The state may pay a fee to a county clerk but not to a district clerk for preparing an

abstract of judgment.

Sources: TEX. GOV’T CODE ANN. §�51.318(b)(5) (Vernon 1998); TEX. LOC. GOV’T
CODE ANN.§�118.052(1)(C)(i) (Vernon Supp. 2004), §�154.004 (Vernon 1999);
TEX. PROP. CODE ANN. §§�52.001, 52.003 (Vernon 1995), §§�52.002, 52.004
(Vernon Supp. 2004).

USAS Purchase Voucher Requirement

Comptroller object code 7222 must be used to pay for the preparation or filing of an

abstract of judgment.

§�4.004 Alternative dispute resolution


A. Governmental Dispute Resolution Act

Unless otherwise stated, in this subsection:

• “Alternative dispute resolution procedure” includes a procedure described


by Chapter 154, Civil Practice and Remedies Code, and a combination of
procedures described by that chapter.
• “Contested case” means a proceeding, including a ratemaking or licensing
proceeding, in which the legal rights, duties, or privileges of a party are to be
determined by a state agency30 after an opportunity for adjudicative hearing.
• “Governmental body” does not include the judiciary. The term means:
– a board, commission, department, committee, institution, agency, or office
that is within or is created by the executive or legislative branch of state
government and that is directed by at least one elected or appointed
member; or
– a county commissioners court or a municipal governing body in the state; or
– a deliberative body that has rulemaking or quasi-judicial power and that
is classified as a department, agency, or political subdivision of a county or
municipality; or
– a school district board of trustees, a county board of school trustees, or a
county board of education; or
– the governing board of a special district; or

30
For the purpose of the definition of “contested case,” “state agency” has the meaning assigned by the

Administrative Procedure Act, TEX. GOV’T CODE ANN. §�2001.003(7) (Vernon 2000).

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Chapter 4 – Expenditures Relating to Legal Proceedings

– a local workforce development board created under TEX. GOV’T CODE ANN.
§�2308.253 (Vernon 2000); or
– the governing body of a nonprofit corporation organized under Chapter 67,
Water Code, that provides a water supply or wastewater service, or both,
and is exempt from ad valorem taxation under TEX. TAX CODE ANN.
§�11.30 (Vernon Supp. 2004); or
– the part, section, or portion of an organization, corporation, commission,
committee, institution, or agency that spends or is supported in whole or in
part by public funds; or
– a nonprofit corporation that is eligible to receive funds under the federal
community services block grant program and that is authorized by this state
to serve a geographic area of the state.
• “Governmental Dispute Resolution Act” means Chapter 2009, Government
Code.
• “Institution of higher education” has the meaning assigned by TEX. EDUC.
CODE ANN. §�61.003 (Vernon Supp. 2004).
• “License” includes the whole or part of a state agency31 permit, certificate,
approval, registration, or similar form of permission required by law.
• “Licensing” includes a state agency32 process relating to granting, denial, renewal,
revocation, suspension, annulment, withdrawal, or amendment of a license.
• “Party” means a person or state agency33 named or admitted as a party.
• “Person” means an individual, partnership, corporation, association, governmental
subdivision, or public or private organization that is not a state agency.
• “Public funds” means funds of the state or of a governmental subdivision of the state.
• “Rule”:
– means a state agency34 statement of general applicability that implements,
interprets, or prescribes law or policy or describes the procedure or practice
requirements of a state agency35; and
– includes the amendment or repeal of a prior rule; and
– does not include a statement regarding only the internal management or
organization of a state agency36 and not affecting private rights or procedures.
• “State agency” means an officer, board, commission, department, or other
agency in the executive branch of state government with statewide
jurisdiction that makes rules or determines contested cases. The term
includes an institution of higher education, the State Office of Administrative
Hearings, and the Attorney General.

31
For the purpose of the definition of “license,” “state agency” has the meaning assigned by the

Administrative Procedure Act, TEX. GOV’T CODE ANN. §�2001.003(7) (Vernon 2000).

32
For the purpose of the definition of “licensing,” “state agency” has the meaning assigned by the

Administrative Procedure Act, TEX. GOV’T CODE ANN. §�2001.003(7) (Vernon 2000).

33
For the purpose of the definition of “party,” “state agency” has the meaning assigned by the

Administrative Procedure Act, TEX. GOV’T CODE ANN. §�2001.003(7) (Vernon 2000).

34
For the purpose of the definition of “rule,” “state agency” has the meaning assigned by the Administrative

Procedure Act, TEX. GOV’T CODE ANN. §�2001.003(7) (Vernon 2000).

35
Id.
36
Id.

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Chapter 4 – Expenditures Relating to Legal Proceedings

The policy of this state is that disputes before governmental bodies be resolved as fairly
and expeditiously as possible and that each governmental body support this policy by
developing and using alternative dispute resolution procedures in appropriate aspects of
the body’s operations and programs.
A governmental body may pay for costs necessary to meet the objectives of the
Governmental Dispute Resolution Act (GDRA), including reasonable fees for training,
policy review, system design, evaluation, and the use of impartial third parties. To the
extent allowed by the General Appropriations Act (GAA), a state agency may use
money budgeted for legal services, executive administration, or any other appropriate
aspect of the agency’s operations to pay for the costs.
A governmental body may contract with another governmental body with an
alternative dispute resolution system created under Chapter 152, Civil Practice and
Remedies Code, or with a private entity for any service necessary to meet the objectives
of the GDRA. This contracting authority specifically includes the Center for Public
Policy Dispute Resolution at The University of Texas School of Law (the “Center”).
A governmental body may appoint a governmental officer or employee or a private
individual to serve as an impartial third party in an alternative dispute resolution
procedure. With two exceptions, the appointment is subject to the approval of the
parties. First, when a State Office of Administrative Hearings (SOAH)
administrative law judge has issued an order referring a case involving a state
agency to an alternative dispute resolution procedure under TEX. GOV’T CODE ANN.
§�2003.042(a)(5) (Vernon 2000), the judge may appoint the impartial third party for
the parties if they cannot agree on an impartial third party within a reasonable
period. Second, a governmental body’s appointment of the impartial third party is not
subject to the approval of the parties if the alternative dispute resolution procedure
concerns victim-offender mediation by the Texas Department of Criminal Justice as
described in TEX. CODE. CRIM. PROC. ANN. art. 56.13 (Vernon Supp. 2004).
A governmental body may obtain the services of a qualified impartial third party
through an agreement with the Center, an alternative dispute resolution system
created under Chapter 152, another governmental body, or a federal agency or
through a pooling agreement with several governmental bodies. The agreements may
provide that the using governmental body or the parties will reimburse the furnishing
entity, in kind or monetarily, for the full or partial cost of providing the qualified
impartial third party.
A state agency may also obtain the services of a qualified third party through an
agreement with SOAH.
The GDRA does not require a party to a dispute to participate in an alternative
dispute resolution procedure and does not preclude a party from seeking another
remedy, including litigation, that otherwise is available.
The information provided in this subsection applies only to an alternative dispute
resolution proceeding that begins after August 31, 1999.
Sources for this subsection: TEX. GOV’T CODE ANN. §�552.003(1), (5)
(Vernon Supp. 2004); Administrative Procedure Act, TEX. GOV’T CODE ANN.
§�2001.003 (Vernon 2000); Governmental Dispute Resolution Act, TEX. GOV’T
CODE ANN. §§�2009.001-2009.004 (Vernon 2000), §�2009.053(a)-(c)
(Vernon Supp. 2004); Act of May 30, 1999, 76th Leg., R.S., ch. 1352, §§�10-11,
1999 Tex. Gen. Laws 4578, 4587.

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Chapter 4 – Expenditures Relating to Legal Proceedings

USAS Purchase Voucher Requirements

A state agency must retain in its files documentation that shows the agency’s compliance
with the requirements described in this subsection. Upon request, the agency must make the
documentation available to the Comptroller during a pre-payment or a post-payment audit.

B. Chapter 151, Civil Practice and Remedies Code


On agreement of the parties, in civil or family law matters, the judge in whose court the
case is filed may order referral of the case as provided by Chapter 151, Civil Practice and
Remedies Code. Each party must file in the court a motion that states the name of the
special judge, the fact that the special judge has agreed to hear the case, and the fee the
judge is to receive as agreed on by the parties.
The parties, in equal shares, shall pay the special judge’s fee and all administrative
costs, including the court reporter’s fee, related to the trial conducted before the
judge. A cost for a witness called by a party or any other cost related only to a single
party’s case shall be paid by the party who incurred the cost. The state may not pay
any costs related to a trial under Chapter 151.
Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §§�151.001,
151.002(5), 151.009 (Vernon 1997).

C. Chapter 154, Civil Practice and Remedies Code


In this subsection:
• “Court” includes an appellate court, district court, constitutional county court,
statutory county court, family law court, probate court, municipal court, or
justice of the peace court.
• “Dispute resolution organization” means a private profit or nonprofit
corporation, political subdivision, or public corporation, or a combination of
these, that offers alternative dispute resolution services to the public.
It is the policy of this state to encourage the peaceable resolution of disputes, with
special consideration given to disputes involving the parent-child relationship,
including the mediation of issues involving conservatorship, possession, and support
of children, and the early settlement of pending litigation through voluntary
settlement procedures.
A court may, on its own motion or the motion of a party, refer a pending dispute for
resolution by an alternative dispute resolution procedure including:
• an alternative dispute resolution system established under Chapter 152,
Civil Practice and Remedies Code; or
• a dispute resolution organization; or
• a nonjudicial and informally conducted forum for the voluntary settlement
of citizens’ disputes through the intervention of an impartial third party,
including those alternative dispute resolution procedures described under
Subchapter B of Chapter 154, Civil Practice and Remedies Code.

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Chapter 4 – Expenditures Relating to Legal Proceedings

If the court refers a pending dispute for resolution by an alternative dispute resolution
procedure, the court may appoint one or more impartial third parties to facilitate the
procedure. The court may set a reasonable fee for the services of an impartial third
party appointed under Subchapter C of Chapter 154. Unless the parties agree to a
method of payment, the court shall tax the fee as other costs of suit.
Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §§�154.001-154.002,
154.021(a), 154.051(a), (c), 154.054 (Vernon 1997). See, generally, In re Acceptance
Ins. Co., 33 S.W.3d 443, 451-3 (Tex. App.—Fort Worth 2000, no pet.); In re Daley,
29 S.W.3d 915, 918 (Tex. App.—Beaumont 2000, pet. filed); Texas Parks & Wildlife
Dept. v. Davis, 988 S.W.2d 370, 376 (Tex. App.—Austin 1999, no pet.).

§�4.006 Attorney’s fees


A. Groundless proceedings or actions against small businesses
In this subsection:
• “Groundless” means having no basis in law or fact.
• “Small business” means a legal entity, including a corporation, partnership,
or sole proprietorship that:
– is formed for the purpose of making a profit; and
– is independently owned and operated; and
– is not a publicly held corporation; and
– has fewer than 100 employees or less than $1 million in annual gross receipts
at the end of the fiscal year preceding the year of the filing of an
administrative adjudicatory proceeding or civil action in which the entity is
seeking recovery under Subchapter B of Chapter�2006, Government Code.
• “State agency” means a board, commission, department, or office that is in
the executive branch of state government, was created by the constitution or a
statute of this state, and has statewide jurisdiction.
Subchapter B of Chapter 2006, Government Code, does not apply to a proceeding or
action filed before September 1, 1987. In addition, Subchapter B does not apply to a
proceeding or action brought under Subchapter E of Chapter 17, Business & Commerce
Code, or Chapter 21, Insurance Code.
In an administrative adjudicatory proceeding or a civil action resulting from a

complaint issued by a state agency against a small business under the agency’s

administrative or statutory functions, the business may be awarded reasonable

attorney’s fees if:

• it is a small business at the time it becomes a party to the proceeding or action;


and
• it prevails in the proceeding or action; and
• the proceeding or action was groundless and brought in bad faith or for
purposes of harassment.
A small business “prevails” in a proceeding or action if there is not:
• an adjudication, stipulation, or acceptance of liability; or
• a determination of noncompliance, violation, infringement, deficiency, or
breach on the part of the business.

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A small business may not recover under Subchapter B if the parties have executed a
settlement agreement that, while not stipulating liability or violation, requires the
business to take corrective action or pay a monetary sum.
To recover under Subchapter B, a small business must file a written motion that
complies with certain requirements not later than the 30th day after the date of the
filing of the administrative adjudicatory proceeding or civil action.
The hearings officer in an administrative adjudicatory proceeding or the court in a
civil action shall determine whether the proceeding or action is groundless and
brought in bad faith or for purposes of harassment.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�2006.011-2006.013,
2006.014(a), 2006.015(a) (Vernon 2000).

B. Uniform Declaratory Judgments Act


In any proceeding under the Uniform Declaratory Judgments Act (UDJA), the
applicable statute says that the court may award reasonable and necessary attorney’s
fees as are equitable and just. The relevant judicial decisions interpreting the UDJA,
however, are unclear about whether the UDJA is an independent basis for awarding the
fees. If the UDJA is not, then the fees may be awarded in a case filed under the UDJA
only if another law is the basis for awarding them.
Sources for this subsection: Uniform Declaratory Judgments Act, TEX. CIV.

PRAC. & REM. CODE ANN. §§�37.002(a), 37.009 (Vernon 1997); see, e.g., John G. &

Marie Stella Kenedy Mem. Found. v. Dewhurst, 90 S.W.3d 268, 289 (Tex. 2002);

Texas Educ. Agency v. Leeper, 893 S.W.2d 432, 446 (Tex. 1994); Texas State Bd.

of Plumbing Examiners v. Associated Plumbing-Heating-Cooling Contractors

of Texas, Inc., 31 S.W.3d 750, 753 (Tex. App.—Austin 2000, pet. dism’d by agr.);

Brush v. Reata Oil and Gas Corp., 984 S.W.2d 720, 730 (Tex. App.—Waco 1998,

pet. denied); Southwest Guaranty Trust Company v. Hardy Road 13.4 Joint

Venture, 981 S.W.2d 951, 956-7 (Tex. App.—Houston [1st Dist.]

1998, pet. denied); McRae Exploration & Prod. v. Reserve Petroleum Co.,

962 S.W.2d 676, 684 (Tex. App.—Waco 1998, pet. denied); Ely v. Briley, 959

S.W.2d 723, 727 (Tex. App.—Austin 1998, no writ); Bexar County Appraisal

Review Board v. First Baptist Church, 846 S.W.2d 554, 561

(Tex. App.—San Antonio 1993, writ denied), cert. denied, 114 S.Ct. 1221 (1994);

Barfield v. Holland, 844 S.W.2d 759, 771 (Tex. App.—Tyler 1992, writ denied).

C. Frivolous causes of action asserted by state agencies


In this subsection:
• “Cause of action” means an original cause of action or a cause of action
asserted as a counterclaim or a cross claim.
• “Party” means an individual, partnership, corporation, association, or public or
private organization other than a state agency.
• “State agency” means a board, commission, department, office, or other
agency that is in the executive branch of state government, was created by the
constitution or a statute of this state, and has statewide jurisdiction.

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Chapter 4 – Expenditures Relating to Legal Proceedings

A party to a civil suit brought by or against a state agency in which the agency
asserts a cause of action against the party is entitled to recover reasonable
attorney’s fees incurred by the party in defending against the agency’s action if:
• the suit is in a court of this state; and
• the court finds that the action is frivolous, unreasonable, or without
foundation; and
• the action is dismissed or judgment is awarded to the party.
The agency shall pay the fees from:
• funds appropriated for operation of the agency; or
• funds appropriated for the payment of fees under Chapter 105, Civil Practice
and Remedies Code; or

• other funds available for that purpose.

Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §§�105.001(2)-(3),
105.002, 105.004 (Vernon 1997).

D. Discrimination because of race, religion, color, sex, or national origin


An officer or employee of the state who is acting or purporting to act in an official
capacity may not, because of a person’s race, religion, color, sex, or national origin:
• refuse to issue to the person a license, permit, or certificate; or
• revoke or suspend the person’s license, permit, or certificate; or
• refuse to permit the person to use facilities open to the public and owned,
operated, or managed by or on behalf of the state; or
• refuse to permit the person to participate in a program owned, operated, or
managed by or on behalf of the state; or
• refuse to grant a benefit to the person; or
• impose an unreasonable burden on the person; or
• refuse to award a contract to the person.
The preceding does not prohibit the adoption of a program designed to increase the
participation of businesses owned and controlled by women, minorities, or
disadvantaged persons in public contract awards.
If an officer or employee has violated or there are reasonable grounds to believe the
officer or employee is about to violate the preceding prohibitions, the person
aggrieved by the violation or threatened violation may sue for preventive relief.
Unless the state is the prevailing party, the court may award the prevailing party
reasonable attorney’s fees as part of the costs. The state’s liability for costs is the
same as that of a private person.
Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §�106.001(a), (c),
(Vernon Supp. 2004), §�106.002 (Vernon 1997). See TEX. CIV. PRAC. & REM. CODE
ANN. §�106.004 (Vernon 1997).

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Chapter 4 – Expenditures Relating to Legal Proceedings

E. Indemnification of public servants37


The state is liable for indemnification of attorney’s fees under Chapter 104,

Civil Practice and Remedies Code, only if the damages:

• are based on an act or omission by the person in the course and scope of the
person’s office, employment, or contractual performance for or service on behalf
of the agency, institution, or department; and
• one of the following is true:
– the damages arise out of a cause of action for negligence, except a willful or
wrongful act or an act of gross negligence; or
– the damages arise out of a cause of action for deprivation of a right, privilege,
or immunity secured by the constitution or laws of this state or the United
States, except when the court in its judgment or the jury in its verdict finds
that the person acted in bad faith, with conscious indifference, or reckless
disregard; or
– indemnification is in the interest of the state as determined by the attorney
general or the attorney general’s designee.
The state is liable for indemnification of attorney’s fees under Chapter 104,

Civil Practice and Remedies Code, if:

• the person is liable for the damages solely because the person signed an
industrial solid waste or hazardous waste manifest or other record required by
TEX. HEALTH & SAFETY CODE ANN. §�361.036 (Vernon 2001); and
• the person signed the manifest or record in the course and scope of the person’s
office, employment, or contractual performance or service on behalf of the
agency, institution, or department; and
• the person or company who signed the manifest did not increase or aggravate
circumstances of contamination by grossly negligent acts or willful misconduct.
In a cause of action based on conduct described above, the state shall indemnify38
the following persons, without regard to whether the persons performed their
services for compensation, for attorney’s fees adjudged against:
• an employee, a member of the governing board, or any other officer of a state
agency, institution, or department; or
• a former employee, former member of the governing board, or other former
officer of a state agency, institution, or department who was an employee or
officer when the act or omission on which the damages are based occurred; or
• a physician or psychiatrist licensed in this state who was performing services
under a contract with any state agency, institution, or department when the
act or omission on which the damages are based occurred; or
• a racing official performing services under a contract with the Texas Racing
Commission when the act or omission on which the damages or based
occurred; or

37
For limitations on appropriations made by the legislature to pay attorney's fees under Chapter 104, Civil
Practice and Remedies Code, see TEX. CIV. PRAC. & REM. CODE ANN. § 109.001 (Vernon 1997), § 109.002
(Vernon Supp. 2004), § 109.003 (Vernon 1997), § 109.004 (Vernon Supp. 2004), §§ 109.006-109.007 (Vernon
1997).
38
There are monetary limits on and certain exceptions concerning this indemnification requirement. See TEX.
CIV. PRAC. & REM. CODE ANN. § 104.003 (Vernon Supp. 2004).

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Chapter 4 – Expenditures Relating to Legal Proceedings

• a chaplain or spiritual advisor who was performing services under contract


with the Texas Department of Criminal Justice, the Texas Youth Commission,
or the Texas Juvenile Probation Commission when the act or omission on
which the damages are based occurred; or39
• a person serving on the governing board of a foundation, corporation, or
association at the request and on behalf of an institution of higher education,
as that term is defined by TEX. EDUC. CODE ANN. §�61.003(8)
(Vernon Supp. 2004), not including a public junior college; or
• a state contractor who signed a waste manifest as required by a state
contract; or
• the estate of a person listed above.
The state shall indemnify40 a person for reasonable attorney’s fees incurred in
defense of a criminal prosecution against the person if:
• the person is covered by the third set of bullets, above; and
• the attorney general determines that the conduct for which the person is
criminally prosecuted could give rise to a civil cause of action covered in the
first or second set of bullets, above; and
• the person is found not guilty after a trial or appeal or the complaint,
information, or indictment is dismissed without a plea of guilty or nolo
contendere being entered; and
• the attorney general determines that the complaint, information, or indictment
presented against the person was dismissed because:
– the presentment was made on mistake, false information, or other similar
basis, indicating absence of probable cause to believe, at the time of the
dismissal, the person committed the offense; or
– the complaint, information, or indictment was void.
Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §�104.001
(Vernon Supp. 2004), §§�104.002, 104.0035(a) (Vernon 1997).

F. Violation of religious freedom

In this subsection:

• “Free exercise of religion” means an act or refusal to act that is


substantially motivated by sincere religious belief. In determining whether an
act or refusal to act is substantially motivated by sincere religious belief, it is
not necessary to determine that the act or refusal to act is motivated by a
central part or central requirement of the person’s sincere religious belief.
• “Government agency” means this state and any agency of this state,
including a department, bureau, board, commission, office, agency, council, or
public institution of higher education.

39
This paragraph took effect June 15, 2001, but applies only to a cause of action that accrues after June 14,
2001. Act of May 23, 2001, 77th Leg., R.S., ch. 1082, §§ 2-3, 2001 Tex. Gen. Laws 2384, 2384.
40
The state's liability may not exceed $10,000 for the prosecution of a criminal offense or the prosecution of two
or more offenses prosecuted in a single criminal action. TEX. CIV. PRAC. & REM. CODE ANN. § 104.0035(b)
(Vernon 1997). Certain types of criminal prosecutions are not covered by this indemnification requirement.
See TEX. CIV. PRAC. & REM. CODE ANN. § 104.0035(c) (Vernon 1997).
The indemnification is payable out of funds appropriated for that purpose. TEX. CIV. PRAC. & REM. CODE
ANN. § 104.0035(e) (Vernon 1997).

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Chapter 4 – Expenditures Relating to Legal Proceedings

A government agency may not substantially burden a person’s free exercise of


religion. This prohibition, however, does not apply if the agency demonstrates that
the application of the burden to the person:
• is in furtherance of a compelling governmental interest; and
• is the least restrictive means of furthering that interest.
The prohibition described above applies to:
• any rule, order, decision, practice, or other exercise of governmental authority;
and
• an act of a government agency, in the exercise of governmental authority,
granting or refusing to grant a government benefit to an individual; and41
• each law of this state unless the law is expressly made exempt from the
application of Chapter 110, Civil Practice and Remedies Code, by reference to
that chapter.
A person whose free exercise of religion has been substantially burdened in violation
of the prohibition described above may assert the violation as a defense in a judicial
or administrative proceeding without regard to whether the proceeding is brought in
the name of the state or by any other person.
A person who successfully asserts a claim or defense under Chapter 110 is entitled
to recover reasonable attorney’s fees incurred in bringing the action.
Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §§�110.001(a),
110.002, 110.003(a)-(b), 110.004, 110.005(a)(4) (Vernon Supp. 2004).

G. Private Real Property Rights Preservation Act


In this subsection:
• “Owner” means a person with legal or equitable title to affected private real
property at the time a taking occurs.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “Private real property” means an interest in real property recognized by
common law, including a groundwater or surface water right of any kind,
that is not owned by the federal government, this state, or a political
subdivision of this state.
• “Taking” has the meaning assigned by TEX. GOV’T CODE ANN. §�2007.002(5)
(Vernon 2000).

41
Chapter 110, however, does not “affect the grant or denial of an appropriation or other grant of money or
benefits to a religious organization, nor does it affect the grant or denial of a tax exemption to a religious
organization.” TEX. CIV. PRAC. & REM. CODE ANN. §�110.012 (Vernon Supp. 2004).

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Chapter 4 – Expenditures Relating to Legal Proceedings

A private real property owner may file a contested case with a state agency to
determine whether a governmental action of the agency results in a taking under
the Private Real Property Rights Preservation Act (PRPRPA),42 which is codified in
Chapter 2007, Government Code. If the person is aggrieved by a final decision or
order in the case, the person may seek judicial review after the person has
exhausted all administrative remedies available within the agency.
The court or the state agency shall award a private real property owner who prevails in
a suit or contested cased filed under PRPRPA reasonable and necessary attorney’s fees.
Sources for this subsection: Private Real Property Rights Preservation Act,
TEX. GOV’T CODE ANN. §§�2007.001, 2007.002(2), (4), (5), 2007.022(a), 2007.025(b),
2007.026(a) (Vernon 2000); Code Construction Act, TEX. GOV’T CODE ANN.
§�311.005(2) (Vernon 1998).

H. Prompt payment law

In this subsection:

• “Goods” includes supplies, materials, or equipment.


• “Payment” means money owed to a vendor.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “Service” includes gas and water utility service.
• “State agency” means:
– a board, commission, department, office, or other agency in the executive
branch of state government that is created by the constitution or a statute of
this state, including an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004); or
– the Legislature or a legislative agency; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, a state
judicial agency, or the State Bar of Texas.
• “Vendor” means a person who supplies goods or a service to a state agency or
another person directed by the agency. The term does not include a state
agency except for Texas Correctional Industries. The term includes an officer
or employee of a state agency when acting in a private capacity to supply
goods or a service.
In a formal administrative or judicial action to collect an invoice payment or interest
due under Chapter 2251, Government Code, the opposing party shall pay the
reasonable attorney’s fees of the prevailing party. Chapter 2251 is commonly known
as the “prompt payment law.”
Sources for this subsection: TEX. GOV’T CODE ANN. §�2251.001(2), (4), (7)-(8), (10)
(Vernon Supp. 2004), §�2251.043 (Vernon 2000); Code Construction Act, TEX. GOV’T
CODE ANN. §�311.005(2) (Vernon 1998).
Cross reference for this subsection: Chapter 6: prompt payment law.

42
The definition of “include” in Section 1.025 does not apply here. See Subdivision (1) of this subsection for
definitions of “witness” and “state agency.” PRPRPA is codified in Chapter 2007, Government Code.

State of Texas Purchase Policies and Procedures Guide July 2004 97


Chapter 4 – Expenditures Relating to Legal Proceedings

I. Child abuse or neglect


In this subsection, “professional” has the meaning assigned by TEX. FAM. CODE ANN.
§�261.110(d)(4) (Vernon Supp. 2004).
A person who prevails in a suit against an employer under TEX. FAM. CODE ANN.
§�261.110 (Vernon 2002) may recover reasonable attorney’s fees. Section 261.110
generally prohibits an employer from suspending or terminating the employment of,
or otherwise discriminating against, a person who is a professional and who reports
child abuse or neglect or initiates or cooperates with an investigation or proceeding
by a governmental entity relating to an allegation of child abuse or neglect.
Source for this subsection: TEX. FAM. CODE ANN. §�261.110(b), (d)(4) (Vernon 2002).

J. General statute authorizing recovery of attorney’s fees


A person may recover reasonable attorney’s fees from an individual or corporation if
the claim qualifies for recovery of those fees. The state is not an “individual” or
“corporation,” however. Therefore, the state is not liable for attorney’s fees under the
statute discussed in this subsection.
Sources for this subsection: TEX. CIV. PRAC, & REM. CODE ANN. §38.001
(Vernon 1997); State v. Bodisch, 775 S.W. 2d 73, 74-5 (Tex. App.—Austin 1989,
writ denied).

K. Attorney’s fees ordered by the State Office of Administrative Hearings


The State Office of Administrative Hearings (SOAH) may order a state agency to
pay the attorney’s fees incurred by an opposing party only if SOAH has express
statutory authority to do so. SOAH is not a “court” under any statute or rule of civil
procedure that authorizes a court to order a state agency to pay the attorney’s fees
incurred by an opposing party.
Source for this subsection: Op. Tex. Att’y Gen. No. JC-495 (2002).

L. Administrative Procedure Act


The Administrative Procedure Act (APA) does not authorize the awarding of

attorney’s fees to a party in a contested case governed by the APA.

Source for this subsection: Op. Tex. Att’y Gen. No. JC-495 (2002).

USAS Purchase Voucher Requirements


1. Comptroller object code 7246 must be used if a state agency is prohibited from
retaining outside legal counsel until the agency receives the attorney general’s
certification that the retention of the counsel would be in the state’s best interest.
2. Comptroller object code 7258 must be used if a state agency is exempt from the
requirements of this section or has received pre-approval from the attorney general to
retain outside legal counsel.
3. A state agency must retain in its files documentation that shows the agency’s
compliance with the requirements and limitations described in this section. Upon
request, the agency must make the documentation available to the comptroller during a
pre-payment or a post-payment audit.

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Chapter 4 – Expenditures Relating to Legal Proceedings

§�4.008 Attorneys, retention or employment of


A. Requirements of the Texas constitution
The attorney general has the exclusive right to represent the state before the Texas
Supreme Court.
District and county attorneys have the exclusive right to represent the state in all
cases in the district and inferior courts in their respective counties. This right,
however, is subject to any specific statutory or constitutional authorization or
requirement for the attorney general to represent the state in those courts.
Sources for this subsection: TEX. CONST. art. IV, §�22; art. V, §�21.

B. Requirements of general law


1. Representation of the state before the courts of appeals
The attorney general has the exclusive right to represent the state before the
courts of appeals.
Source for this subdivision: TEX. GOV’T CODE ANN. §�402.021 (Vernon 1998).
2. Contracts with outside legal counsel

In this subdivision:

• “Legal services” does not include the functions of a hearings examiner,


administrative law judge, or other quasi-judicial officer.
• “State agency” means a governmental entity in the executive branch of state
government that was not specifically established by the Texas Constitution.
Unless a law specifically provides otherwise, a contract for legal services between
a state agency and an attorney who is not a full-time employee of the agency is
valid only if the attorney general has approved the contract.
This subdivision does not apply to the Texas Turnpike Authority Division of the
Texas Department of Transportation.
Source for this subdivision: TEX. GOV’T CODE ANN. §�402.0212 (Vernon Supp. 2004).
3. Representation of the Legislature in litigation
The Government Code says the following.
The Legislature may employ legal counsel or authorize the legal counsel of a
legislative agency to represent the Legislature in the courts of this state or the
United States.
The Legislature may employ legal counsel or authorize the legal counsel of a
legislative agency to represent the Legislature only if:
• the Legislature notifies and consults with the attorney general before
employing legal counsel or authorizing the legal counsel of a legislative agency;
and
• the speaker of the house of representatives and the president of the senate
approve the representation in writing; and
• the house of representatives and the senate approve the representation by
concurrent resolution.

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Chapter 4 – Expenditures Relating to Legal Proceedings

This subdivision does not apply to representation of the Legislature before the
Texas Supreme Court in violation of TEX. CONST. art. IV, §�22.
Source for this subdivision: TEX. GOV’T CODE ANN. §�301.061 (Vernon 1998).

4. Subchapter D of Chapter 2254, Government Code


In this subdivision, “state agency” means a department, commission, board,
authority, office, or other agency in the executive branch of state government
created by the state constitution or a state statute.
The requirements described in this subdivision do not apply to a contingent fee
contract for legal services.
Subject to TEX. GOV’T CODE ANN. §�402.0212 (Vernon Supp. 2004), a state agency
may contract for outside legal services. The attorney general may require the
agency to obtain the services through a competitive procurement process, under
conditions prescribed by the attorney general.
Sources for this subdivision: TEX. GOV’T CODE ANN. §§�2254.151-2254.154
(Vernon Supp. 2004).

C. Requirements of the General Appropriations Act


Except for Subdivision (5) of this subsection, the information in this subsection does
not apply to funds appropriated by the General Appropriations Act (GAA) to the
governor, the Comptroller, the Department of Agriculture, the General Land Office
and Veterans’ Land Board, or the Railroad Commission of Texas.

1. Representation of state agencies in court


The information in this subdivision does not apply to a state agency included43 in
Article X of the GAA.
Unless otherwise provided by law, the attorney general is primarily responsible for
representing the state in the trial of civil cases. A state agency may not expend
funds appropriated by the GAA to initiate a civil suit or defend itself against any
legal action without the consent of the attorney general. Absent this consent, the
attorney general shall represent the agency in that particular action.
If the attorney general is required by law to represent a state agency or state
official, then the funds appropriated by the GAA may not be expended to pay
compensation to any other attorney for representing the state in the trial of a civil
suit unless the attorney general consents to the representation. In this paragraph,
“state agency” means a state agency, a state board, or a state department.
If a district attorney, a criminal district attorney, a county attorney, or other
lawyer is required by law to represent a state agency or state official, then the
funds appropriated by the GAA may not be expended to pay compensation to any
other attorney for representing the state in the trial of a civil suit unless the
district attorney, criminal district attorney, county attorney, or other lawyer has
requested that the attorneys employed by the particular state agency or official
assist with the trial of the particular civil suit. In this paragraph, “state agency”
means a state agency, a state board, or a state department.

43
The definition of “include” in Section 1.002 does not apply here.

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Chapter 4 – Expenditures Relating to Legal Proceedings

2. Investigations, evidence gathering, and presenting claims


Article IX, Section 6.23 of the GAA does not restrict a state agency, state official,
state department, or state board from expending funds appropriated by the GAA
to investigate and assemble evidence for a pending or prospective civil suit. Nor
is a state agency, state official, state department, or state board prohibited from
investigating, filing, or presenting to any person a claim owing to the state.

3. Retention of outside legal counsel


A state agency may not expend funds appropriated by the GAA to retain outside
legal counsel unless the agency first requests the attorney general to perform the
services. If the attorney general determines that outside legal counsel is in the
best interest of the state, he must certify that fact to the Comptroller and the
requesting agency. Upon receiving the certification, the agency may expend
funds appropriated by the GAA to retain the counsel. The agency may not begin
the process of selecting outside legal counsel before receiving the attorney
general’s certification. The preceding four sentences do not apply to a state
agency included44 in Article X of the GAA.
On receipt of a request for outside legal counsel, the attorney general shall make
a determination on the request as expeditiously as possible, but in no event later
than ten working days after receiving the request.
For the purpose of the first paragraph of this subdivision, a state agency retains
outside legal counsel whenever the agency contracts with an attorney to provide
services that require the use of legal skills or knowledge. The following are
examples of services that require the use of legal skills or knowledge:
• advising a state agency about intellectual property rights; or
• advising a state agency about legislation; or
• reviewing a private placement memorandum in connection with the
securities laws; or
• providing advice about bonds; or
• preparing amicus curiae briefs; or
• representing a state agency in bankruptcy court.
If a state agency requests the attorney general to take legal action in court
against another state agency, then the attorney general shall give special
consideration to permitting one of the agencies to employ outside legal counsel to
represent that agency in the action. The agency must pay the counsel from its
own funds.
If the attorney general initiates legal action in court against a state agency on
behalf of the attorney general instead of another state agency, then the agency
may retain outside legal counsel to defend the agency without obtaining the prior
approval or consent of the attorney general.

44
The definition of “include” in Section 1.002 does not apply here.

State of Texas Purchase Policies and Procedures Guide July 2004 101
Chapter 4 – Expenditures Relating to Legal Proceedings

4. Retaining an attorney who represents clients before a state agency


A state agency may not expend funds appropriated by the GAA to contract with an
attorney who:
• represents clients before the agency; or
• has represented a client during the six month period preceding the start of the
contract; or
• has represented a client before the agency during the six month period after
the end of the contract.
The preceding paragraph (including its three bullets) does not apply to an entity
or appropriation in Article X of the GAA.

5. Retaining an attorney or law firm that represents a plaintiff in a

proceeding against the state

The GAA says that the funds appropriated by the GAA may not be expended to
pay the legal fees or expenses of an attorney or law firm that represents the state
or any state agency in any contested matter if the attorney or firm is
representing a plaintiff in a proceeding seeking monetary damages from the
state or any state agency.
The preceding paragraph does not apply to an entity or appropriation in
Article X of the GAA.
Sources for this subsection: Article IX, Section 6.23(a)-(e), (g)-(j) and Article X,

Section 2(a) of the General Appropriations Act. See Op. Tex. Att’y Gen.

No. MW-191 (1980).

D. Contingent fee contracts for legal services


1. Generally
In this subsection:
• “Contingent fee” means that part of a fee for legal services, under a
contingent fee contract, the amount or payment of which is contingent on the
outcome of the matter for which the services were obtained.
• “Contingent fee contract” means a contract for legal services under which
the amount or the payment of the fee for the services is contingent in whole or
in part on the outcome of the matter for which the services were obtained.
• “State governmental entity”:
– means the state or a board, commission, department, office, or other agency
in the executive branch of state government created under the constitution
or a statute of the state, including an institution of higher education as
defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004); and
– includes the state when a state officer is bringing a parens patriae proceeding
in the name of the state; and
– does not include a state agency or state officer acting as a receiver,
special deputy receiver, liquidator, or liquidating agent in connection
with the administration of the assets of an insolvent entity under TEX.
INS. CODE ANN. art. 21.28 (Vernon Supp. 2004) or Chapter 36, 66, 96, or
126, Finance Code.

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Chapter 4 – Expenditures Relating to Legal Proceedings

The requirements described in this subdivision apply only to a contingent fee


contract for legal services entered into by a state governmental entity. The
requirements apply only to a contract entered into after August 31, 1999. The
requirements were enacted by the Legislature, in accordance with
TEX. CONST. art. III, §�44, for the manner in which and the situations under
which a state governmental entity may compensate a public contractor under a
contingent fee contract for legal services.
Unless the governor approves and signs the contract, a state governmental
entity that has authority to enter into a contract for legal services in its own
name may enter into a contingent fee contract for legal services only if:
• the governing body of the entity approves the contract and the approved

contract is signed by the body’s presiding officer; or

• for an entity that is not governed by a multimember governing body, the

elected or appointed officer who governs the entity approves and signs the

contract.

Unless the governor approves and signs the contract, the attorney general may
enter into a contingent fee contract for legal services in the name of the state in
relation to a matter that has been referred to the attorney general under law by
another state governmental entity only if the other entity approves and signs the
contract in accordance with the preceding paragraph (including its two bullets).
Before approving a contingent fee contract for legal services, a governing body,
the elected or appointed officer, or the governor (as appropriate) must find that:
• there is a substantial need for the legal services; and
• the legal services cannot be adequately performed by the attorneys and
supporting personnel of the state governmental entity or by the attorneys and
supporting personnel of another state governmental entity; and
• the legal services cannot reasonably be obtained from attorneys in private

practice under a contract providing only for the payment of hourly fees,

without regard to the outcome of the matter, because of the nature of the

matter for which the services will be obtained or because the entity does not

have appropriated funds available to pay the estimated amounts required

under a contract providing for payment of only hourly fees.

• Before entering into a contingent fee contract for legal services in which the
estimated amount that may be recovered exceeds $100,000, a state
governmental entity that proposes to enter into the contract in its own name or
in the name of the state must also:
– notify the Legislative Budget Board (LBB) that the entity proposes to enter
into the contract; and
– send the LBB copies of the proposed contract; and
– send the LBB information demonstrating that the conditions required in the
last bullet, above, exist.
If a state governmental entity finds that the entity does not have appropriated
funds available to pay the estimated amounts required under a contract for the
legal services providing only for the payment of hourly fees, the entity may not
enter into the proposed contract in its own name or in the name of the state
unless the LBB finds that the entity’s finding with regard to available
appropriated funds is correct. The contract is void if the LBB does not make
this finding.

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Except as described in this paragraph (and the two bullets following this
paragraph), a contingent fee and a reimbursement of an expense under a
contract with a state governmental entity is payable only from funds the
Legislature specifically appropriates to pay the fee or reimburse the expense. An
appropriation to pay the fee or reimburse the expense must specifically describe
the individual contract, or the class of contracts classified by subject matter, on
account of which the fee is payable or expense is reimbursable. A general
reference to contingent fee contracts for legal services or to contracts subject to
Subchapter C of Chapter 2254, Government Code, or a similar general
description is insufficient. If the Legislature has not specifically appropriated
funds for paying the fee or reimbursing the expense, the entity may pay the fee
or reimburse the expense from other available funds only if:
• the Legislature is not in session; and
• the LBB gives its prior approval for that payment or reimbursement under
TEX. CONST. art. XVI, §�69 after examining the statement required under
TEX. GOV’T CODE ANN. §�2254.104(c) (Vernon 2000) and determining that the
requested payment and the contract under which payment is requested meet
all the requirements of Subchapter C of Chapter 2254, Government Code.
A payment or reimbursement under a contingent fee contract may not be made
until:
• final and unappealable arrangements have been made for depositing all
recovered funds to the credit of the appropriate fund or account in the state
treasury; and
• the state governmental entity and the state auditor have received from the
contracting attorney or law firm the statement required under
Section 2254.104(c).
Litigation and other expenses payable under a contingent fee contract, including
expenses attributable to attorney, paralegal, accountant, expert, or other
professional work performed by a person who is not a contracting attorney or a
partner, shareholder, or employee of a contracting attorney or law firm, may be
reimbursed only if the state governmental entity and the state auditor determine
that the expenses were reasonable, proper, necessary, actually incurred on
behalf of the entity, and paid for by the contracting attorney or law firm. The
contingent fee may not be paid until the state auditor has reviewed the relevant
time and expense records and verified that the hours of work on which the fee
computation is based were actually worked in performing reasonable and
necessary services for the entity under the contract.
All funds recovered by a state governmental entity in litigation or in settlement
of a matter that could have resulted in litigation are public funds of the state or
the entity and shall be deposited in the state treasury to the credit of the
appropriate fund or account. For this purpose, “funds” includes money
designated as damages, amounts adjudged or awarded, attorney’s fees, costs,
interest, settlement proceeds, and expenses. Legal fees or expenses may be paid
from recovered funds under a contingent fee contract for legal services only:
• after the funds are deposited as described in this paragraph; and
• in accordance with Subchapter C of Chapter 2254, Government Code, if that
subchapter applies to the contract.

104 July 2004 State of Texas Purchase Policies and Procedures Guide
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A state officer, employee, or governing body (including the attorney general) may
not waive the requirements of Subchapter C of Chapter 2254, Government Code,
or prejudice the interests of the state under that subchapter.
The GAA says that none of the money appropriated by the GAA may be expended by
a state governmental entity for payment of legal fees or expenses under a contingent
fee contract for legal services without the prior approval of the LBB in accordance
with TEX. CONST. art. XVI, §�69. In this paragraph, “state governmental entity”
means a board, commission, department, office, or other agency in the executive
branch of state government created under the constitution or a statute, including an
institution of higher education. The restrictions described in this paragraph apply to
all contingent fee contracts for legal services entered into by a state governmental
entity, including legal services relating to a parens patriae action or proceeding
brought by a state governmental entity in the name of the state. Those restrictions
do not apply to a contingent fee contract for legal services performed for a state
governmental entity in relation to the entity’s actions as a receiver, special deputy
receiver, liquidator, or liquidating agent in connection with the administration of the
assets of an insolvent entity, including actions under TEX. INS. CODE ANN. art. 21.28
(Vernon Supp. 2004) or Chapter 36, 66, 96, or 126, Finance Code. Those restrictions
also do not apply to a contingent fee contract under which recoveries from more than
one entity are contemplated and the expected amount of each recovery and the
actual amount of each recovery do not exceed $100,000.
Sources for this subdivision: TEX. GOV’T CODE ANN. §�404.097 (Vernon Supp. 2004),
§§�2254.101, 2254.102(a)-(b), 2254.103, 2254.108, 2254.109(c) (Vernon 2000); Act of
May 30, 1999, 76th Leg., R.S., ch. 1499, §�3.04, 1999 Tex. Gen. Laws 5164, 5185;
Article IX, Section 6.23(k) of the General Appropriations Act. See Tex. Att’y Gen.
LO-96-124 (1996).

2. Certain legal services contracts entered into by institutions of higher

education

The requirements described in Subdivision (1) of this subsection do not apply to a


contract for legal services described in Subsection (E) of this section. The fees or
other compensation paid in connection with the contract may be paid on a
contingency basis, at an hourly rate, or on another basis the governing board of
the institution considers appropriate.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.102(c) (Vernon Supp. 2004).

E. Centers for technology development and transfer


In this subsection:
• “Center” means an office, a department, or other organizational unit
established under Chapter 153, Education Code.
• “Governing board” has the meaning assigned by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004).
• “Institution of higher education” has the meaning assigned by TEX. EDUC.
CODE ANN. §�61.003 (Vernon Supp. 2004).
• “Technology” means the application of scientific knowledge for practical
purposes and includes inventions, discoveries, trade secrets, copyrighted
materials, tools, machines, materials, processes to do work, processes to
produce goods, processes to perform services, processes to carry out other
useful activities, trademarks, and computer software.

State of Texas Purchase Policies and Procedures Guide July 2004 105
Chapter 4 – Expenditures Relating to Legal Proceedings

An institution of higher education may establish a center to manage, transfer,


market, or otherwise commercialize technology owned by the institution or in which
the institution owns an interest. The institution may contract with a center under
the control of a governing board other than its own.
To carry out the purposes of Chapter 153, Education Code, and to support the
activities of centers, to the extent authorized by its governing board, an institution
of higher education may enter into a contract for legal services with a competent
lawyer or law firm to:
• prepare, file, pursue, and maintain patent applications in the United States or
foreign jurisdictions; or
• secure copyright protection for computer software; or
• prepare, file, and pursue trademark and service mark applications; or
• pursue litigation to prevent or stop infringement of any intellectual property
rights of the institution; or
• handle any other legal matter related to the operation and activities of the
center.
The fees or other compensation paid in connection with the contract may be paid on
a contingency basis, at an hourly rate, or on another basis the governing board of
the institution considers appropriate.
Sources for this subsection: TEX. EDUC. CODE ANN. §§�153.001(1)-(3), (6),
153.003(a), (c) (Vernon 2002), §�153.006 (Vernon Supp. 2004).

USAS Purchase Voucher Requirements


1. Comptroller object code 7246 must be used if a state agency is prohibited from
retaining outside legal counsel until the agency receives the attorney general’s
certification that the retention of the counsel would be in the state’s best interest.
2. Comptroller object code 7258 must be used if a state agency is exempt from the
requirements of this section or has received pre-approval from the attorney general to
retain outside legal counsel.

§�4.010 Condemnation proceedings


A state agency may not pay a filing fee to a county clerk concerning a condemnation
proceeding unless an objection has been filed or a judgment has been entered in county
court.
A state agency must pay a filing fee to a district clerk concerning a condemnation
proceeding when the condemnor begins proceedings in district court.
Sources: TEX. GOV’T CODE ANN. §�51.319(3) (Vernon 1998); TEX. LOC. GOV’T CODE
ANN. §�118.052(1)(A)(ii) (Vernon Supp. 2004); Op. Tex. Att’y Gen. No. DM-26 (1991).

USAS Purchase Voucher Requirement


Comptroller object code 7222 must be used.

106 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 4 – Expenditures Relating to Legal Proceedings

§�4.012 Court costs


The court costs that are payable with state funds include:
• transcription fees paid to court reporters; and
• filing fees for suits on behalf of the state; and
• certified paper fees; and
• recording fees; and
• fees for administering oaths.
For the purpose of this section, witness fees are not court costs.
Cross reference: Chapter 4: Witness expenses.

USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation that contains a full
description of the court costs paid by the agency. Upon request, the agency must
make the documentation available to the Comptroller during a pre-payment or a
post-payment audit.
2. Comptroller object code 7223 must be used.

§�4.014 Litigation revenues or financial benefits


The General Appropriations Act says the following about money paid to a state
government entity as a result of the settlement of litigation or other
arrangement providing revenues or financial benefits as a result of litigation.
The money may not be expended by any person unless the Legislative Budget
Board (LBB) is notified in writing about the terms of the settlement or
arrangement and about the entity’s plans for use of the money. The notice must
be delivered to the LBB by or on behalf of the entity at least 12 days before the
date of authorization, execution, or other creation of evidence of the approval of
the settlement or arrangement.
The preceding paragraph does not apply to a settlement of litigation, a court order
resulting from litigation, or other arrangement providing revenues or financial
benefits as a result of litigation:
• for a state governmental entity in relation to the entity’s actions as a
receiver, special deputy receiver, liquidator, or liquidating agent in
connection with the administration of the assets of an insolvent entity,
including actions under TEX. INS. CODE ANN. art. 21.28
(Vernon Supp. 2004) or Chapter 36, 66, 96, or 126, Finance Code; or
• under which recovery to the entity does not exceed $500,000.
Source: Article IX, Section 6.23(m) of the General Appropriations Act.

State of Texas Purchase Policies and Procedures Guide July 2004 107
Chapter 4 – Expenditures Relating to Legal Proceedings

§�4.016 State Purchasing and General Services Act,


applicability of
Subtitle D of Title 10, Government Code,45 does not apply to:
• obtaining outside legal counsel services; or
• obtaining expert witnesses; or
• procuring litigation-related goods and services for which competitive
procurement is not feasible under the circumstances.
Source: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2151.005 (Vernon Supp. 2004).

§�4.018 Witness fees and expenses


A. Witnesses in administrative hearings or proceedings
1. Administrative hearings or proceedings covered by the Administrative
Procedure Act

In this subdivision:

• “Commercial lodging establishment” means a motel, hotel, inn,


apartment, or similar entity that offers lodging to the public in exchange
for compensation.
• “Commercial transportation company” means an entity that offers
transportation of people or goods to the public in exchange for
compensation.
• “State agency” means a state officer, board, commission, or department
with statewide jurisdiction that makes rules or determines contested
cases. The term includes the State Office of Administrative Hearings for
the purpose of determining contested cases. The term does not include a
state agency wholly financed by federal money, the Legislature, the
courts, the Texas Workers’ Compensation Commission, or an institution
of higher education.
• “Witness” means a person who is not a party and who is subpoenaed or
otherwise compelled to attend a hearing or proceeding to give a deposition
or to produce books, records, papers, or other objects that are necessary
and proper for a hearing or proceeding governed by the Administrative
Procedure Act. The term does not include an expert witness.

45
Subtitle D of Title 10, Government Code, is commonly known as the State Purchasing and General Services
Act. State Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2151.001 (Vernon 2000).

108 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 4 – Expenditures Relating to Legal Proceedings

Subject to the limitations described in this subdivision, a witness of a state


agency is entitled to receive from the agency:
• 10 cents a mile if the place of the hearing or proceeding is more than
25 miles from the witness’s place of residence and the witness uses the
witness’s personally owned or leased motor vehicle to attend the hearing or
proceeding; and
• reimbursement of the witness’s transportation expenses while going to and
returning from the place of the hearing or proceeding if the place is more than
25 miles from the witness’s place of residence and the witness does not use the
witness’s personally owned or leased motor vehicle for the travel; and
• reimbursement of the witness’s meal and lodging expenses while going to and
returning from the place of the hearing or proceeding if the place is more than
25 miles from the witness’s place of residence; and
• a fee of $10 per day or part of a day that the witness is necessarily present at
the hearing or proceeding.
A state agency may increase the mileage rate or the fee rate, or both, if the agency
adopts a formal rule to that effect. A state agency may not, however, adopt a rule
that specifies a mileage rate greater than the maximum mileage rate provided by
law for state employees.
When a state agency is required to reimburse a witness for transportation and
lodging expenses, the agency may instead directly pay a commercial
transportation company for the transportation and a commercial lodging
establishment for the lodging.
A state agency may not pay a commercial lodging establishment or commercial
transportation company or reimburse a witness for transportation, meal, or
lodging expenses at a rate that exceeds the maximum rates provided by law for
state employees.
A state agency that is required to pay mileage or fees to a witness or to
reimburse a witness’s transportation, meal, or lodging expenses must submit a
proper voucher to the Comptroller. The voucher must be sworn by the witness.
Sources for this subsection: Administrative Procedure Act, TEX. GOV’T CODE
ANN. §§�2001.003(7), 2001.103 (Vernon 2000).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply only to a purchase voucher
submitted to pay the witness fees and expenses of a witness in an administrative hearing
that is covered by the Administrative Procedure Act.
1. A state agency must retain in its files documentation that explains the type of
proceeding the witness attended. Upon request, the agency must make the
documentation available to the Comptroller during a pre-payment or a
post-payment audit.
2. A state agency that has adopted a rule to increase the mileage or fee rate must retain in
its files a copy of the rule. Upon request, the agency must make the documentation
available to the Comptroller during a pre-payment or a post-payment audit.
3. Comptroller object code 7224 must be used.

State of Texas Purchase Policies and Procedures Guide July 2004 109
Chapter 4 – Expenditures Relating to Legal Proceedings

2. Administrative hearings or proceedings not covered by the


Administrative Procedure Act
The requirements described in this subdivision apply only to a witness in a
hearing or proceeding that is not covered by the Administrative Procedure Act. 46
Those requirements do not apply to an expert witness.
A witness is entitled to receive a fee or a reimbursement of a meal, lodging,
incidental, mileage, or other transportation expense only if the statute that
covers the hearing or proceeding provides for the fee or reimbursement.

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only to a purchase voucher
submitted to pay the witness fees and expenses of a witness in an administrative hearing
that is not covered by the Administrative Procedure Act.
1. A state agency must retain in its files documentation that explains the type of

proceeding that the witness attended. Upon request, the agency must make the

documentation available to the Comptroller during a pre-payment or a

post-payment audit.

2. The agency must retain in its files documentation that cites the statutory authority to
pay the fee or reimburse the meal, lodging, incidental, mileage, or other transportation
expense. Upon request, the agency must make the documentation available to the
Comptroller during a pre-payment or a post-payment audit.
3. Comptroller object code 7224 must be used.

B. Witnesses in civil court proceedings

In this subsection:

• “Commercial lodging establishment” means a motel, hotel, inn, apartment,


or similar entity that offers lodging to the public in exchange for compensation.
• “Commercial transportation company” means an entity that offers
transportation of people or goods to the public in exchange for compensation.
Subject to the limitations described in this subsection, a witness summoned by a
state agency in a civil court proceeding is entitled to receive:
• one dollar for each day the witness attends court; and
• mileage at the rate provided by law for state employees if the witness uses the
witness’s personally owned or leased motor vehicle to attend court; and
• reimbursement of the witness’s transportation expenses if the witness does not
use the witness’s personally owned or leased motor vehicle to attend court; and
• reimbursement of the witness’s meal and lodging expenses while attending
court if the court is at least 25 miles from the witness’s place of residence.
A witness summoned by a state agency to give testimony outside of a courtroom in
connection with a civil court proceeding is entitled to receive the same fees and
expenses the witness would have received if the witness had testified in a courtroom.
When a state agency is required to reimburse a witness for transportation and lodging
expenses, the agency may instead directly pay a commercial transportation company
for the transportation and a commercial lodging establishment for the lodging.

46
See Subdivision (1) for definitions of “witness” and “state agency.”

110 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 4 – Expenditures Relating to Legal Proceedings

A state agency may not pay a commercial lodging establishment or commercial


transportation company or reimburse a witness for transportation, meal, or lodging
expenses at a rate that exceeds the maximum rates provided by law for state
employees.
A witness may claim fees and mileage only by filing an affidavit with the clerk of the
court. The affidavit must state the number of days the witness attended court and
the number of miles traveled while going to and returning from court.
The requirements described in this subsection do not apply to an expert witness.
Sources for this subsection: TEX. CIV. PRAC. & REM. CODE ANN. §�22.003
(Vernon 1997); Op. Tex. Att’y Gen. No. DM-342 (1995).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply only to a purchase voucher
submitted to pay the witness fees and expenses of a witness in a civil court proceeding.
1. A state agency must retain in its files documentation that explains the type of
proceeding that the witness attended. Upon request, the agency must make the
documentation available to the Comptroller during a pre-payment or a post-payment
audit.
2. Comptroller object code 7254 must be used.

C. Witnesses in criminal proceedings


1. Witnesses who reside outside Texas

In this subdivision:

• “Commercial lodging establishment” means a motel, hotel, inn, apartment,


or similar entity that offers lodging to the public in exchange for compensation.
• “Commercial transportation company” means an entity that offers
transportation of people or goods to the public in exchange for compensation.
• “Criminal proceeding” means a proceeding in which confinement in jail is a
permissible punishment. The term includes a juvenile proceeding in which a
determinate sentence is possible.
• “Witness” means an individual who resides outside Texas and who is
summoned to attend and testify in Texas at a criminal court or grand jury
proceeding. The term does not include an expert witness.
Subject to the limitations described in this subdivision, a witness is entitled to be
reimbursed by the state for the reasonable and necessary transportation, meal,
and lodging expenses that the witness incurs as a result of the witness’s
attendance at a criminal proceeding.
The state may reimburse a witness for transportation expenses only if the
transportation is provided by a commercial transportation company or the
transportation is by the witness’s personally owned or leased motor vehicle.
The state may reimburse a witness for lodging expenses only if the lodging is
provided by a commercial lodging establishment.
A reimbursement or payment of transportation, meal, or lodging expenses may
not be paid at rates that exceed the maximum rates provided by law for state
employees.

State of Texas Purchase Policies and Procedures Guide July 2004 111
Chapter 4 – Expenditures Relating to Legal Proceedings

When the state is required to reimburse a witness for transportation and lodging
expenses, the state may instead directly pay a commercial transportation company
for the transportation and a commercial lodging establishment for the lodging.
In addition to reimbursement or payment for transportation, meal, and lodging
expenses, the Comptroller is required to pay other expenses required by the laws of
Texas or the laws of the state where the witness resides if those expenses are
properly requested by the attorney for the state.
A reimbursement may be paid to an assignee of a witness only if the assignment is
made under oath and is acknowledged, certified, and sealed by someone authorized
to administer oaths. A county that has advanced funds to enable a witness to
attend a criminal proceeding in the county is entitled to be reimbursed as an
assignee of the witness.
The Comptroller may pay the transportation, meal, and lodging expenses of a
witness only if the Comptroller receives the witness’s court-approved claim for
the expenses.
If a court certifies that travel, living, and other expenses must be paid to a
witness to obtain the attendance of the witness at a trial in the court, then the
Comptroller is required to pay the expenses into the registry of the court.
A person reimbursed by the state for travel and expenses for attendance as a
witness as provided by TEX. CODE CRIM. PROC. ANN. art. 35.27
(Vernon 1989 & Supp. 2004) is not entitled to an amount that exceeds the
amount appropriated for that purpose by the General Appropriations Act.
Sources for this subdivision: Uniform Act to Secure the Attendance of Witnesses
from Without the State in Criminal Proceedings, TEX. CODE CRIM. PROC. ANN.
art. 24.28, §�4(b) (Vernon 1989); TEX. CODE CRIM. PROC. ANN. art. 35.27
(Vernon 1989 & Supp. 2004); Act of May 29, 2003, 78th Leg., R.S., ch. 315,
§�22, 2003 Tex. Gen. Laws 1337, 1342.

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply only to a purchase voucher
submitted to pay the witness fees and expenses of a witness who resides outside Texas.

1. A state agency must retain in its files documentation that explains the type of
proceeding that the witness attended and specifies the state in which the witness
resided at the time the witness attended the proceeding. Upon request, the agency must
make the documentation available to the Comptroller during a pre-payment or a
post-payment audit.

2. Comptroller object code 7224 must be used.

112 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 4 – Expenditures Relating to Legal Proceedings

2. Witnesses who reside in Texas but outside the county where the proceeding
occurs

In this subdivision:

• “Commercial lodging establishment” means a motel, hotel, inn, apartment,


or similar entity that offers lodging to the public in exchange for compensation.
• “Commercial transportation company” means an entity that offers
transportation of people or goods to the public in exchange for compensation.
• “Criminal proceeding” means a proceeding in which confinement in jail is a
permissible punishment. The term includes a juvenile proceeding in which a
determinate sentence is possible.
• “Witness” means a person subpoenaed by a party or otherwise required or
requested in writing by the prosecuting attorney or the court to appear for the
purpose of giving testimony in a criminal proceeding if the person resides
outside the county in which the prosecution is pending. The term does not
include an expert witness.
This subdivision does not apply to a witness who resides outside Texas.
Subject to the limitations described in this subdivision, a witness is entitled to be
reimbursed by the state for the reasonable and necessary transportation, meal,
and lodging expenses that the witness incurs as a result of the witness’s
attendance at a criminal proceeding.
The state may reimburse a witness for transportation expenses only if the
transportation is provided by a commercial transportation company or the
transportation is by the witness’s personally owned or leased motor vehicle. The
state may reimburse a witness for lodging expenses only if the lodging is
provided by a commercial lodging establishment.
A reimbursement or payment of transportation, meal, or lodging expenses may
not be paid at rates that exceed the maximum rates provided by law for state
employees.
When the state is required to reimburse a witness for transportation and

lodging expenses, the state may instead directly pay a commercial

transportation company for the transportation and a commercial lodging

establishment for the lodging.

In addition to reimbursement or payment for transportation, meal, and lodging


expenses, the Comptroller is required to reimburse or pay other expenses
required by Texas law if those expenses are properly requested by the attorney
for the state.
A reimbursement may be paid to an assignee of a witness only if the assignment is
made under oath and is acknowledged, certified, and sealed by a person authorized
to administer oaths. A county that has advanced funds to enable a witness to
attend a criminal proceeding is entitled to be reimbursed by the state as an
assignee of the witness.
The Comptroller may pay the transportation, meal, and lodging expenses of a
witness only if the Comptroller receives the witness’s court-approved claim for
the expenses.

State of Texas Purchase Policies and Procedures Guide July 2004 113
Chapter 4 – Expenditures Relating to Legal Proceedings

A person reimbursed by the state for travel and expenses for attendance as a
witness as provided by TEX. CODE CRIM. PROC. ANN. art. 35.27
(Vernon 1989 & Supp. 2004) is not entitled to an amount that exceeds the
amount appropriated for that purpose by the General Appropriations Act.
Sources: TEX. CODE CRIM. PROC. ANN. art. 35.27 (Vernon 1989 & Supp. 2004);
Act of May 29, 2003, 78th Leg., R.S., ch. 315, §�22, 2003 Tex. Gen. Laws 1337,
1342; Op. Tex. Att’y Gen. Nos. H-107 (1973), C-579 (1966).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only to a purchase voucher
submitted to pay the witness fees and expenses of a witness who resides in Texas but
outside the county where the criminal proceeding occurred.
1. A state agency must retain in its files documentation that:
a. explains the type of proceeding that the witness attended; and
b. lists the county in which the witness resided; and
c. lists the county in which the criminal proceeding occurred.
2. Upon request, the agency must make the preceding documentation available to the
Comptroller during a pre-payment or a post-payment audit.
3. Comptroller object code 7224 must be used.

D. Expert witnesses in any proceeding


An expert witness is a person who provides expert evidence. Expert evidence is an
opinion by a qualified person on facts already proved, involving scientific or
technical knowledge, not evidence of things done or seen that anyone who had done
them or seen them would be competent to prove.
An expert witness is entitled to receive compensation and reimbursement of the
witness’s expenses in compliance with the contract between the witness and the
state agency that hired the witness. The contract might be subject to certain
required contracting procedures, such as the procedures that govern the purchasing
of consulting services.

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only to a purchase voucher
submitted to pay the compensation or expenses, or both, of an expert witness in any proceeding.
1. A state agency must retain in its files documentation which proves that the witness was
an expert witness. Upon request, the agency must make the documentation available to
the Comptroller during a pre-payment or a post-payment audit.
2. Comptroller object code 7254 must be used.

E. Witness fees and expenses incurred in federal court


Federal law requires that a person subpoenaed to testify in federal court be paid witness
fees for one day’s attendance plus mileage. The fees and mileage must be paid to the
witness when the subpoena is served. The attorney general has said that either the
attorney general or the state agency represented by the attorney general may pay those
witness fees and the mileage.

114 July 2004 State of Texas Purchase Policies and Procedures Guide
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A witness shall be paid an attendance fee of $40 for each day’s attendance:
• at any court of the United States; or
• before a United States magistrate; or
• before any person authorized to take the deposition of the witness pursuant
to any rule or order of a court of the United States.
The witness shall also be paid the $40 per day fee for the time necessarily used in
going to and returning from the place of attendance at the beginning and end of the
attendance or at any time during the attendance.
A witness who travels by common carrier shall be paid for the actual expenses of
travel on the basis of the means of transportation reasonably utilized and the distance
necessarily traveled to and from the witness’s residence by the shortest practical route
in going to and returning from the place of attendance. The witness must use a
common carrier at the most economical rate reasonably available. A receipt or other
evidence of actual cost must be furnished.
A travel allowance equal to the mileage allowance that the administrator of the
General Services Administration has prescribed for official travel of employees of the
federal government shall be paid to a witness who travels by privately owned vehicle.
Computation of mileage shall be made on the basis of a uniformed table of distances
adopted by the administrator.
The following expenses shall be paid in full to a witness incurring them: toll charges
for toll roads, bridges, tunnels, and ferries; taxicab fares between places of lodging and
carrier terminals; and parking fees (upon presentation of a valid parking receipt).
A subsistence allowance shall be paid to a witness when an overnight stay is required at
the place of attendance because the place is so far removed from the residence of the
witness as to prohibit return thereto from day to day. The amount of the allowance may
not exceed the maximum per diem allowance prescribed by the administrator for official
travel in the area of attendance by employees of the federal government. The amount of
the allowance for a witness attending in an area designated by the administrator as a
high-cost area may not exceed the maximum actual subsistence allowance prescribed by
the administrator for official travel in the area by employees of the federal government.
Sources for this subsection: Fed. R. Civ. P. 45(b)(1); 5 U.S.C.A. §§�5704(a),
5707(b)(2) U.S.C.S. §§�5704(a), 5707(b)(2) (Law. Co-op. LEXIS through Pub. L.
No. 108-98, approved December 19, 2003 (with a gap of Pub. L. No.�108-173));
28 U.S.C.S. §�1821(a)-(d) (Law. Co-op. LEXIS through Pub. L. No. 108-98,
approved December 19, 2003 (with a gap of Pub. L. No.�108-173)); Op. Tex.
Att’y Gen. No.�C-786 (1966).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only to a purchase voucher
submitted to pay the witness fees or expenses, or both, of a person subpoenaed to testify in
federal court.
1. A state agency must retain in its files documentation that explains the type of proceeding
that the person attended. Upon request, the agency must make the documentation
available to the Comptroller during a pre-payment or a post-payment audit.
2. Comptroller object code 7224 must be used for criminal proceedings.
3. Comptroller object code 7254 must be used for civil proceedings.

State of Texas Purchase Policies and Procedures Guide July 2004 115
Chapter 5 – Expenditures Under Particular Contracts
§�5.002 Automated information systems
In this section:
• “Automated information system” includes:
– the computers and computer devices on which an information system is
automated, including computers and computer devices that the Texas
Building and Procurement Commission (TBPC) identifies in guidelines
developed by TBPC in consultation with the Department of Information
Resources and in accordance with Chapter 2054, Government Code, and
rules adopted under that chapter; and
– a service related to the automation of an information system, including
computer software or computers; and
– a telecommunications apparatus or device that serves as a component of a
voice, data, or video communications network for transmitting, switching,
routing, multiplexing, modulating, amplifying, or receiving signals on the
network, and services related to telecommunications that are not covered
under the following bullet; and
– for the Department of Information Resources, as telecommunications
provider for the state, the term includes any service provided by a
telecommunications provider, as that term is defined by TEX. UTIL. CODE
ANN. §�51.002 (10) (Vernon Supp. 2004).
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or
the Texas Judicial Council; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public
junior college.
State funds may not be expended in the purchase of an automated information system
unless the contract contains a technology access clause to read as follows:
The vendor expressly acknowledges that state funds may not be expended in
connection with the purchase of an automated information system unless that
system meets certain statutory requirements relating to accessibility by persons
with visual impairments. Accordingly, the vendor represents and warrants to
(name of state agency) that the technology provided to (name of state agency) for
purchase is capable, either by virtue of features included within the technology or
because it is readily adaptable by use with other technology, of:
(1) providing equivalent access for effective use by both visual and
nonvisual means;
(2) presenting information, including prompts used for interactive
communications, in formats intended for both visual and nonvisual use; and
(3) being integrated into networks for obtaining, retrieving, and
disseminating information used by individuals who are not blind or
visually impaired.

116 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

For purposes of this clause, the phrase “equivalent access” means a


substantially similar ability to communicate with or make use of the technology,
either directly by features incorporated within the technology or by other
reasonable means such as assistive devices or services that would constitute
reasonable accommodations under the federal Americans with Disabilities Act or
similar state or federal laws. Examples of methods by which equivalent access
may be provided include, but are not limited to, keyboard alternatives to mouse
commands and other means of navigating graphical displays, and customizable
display appearance.
This requirement applies to all contracts made by state agencies that involve the

purchase of an automated information system, without regard to:

• the source of funds used to make the purchase; or


• whether the purchase is made under delegated purchasing authority; or
• whether the purchase is made under the authority of Subtitle D of Title�10,
Government Code,47 or other law.
The requirement, however, applies to a state agency only if the agency is subject to the
Information Resources Management Act codified at Chapter 2054, Government Code.
The requirement does not apply to the purchase of a wireless communication device to
be used by peace officers, firefighters, and other emergency response personnel to
respond to a public safety emergency.
Sources: Information Resources Management Act, TEX. GOV’T CODE ANN.

§�2054.002 (Vernon 2000); State Purchasing and General Services Act, TEX.

GOV’T CODE ANN. §§�2151.002, 2157.001(1) (Vernon Supp. 2004),

§§�2157.002, 2157.005(b)-(c) (Vernon 2000).

§�5.004 Construction projects


In this section:
• “Construction” includes acquisition and reconstruction.
• “Cost of a project” includes the cost of: real estate; other property; rights and
easements; utility services; site development; construction and initial
furnishing and equipment; architectural, engineering, and legal services;
surveys, plans, and specifications; and other costs, including those incurred by
the Texas Building and Procurement Commission (TBPC), that are necessary
or incidental to determining the feasibility or practicability of a project.
• “Project” means a building construction project that is financed wholly or
partly by a specific appropriation, a bond issue, or federal money. The term
includes the construction of: (1) a building, structure, or appurtenant
facility or utility, including the acquisition and installation of original
equipment and original furnishings; and (2) an addition to or alteration,
rehabilitation, or repair of an existing building, structure, or appurtenant
facility or utility.
• “Project analysis” means work done before the legislative appropriation for a
project to develop a reliable estimate of the cost of the project to be used in the
appropriations request.

47
Subtitle D of Title 10, Government Code, is commonly known as the State Purchasing and General Services
Act. State Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2151.001 (Vernon 2000).

State of Texas Purchase Policies and Procedures Guide July 2004 117
Chapter 5 – Expenditures Under Particular Contracts

• “Rehabilitation” includes renewal, restoration, extension, enlargement, and


improvement.
• “State agency” means:
– a department, commission, board, office, or other agency in the executive branch
of state government created by the state constitution or a state statute; or
– the supreme court, the court of criminal appeals, a court of appeals, or the
Texas Judicial Council; or
– a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004) except a public junior college.
• “Using agency” means:
– an instrumentality of the state that occupies and uses a state-owned or
state-leased building; or
– the TBPC, with respect to a state-owned building maintained by TBPC.
The information provided in this section applies only to a building construction project of the state.
The information provided in this section does not apply to:
• a project constructed by and for the Texas Department of Transportation; or
• a project constructed by and for a state institution of higher education; or
• a pen, shed, or ancillary building constructed by and for the Department of
Agriculture for the processing of livestock before export; or
• a project constructed by the Parks and Wildlife Department; or
• a repair or rehabilitation project, except a major renovation, of buildings and
grounds on TBPC’s inventory; or
• a repair and rehabilitation project of another using agency, if all labor for the
project is provided by the regular maintenance force of the using agency under
specific legislative authorization and the project does not require the advance
preparation of working plans or drawings; or
• a repair and rehabilitation project involving the use of contract labor, if the
project has been excluded from Chapter 2166, Government Code, by TBPC rule
and does not require the advance preparation of working plans or drawings; or
• an action taken by the Texas Commission on Environmental Quality48 under
Subchapter F or I of Chapter 361, Health and Safety Code; or
• a repair, rehabilitation, or construction project on property owned by the Texas
Department of Housing and Community Affairs or the Texas State Affordable
Housing Corporation; or
• a project constructed by or under the supervision of a public authority created
by the laws of this state; or
• a state-aided local government project.

48
Those requirements are not discussed in the guide. The information provided in this subdivision applies only

to a major consulting services contract that is entered into after August�31, 1999. A major consulting services

contract that is entered into before September 1, 1999, is governed by the law in effect on the date the

contract is entered into, and the former law is continued in effect for that purpose. Act of May 31, 1999, 76th

Leg., R.S., ch. 1467, §�4.05, 1999. A reference in law to the Texas Natural Resource Conservation Commission

(TNRCC) is a reference to the Texas Commission on Environmental Quality. Act of May 28, 2001, 77th Leg.,

R.S., ch. 965, §�18.01(b), 2001 Tex. Gen. Laws 1933, 1985 (House Bill No. 2912). TNRCC is required to adopt

a timetable for phasing in the name change. Section 4996, 5036. The former law may be found at Act of May

28, 1997, 75th Leg., R.S., ch.�1035, §�10, 199718.01(c) of House Bill No. 2912, 2001 Tex. Gen. Laws at 1985.

118 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

TBPC may waive, suspend, or modify a provision described in this subsection that conflicts
with a federal statute or a rule or administrative procedure of a federal agency if a waiver,
suspension, or modification is essential to receive federal money for a project. If a project is
wholly financed with federal money, a standard required by an enabling federal statute or
required by a rule of the administering federal agency controls.
Money appropriated by the Legislature may not be used for a capital construction project for
which a project analysis described by the State Purchasing and General Services Act, TEX.
GOV’T CODE ANN. §�2166.152 (Vernon 2000) is required until the analysis is filed with the
Legislative Budget Board, the Budget Division of the Governor’s Office, and the Comptroller.
A state agency may not spend more than the amount authorized for the cost of a project
unless the governor and the Legislative Budget Board (LBB) approve the expenditure.
Once the cost of a project reaches the amount authorized for the project, each change to
approved project plans must be approved by the governor and the LBB.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§§�2151.002(2), �2166.001(1)-(2), (4)-(5), (7), (10) (Vernon Supp. 2004), §§�2166.002,
2166.003(a), 2166.004, 2166.051, 2166.063, 2166.152(e) §�2166.260 (Vernon Supp. 2004).

USAS Purchase Voucher Requirements


1. Upon request, the agency must make documentation available to the Comptroller that
proves compliance with the State Purchasing and General Services Act, including a
copy of any waiver provided by the Texas Building and Procurement Commission.
2. Comptroller object code 7341 must be used.

§�5.006 Consulting services


A. Definitions
Except where provided otherwise, in this section:
• “Consultant” means a person that provides or proposes to provide a consulting
service.
• “Consulting service” means a study conducted for a state agency or advice
provided to a state agency under a contract that does not involve the traditional
relationship of employer and employee. The term does not include a routine
service that is necessary to the functioning of a state agency’s programs.
• “Executive director” means the individual who is the chief administrative
officer of a state agency. The term excludes a member of a governing body.
• “Executive head” means:
– the elected or appointed state official who is authorized by law to administer
a state agency if the agency is not headed by a governing body; or
– the executive director of a state agency if the agency is headed by a
governing body.
• “Major consulting services contract” means a consulting services contract
for which it is reasonably foreseeable that the value of the contract will exceed
$15,000, or $25,000 for an institution of higher education other than a public
junior college.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.

State of Texas Purchase Policies and Procedures Guide July 2004 119
Chapter 5 – Expenditures Under Particular Contracts

• “Political subdivision” means: (1) a county; or (2) an incorporated or


unincorporated municipality; or (3) a public junior college; or (4) a public
school district or other educational or rehabilitative district; or
(5) a metropolitan or regional transit authority; or (6) an airport authority; or
(7) a river authority or compact; or (8) a regional planning commission, a
council of governments, or a similar regional planning agency created under
Chapter 391, Local Government Code; or (9) the Edwards Aquifer Authority
or a district governed by Title 4, Water Code; or (10) a soil and water
conservation district; or (11) a county or municipal improvement district; or
(12) a county road or road utility district; or (13) a county housing authority;
or (14) an emergency services or communications district; or (15)�a fire
prevention district; or (16) a public health or hospital authority or district; or
(17) a mosquito control district; or (18) a special waste district; or (19) a rural
rail transportation district; or (20) any other local government or special
district of this state.
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or the
Texas Judicial Council; or
– a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior college.
• “State governmental entity” means a state department, commission, board,
office, institution, facility, or other agency the jurisdiction of which is not
limited to a geographical portion of the state. The term includes a university
system and an institution of higher education, other than a public junior
college, as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
The term does not include a political subdivision.
Sources for this subsection: State Purchasing and General Services Act, TEX.
GOV’T CODE ANN. §�2151.002(2) (Vernon Supp. 2004); TEX. GOV’T CODE ANN.
§�2254.021 (Vernon 2000); Code Construction Act, TEX. GOV’T CODE ANN.
§�311.005(2) (Vernon 1998); 34 TEX. ADMIN. CODE §�5.54(a)(2)-(3) (2003).

B. Applicability of this section


1. General discussion
The requirements described in this section apply to a consulting service that a
state agency acquires with money appropriated by the Legislature, derived from
the exercise of the statutory duties of the agency, or received from the federal
government.
The requirements described in this section apply only to:
• a consulting services contract that was entered into after August 31, 1991; or
• the amendment, extension, or renewal of a consulting services contract if the
amendment, extension, or renewal was entered into after August�31, 1991.

120 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

The requirements49 in the consulting services law that was in effect before
September�1, 1991, apply to:
• a consulting services contract that was entered into before that date;
or
• the amendment, extension, or renewal of a consulting services
contract if the amendment, extension, or renewal was entered into
before that date.
The requirements described in this section do not apply to the extent they
conflict with federal laws or regulations about the expenditure of federal funds.
The requirements described in this section do not apply to a consulting service
provided by:
• a practitioner of a professional service as defined under the Professional
Services Procurement Act, TEX. GOV’T CODE ANN. §�2254.002(2)
(Vernon Supp. 2004); or
• a private legal counsel; or
• an investment counselor; or
• an actuary; or
• a medical service provider; or
• a dental service provider.
Sources for this subdivision: TEX. GOV’T CODE ANN. §§�2254.023,

2254.024(a)(1)-(5) (Vernon 2000); Act of August 25, 1991, 72nd Leg., 2d

C.S., ch. 8, §§�7.05, 8.01, 1991 Tex. Gen. Laws 137, 176-7.

2. Retirement system trust funds


With one exception, the requirements described in this section do not apply
to the procurement of a consulting service by the governing board of a
retirement system trust fund if the board determines that the service is
necessary for the performance of the board’s constitutional fiduciary duties.
The exception is as follows. The requirements described in Subsection (G)(1)
of this section apply whenever the governing board of a retirement system
trust fund procures a consulting service.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.024(a)(6)

(Vernon 2000).

49
Those requirements are not discussed in the guide.

State of Texas Purchase Policies and Procedures Guide July 2004 121
Chapter 5 – Expenditures Under Particular Contracts

3. Exceptions provided by the Comptroller, the governor, and the Texas

Building and Procurement Commission

The Comptroller, the governor, and the Texas Building and Procurement
Commission may jointly decide to subject the procurement of a particular
consulting service to the procedures required by Chapters 2155-2158,
Government Code, instead of the procedures described in this section. Before
they may make that decision:
• they must conclude that using the procedures required by those chapters would
be more advantageous to the state; and
• they must each adopt by rule a memorandum of understanding that states the
substance of their decision.
Sources for this subdivision: State Purchasing and General Services Act, TEX.
GOV’T CODE ANN. §�2151.003 (Vernon Supp. 2004) (a statutory reference to the
General Services Commission (GSC) means the Texas Building and
Procurement Commission (TBPC)); TEX. GOV’T CODE ANN. §�2254.024(b)
(Vernon 2000).

C. Necessity for consulting services


A state agency may contract with a consultant only if:
• there is a substantial need for the consulting services; and
• the agency cannot adequately perform the services with its own personnel or
through a contract with a state governmental entity.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.026 (Vernon 2000).

D. Selection of consultants
1. Criteria for selection

When selecting a consultant, a state agency must:

• base its choice on demonstrated competence, knowledge, and qualifications and


on the reasonableness of the proposed fee for the services; and
• if other considerations are equal, give preference to a consultant whose
primary place of business is in the state or who will manage the consulting
contract wholly from an office in the state.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.027 (Vernon 2000).

2. Prohibited selection
A state agency may not accept a bid or award a contract that includes proposed
financial participation by a person who received compensation from the agency to
participate in preparing the specifications or request for proposals on which the bid or
contract is based.
Source for this subdivision: State Purchasing and General Services Act,
TEX. GOV’T CODE ANN. §�2155.004(a) (Vernon Supp. 2004).

122 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

E. Notice of intent to employ a consultant


Before entering into a major consulting services contract, a state agency shall:
• notify the Legislative Budget Board and the Governor’s Budget and
Planning Office that the agency intends to contract with a consultant;
and
• give information to the Legislative Budget Board and the Governor’s
Budget and Planning Office to demonstrate that the agency has
complied or will comply with the requirements described in Subsections
(C) and (D)(1) of this section; and
• obtain a finding of fact from the Governor’s Budget and Planning Office
that the consulting services are necessary. This does not apply to a
major consulting services contract to be entered into by an institution of
higher education other than a public junior college if the institution
includes in the invitation published under 2254.029 TEX GOV’T CODE,
a finding by the chief executive officer of the institution that the
consulting services are necessary and an explanation of that finding.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.028(a), (c)
(Vernon Supp. 2004).

F. Publication in the Texas Register before entering into a major consulting


services contract
Not later than the 30th day before the date it enters into a major consulting
services contract, a state agency shall file a document with the secretary of state
for publication in the Texas Register. The document must:
• invite consultants to provide offers of consulting services; and
• identify the individual who should be contacted by a consultant that
intends to make an offer; and
• specify the closing date for the receipt of offers; and
• describe the procedure by which the state agency will award the contract.
If the consulting services sought by a state agency relate to services previously
provided by a consultant, the agency shall disclose that fact in the invitation for
offers. If the agency intends to award the contract for the consulting services to a
consultant that previously provided the services, unless a better offer is received,
the agency shall disclose its intention in the invitation for offers.

Source for this subsection: TEX. GOV’T CODE ANN. §�2254.029 (Vernon 2000).

State of Texas Purchase Policies and Procedures Guide July 2004 123
Chapter 5 – Expenditures Under Particular Contracts

G. Publication and notification after entering into a consulting services

contract

1. Publication in the Texas Register50


Not later than the 20th day after the date of entering into a major consulting
services contract, the contracting state agency shall file with the secretary of
state for publication in the Texas Register:
• a description of the activities that the consultant will conduct; and
• the name and business address of the consultant; and
• the total value of the contract; and
• the beginning and ending dates of the contract; and
• the dates on which documents, films, recordings, or reports that the consultant
is required to present to the agency are due.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.030 (Vernon 2000).

2. Notification to the Legislative Budget Board


A state agency shall provide written notice to the Legislative Budget Board (LBB) of
a contract for consulting services if the amount of the contract, including an
amendment, modification, renewal, or extension of the contract, exceeds $14,000.
The notice must be on the form prescribed by the LBB and filed not later than the
tenth day after the date the entity51 enters into the contract.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.0301 (Vernon 2000).

H. Renewals, extensions, or amendments of consulting services contracts

1. Renewal of a major consulting services contract


A state agency must comply with the requirements described in this subdivision
when the agency intends to renew a major consulting services contract.
If the renewal contract itself is not a major consulting services contract, then the
agency shall file with the secretary of state for publication in the Texas Register the
information described in Subsection (G)(1) of this section. The information must be
filed not later than the 20th day after the renewal contract is entered into. 52
If the renewal contract itself is a major consulting services contract, then the agency
shall comply with the requirements described in Subsections (E) and (F) of this
section.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.031(a) (Vernon 2000).

50
The information provided in this subdivision applies only to a major consulting services contract that is
entered into after August 31, 1999. A major consulting services contract that is entered into before
September 1, 1999, is governed by the law in effect on the date the contract is entered into, and the former
law is continued in effect for that purpose. Act of May 31, 1999, 76th Leg., R.S., ch. 1467, §�4.05, 1999 Tex.
Gen. Laws 4996, 5036. The former law may be found at Act of May 28, 1997, 75th Leg., R.S., ch. 1035, §�10,
1997 Tex. Gen. Laws 3845, 3848.
51
As in the original. “The entity” in this context probably means “the agency.”
52
This paragraph applies only to a major consulting services contract that is renewed after August 31, 1999. A
major consulting services contract that is renewed before September 1, 1999, is governed by the law in effect
on the date the contract is renewed, and the former law is continued in effect for that purpose. Act of
May 31, 1999, 76th Leg., R.S., ch. 1467, §�4.05, 1999 Tex. Gen. Laws 4996, 5036. The former law may be
found at Act of May 28, 1997, 75th Leg., R.S., ch. 1035, §�11, 1997 Tex. Gen. Laws 3845, 3848.

124 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

2. Renewal of a consulting services contract that is not a major consulting


services contract
A state agency must comply with the requirements described in this subdivision
when the agency intends to renew a consulting services contract that is not a major
consulting services contract.
If the contracting state agency is not an institution of higher education and if the
original contract and the renewal contract have a reasonably foreseeable value
totaling more than $15,000, then the agency shall comply with the requirements
described in Subsections (E) and (F).
If the contracting state agency is an institution of higher education and if the
original contract and the renewal contract have a reasonably foreseeable value
totaling more than $25,000, then the agency shall comply with the requirements
described in Subsections (E) and (F).
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.031(b)

(Vernon Supp. 2004).

3. Extension or amendment of a major consulting services contract


A state agency must comply with the requirements described in this subdivision
when the agency intends to extend or amend a major consulting services contract.
If the contract after the extension or amendment is no longer a major consulting
services contract, then the agency shall file the information required by
Subsection�(G)(1) of this section with the secretary of state for publication in the
Texas Register. The information must be filed not later than the 20th day after the
date the contract is extended or amended. 53
If the contract after the extension or amendment is still a major consulting
services contract, then the agency shall comply with the requirements described in
Subsections (E) and (F) of this section.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.031(c) (Vernon 2000).

4. Extension or amendment of a consulting services contract that is not a


major consulting services contract
A state agency must comply with the requirements described in this subdivision
when the agency intends to extend or amend a consulting services contract that is
not a major consulting services contract.
If the contracting state agency is not an institution of higher education and if the
original contract and the extension or amendment have a reasonably foreseeable
value totaling more than $15,000, then the agency shall comply with the
requirements described in Subsections (E) and (F).
If the contracting state agency is an institution of higher education and if the
original contract and the extension or amendment have a reasonably foreseeable
value totaling more than $25,000, then the agency shall comply with the
requirements described in Subsections (E) and (F).
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.031(d)

(Vernon Supp. 2004).

53
This paragraph applies only to a major consulting services contract that is extended or amended after
August�31, 1999. A major consulting services contract that is extended or amended before September 1, 1999,
is governed by the law in effect on the date the contract is extended or amended, and the former law is
continued in effect for that purpose. Act of May 31, 1999, 76th Leg., R.S., ch. 1467, §�4.05, 1999 Tex. Gen.
Laws 4996, 5036. The former law may be found at Act of May 28, 1997, 75th Leg., R.S., ch. 1035, §�11, 1997
Tex. Gen. Laws 3845, 3848.

State of Texas Purchase Policies and Procedures Guide July 2004 125
Chapter 5 – Expenditures Under Particular Contracts

I. Consulting services provided by former state employees


1. Prohibition against contracting with former or retired employees

In this subdivision:

• “Retired agency employee” means a person:


– whose last state service before retirement was for the state agency with
which the retiree contracts to perform services; and
– who is a retiree of:
• the employee class of membership of the Employees Retirement
System of Texas; or
• the Teacher Retirement System of Texas, the majority of whose
service was credited in that system in a position with a state agency.
• “State agency” includes a “public senior college or university,” as that term is
defined by TEX. EDUC. CODE ANN. §�61.003(4) (Vernon Supp. 2004).
A state agency may not enter into a consulting services contract with a former or retired
employee of the agency before the first anniversary of the last date on which the
individual was employed by the agency, if appropriated money will be used to make
payments under the contract. The agency, however, is not prohibited from entering into
a professional services contract with a corporation, firm, or other business entity that
employs a former or retired employee of the agency within one year of the employee’s
leaving the agency, provided that the former or retired employee does not perform
services on projects for the corporation, firm, or other business entity that the employee
worked on while employed by the agency.
Chapter 1499, 76th legislature, regular session, 1999, does not affect the authority of an
institution of higher education to collect, account for, and control local funds and
institutional funds in the manner authorized by Subchapter A of Chapter 51, Education
Code. Section 1.36 of that chapter amended the statute from which this subdivision is
derived.
Sources for this subdivision: TEX. GOV’T CODE ANN. §�2252.901(a), (d)

(Vernon Supp. 2004); Act of May 30, 1999, 76th Leg., R.S., ch. 1499, §�1.46,

1999 Tex. Gen. Laws 5164, 5176.

2. Disclosure by former state employee of former state employment


The following requirements apply to an individual who has been employed by a
state agency at any time during the two years preceding the date on which the
individual offers to perform a consulting service for a state agency. The
individual shall disclose in the offer:
• the nature of the previous employment with the agency or another state agency; and
• the date the employment was terminated; and
• the annual rate of compensation for the employment at the time of its termination.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.033(a) (Vernon 2000).

3. Disclosure by a state agency of a consultant’s former state employment


A state agency that accepts an offer to provide consulting services from an
individual described in the preceding subdivision must include, in the
information filed under Subsection (G)(1) of this section, a statement about:
• the individual’s employment with a state agency; and
• the nature of that employment.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2254.033(b) (Vernon 2000).

126 July 2004 State of Texas Purchase Policies and Procedures Guide
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J. Dividing contracts
A state agency may not divide a consulting services contract or a renewal,
amendment, or extension of a consulting services contract into more than one
contract, renewal, amendment, or extension to avoid the requirements described in
this section.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.035 (Vernon 2000).
K. Reporting of financial interests
The information provided in this subsection applies only to an officer or employee of a
state agency who has a financial interest or who is related within the second degree of
consanguinity or affinity to an individual who has a financial interest in a consultant
that submits an offer to provide consulting services to the agency. Degrees of
relationship must be determined in compliance with Chapter 573, Government Code.
The officer or employee shall report the financial interest to the chief executive of the
agency not later than the 10th day after the date on which the consultant submits the
offer. The information provided in this subsection applies to all consulting services
contracts and renewals, amendments, and extensions of those contracts.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.032 (Vernon 2000).
L. Archives
On request, a state agency shall, after the agency’s contract with a consultant has
ended, supply the Legislative Budget Board and the Governor’s Budget and Planning
Office with a copy of each document, film, recording, or report compiled by the
consultant under the contract.
A state agency shall file with the Texas State Library a copy of each document, film,
recording, or report compiled by the consultant.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.036(a)-(b)
(Vernon 2000).
M. Actions by state agencies on recommendations from consultants
As part of the biennial budgetary hearing process conducted by the Legislative Budget
Board and the Governor’s Budget and Planning Office, a state agency shall report to
each of them on any actions taken in response to the recommendations of any
consultant with whom the agency contracts during the previous biennium.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.037 (Vernon 2000).
N. Emergency procurements of consulting services
A state agency that needs consulting services before compliance with the
requirements described in this section can be completed because of an unforeseen
emergency shall comply with the governor’s rules about emergency waivers of those
requirements.
In this subsection, “unforeseen emergency” means a situation that suddenly
and unexpectedly causes a state agency to need the services of a consultant. The
term includes the issuance of a court order, an actual or imminent natural
disaster, and new state or federal legislation. An emergency is not unforeseen if a
state agency was negligent in foreseeing the occurrence of the emergency.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.025 (Vernon 2000).

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Chapter 5 – Expenditures Under Particular Contracts

O. Mixed contracts
When a contract involves both consulting services and other services, the
requirements described in this section apply if the primary objective of the contract
is the acquisition of consulting services.
Source for this subsection: TEX. GOV’T CODE ANN. §�2254.038 (Vernon 2000).

P. Competitive bidding
The requirements described in this section neither require nor prohibit the use of
competitive bidding procedures to purchase consulting services.
Sources for this subsection: Op. Tex. Att’y Gen. Nos. JM-940 (1988),
H-1173 (1978).

Q. Procurement of consulting services by the Texas Building and Procurement


Commission
At the request of a state agency, the Texas Building and Procurement Commission
(TBPC) may procure consulting services for the agency. When TBPC procures
consulting services for a state agency, TBPC may require the agency to reimburse
TBPC for the costs incurred by the TBPC in procuring the services.
Sources for this subsection: TEX. GOV’T CODE ANN. §�2254.040 (Vernon 2000).
See TEX. GOV’T CODE ANN. §�2151.003 (Vernon Supp. 2004) (a statutory reference to
the General Services Commission (GSC) means the Texas Building and
Procurement Commission (TBPC)).

R. Consequences of non-compliance
If a state agency contracts for consulting services or renews, amends, or extends a
consulting services contract without complying with the requirements described in
Subsections (F), (G)(1), and (H) of this section, then the contract, renewal,
amendment, or extension is void.
A major consulting services contract that a state agency enters into without first
obtaining a finding of fact from the Governor’s Budget and Planning Office in
compliance with the requirements described in Subsection (E) of this section is void.
If a consultant contracts with a state agency without complying with the requirements
described in Subsection (I)(2)-(3) of this section, then the contract is void.
When a contract, renewal, amendment, or extension is void, the Comptroller may not:
• draw a warrant or transmit money to satisfy an obligation under the contract,
renewal, amendment, or extension; or
• reimburse a state agency for a payment made under the contract, renewal,
amendment, or extension.
When a contract, renewal, amendment, or extension is void, a state agency may not
make any payments under the contract, renewal, amendment, or extension from any
state or federal funds held in or outside the state treasury.

Source for this subsection: TEX. GOV’T CODE ANN. §�2254.034 (Vernon 2000).
Cross references for this section: Chapter 5: Professional services; Chapter 5:
State employees, contracting with former (generally); Chapter 5: State
employees, contracting with retired; Chapter 5: State officers and employees,
contracting under Chapter 572, Government Code with former.

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Chapter 5 – Expenditures Under Particular Contracts

USAS Purchase Voucher Requirements

A. Consulting services contracts that are not major consulting services contracts

These requirements apply to a purchase voucher that requests a payment under a

consulting services contract that is not a major consulting services contract.

These requirements do not apply if the contract has been renewed, extended, or

amended.

The voucher must contain the following information in the descriptive legal text

screen and be supported by the following documentation:


(1) the reasonably foreseeable value of the contract; and
(2) the cumulative total of prior payments made under the contract; and
(3) a copy of the contract if the copy has not already been provided to the
Comptroller; and
(4) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
Comptroller object code 7240 must be used.

B. Major consulting services contracts


These requirements apply to a purchase voucher that requests a payment under a
major consulting services contract. These requirements do not apply if the contract has

been renewed, extended, or amended.

The voucher must contain the following information in the descriptive legal text

screen and be supported by the following documentation:


(1) the reasonably foreseeable value of the contract; and
(2) the cumulative total of prior payments made under the contract; and
(3) a copy of the contract if the copy has not already been provided to the
Comptroller; and
(4) the volume and page number of the Texas Register in which the
requirements described in Subsections (F), (G)(1), and, if applicable, (I)(3) of
this section were fulfilled; and
(5) a copy of the governor’s finding of fact that the consulting services are
necessary if the copy has not already been provided to the Comptroller; and
(6) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
(7) For an institution of higher education other than a public junior college a copy
of the finding in the invitation by the CEO of the institution that the consulting
services are necessary and an explanation of that finding.
Comptroller object code 7240 must be used for an institution of higher education
other than a public junior college. Comptroller object code 7239 must be used for state
agencies other than those of higher education.

State of Texas Purchase Policies and Procedures Guide July 2004 129
Chapter 5 – Expenditures Under Particular Contracts

C. Original contract is a major consulting services contract, but the renewal contract is
not a major consulting services contract
These requirements apply to a purchase voucher if: (1) the voucher requests a payment under
a consulting services contract that was originally a major consulting services contract; and
(2) the contract has been renewed; and (3) the renewal contract itself is not a major
consulting services contract.

The voucher must contain the following information in the descriptive legal text

screen and be supported by the following documentation:

(1) the reasonably foreseeable value of the original contract; and


(2) the reasonably foreseeable value of the renewal contract; and
(3) the cumulative total of prior payments made under the original contract; and
(4) the cumulative total of prior payments made under the renewal contract; and
(5) a copy of the original contract if the copy has not already been provided to the
Comptroller; and
(6) a copy of the renewal contract if the copy has not already been provided to the
Comptroller; and
(7) the volume and page number of the Texas Register in which the
requirements described in Subsections (F), (G)(1), and, if applicable, (I)(3) of
this section were fulfilled when the original contract was entered into; and
(8) the volume and page number of the Texas Register in which the
requirements described in Subsection (G)(1) of this section were fulfilled
when the renewal contract was entered into; and
(9) a copy of the governor’s finding of fact that the consulting services under the
original contract are necessary if the copy has not already been provided to
the Comptroller; and
(10) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
(11) For an institution of higher education other than a public junior college a
copy of the finding in the invitation by the CEO of the institution that the
consulting services are necessary and an explanation of that finding.
Comptroller object code 7240 must be used for an institution of higher education
other than a public junior college. Comptroller object code 7239 must be used for state
agencies other than those of higher education.

D. Original contract was a major consulting services contract, and the renewal contract
also is a major consulting services contract

These requirements apply to a purchase voucher if: (1) the voucher requests a

payment under a consulting services contract that was originally a major

consulting services contract; and (2) the contract has been renewed; and (3) the

renewal contract itself is a major consulting services contract.

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Chapter 5 – Expenditures Under Particular Contracts

The voucher must contain the following information in the descriptive legal text
screen and be supported by the following documentation:
(1) the reasonably foreseeable value of the original contract; and
(2) the reasonably foreseeable value of the renewal contract; and
(3) the cumulative total of prior payments made under the original contract;
and
(4) the cumulative total of prior payments made under the renewal contract;
and
(5) a copy of the original contract if the copy has not already been provided to
the Comptroller; and
(6) a copy of the renewal contract if the copy has not already been provided to
the Comptroller; and
(7) the volume and page number of the Texas Register in which the
requirements described in Subsections (F), (G)(1), and, if applicable,
(I)(3) of this section were fulfilled when the original contract was
entered into; and
(8) the volume and page number of the Texas Register in which the
requirements of Subsection (F) of this section were fulfilled when the
renewal contract was entered into; and
(9) a copy of the governor’s finding of fact that the consulting services
under the original contract are necessary if the copy has not already
been provided to the Comptroller; and
(10) a copy of the governor’s finding of fact that the consulting services under
the renewal contract are necessary if the copy has not already been
provided to the Comptroller; and
(11) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
(12) For an institution of higher education other than a public junior
college a copy of the finding in the invitation by the CEO of the
institution that the consulting services are necessary and an
explanation of that finding.
Comptroller object code 7240 must be used for an institution of higher education
other than a public junior college. Comptroller object code 7239 must be used for
state agencies other than those of higher education.

E. Original contract was not a major consulting services contract, and the original
contract and the renewal contract have a reasonably foreseeable value totaling more
than $15,000, or $25,000 for an institution of higher education, other than a public
junior college
These requirements apply to a purchase voucher if: (1) the voucher requests a payment
under a consulting services contract that was originally not a major consulting services
contract; and (2) the contract has been renewed; and (3) the original contract and the
renewal contract have a reasonably foreseeable value totaling more than $15,000, or
$25,000 for an institution of higher education other than a public junior college.

State of Texas Purchase Policies and Procedures Guide July 2004 131
Chapter 5 – Expenditures Under Particular Contracts

The voucher must contain the following information in the descriptive legal text

screen and be supported by the following documentation:

(1) the reasonably foreseeable value of the original contract; and


(2) the reasonably foreseeable value of the renewal contract; and
(3) the cumulative total of prior payments made under the original contract; and
(4) the cumulative total of prior payments made under the renewal contract; and
(5) a copy of the original contract if the copy has not already been provided to
the Comptroller; and
(6) a copy of the renewal contract if the copy has not already been provided to
the Comptroller; and
(7) the volume and page number of the Texas Register in which the
requirements described in Subsection (F) of this section were fulfilled when
the renewal contract was entered into; and
(8) a copy of the governor’s finding of fact that the consulting services under the
renewal contract are necessary if the copy has not already been provided to
the Comptroller; and
(9) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
(10) For an institution of higher education other than a public junior college a copy
of the finding in the invitation by the CEO of the institution that the consulting
services are necessary and an explanation of that finding.
Comptroller object code 7240 must be used for an institution of higher education other
than a public junior college. Comptroller object code 7239 must be used for state agencies
other than those of higher education.

F. Original contract was not a major consulting services contract, and the original contract
and the renewal contract have a reasonably foreseeable value totaling $15,000, or $25,000
for an institution of higher education, other than a public junior college, or less
These requirements apply to a purchase voucher if: (1) the voucher requests a payment
under a consulting services contract that was originally not a major consulting services
contract; and (2) the contract has been renewed; and (3) the original contract and the
renewal contract have a reasonably foreseeable value totaling $15,000, or $25,000 for an
institution or higher education, other than a public junior college, or less.
The voucher must contain the following information in the descriptive legal text

screen and be supported by the following documentation:

(1) the reasonably foreseeable value of the original contract; and


(2) the reasonably foreseeable value of the renewal contract; and
(3) the cumulative total of prior payments made under the original contract; and
(4) the cumulative total of prior payments made under the renewal contract; and
(5) a copy of the original contract if the copy has not already been provided to the
Comptroller; and
(6) a copy of the renewal contract if the copy has not already been provided to the
Comptroller; and
(7) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
Comptroller object code 7240 must be used.

132 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

G. Original contract was a major consulting services contract and is still a major
consulting services contract after being extended or amended
These requirements apply to a purchase voucher if: (1) the voucher requests a payment
under a consulting services contract that was originally a major consulting services
contract; and (2) the contract has been extended or amended; and (3) the contract after
the extension or amendment is still a major consulting services contract.
The voucher must contain the following information in the descriptive legal text

screen and be supported by the following documentation:

(1) the reasonably foreseeable value of the original contract; and


(2) the reasonably foreseeable value of the contract after the extension or
amendment; and
(3) the cumulative total of prior payments made under the original contract; and
(4) the cumulative total of prior payments made under the contract after the
extension or amendment took effect; and
(5) a copy of the original contract if the copy has not already been provided to
the Comptroller; and
(6) a copy of the extension or amendment if the copy has not already been
provided to the Comptroller; and
(7) the volume and page number of the Texas Register in which the
requirements described in Subsections (F), (G)(1), and, if applicable, (I)(3) of
this section were fulfilled when the original contract was entered into; and
(8) the volume and page number of the Texas Register in which the requirements
described in Subsection (F) of this section were fulfilled when the extension or
amendment was entered into; and
(9) a copy of the governor’s finding of fact that the consulting services under the
original contract are necessary if the copy has not already been provided to
the Comptroller; and
(10) a copy of the governor’s finding of fact that the consulting services under the
contract after the extension or amendment are necessary if the copy has not
already been provided to the Comptroller; and
(11) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
(12) For an institution of higher education other than a public junior college a
copy of the finding in the invitation by the CEO of the institution that the
consulting services are necessary and an explanation of that finding.
Comptroller object code 7240 must be used for an institution of higher education other
than a public junior college. Comptroller object code 7239 must be used for state
agencies other than those of higher education.

H. Original contract was a major consulting services contract but is no longer a major
consulting services contract after being extended or amended

These requirements apply to a purchase voucher if: (1) the voucher requests a

payment under a consulting services contract that was originally a major

consulting services contract; and (2) the contract has been extended or amended;

and (3) the contract after the extension or amendment is no longer a major

consulting services contract.

State of Texas Purchase Policies and Procedures Guide July 2004 133
Chapter 5 – Expenditures Under Particular Contracts

The voucher must contain the following information in the descriptive legal text
screen and be supported by the following documentation:
(1) the reasonably foreseeable value of the original contract; and
(2) the reasonably foreseeable value of the contract after the extension or
amendment; and
(3) the cumulative total of prior payments made under the original
contract; and
(4) the cumulative total of prior payments made under the contract after the
extension or amendment took effect; and
(5) a copy of the original contract if the copy has not already been provided to
the Comptroller; and
(6) a copy of the extension or amendment if the copy has not already been
provided to the Comptroller; and
(7) the volume and page number of the Texas Register in which the
requirements described in Subsections (F), (G)(1), and, if applicable,
(I)(3) of this section were fulfilled when the original contract was entered
into; and
(8) the volume and page number of the Texas Register in which the
requirements described in Subsection (G)(1) of this section were fulfilled
when the extension or amendment was entered into; and
(9) a copy of the governor’s finding of fact that the consulting services under the
original contract are necessary if the copy has not already been provided to
the Comptroller; and
(10) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
(11) For an institution of higher education other than a public junior college
a copy of the finding in the invitation by the CEO of the institution that
the consulting services are necessary and an explanation of that finding.
Comptroller object code 7240 must be used for both state agencies and institutions
of higher education other than a public junior college.

I. Original contract is not a major consulting services contract, and the original
contract and the extension or amendment have a reasonably foreseeable value
totaling more than $15,000, or $25,000 for an institution of higher education
other than a public junior college
These requirements apply to a purchase voucher if: (1) the voucher requests a
payment under a consulting services contract that was originally not a major
consulting services contract; and (2) the contract has been extended or amended;
and (3) the original contract and the extension or amendment have a reasonably
foreseeable value totaling more than $15,000, or $25,000 for an institution of
higher education other than a public junior college.

134 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

The voucher must contain the following information in the descriptive legal text
screen and be supported by the following documentation:
(1) the reasonably foreseeable value of the original contract; and
(2) the reasonably foreseeable value of the extension or amendment; and
(3) the cumulative total of prior payments made under the original contract;
and
(4) the cumulative total of prior payments made under the contract after the
extension or amendment took effect; and
(5) a copy of the original contract if the copy has not already been provided to
the Comptroller; and
(6) a copy of the extension or amendment if the copy has not already been
provided to the Comptroller; and
(7) the volume and page number of the Texas Register in which the
requirements described in Subsections (F) of this section were fulfilled
when the extension or amendment was entered into; and
(8) a copy of the governor’s finding of fact that the consulting services under
the extension or amendment are necessary if the copy has not already been
provided to the Comptroller; and
(9) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
(10) For an institution of higher education other than a public junior college
a copy of the finding in the invitation by the CEO of the institution that
the consulting services are necessary and an explanation of that finding.
Comptroller object code 7240 must be used for an institution of higher education
other than a public junior college. Comptroller object code 7239 must be used for
state agencies other than those of higher education.

J. Original contract is not a major consulting services contract, and the original
contract and the extension or amendment have a reasonably foreseeable value
totaling $15,000, or $25,000 for an institution of higher education other than a
public junior college, or less
These requirements apply to a purchase voucher if: (1) the voucher requests a
payment under a consulting services contract that was originally not a major
consulting services contract; and (2) the contract has been extended or amended; and
(3) the original contract and the extension or amendment have a reasonably
foreseeable value totaling $15,000, or $25,000 for an institution of higher education
other than a public junior college, or less.

State of Texas Purchase Policies and Procedures Guide July 2004 135
Chapter 5 – Expenditures Under Particular Contracts

The voucher must contain the following information in the descriptive legal text

screen and be supported by the following documentation:

(1) the reasonably foreseeable value of the original contract; and


(2) the reasonably foreseeable value of the extension or amendment; and
(3) the cumulative total of prior payments made under the original contract; and
(4) the cumulative total of prior payments made under the contract after the
extension or amendment took effect; and
(5) a copy of the original contract if the copy has not already been provided to
the Comptroller; and
(6) a copy of the extension or amendment if the copy has not already been
provided to the Comptroller; and
(7) a statement that the payment complies with the requirements described in
Subsections (C), (D), and (I) of this section.
Comptroller object code 7240 must be used for both state agencies and institutions of
higher education other than a public junior college.

K. Emergency waiver from the governor


A state agency that has received the governor’s emergency waiver of the requirements
described in this section must submit a copy of the emergency waiver with each
purchase voucher submitted to the Comptroller to request a payment under the
consulting services contract covered by the waiver.

§�5.008 Contract claims against the state, resolving


In this section:
• “Contract” means a written contract between a unit of state government
and a contractor for goods or services, or for a project as defined by the State
Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2166.001(4)
(Vernon 2000). The term does not include a contract subject to TEX. TRANSP.
CODE ANN. §�201.112 (Vernon Supp. 2004).
• “Contractor” means an independent contractor who has entered into a
contract directly with a unit of state government. The term does not include:
– a contractor’s subcontractor, officer, employee, agent, or other person
furnishing goods or services to a contractor; or
– an employee of a unit of state government; or
– a student at an institution of higher education.
• “Institution of higher education” has the meaning assigned by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
• “Unit of state government” means the state or an agency, department,
commission, bureau, board, office, council, court, or other entity that is in
any branch of state government and that is created by the constitution or
a statute of this state, including a university system or an institution of
higher education. The term does not include a county, municipality, court
of a county or municipality, special purpose district, or other political
subdivision of this state.

136 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

Chapter 2260, Government Code, applies only to a claim pending or arising after
August 29, 1999, without regard to the date on which the contract was entered into.
Chapter 2260 does not apply to: (1) a claim for personal injury or wrongful death
arising from the breach of a contract; or (2) a contract executed or awarded before
August 31, 1999. Chapter 2260 does not apply to a claim or dispute with respect to
which the 76th Legislature or a previous Legislature has enacted a concurrent
resolution granting permission to the contractor to bring a suit against the state or a
unit of state government.54

Chapter 2260 does not waive sovereign immunity to suit or liability.

A contractor may make a claim against a unit of state government for breach of a
contract between the contractor and the unit. The unit may assert a counterclaim
against the contractor. The contractor must provide written notice to the unit not later
than the 180th day after the date of the event giving rise to the claim.55 The unit must
assert in a writing delivered to the contractor any counterclaim not later than the 90th
day after the date of notice under the preceding sentence.

The total amount of money recoverable on a claim for breach of contract under
Chapter 2260 may not, after deducting the amount specified in the next sentence,
exceed an amount equal to the sum of: (1) the balance due and owing on the contract
price; and (2) the amount or fair market value of orders or requests for additional
work made by a unit of state government to the extent that the orders or requests for
additional work were actually performed. Any amount owed the unit of state
government for work not performed under a contract or in substantial compliance
with its terms shall be deducted from the amount described in the preceding sentence.

An award of damages under Chapter 2260 may not include consequential or similar
damages, exemplary damages, any damages based on an unjust enrichment theory,
attorney’s fees, or home office overhead.

Each unit of state government that enters into a contract to which Chapter 2260
applies shall include as a term of the contract a provision stating that the dispute
resolution process used by the unit under Chapter 2260 must be used to attempt to
resolve a dispute arising under the contract.

A unit of state government may pay a claim resolved in accordance with Subchapter�B
of Chapter 2260 only from money appropriated to it for payment of contract claims or
for the payment of the contract that is the subject of the claim. If money previously
appropriated for payment of contract claims or payment of the contract is insufficient to
pay the claim or settlement, the balance of the claim may be paid only from money
appropriated by the Legislature for payment of the claim.

54
The definitions of “contractor” and “unit of state government” set forth at the beginning of this section do not
specifically apply in this sentence.
55
There is an important exception to this deadline. If the claim was pending before August 30, 1999, the

claimant must have provided written notice to the unit not later than February 26, 2000. See Act of

May�30, 1999, 76th Leg., R.S., ch. 1352, §�12(b), 1999 Tex. Gen. Laws 4578, 4587.

State of Texas Purchase Policies and Procedures Guide July 2004 137
Chapter 5 – Expenditures Under Particular Contracts

If a contractor is dissatisfied with the result of negotiation with a unit of state government
under Section 2260.052, Government Code, the contractor may file a request for hearing with
the unit. Upon receipt of the request, the unit shall refer the claim to the State Office of
Administrative Hearings (SOAH). The unit shall pay the amount of the claim or part of the
claim if the SOAH administrative law judge finds, by a preponderance of the evidence, that
under the laws of this state the claim or part of the claim is valid and the total amount of
damages, after considering any counterclaim, is less than $250,000. The unit shall pay the
claim from money appropriated to it for payment of contract claims or for payment of the
contract that is the subject of the claim. If money previously appropriated for payment of
contract claims or payment of the contract is insufficient to pay the claim, the balance of the
claim may be paid only from money appropriated by the Legislature for payment of the claim.
Chapter 304, Finance Code, applies to a judgment awarded to a claimant under Chapter 2260
except that the applicable rate of interest may not exceed six percent.
The chief administrative law judge of SOAH may set a fee for the hearing in an amount
not less than $250 and that allows SOAH to recover all or a substantial part of its costs
in holding hearings. SOAH may assess the fee against the party that does not prevail in
the hearing or may apportion the fee against the parties in an equitable manner.
Sources: TEX. GOV’T CODE ANN. §§�2260.001, 2260.004(a), 2260.006,
2260.051(a)-(b), (d), 2260.054, 2260.102(a), (c), 2260.103, 2260.105-2260.106
(Vernon 2000), §§�2260.002-2260.003 (Vernon Supp. 2004); Act of May 30, 1999,
76th Leg., R.S., ch. 1352, §§�12(a), 13, 1999 Tex. Gen. Laws 4578, 4587.

§�5.010 Contractor oversight


In this section:
• “Contract” includes a grant, other than a grant made to a school district or a
grant made for other academic purposes, under which the recipient of the grant is
required to perform a specific act or service, supply a specific type of product, or
both.
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or the
Texas Judicial Council; or
– a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior college.
The requirements described in this section apply to a procurement of goods or services
unless the procurement:
• is made by the Texas Building and Procurement Commission or the Texas
Department of Transportation; or
• is paid for with local or institutional funds of an institution of higher education; or
• is made by a state agency under purchasing authority delegated to the agency under:
– TEX. EDUC. CODE ANN. §�51.9335(a)-(e) (Vernon Supp. 2004); or
– TEX. EDUC. CODE ANN. §§�51.9335(f), 73.115 (Vernon Supp. 2004); or
– the State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§§�2155.131-2155.133 (Vernon 2000).

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The requirements described in this section apply to contracts and to contract


management activities that are related to the procurements to which the section applies.
The requirements described in this section do not affect the authority of institutions of
higher education to collect, account for, and control local funds and institutional funds in
the manner authorized by Subchapter A of Chapter 51, Education Code. The requirements
apply only to an expenditure made after August 31, 1999. The requirements do not obligate
a state agency to purchase a good or service under contract if the agency is authorized
under other law to purchase the good or service on the open market.
Each state agency shall use competitive selection procedures to the greatest extent
possible when selecting contractors.
To ensure that its payment and reimbursement methods and rates are appropriate,
each state agency that makes procurements subject to the requirements described in
this section shall reevaluate at least biennially its payment and reimbursement
methods and rates. The reevaluation is especially important for methods and rates
based on historical funding levels or a formula established by agency rule rather than
being based on reasonable and necessary actual costs incurred. The agency shall submit
formal rate reevaluation information to the Legislative Budget Board and the
Comptroller on request.
Each state agency that makes procurements subject to the requirements described in
this section shall:
• design and implement procedures to detect and report double-billing by
contractors; and
• monitor performance under a contract to verify that comparable costs are being
charged for comparable goods and services.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§§�2151.002(2), 2151.003 (Vernon Supp. 2004); TEX. GOV’T CODE ANN.
§§�2261.001(a)-(b), (d)-(e), 2261.002-2261.003, 2261.051, 2261.151, 2261.201,
2261.203(a) (Vernon Supp. 2004); Act of May 29, 1999, 76th Leg., R.S., ch. 1498,
§§�9-10, 1999 Tex. Gen. Laws 5153, 5163.

§�5.012 Contracts that extend beyond the life of appropriations


A. General discussion
The information provided in this subsection applies to a contract if a state agency is
a party to the contract and the term of the contract extends beyond the expiration of
appropriations that are in effect when the contract is entered into. The contract
must contain a provision that specifically conditions the agency’s financial
obligations under the contract on the availability of sufficient appropriations.
The provision is necessary to avoid the creation of an unconstitutional debt.
Sources for this subsection: TEX. CONST. art. III, §�49; City of Big Spring v.
Board of Control, 404 S.W.2d 810, 814 (Tex. 1966); Texas National Guard
Armory Board v. McCraw, 132 Tex. 613, 126 S.W.2d 627, 634 (1939); Charles
Scribner’s Sons v. Marrs, 114 Tex. 11, 262 S.W. 722, 725 (1924); City of Tyler v.
L. L. Jester & Co., 97 Tex. 344, 78 S.W. 1058, 1062 (1904); Op. Tex. Att’y Gen.

Nos. JM-969 (1988), JM-709 (1987), JM-394 (1985), MW-512 (1982), MW-70 (1979),

M-656 (1970), M-89 (1967), C-206 (1964), C-134 (1963), WW-424 (1958),

O-5962 (1945).

State of Texas Purchase Policies and Procedures Guide July 2004 139
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B. Certain leases of space


The information provided in this subsection applies to:

• office space; and

• warehouse space; and


• laboratory space; and
• storage space exceeding 1,000 gross square feet; and
• boat storage space; and
• aircraft hangar space other than hangar space and adjacent space leased by
the State Aircraft Pooling Board at Austin-Bergstrom International Airport
and operated for the purpose of providing air transportation services for the
State of Texas; and
• vehicle parking space; and
• a combination of those kinds of space.

The information provided in this subsection does not apply to:


• radio antenna space; or
• residential space for a program of the Department of Aging and Disability
Services; or
• residential space for a program of the Texas Youth Commission; or
• space to be used for less than one month for meetings, conferences, conventions,
seminars, displays, examinations, auctions, or similar purposes; or
• district office space for legislators; or
• space used by the Texas Workforce Commission; or
• residential property acquired by the Texas Department of Housing and
Community Affairs or the Texas State Affordable Housing Corporation that is
offered for sale or rental to individuals and families of low or very low income
or families of moderate income; or
• classroom and instructional space for an institution of higher education, except
as provided by the State Purchasing and General Services Act, TEX. GOV’T
CODE ANN. §�2167.007 (Vernon Supp. 2004).

A lease contract automatically is contingent on the availability of money


appropriated by the Legislature to pay for the lease. This paragraph applies only to
a contract by the Texas Building and Procurement Commission for the lease of space
under Chapter�2167, Government Code.
Sources for this subsection: State Purchasing and General Services Act,
TEX. GOV’T CODE ANN. §�2167.001 (Vernon 2000), §�2167.055(a), (e)
(Vernon Supp. 2004).
Cross reference for this section: Chapter 8: Excess obligations.

140 July 2004 State of Texas Purchase Policies and Procedures Guide
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§�5.014 Contract workforce


In this section, “contract worker” means an independent contractor, a temporary
worker supplied by a staffing company, a contract company worker, or a consultant.
The General Appropriations Act (GAA) says that an agency or institution may not expend
the funds appropriated by the GAA for payment of a contract workforce under a contract
that is executed, amended, or renewed after August 31, 2003, until the agency or institution:
• develops and documents comprehensive policies and procedures for its contract
workforce; and
• examines and documents the legal and personnel issues related to the use of a
contract workforce; and
• conducts and documents a cost benefit analysis of its current contract
workforce before hiring additional contract workers or amending or renewing
existing contracts; and
• documents why and how the use of contract workers fits into agency staffing
strategies, including consideration of agency mission, goals and objectives,
existing and future employee skills needed, compensation costs, productivity,
nature of services to be provided, and workload.
Each agency shall consult the Best Practices and Guidelines for Effectively Using a
Contract Workforce (SAO Report No. 99-326) when planning for and implementing the
requirements described in this section.
The state auditor is required to notify the comptroller and the Legislative Audit
Committee if an agency fails to comply with the requirements described in this section.
Source: Article IX, Section 4.07(a)-(b), (d) of the General Appropriations Act.

§�5.016 County clerks


The state must pay a fee to a county clerk for the following services:
• personal property records filings; and
• real property records filings; and
• certified papers; and
• noncertified papers; and
• birth or death certificates; and
• bond approvals; and
• brand registrations; and

• oath administrations; and

• returned checks; and


• records management and preservation fees; and
• other duties prescribed or authorized by statute for which a fee is not
prescribed by Subchapter B of Chapter 118, Local Government Code, if the fee
charged by the county clerk is reasonable.

State of Texas Purchase Policies and Procedures Guide July 2004 141
Chapter 5 – Expenditures Under Particular Contracts

The prohibition in the Local Government Code against the state paying a fee to a county
officer who is paid an annual salary does not apply to these fees.
Sources: TEX. LOC. GOV’T CODE ANN. §�118.011 (Vernon Supp. 2004), §�154.004(b)
(Vernon 1999); Act of May 20, 2003, 78th Leg., R.S., ch. 1275, §�2(105), 2003 Tex.
Gen. Laws 4140, 4146; Op. Tex. Att’y Gen. Nos. DM-360 (1995), M-134 (1967).
Cross reference: Chapter 4: Abstracts of judgment.

USAS Purchase Voucher Requirement

Comptroller object code 7222 must be used.

§�5.018 Debt collection


In this section:
• “Obligation” includes a debt, judgment, claim, account, fee, fine, tax, penalty,
interest, loan, charge, or grant.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “State agency” means an agency, board, commission, institution, or other unit
of state government.

Except as described in the next paragraph, a state agency shall request the attorney
general to collect an obligation before the agency may employ, retain, or contract with a
person other than a full-time employee of the agency to collect the obligation. The
attorney general may authorize the requesting agency to employ, retain, or contract with
a person other than a full-time employee of the agency to collect an obligation that the
attorney general cannot collect.

The Comptroller may employ, retain, or contract with a person other than a full-time state
employee to collect delinquent obligations that are owed the Comptroller in the Comptroller’s
official capacity, are not collected through normal collection procedures, and do not meet the
guidelines adopted for collection by the attorney general. A proposed contract shall be
reviewed by the attorney general and may include a collection fee computed on the amounts
collected under the contract.

An obligation reported to the attorney general for collection under Chapter 2107,
Government Code, is subject to a collection fee for the use and benefit of the attorney
general as provided by legislative appropriation. The attorney general may retain the
amount of the fee from the amount of the obligation collected. A collection fee may not be
retained from amounts collected for the unemployment compensation fund established
under Subchapter B of Chapter 203, Labor Code.
Sources: TEX. GOV’T CODE ANN. §§�2107.001, 2107.003, 2107.007 (Vernon 2000);
Code Construction Act, TEX. GOV’T CODE ANN. §�311.005(2) (Vernon 1998).
See 1 TEX. ADMIN. CODE §�59.2(a)(5), (7), (c)(3) (2003); Rider 6 in the
appropriations for the Office of the Attorney General in the General
Appropriations Act. See also TEX. GOV’T CODE ANN. §�403.019 (Vernon 1998)
(concerning the Comptroller ).

142 July 2004 State of Texas Purchase Policies and Procedures Guide
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§�5.020 Historically underutilized businesses


In this section:
• “Disparity study” means the “State of Texas Disparity Study, A Report to the
Texas Legislature as Mandated by House Bill No. 2626, 73rd Legislature,
December 1994,” which was prepared by National Economic Research Associates,
Inc. See Act of May 24, 1993, 73rd Leg., R.S., ch. 684, §�65(c), 1993 Tex. Gen. Laws
2537, 2558.
• “Economically disadvantaged person” means a person who is economically
disadvantaged because of the person’s identification as a member of a certain
group, including Black Americans, Hispanic Americans, women, Asian Pacific
Americans, and Native Americans, and who has suffered the effects of
discriminatory practices or other similar insidious circumstances over which
the person has no control.
• “Goods” means supplies, materials, or equipment.
• “Historically underutilized business” means an entity with its principal
place of business in this state that does not exceed any size standard
established by the Texas Building and Procurement Commission (TBPC) and
that is:
– a corporation formed for the purpose of making a profit in which at least
51 percent of all classes of the shares of stock or other equitable securities are
owned by one or more economically disadvantaged persons who have a
proportionate interest and actively participate in the corporation’s control,
operation, and management; or
– a sole proprietorship created for the purpose of making a profit that is
completely owned, operated, and controlled by an economically disadvantaged
person; or
– a partnership formed for the purpose of making a profit in which at least
51 percent of the assets and interest in the partnership are owned by one or
more economically disadvantaged persons who have a proportionate
interest and actively participate in the partnership’s control, operation, and
management; or
– a joint venture in which each entity in the venture is a historically
underutilized business, as determined under another bullet of this definition; or
– a supplier contract between a historically underutilized business as determined
under another bullet of this definition and a prime contractor under which the
historically underutilized business is directly involved in the manufacture or
distribution of the goods or otherwise warehouses and ships the goods.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a statute; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or
the Texas Judicial Council; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public
junior college.

State of Texas Purchase Policies and Procedures Guide July 2004 143
Chapter 5 – Expenditures Under Particular Contracts

TBPC is authorized to adopt rules to administer Subchapters B and C of Chapter 2161,


Government Code, concerning historically underutilized businesses. Those rules must be
based on the results of the disparity study. TBPC must revise the rules in response to the
findings of any updates of the study that are prepared on behalf of the state.
A state agency shall make a good faith effort to increase the contract awards for the purchase
of goods or services that the agency expects to make during a fiscal year to historically
underutilized businesses based on the rules described in the preceding paragraph. A state
agency that contracts for a construction project, including a project under the State Purchasing
and General Services Act, TEX. GOV’T CODE ANN. §�2166.003 (Vernon 2000), shall make a good
faith effort to increase the construction contract awards that the agency expects to make
during a fiscal year to historically underutilized businesses based on the rules described in the
preceding paragraph.
A state agency that considers entering into a contract with an expected value of $100,000 or more
shall determine whether there will be subcontracting opportunities under the contract. The agency
must do this before the agency solicits bids, proposals, offers, or other applicable expressions of
interest for the contract. If the agency determines that there is that probability, the agency shall
require each expression of interest for the contract to include a historically underutilized business
subcontracting plan. An expression of interest that does not contain the plan is considered to be
unresponsive. As a contract provision, the contract awarded by the agency shall contain the plan
that the contractor submitted in its expression of interest. The contractor shall make good faith
efforts to implement the plan. A contractor’s participation in a mentor-protégé program under the
State Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2161.065 (Vernon 2000) and
submission of a protégé as a subcontractor in the contractor’s historically underutilized
subcontracting plan constitutes a good faith effort for the particular area of the subcontracting
plan involving the protégé. The Railroad Commission of Texas is not required to follow the
purchasing procedures described in this paragraph when the commission makes a purchase in
connection with the remediation of surface locations or well plugging.
A state agency shall use TBPC’s directory of businesses certified as historically
underutilized businesses when the agency determines awards of state purchasing and
public works contracts.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§§�2151.002(2), 2161.253 (Vernon Supp. 2004), §§�2161.001(1)-(3), 2161.0015,
2161.002(a)(2), (c), 2161.064(a), (e), 2161.181-2161.182, 2161.251-2161.252
(Vernon 2000), §2161.123 (Veron Supp. 2004); Code Construction Act, TEX. GOV’T
CODE ANN. §�311.005(2) (Vernon 1998); TEX. NAT. RES. CODE ANN. §�81.057(3)
(Vernon Supp. 2004). See 1 TEX. ADMIN. CODE §§�111.13-111.16, 111.18, 111.21-111.22,
111.24 (2003); 28 TEX. REG. 811-4 (2003), adopted 28 TEX. REG. 3711 (2003) (to be
codified at 1 TEX. ADMIN. CODE §§�111.11-111.12, 111.17, 111.19-111.20, 111.23, 111.25).

§�5.022 Interagency contracts


A. Requirements for the contracts
A state agency may contract with another state agency for necessary and authorized
special or technical services, including the services of employees, materials, or equipment.
A state agency may not, however, enter into a contract that requires or permits the
agency to exceed its duties and responsibilities or the limitations of its appropriated
funds. The Interagency Cooperation Act does not enlarge the authority of state agencies.
An interagency contract must specify:
• the kind and amount of services to be furnished; and
• the basis for computing reimbursable costs; and
• the maximum cost during the period of the contract.

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An interagency contract must be in writing unless:


• the contract concerns an emergency for the defense or safety of the civil
population or in planning and preparing for that type of emergency; or
• the contract concerns a cooperative effort, proposed by the governor, for the
economic development of the state; or
• the amount of the contract is less than $50,000.
If an interagency contract is not required to be in writing, then the parties to the contract
must document the contract through informal letters of agreement or memoranda.

B. Reimbursements
A state agency that receives services or resources under the Interagency Cooperation Act
shall reimburse each state agency providing the services or resources the actual cost or
nearest practicable estimate of the cost of providing the services or resources. A
reimbursement is not required, however, if the services or resources are provided:
• for national defense or disaster relief; or
• in cooperative efforts, proposed by the governor, to promote the economic
development of the state.
When a reimbursement is required, a receiving agency may authorize the providing
agency to access the receiving agency’s appropriations for the reimbursement.
A receiving agency may advance funds to a providing agency if necessary for the
providing agency to provide services, materials, or equipment to the receiving
agency. If an advance of funds is made, then the receiving agency and the providing
agency must ensure after the services, materials, or equipment are provided that
the providing agency has received only enough funds to reimburse it for its costs.
An advance or reimbursement must be paid on an interagency transaction voucher if
the advance or reimbursement will be deposited in the state treasury. An advance or
reimbursement must be paid on a purchase voucher if the advance or reimbursement
will be deposited in a local account.
This paragraph applies only if the services or resources are provided under a written
contract or agreement. The receiving agency shall reimburse the providing agency
within 30 days after the date by which the services or resources are provided and an
invoice is received. If the receiving agency does not accept the services or resources or
finds an error in the invoice, then it shall notify the providing agency of the fact in
writing as soon as possible within the 30-day period and make payment within ten days
after the date the agencies agree the problems are corrected or the error resolved. If the
agencies cannot agree on the amount of the reimbursement, then the Comptroller shall
determine the appropriate amount. If the receiving agency does not, within the 30-day
period, reimburse the providing agency or give the providing agency written notice of a
problem or error, the Comptroller on request of the providing agency may transfer from
amounts appropriated to the receiving agency the appropriate amount in accordance
with TEX. GOV’T CODE ANN. §�771.008 (Vernon Supp. 2004).

C. Exception for institutions of higher education


In this subsection, “institution of higher education” and “governing board” have
the meanings assigned by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).

State of Texas Purchase Policies and Procedures Guide July 2004 145
Chapter 5 – Expenditures Under Particular Contracts

A written contract or agreement between institutions of higher education with a


common governing board for the furnishing of resources or services is not subject to
the requirements of the Interagency Cooperation Act if the board has adopted rules
providing for board review and approval of those contracts.
Sources for this section: TEX. EDUC. CODE ANN. §�51.928 (Vernon 1996);
Interagency Cooperation Act, TEX. GOV’T CODE ANN. §§�771.001-771.010
(Vernon 1994 & Supp. 2004); Op. Tex. Att’y Gen. No. JM-903 (1988).

USAS Purchase Voucher Requirements

A state agency must retain in its files a copy of an interagency contract if the contract must
be in writing. If the contract is not required to be in writing, then the agency must retain in
its files the informal letters of agreement or memoranda that documented the contract.
Upon request, the agency must make this documentation available to the Comptroller
during a pre-payment or a post-payment audit.

§�5.024 Professional services


A. Professional Services Procurement Act
In this subsection, “professional services” means:
• services within the scope of the practice, as defined by state law, of accounting,
architecture, landscape architecture, land surveying, medicine, optometry,
professional engineering, real estate appraising, or professional nursing; or
• services provided in connection with the professional employment or practice of
a person who is licensed or registered as a certified public accountant, an
architect, a landscape architect, a land surveyor, a physician (including a
surgeon), an optometrist, a professional engineer, a state certified or state
licensed real estate appraiser, or a registered nurse.
A state agency may not select a provider of professional services or a group or
association of providers or award a contract for the services on the basis of competitive
bids for the contract or services. A state agency may not contract with a person if the
person would procure professional services in connection with the contract on the
basis of competitive bids.
When selecting a provider of professional services or a group or association of
providers or when awarding a contract for the services, a state agency shall make the
selection and award:
• on the basis of demonstrated competence and qualifications to perform the
services; and
• for a fair and reasonable price.
A state agency must purchase architectural, engineering, or land surveying services
through a two-step negotiation process. The first step is the initial selection of the most
highly qualified provider of the services based on demonstrated competence and
qualifications. The second step is negotiating a contract with the provider at a fair and
reasonable price. If the agency is unable to negotiate a satisfactory contract with the
most highly qualified provider, then the agency must formally end negotiations with
that provider and begin negotiations with the second most qualified provider. This
sequence must continue until a satisfactory contract is made.

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A state agency, including an institution of higher education as defined by


TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), shall provide written notice to
the Legislative Budget Board (LBB) of a contract for professional services, other than
a contract for physician or optometric services, if the amount of the contract, including
an amendment, modification, renewal, or extension of the contract, exceeds $14,000.
The notice must be on the form prescribed by the LBB and filed not later than the
tenth day after the date the agency enters into the contract.
A contract made in violation of any requirement described in this subsection is void as
contrary to the public policy of this state.
Professional services are not “services” for the purposes of Subtitle D of Title 10,
Government Code.56
The Comptroller’s authority to audit claims includes the responsibility for requiring
state agencies to comply with the Professional Services Procurement Act (PSPA). The
Comptroller may refuse a state agency’s request to make a payment under a contract
that is void under the PSPA.
The state auditor has a supporting role in ensuring state agency compliance with
the PSPA.
Sources for this subsection: Professional Services Procurement Act,

TEX. GOV’T CODE ANN. §§�2254.001, 2254.003, 2254.004-2254.006 (Vernon 2000),

§�2254.002 (Vernon Supp. 2004); State Purchasing and General Services Act,

TEX. GOV’T CODE ANN. §�2155.001(2)(A) (Vernon 2000); Op. Tex. Att’y Gen. Nos.

JC-374 (2001), JC-266 (2000), JM-1189 (1990).

USAS Purchase Voucher Requirements


A state agency must retain in its files documentation that shows the type of services
performed and how the agency’s award of a contract for those services complied with the
Professional Services Procurement Act. Upon request, the documentation must be made
available to the Comptroller during a pre-payment or a post-payment audit.

B. Contracts with former or retired employees


In this subsection:
• “Retired agency employee” means a person:
– whose last state service before retirement was for the state agency with
which the retiree contracts to perform services; and
– who is a retiree of:
• the employee class of membership of the Employees Retirement
System of Texas; or
• the Teacher Retirement System of Texas, the majority of whose
service was credited in that system in a position with a state agency.
• “State agency” includes a “public senior college or university,” as that term is
defined by TEX. EDUC. CODE ANN. §�61.003(4) (Vernon Supp. 2004).

56
Subtitle D of Title 10, Government Code, is commonly known as the State Purchasing and General Services
Act. State Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2151.001 (Vernon 2000).

State of Texas Purchase Policies and Procedures Guide July 2004 147
Chapter 5 – Expenditures Under Particular Contracts

A state agency may not enter into a professional services contract under the PSPA with a
former or retired employee of the agency before the first anniversary of the last date on
which the individual was employed by the agency, if appropriated money will be used to
make payments under the contract. The agency, however, is not prohibited from entering
into a professional services contract with a corporation, firm, or other business entity that
employs a former or retired employee of the agency within one year of the employee’s
leaving the agency, provided that the former or retired employee does not perform services
on projects for the corporation, firm, or other business entity that the employee worked on
while employed by the agency.
Chapter 1499, 76th legislature, regular session, 1999, does not affect the authority
of an institution of higher education to collect, account for, and control local funds
and institutional funds in the manner authorized by Subchapter A of Chapter 51,
Education Code. Section 1.36 of that chapter amended Section 2252.901,
Government Code, which is the primary basis for this subsection.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�2252.901(a), (d)(2)-(3)
(Vernon Supp. 2004); Act of May 30, 1999, 76th Leg., R.S., ch. 1499, §�1.46,
1999 Tex. Gen. Laws 5164, 5176.
Cross references for this subsection: Chapter 5: Consulting services;
Chapter 5: State employees, contracting with former (generally);
Chapter 5: State employees, contracting with retired; Chapter 5: State officers
and employees, contracting under Chapter 572, Government Code with
former.

USAS Purchase Voucher Requirements

A state agency must retain in its files documentation that shows the type of services
performed and how the agency’s award of a contract for those services complied with
the PSPA. Upon request, the documentation must be made available to the
Comptroller during a pre-payment or a post-payment audit.

§�5.026 State employees, contracting with former (generally)


A. Definitions
In this section:
• “Employment contract” includes a personal services contract, regardless of
whether the performance of the contract involves the traditional relationship of
employer and employee. The term does not apply to an at-will employment
relationship that involves the traditional relationship of employer and
employee.
• “State agency” includes a “public senior college or university,” as that term is
defined by TEX. EDUC. CODE ANN. §�61.003(4) (Vernon Supp. 2004).
Source for this subsection: TEX. GOV’T CODE ANN. §�2252.901(d)(1), (3)
(Vernon Supp. 2004).

B. Prohibition of contracts
A state agency may not enter into an employment contract with a former employee
of the agency before the first anniversary of the last date on which the individual
was employed by the agency, if appropriated money will be used to make payments
under the contract.

148 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 5 – Expenditures Under Particular Contracts

Chapter 1499, 76th legislature, regular session, 1999, does not affect the authority

of an institution of higher education to collect, account for, and control local funds

and institutional funds in the manner authorized by Subchapter A of Chapter 51,

Education Code. Section 1.36 of that chapter amended Section 2252.901,

Government Code, which is the primary basis for this subsection.

Sources for this subsection: TEX. GOV’T CODE ANN. §�2252.901(a)


(Vernon Supp. 2004); Act of May 30, 1999, 76th Leg., R.S., ch. 1499, §�1.46,
1999 Tex. Gen. Laws 5164, 5176.
Cross references for this section: Chapter 5: Consulting services; Chapter 5:
Professional services; Chapter 5: State employees, contracting with retired;
Chapter 5: State officers and employees, contracting under Chapter 572,
Government Code with former.

§�5.028 State employees, contracting with retired


A. Definitions
In this section:
• “Employment contract” includes a personal services contract, regardless of
whether the performance of the contract involves the traditional relationship of
employer and employee. The term does not apply to an at-will employment
relationship that involves the traditional relationship of employer and employee.
• “Retired agency employee” means a person:
– whose last state service before retirement was for the state agency with which
the retiree contracts to perform services; and
– who is a retiree of:
• the employee class of membership of the Employees Retirement System of
Texas; or
• the Teacher Retirement System of Texas, the majority of whose service
was credited in that system in a position with a state agency.
• “State agency” includes a “public senior college or university,” as that term is
defined by TEX. EDUC. CODE ANN. §�61.003(4) (Vernon Supp. 2004).
Source for this subsection: TEX. GOV’T CODE ANN. §�2252.901(d)
(Vernon Supp. 2004).

B. Prohibition of contracts
A state agency may not enter into an employment contract with a retired employee of
the agency before the first anniversary of the last date on which the individual was
employed by the agency, if appropriated money will be used to make payments under
the contract. The agency, however, is not prohibited from entering into a professional
services contract with a corporation, firm, or other business entity that employs a
retired employee of the agency within one year of the employee’s leaving the agency,
provided that the retired employee does not perform services on projects for the
corporation, firm, or other business entity that the employee worked on while
employed by the agency.
Source for this subsection: TEX. GOV’T CODE ANN. §�2252.901(a)
(Vernon Supp. 2004).

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Chapter 5 – Expenditures Under Particular Contracts

C. Special provision for institutions of higher education


Chapter 1499, 76th legislature, regular session, 1999, does not affect the authority of
an institution of higher education to collect, account for, and control local funds and
institutional funds in the manner authorized by Subchapter A of Chapter 51,
Education Code. Section 1.36 of that chapter amended Section 2252.901, Government
Code, which is the primary basis for this section.
Source for this subsection: Act of May 30, 1999, 76th Leg., R.S., ch. 1499,
§�1.46, 1999 Tex. Gen. Laws 5164, 5176.
Cross references for this section: Chapter 5: Consulting services; Chapter 5:
Professional services; Chapter 5: State employees, contracting with former
(generally); Chapter 5: State officers and employees, contracting under
Chapter 572, Government Code with former.

§�5.030 State officers and employees, contracting under


Chapter 572, Government Code, with former
A. Definitions
In this section:
• “Appointed officer” means:
– the secretary of state; or
– an individual appointed with the advice and consent of the senate to the
governing board of a state-supported institution of higher education; or
– an officer of a state agency who is appointed for a term of office specified
by the Texas constitution or a statute of this state, excluding an appointee
to a vacated elective office; or
– an individual who is a member of the governing board or commission of a
state agency, who is not appointed, and who is not otherwise:
• an elected officer; or
• an officer described in dashes 1-3 of this definition; or
• an executive head of a state agency.
• “Appointed officer of a major state agency” has the meaning assigned by
§�572.003(c), Government Code.
• “Business entity” means any entity recognized by law through which business
for profit is conducted, including a sole proprietorship, partnership, firm,
corporation, holding company, joint stock company, receivership, or trust.
• “Elected officer” means:
– a member of the Legislature; or
– an executive or judicial officer elected in a statewide election; or
– a judge of a Court of Appeals or of a district court; or
– a member of the State Board of Education; or
– a district attorney or criminal district attorney; or
– an individual appointed to fill a vacancy in an office or appointed to a newly
created office who, if elected to the office instead of appointed, would be an
elected officer under this definition.

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• “Executive head of a state agency” means the director, executive director,

commissioner, administrator, chief clerk, or other individual who is appointed

by the governing body or highest officer of the state agency to act as the chief

executive or administrative officer of the agency and who is not an appointed

officer. The term includes the chancellor or highest executive officer of a

university system and the president of a public senior college or university as

defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).

• “Participated” means to have taken action as an officer or employee through

decision, approval, disapproval, recommendation, giving advice, investigation,

or similar action.

• “Particular matter” means a specific investigation, application, request for a

ruling or determination, rulemaking proceeding, contract, claim, charge,

accusation, arrest, or judicial or other proceeding.

• “Person” means an individual or business entity.


• “Regulatory agency” means any department, commission, board, or other

agency that:

– is in the executive branch of state government; and


– has authority that is not limited to a geographical portion of this state; and
– was created by the Texas Constitution or a statute of this state; and
– has constitutional or statutory authority to engage in regulation.
• “Salaried appointed officer” means an appointed officer who receives or is

authorized to receive a salary for state service but not a per diem or other form

of compensation.

• “State agency” means:


– a department, commission, board, office, or other agency that:
• is in the executive branch of state government; and
• has authority that is not limited to a geographical portion of the state; and
• was created by the Texas Constitution or a statute of this state; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), other than a public
junior college; or
– a river authority created under the Texas Constitution or a statute of
this state.
• “State employee” means an individual, other than a state officer, who is

employed by:

– a state agency; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or
the Texas Judicial Council; or
– either house of the Legislature or a legislative agency, council, or
committee, including the Legislative Budget Board, the Texas Legislative
Council, the state auditor’s office, and the Legislative Reference Library.
• “State officer” means an elected officer, an appointed officer, a salaried

appointed officer, an appointed officer of a major state agency, or the executive

head of a state agency.

Sources for this subsection: TEX. GOV’T CODE ANN. §§�572.002(1)-(2), (4)-(5),
(7)-(12), 572.003(c) (Vernon Supp. 2004), §�572.054(g)-(h) (Vernon 1994).

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B. Prohibition
A former state officer or employee of a regulatory agency who ceases service or
employment with the agency after December 31, 1991, may not represent any person
or receive compensation for services rendered on behalf of any person regarding a
particular matter in which the former officer or employee participated during the
period of state service or employment, either through personal involvement or because
the case or proceeding was a matter within the officer’s or employee’s official
responsibility.
An individual commits an offense if the individual violates this prohibition. The
offense is a Class A misdemeanor.
Sources for this subsection: TEX. GOV’T CODE ANN. §�572.054(b), (f) (Vernon 1994).
See Op. Tex. Ethics Comm’n Nos. 364 (1997), 353 (1996), 285 (1995), 232 (1994),
212 (1994), 167 (1993).

C. Limitations and exceptions


The prohibition described in Subsection (B) of this section applies only to:
• a state officer of a regulatory agency; or
• a state employee of a regulatory agency who is compensated, as of the last date
of state employment, at or above the amount prescribed by the General
Appropriations Act for step 1, salary group 17, of the position classification
salary schedule, including an employee who is exempt from the state’s position
classification plan.
The prohibition described in Subsection (B) of this section does not apply to a
rulemaking proceeding that was concluded before the officer’s or employee’s service
or employment ceased. The prohibition also does not prevent a former state officer or
employee of a regulatory agency from being an independent contractor of that
agency.
Any law not discussed in this section that restricts the representation of a person
before a particular state agency by a former state officer or employee of that agency
prevails over the law discussed in this section.
Sources for this subsection: TEX. GOV’T CODE ANN. §�572.054(c)-(e)
(Vernon 1994); Op. Tex. Ethics Comm’n No. 229 (1994).
Cross references for this section: Chapter 5: Consulting services; Chapter 5:
Professional services; Chapter 5: State employees, contracting with former
(generally); Chapter 5: State employees, contracting with retired.

§�5.032 United Mexican States, contracts or agreements with


A. General Discussion
In this subsection:
• “Political subdivision” includes any corporate and political entity organized
under state law.
• “State agency” means, except as otherwise stated in this section, a state board,
commission, department, or office having statewide jurisdiction. The term does
not include a state college or university.

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A state agency may, to the extent permitted under federal law, enter into an

agreement under Chapter 792, Government Code, with:

• the United Mexican States or a political subdivision of the United Mexican


States; or
• an agency of the United States; or
• an agency or entity that is created under a treaty or executive agreement
between the United States and the United Mexican States.
A state agency may enter into an agreement under Chapter 792, Government Code,
only if the agreement is for the accomplishment of a function that the agency is
authorized to perform under a law outside Chapter 792.
Under an agreement authorized by Chapter 792, Government Code, a state agency may:
• acquire or dispose of in any manner available to the agency under a law outside
Chapter 792, Government Code, an interest in real property in this state or the
United Mexican States; or
• use any funds of the agency that are not otherwise dedicated by law for another
purpose to accomplish the purposes of the agreement; or
• use any equipment, facilities, or other property of the agency to carry out the
agreement; or
• agree to any other terms that are not prohibited under state or federal law.
An agreement made under Chapter 792, Government Code, may not provide for the
liability of this state on a bond or other obligation issued by the United Mexican States
or a political subdivision of the United Mexican States.
A state agency may issue bonds or other evidence of indebtedness to provide financing
for an agreement under Chapter 792, Government Code, to the same extent and in the
same manner that the agency is authorized to issue the bonds or other evidence of
indebtedness to perform the activity on its own behalf. In this paragraph, “state
agency” includes only the Department of Agriculture, the Texas Economic
Development and Tourism Office,57 the Texas Department of Housing and Community
Affairs, the Texas Public Finance Authority, the Texas Turnpike Authority,58 and the
Texas Water Development Board.
An agreement made by a state agency under Chapter 792, Government Code, that
involves the use of money appropriated from the state treasury is not valid unless it
is approved by both the governor and the Legislative Budget Board.
Sources for this subsection: TEX. GOV’T CODE ANN. §�783.003(4) (Vernon 1994),
§§�791.003(5), 792.001-792.006 (Vernon Supp. 2004).

57
A reference in law to the Texas Department of Economic Development means the Texas Economic
Development and Tourism Office. Act of May 29, 2003, 78th Leg., R.S., ch. 814, §�1.66(2), 2003 Tex. Gen.
Laws 2372, 2391.
58
But see Act of June 1, 1997, 75th Leg., R.S., ch. 1171, §�8.01(a), 1997 Tex. Gen. Laws 4427, 4490 (abolishing
the Texas Turnpike Authority and creating the Texas Turnpike Authority division of the Texas Department
of Transportation).

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B. Texas Department of Transportation


The Texas Department of Transportation may enter into a contract or operating
agreement with a similar authority or agency of a state of the United Mexican
States if both the governor and the Texas Transportation Commission approve the
contract or agreement.
TxDOT and a private entity jointly may enter into an agreement with the United
Mexican States or a state of the United Mexican States to independently or jointly
provide services, to study the feasibility of a turnpike project, or to finance,
construct, operate and maintain a turnpike project. TxDOT may not enter into the
agreement without the approval of the governor.
Sources for this subsection: TEX. TRANSP. CODE ANN. §�201.001(1)-(2)
(Vernon 1999), §�361.032(b)(3) (Vernon Supp. 2004), §361.307
(Vernon Interim Supp. 2004).

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Chapter 6 – Miscellaneous Expenditures


or Requirements
§�6.002 Aircraft
A. Definitions

In this section (unless otherwise defined):

• “Authorized state entity” means The Texas A & M University System, the
Texas Department of Criminal Justice, the Texas Department of
Transportation, the Parks and Wildlife Department, the Department of Public
Safety of the State of Texas, The University of Texas System, the Texas State
Technical College, the Texas Forest Service, or the State Aircraft Pooling Board.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “SAPB” means the State Aircraft Pooling Board.
• “State agency” means an office, department, board, commission, institution,
or other agency to which a legislative appropriation is made.
Sources for this subsection: State Aircraft Pooling Act, TEX. GOV’T CODE ANN.
§�2205.002(2) (Vernon 2000); Code Construction Act, TEX. GOV’T CODE ANN.
§�311.005(2) (Vernon 1998); Article IX, Section 5.08(b) of the General
Appropriations Act.

B. Custody, control, and lease of aircraft


SAPB shall operate a pool for the custody and control of all aircraft owned or leased
by the state. SAPB may purchase aircraft with funds appropriated for that purpose.
SAPB may by interagency contract lease a state-owned aircraft to a state agency.
The agency that is the prior owner or lessee of an aircraft has the first option to
lease that aircraft from SAPB.
A state agency may not expend appropriated funds for the lease of an aircraft unless
SAPB executes the lease or approves the lease by order.
A state agency may not use money appropriated by the Legislature to rent or lease
aircraft except from SAPB or as described in the next sentence. If SAPB determines
that no state-owned aircraft is available to meet a transportation need that has
arisen or that a rental or lease of aircraft would reduce the state’s transportation
costs, then SAPB shall authorize the agency to expend funds for the rental or lease
of aircraft, which may include a helicopter.51 For purposes of this paragraph, a
mileage reimbursement authorized by the General Appropriations Act (GAA) is not
a rental or lease of an aircraft.
Sources for this subsection: State Aircraft Pooling Act, Tex. Gov’t Code Ann.
§§�2205.032(a)-(b), 2205.035(a)-(b), (d)-(f) (Vernon 2000). See Article IX,
Section 5.08(c) of the General Appropriations Act.

51
The information provided in this paragraph applies only to a travel expense incurred after August�31, 1999.
Act of May 11, 1999, 76th Leg., R.S., ch. 280, §�22, 1999 Tex. Gen. Laws 1170, 1175.

State of Texas Purchase Policies and Procedures Guide July 2004 155
Chapter 6 – Miscellaneous Expenditures or Requirements

C. Operation and maintenance of aircraft


SAPB shall operate a pool for the operation and maintenance of all aircraft owned or
leased by the state.
SAPB’s lease of a state-owned aircraft to a state agency may provide for the

operation or maintenance of the aircraft by SAPB or the agency.

Unless the GAA specifically provides otherwise, only an authorized state entity may
expend funds appropriated by the GAA to maintain or operate state-owned aircraft.
A state agency that operates an aircraft may not use a facility in Austin other than a
facility operated by SAPB for the storage, parking, fueling, or maintenance of the
aircraft. This prohibition applies regardless of whether the aircraft is based in Austin. If
SAPB determines that there is an emergency, then SAPB may authorize a state agency
to use a facility in Austin other than a SAPB facility for the storage, parking, fueling, or
maintenance of an aircraft.
Sources for this subsection: State Aircraft Pooling Act, TEX. GOV’T CODE ANN.
§�2205.032(a) (Vernon Supp. 2004), §§�2205.034(b), 2205.035(c) (Vernon 2000);
Article IX, Section 5.08(b) of the General Appropriations Act.

D. Replacement of state-owned aircraft


The requirements described in this subsection apply unless the GAA specifically
provides otherwise.
An authorized state agency may expend funds appropriated by the GAA to replace
aircraft with aircraft of comparable quality if SAPB approves and the governor
issues a finding of fact.52 The finding of fact must state that the agency has filed a
report with the governor showing:
• the aircraft to be replaced:
– has been destroyed; or
– has deteriorated to the extent that continued operation of the aircraft
presents a serious hazard; or
– no longer meets the mission requirements of the principal user agency; and
• other state-owned aircraft cannot be effectively used in lieu of the replacement
aircraft.
Source for this subsection: Article IX, Section 5.08(d) of the General
Appropriations Act.

E. Use of aircraft by all state agencies


Each state agency shall use state-owned aircraft to the extent feasible. A state
agency that operates a state-owned aircraft must file an annual report with the
Legislative Budget Board that specifies the methods used by the agency to reach the
goal described in the preceding sentence.
SAPB shall adopt rates for interagency aircraft services that are sufficient to recover, in
the aggregate and to the extent possible, all direct costs for the services provided,
including a state agency’s pro rata share of major maintenance, overhauls of equipment
and facilities, and pilots’ salaries.

52
The definition of “state agency” in Subsection (A) of this section does not apply to this paragraph or the
bullets that follow. The law does not specifically define “state agency” for this purpose.

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When a state agency is reimbursed for authorized aircraft services provided to another
state agency, the reimbursement is appropriated to the first agency’s appropriation item
from which the cost of aircraft operation is paid.53
Sources for this subsection: State Aircraft Pooling Act, GOV’T CODE ANN.
§§�2205.031(b), 2205.040(a), 2205.041(a)(1) (Vernon 2000); Article IX, Section 5.08(f)
of the General Appropriations Act. See 1 TEX. ADMIN. CODE §�181.8 (2003).

F. Priority on use of aircraft

SAPB shall give an officer normally elected by statewide election priority in the

scheduling of aircraft. SAPB may, by rule, require a 12-hour notice by the officer to
obtain the priority in scheduling.
Source for this subsection: State Aircraft Pooling Act, GOV’T CODE ANN.
§�2205.038(d) (Vernon 2000).

G. Permissible uses of aircraft

A state agency54 may pay or reimburse a travel expense for the rental, lease, or

operation of aircraft only if the transportation under the rental, lease, or operation
satisfies the criteria described in the remainder of this subsection.
SAPB shall provide aircraft transportation, to the extent that its aircraft are

available, to:

• state officers and employees who are traveling on official business according to
the coordinated passenger scheduling system and the priority scheduling
system developed as part of the aircraft operations manual under the State
Aircraft Pooling Act, TEX. GOV’T CODE ANN. §�2205.038 (Vernon 2000); and
• persons in the care or custody of the state officers or employees described in the
preceding bullet; and
• persons whose transportation furthers official state business.
SAPB may not provide aircraft transportation to a passenger if the passenger is to
be transported to or from a place where the passenger:
• will make or has made a speech not related to official state business; or
• will attend or has attended an event sponsored by a political party; or
• will perform a service or has performed a service for which the passenger is to
receive an honorarium, unless the passenger reimburses SAPB for the cost of
transportation; or
• will attend or has attended an event at which money is raised for private or
political purposes; or
• will attend or has attended an event at which an audience was charged an
admission fee to see or hear the passenger.

53
The definition of “state agency” in Subsection (A) of this section does not apply to this paragraph. The law
does not specifically define “state agency” for this purpose.
54
In this paragraph, “state agency” means a unit of state government that uses appropriated funds to pay or
reimburse a travel expense of a state employee, the Teacher Retirement System of Texas, or the Employees
Retirement System of Texas. Travel Regulations Act, TEX. GOV’T CODE ANN. §�660.002(19)
(Vernon Supp. 2002). See Travel Regulations Act, TEX. GOV’T CODE ANN. §�660.002(1), (20)-(22)
(Vernon Supp. 2002) (definitions of “appropriated funds,” “state employee,” “travel expense,” and “unit
of state government”).

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Chapter 6 – Miscellaneous Expenditures or Requirements

SAPB may not provide aircraft transportation to a destination unless:


• the destination is not served by a commercial carrier; or
• the time required to use a commercial carrier interferes with passenger
obligations; or
• the number of passengers traveling makes the use of state aircraft
cost-effective.
A person may not use a state-owned aircraft solely for political purposes or spend state
funds for the use of an aircraft solely for political purposes. A person who violates this
prohibition is civilly liable to the state for the costs incurred by the state because of the
violation.
Sources for this subsection: Travel Regulations Act, TEX. GOV’T CODE ANN.
§�660.003(g) (Vernon Supp. 2004); State Aircraft Pooling Act, TEX. GOV’T CODE ANN.
§§�2205.036-2205.037 (Vernon 2000). See Op. Tex. Att’y Gen. No. H-1089 (1977).

H. Interagency Contract
The Texas Department of Transportation may enter into an interagency contract
with the State Aircraft Pooling Board. The existing interagency contract, as
amended on September 30, 2003, remains in effect until the governor, the lieutenant
governor, and the speaker of the house of representatives have all approved a new
interagency contract entered into under this subsection.
The Texas Department of Transportation shall operate under the interagency contract
on a full cost recovery basis and may not allow differential rates for any reason.

I. Texas Department of Criminal Justice


The GAA says the following. The Texas Department of Criminal Justice (TDCJ) may
expend funds appropriated by the GAA to own or lease, operate, maintain, and, if
necessary, replace one aircraft. In addition, TDCJ may expend those funds to lease
or rent aircraft when a temporary need arises.
Source for this subsection: Rider 39 in the appropriations to the Department
of Criminal Justice in the General Appropriations Act.

J. The University of Texas System Administration


The GAA says the following. The University of Texas System may acquire, operate,
maintain, and replace one passenger airplane. The airplane should be acquired by
gift if possible. The airplane may, however, be acquired by purchase subject to the
authority of SAPB under the State Aircraft Pooling Act, Chapter 2205, Government
Code. All costs of acquisition, operation, maintenance, and replacement may be paid
out of the available university fund allocable to the system. The system also may
lease, on a short-term basis, additional aircraft as may be needed from time to time.
Source for this subsection: Rider 2 in the appropriations to the University of
Texas System Administration in the General Appropriations Act.

K. Texas Commission on Environmental Quality


The GAA says the following. The Texas Commission on Environmental Quality may
expend funds appropriated by the GAA to charter aircraft for monitoring environmental
quality and the enforcement of the state’s environmental and water rights laws.
Source for this subsection: Rider 3 in the appropriations to the Commission
on Environmental Quality in the General Appropriations Act.

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L. Texas State Technical College


The GAA says the following. The Texas State Technical College may use funds
appropriated by the GAA for the operation, maintenance, or lease of aircraft for use
in the aircraft pilot training programs, subject to the requirement that excess costs
of flight instruction be recovered by an assessment of charge to student pilots.
Source for this subsection: Rider 7 in the Special Provisions Relating Only to
Components of Texas State Technical College in the General Appropriations Act.

M. Department of Public Safety of the State of Texas


The GAA says the following. The Department of Public Safety (DPS) may purchase, own,
maintain, and operate helicopters in performance of its responsibilities. DPS may
purchase additional aircraft through seized funds. In addition to its authority to
purchase, own, maintain, and operate aircraft, DPS may own, maintain, and operate any
aircraft seized under Chapter 481 of the Health and Safety Code or Chapter 59 of the
Code of Criminal Procedure or under any other statute authorizing DPS to own,
maintain, or operate seized aircraft.
Source for this subsection: Rider 9 in the appropriations to the Department of
Public Safety in the General Appropriations Act.

N. The University of Texas Medical Branch at Galveston


The GAA says the following. The University of Texas Medical Branch at Galveston
(UTMB) may lease and operate a helicopter for the purpose of transporting critically ill or
emergency patients to UTMB hospitals. No state funds may be used to operate the
helicopter unless the patient is indigent or through an interagency contract with another
state agency, or the costs are reimbursed from insurance proceeds.
Source for this subsection: Rider 4 in the appropriations to the University of
Texas Medical Branch at Galveston in the General Appropriations Act.

USAS Purchase Voucher Requirements


1. When a state agency pays for the replacement of state-owned aircraft, the agency must
retain in its files a copy of both SAPB’s approval and the finding of fact by the governor if
the approval and finding are required. Upon request, the agency must make the copies
available to the Comptroller during a pre-payment or a post-payment audit.
2. When a state agency pays for the lease or rental of aircraft:
a. the agency must retain in its files proof of SAPB’s approval; and
b. the agency must retain in its documentation the agency’s compliance with the
requirements described in Subsection (G) of this section.
3. A state agency must state the trip’s purpose and list the names of all passengers in its
documentation when paying for aircraft rental.
4. Upon request, a state agency must make the documentation described in voucher
requirements (1)-(3) available to the Comptroller during a pre-payment or a post-payment
audit.
5. Comptroller object code 7375 must be used for the purchase of aircraft.
6. Comptroller object code 7445 must be used for the rental of aircraft.
7. Payments to SAPB for transportation provided by SAPB must be submitted on interagency
transaction vouchers and must use Comptroller object code 7444.

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Chapter 6 – Miscellaneous Expenditures or Requirements

§�6.004 Assignments of payments from the state


A. Definitions
In this section:
• “Compensation” means base salary or wages, longevity pay, hazardous duty
pay, benefit replacement pay, or an emolument provided in lieu of base salary or
wages.
• “EFT” means an electronic funds transfer.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “State agency” means a board, commission, council, committee, department,
office, agency, or other governmental entity in the executive, legislative, or
judicial branch of state government. The term includes an institution of higher
education as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004),
other than a public junior or community college.
• “State officer or employee” means an officer or employee of a state agency.
• “Tax delinquency” means a delinquency in payment of either a tax to the
state or a tax that the Comptroller administers or collects.
Sources for this subsection: TEX. EDUC. CODE ANN. §§�57.48(k), 57.482(e)
(Vernon Supp. 2004); TEX. FAM. CODE ANN. §�231.007(k) (Vernon Supp. 2004);
Code Construction Act, TEX. GOV’T CODE ANN. §�311.005(2) (Vernon 1998);
TEX. GOV’T CODE ANN. §§�403.055(l), 2107.008(n) (Vernon Supp. 2004).

B. Authority to assign
A person generally may assign the right to receive a payment from the state in the same
way that a person may assign the right to receive a payment from a private person.
The notice of assignment must be delivered to the state agency whose payment has
been assigned. The Comptroller accepts an assignment notice only for a payment
made by the Comptroller’s Claims Division on behalf of the Comptroller. An
assignment notice concerning a payment made by the Claims Division on behalf of
another state agency must be delivered to that agency.

C. Prohibited payments by the Comptroller to assignees because of certain loan


defaults
The Comptroller may not issue a warrant or initiate an EFT to an assignee if:
• the Texas Guaranteed Student Loan Corporation (TGSLC) has properly
reported the assignee to the Comptroller as being in default on a loan
guaranteed under Chapter 57, Education Code; or
• TGSLC has properly reported the assignor55 to the Comptroller as being in
default on a loan guaranteed under Chapter 57, Education Code, and the
assignment became effective after the assignor defaulted.

55
“Assignor” means the person who was legally entitled to receive the warrant or EFT before the person

transferred that entitlement to the assignee.

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Whenever the Comptroller is prohibited from issuing a warrant or initiating an EFT


to an assignee, the Comptroller also is prohibited from issuing a warrant or
initiating an EFT to:
• the assignee’s estate; or
• the distributees of the assignee’s estate; or
• the assignee’s surviving spouse.
The prohibitions described above do not apply when the Comptroller issues a
warrant or initiates an EFT to pay:
• the compensation of a state officer or employee; or
• the remuneration of an individual if the remuneration is being paid by a
private person through a state agency.
The Comptroller is not prohibited from issuing a warrant or initiating an EFT to an
assignee properly reported to the Comptroller as being in default on a loan
guaranteed under Chapter 57, Education Code, if TGSLC subsequently and properly
reports to the Comptroller that:
• the assignee is complying with an installment payment agreement or similar
agreement to eliminate the default, unless TGSLC subsequently and properly
reports to the Comptroller that the assignee no longer is complying with the
agreement; or
• the assignee’s default is being eliminated by deductions of money from the
assignee’s compensation under the garnishment provisions of 20 U.S.C.S.
§�1095a (Law. Co-op. LEXIS through Pub. L. No. 108-98, approved
December 19, 2003 (with a gap of Pub. L. No. 108-173)), unless TGSLC
subsequently and properly reports to the Comptroller that the default is no
longer being eliminated by the deductions; or
• the assignee’s default has been eliminated; or
• the report of default was prohibited by TEX. EDUC. CODE ANN. §�57.48(g)
(Vernon Supp. 2004)56 or was otherwise erroneous.

56
This statute prohibits TGSLC from reporting an assignee to the comptroller as being in default on a loan
guaranteed under Chapter 57, Education Code, unless TGSLC first provides the assignee an opportunity to
exercise any due process or other constitutional or statutory protection that must be accommodated before
TGSLC may begin a collection action or procedure. The statute specifically prohibits the comptroller from
investigating or determining whether TGSLC has complied with this prohibition.

State of Texas Purchase Policies and Procedures Guide July 2004 161
Chapter 6 – Miscellaneous Expenditures or Requirements

The Comptroller is not prohibited from issuing a warrant or initiating an EFT to an


assignee whose assignor has been properly reported to the Comptroller as being in
default on a loan guaranteed under Chapter 57, Education Code, if TGSLC subsequently
and properly reports to the Comptroller that:
• the assignor is complying with an installment payment agreement or similar
agreement to eliminate the default, unless TGSLC subsequently and properly
reports to the Comptroller that the assignor no longer is complying with the
agreement; or
• the assignor’s default is being eliminated by deductions of money from the
assignor’s compensation under the garnishment provisions of 20 U.S.C.S. §�1095a
(Law. Co-op. LEXIS through Pub. L. No. 108-98, approved December 19, 2003
(with a gap of Pub. L. No. 108-173)), unless TGSLC subsequently and properly
reports to the Comptroller that the default is no longer being eliminated by the
deductions; or
• the assignor’s default has been eliminated; or
• the report of default was prohibited by TEX. EDUC. CODE ANN. §�57.48(g)
(Vernon Supp. 2004) 57 or was otherwise erroneous.
The prohibitions described at the beginning of this subsection do not apply if:
• the warrant or EFT would result in a payment being made in whole or in part
with money paid to the state by the United States; and
• the state agency that administers the money certifies to the Comptroller that
federal law either requires the payment to be made or conditions the state’s
receipt of the money on the payment being made.
Source for this subsection: TEX. EDUC. CODE ANN. §�57.48(b)-(c), (e)-(f), (h)
(Vernon Supp. 2004).

D. Prohibited payments by state agencies to assignees because of certain loan

defaults

The information provided in this subsection applies to a payment only if the


Comptroller is not responsible under TEX. GOV’T CODE ANN. §§�404.046, 404.069
(Vernon Supp. 2004), §�2103.003 (Vernon 2000) for issuing a warrant or initiating an
EFT to make the payment.
A state agency, as a ministerial duty, may not use funds inside or outside the state
treasury to pay an assignee if Section 57.48, Education Code (Vernon Supp. 2004),
prohibits the Comptroller from issuing a warrant or initiating an EFT to the assignee.
Whenever a state agency is prohibited from making a payment to an assignee, the
agency also is prohibited from paying any part of that payment to:
• the assignee’s estate; or
• the distributees of the assignee’s estate; or
• the assignee’s surviving spouse.

57
This statute prohibits TGSLC from reporting an assignor to the comptroller as being in default on a loan
guaranteed under Chapter 57, Education Code, unless TGSLC first provides the assignor an opportunity to
exercise any due process or other constitutional or statutory protection that must be accommodated before
TGSLC may begin a collection action or procedure. The statute specifically prohibits the comptroller from
investigating or determining whether TGSLC has complied with this prohibition.

162 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

The Comptroller may not reimburse a state agency for a payment that the
Comptroller determines was made in violation of the prohibitions described above.
Source for this subsection: TEX. EDUC. CODE ANN. §�57.482 (Vernon Supp. 2004).

E. Prohibited payments by the Comptroller to assignees because of an

indebtedness to the state or a tax delinquency

The Comptroller may not issue a warrant or initiate an EFT to an assignee if:
• a state agency has properly reported the assignee to the Comptroller as being
indebted to the state; or
• a state agency has properly reported the assignee to the Comptroller as having
a tax delinquency; or
• a state agency has properly reported the assignor to the Comptroller as being
indebted to the state and the assignment became effective after the assignor
became indebted; or
• a state agency has properly reported the assignor to the Comptroller as having
a tax delinquency and the assignment became effective after the assignor
incurred the delinquency.
Whenever the Comptroller is prohibited from issuing a warrant or initiating an EFT
to an assignee, the Comptroller also is prohibited from issuing a warrant or
initiating an EFT to:
• the assignee’s estate; or
• the distributees of the assignee’s estate; or
• the assignee’s surviving spouse.
The prohibitions described above do not apply when the Comptroller issues a
warrant or initiates an EFT to pay:
• the compensation of a state officer or employee; or
• the remuneration of an individual if the remuneration is being paid by a
private person through a state agency.
The Comptroller is not prohibited from issuing a warrant or initiating an EFT to an
assignee properly reported to the Comptroller as being indebted to the state or
having a tax delinquency if the state agency responsible for collecting the assignee’s
debt or delinquency subsequently and properly reports to the Comptroller that:
• the assignee is complying with an installment payment agreement or
similar agreement to pay or eliminate the debt or delinquency, unless the
agency subsequently and properly reports to the Comptroller that the
assignee no longer is complying with the agreement; or
• the assignee’s debt or delinquency has been eliminated; or
• the report of indebtedness or delinquency was prohibited by TEX. GOV’T CODE
ANN. §�403.055(g) (Vernon Supp. 2004)58 or was otherwise erroneous.

58
This statute prohibits a state agency from reporting an assignee to the comptroller as being indebted to the
state or having a tax delinquency unless the agency first provides the assignee an opportunity to exercise
any due process or other constitutional or statutory protection that must be accommodated before the agency
or the state may begin a collection action or procedure. The statute specifically prohibits the Comptroller

State of Texas Purchase Policies and Procedures Guide July 2004 163
Chapter 6 – Miscellaneous Expenditures or Requirements

The Comptroller is not prohibited from issuing a warrant or initiating an EFT to an


assignee whose assignor has been properly reported to the Comptroller as being
indebted to the state or having a tax delinquency if the state agency responsible for
collecting the assignor’s debt or delinquency subsequently and properly reports to
the Comptroller that:
• the assignor is complying with an installment payment agreement or
similar agreement to pay or eliminate the debt or delinquency, unless the
agency subsequently and properly reports to the Comptroller that the
assignor no longer is complying with the agreement; or
• the assignor’s debt or delinquency has been eliminated; or
• the report of indebtedness or delinquency was prohibited by
TEX. GOV’T CODE ANN. §�403.055(g) (Vernon Supp. 2004)59 or was
otherwise erroneous.
The prohibitions described at the beginning of this subsection do not apply if:
• the warrant or EFT would result in a payment being made in whole or
in part with money paid to the state by the United States; and
• the state agency that administers the money certifies to the
Comptroller that federal law either requires the payment to be made or
conditions the state’s receipt of the money on the payment being made.
Source for this subsection: TEX. GOV’T CODE ANN. §�403.055(a)-(e), (i)
(Vernon Supp. 2004).

F. Prohibited payments by state agencies to assignees because of an


indebtedness to the state or a tax delinquency
The information provided in this subsection applies to a payment only if the
Comptroller is not responsible under TEX. GOV’T CODE ANN. §§�404.046, 404.069
(Vernon Supp. 2004), §�2103.003 (Vernon 2000) for issuing a warrant or initiating an
EFT to make the payment.

from investigating or determining whether the agency has complied with this prohibition.
59
This statute prohibits a state agency from reporting an assignor to the comptroller as being indebted to the
state or having a tax delinquency unless the agency first provides the assignor an opportunity to exercise
any due process or other constitutional or statutory protection that must be accommodated before the agency
or the state may begin a collection action or procedure. The statute specifically prohibits the comptroller
from investigating or determining whether the agency has complied with this prohibition.

164 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

A state agency, as a ministerial duty, may not use funds inside or outside the state
treasury to pay an assignee if:
• Section 403.055, Government Code, prohibits the Comptroller from issuing a
warrant or initiating an EFT to the assignee; or
• (a) the assignor is indebted to the state or has a tax delinquency; and (b)�the
agency is responsible for collecting that indebtedness or delinquency; and (c)
Section 403.055, Government Code, does not prohibit the Comptroller from
issuing a warrant or initiating an EFT to the assignor;60 and (d) the
assignment became effective after the assignor became indebted to the state or
incurred a tax delinquency; or
• (a) the assignee is indebted to the state or has a tax delinquency; and (b)�the
agency is responsible for collecting that indebtedness or delinquency; and (c)
Section 403.055, Government Code, does not prohibit the Comptroller from
issuing a warrant or initiating an EFT to the assignee.61
Whenever a state agency is prohibited from making a payment to an assignee, the
agency also is prohibited from paying any part of that payment to:
• the assignee’s estate; or
• the distributees of the assignee’s estate; or
• the assignee’s surviving spouse.
The prohibitions described in the second and third bullets at the beginning of this
subsection do not apply when a state agency pays:
• the compensation of a state officer or employee; or
• the remuneration of an individual if the remuneration is being paid by a
private person through a state agency.
A state agency is not prohibited from paying an assignor who is subject to the second
bullet at the beginning of this subsection if the agency determines that the assignor
is complying with an installment payment agreement or similar agreement between
the agency and the assignor to eliminate the debt or delinquency.
A state agency is not prohibited from paying an assignee who is subject to the third
bullet at the beginning of this subsection if the agency determines that the assignee
is complying with an installment payment agreement or similar agreement between
the agency and the assignee to eliminate the debt or delinquency.

60
The agency, however, may not refuse to make the payment before the agency has provided the assignor with
an opportunity to exercise any due process or other constitutional or statutory protection that must be
accommodated before the agency or the state may begin a collection action or procedure. TEX. GOV'T CODE
ANN. §�2107.008(j) (Vernon Supp. 2004).
61
The agency, however, may not refuse to make the payment before the agency has provided the assignee with
an opportunity to exercise any due process or other constitutional or statutory protection that must be
accommodated before the agency or the state may begin a collection action or procedure. TEX. GOV'T CODE
ANN. §�2107.008(j) (Vernon Supp. 2004).

State of Texas Purchase Policies and Procedures Guide July 2004 165
Chapter 6 – Miscellaneous Expenditures or Requirements

The prohibitions described in the second and third bullets at the beginning of this
subsection do not apply to a payment by a state agency if:
• the payment would be made in whole or in part with money paid to the state by
the United States; and
• the agency determines that federal law either requires the payment to be made
or conditions the state’s receipt of the money on the payment being made.
The Comptroller may not reimburse a state agency for a payment that the
Comptroller determines was made in violation of the prohibitions described above.
Source for this subsection: TEX. GOV’T CODE ANN. §�2107.008(a)-(j), (m)
(Vernon Supp. 2004).

G. Child support delinquencies


A person who is obligated to pay child support in a case for which the Office of

the Attorney General62 is providing services under Chapter 231, Family Code,

and who does not pay the support is “indebted to the state” if the office has

properly reported the person to the Comptroller.

The Office of the Attorney General is the sole assignee of all payments,
including payments of compensation, by the state to a person who is “indebted
to the state” because of a child support delinquency. On request of the Office of
the Attorney General:
• the Comptroller shall make payable and deliver to the office any payments
for which the office is the sole assignee, if the Comptroller is responsible for
issuing warrants or initiating EFTs to make those payments; and
• a state agency shall make payable and deliver to the office any payments for
which the office is the sole assignee, if the Comptroller is not responsible for
issuing warrants or initiating EFTs to make those payments.
Source for this subsection: TEX. FAM. CODE ANN. §�231.007(a), (c)-(d)
(Vernon 2002).
Cross reference for this section: Chapter 2: Indebted to the state, persons.

§�6.006 Bank fees and charges


The General Appropriations Act (GAA) says that interest income appropriated by the
GAA may be used to pay necessary bank fees and charges.
Source: Article IX, Section 11.02 of the General Appropriations Act.

USAS Purchase Voucher Requirement

Comptroller object code 7210 must be used.

62
The “office of the attorney general” is the state's Title IV-D agency. TEX. FAM. CODE ANN. §�231.001
(Vernon 2002).

166 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

§�6.008 Cancellation fees and similar charges


In this section, “state agency” means:
• a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
• the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or
the Texas Judicial Council; or
• a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior
college.
A state agency or the Texas Building and Procurement Commission may pay a
cancellation fee, restocking charge, or other similar charge if the agency or
commission determines that the charge is justifiable.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2151.002(2) (Vernon Supp. 2004), §�2155.384 (Vernon 2000).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply only to a purchase voucher
submitted by a state agency to pay a cancellation fee or a similar charge.
1. Upon request, a copy of the determination that the fee or charge is justifiable must be
available to the Comptroller during a pre-payment or a post-payment audit.
2. Comptroller object code 7210 must be used.

§�6.010 Contaminated property, preference for products of


facilities on formerly
In this section:
• “Goods” means supplies, materials, or equipment.
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or the
Texas Judicial Council; or
– a university system or an institution of higher education as defined by TEX.
EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior college.
The Texas Building and Procurement Commission or a state agency shall give
preference to goods produced at a facility located on property for which the owner has
received a certificate of completion under TEX. HEALTH & SAFETY CODE ANN. §�361.609
(Vernon 2001) if the goods meet state specifications regarding quantity, quality,
delivery, life cycle costs, and price.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2155.001(1) (Vernon 2000); §§�2151.002(2), 2155.450 (Vernon Supp. 200), as
added by Act of May 18, 2001, 77th Leg., R.S., ch. 483, §�4, 2001 Tex. Sess. Law
Serv. 875, 876 (Vernon).

State of Texas Purchase Policies and Procedures Guide July 2004 167
Chapter 6 – Miscellaneous Expenditures or Requirements

§�6.012 Disabilities, purchases of products and services


provided by persons with
A. Chapter 122, Human Resources Code
In this subsection:
• “Community rehabilitation program” means a government or nonprofit
private program operated under criteria established by the Council and under
which persons with severe disabilities produce products or perform services for
compensation.
• “Council” means the Texas Council on Purchasing from People with
Disabilities.
A suitable product or service that meets applicable specifications established by the
state and that is available within the time specified must be procured from a
community rehabilitation program at the price determined by the Council to be the
fair market price.
Sources for this subsection: TEX. HUM. RES. CODE ANN. §§�122.002(3)-(4), 122.008
(Vernon 2001).

B. State Purchasing and General Services Act


The products of workshops, organizations, or corporations whose primary purpose is
training and employing individuals having mental retardation or a physical
disability shall be given preference if they meet state specifications regarding
quantity, quality, delivery, life cycle costs, and price. The Texas Building and
Procurement Commission (TBPC), however, is not required to purchase any product
that does not meet formal state specifications developed by TBPC or meet
commercial specifications approved by TBPC.
Sources for this subsection: State Purchasing and General Services Act,
TEX. GOV’T CODE ANN. §�2155.441(a), (c) (Vernon 2000).

§�6.014 Deaf or hearing impaired, interpreters for the


In this section, “deaf or hearing impaired” means having a hearing impairment,
regardless of the existence of a speech impairment, that inhibits communication with
others or comprehension of an examination or proceeding.
A deaf or hearing impaired person taking a state examination required for state
employment or issuance of a state license is entitled, on request, to an interpreter. The
interpreter may be paid for not more than eight hours for interpreting in a calendar day
and is entitled to $5 for each hour of interpreting in a calendar day, except that the
interpreter is entitled to $15 for the first hour.
Sources: TEX. GOV’T CODE ANN. §§�558.001-558.002 (Vernon 1994).

168 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

§�6.016 Discounts
In this section:
• “Goods” includes supplies, materials, or equipment.
• “Payment” means money owed to a vendor.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
• “Service” includes gas and water utility service.
• “State agency” means:
– a board, commission, department, office, or other agency in the
executive branch of state government that is created by the
constitution or a statute of this state, including an institution of higher
education as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp.
2004); or
– the Legislature or a legislative agency; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, a
state judicial agency, or the State Bar of Texas.
• “Vendor” means a person who supplies goods or a service to a state agency
or another person directed by the agency. The term does not include a state
agency except for Texas Correctional Industries. The term includes an officer
or employee of a state agency when acting in a private capacity to supply
goods or a service.
A state agency shall, when possible, negotiate a prompt payment discount with a
vendor.
A state agency, when paying for the goods or service purchased under an agreement
that includes a prompt or early payment discount, shall submit the necessary payment
documents or information to the Comptroller sufficiently in advance of the prompt or
early payment deadline to allow the Comptroller or the agency to pay the vendor in time
to obtain the discount.
Sources: TEX. GOV’T CODE ANN. §§�2251.001(2), (4), (7)-(8), (10), 2251.030(a), (d)
(Vernon Supp. 2004); Code Construction Act, TEX. GOV’T CODE ANN. §�311.005(2)
(Vernon 1998).

State of Texas Purchase Policies and Procedures Guide July 2004 169
Chapter 6 – Miscellaneous Expenditures or Requirements

§�6.018 Economically depressed or blighted areas, preference


for goods and services from
In this section:
• “Economically depressed or blighted area” means an area that:
• is an economically depressed or blighted area as defined by
TEX. GOV’T CODE ANN. §�2306.004 (Vernon Supp. 2004); or
• meets the definition of a historically underutilized business zone as defined by
Section 632(p) of Title 15 of the United States Code.
• “Goods” means supplies, materials, or equipment.
• “Service” means the furnishing of skilled or unskilled labor or professional
work, but does not include:
• a professional service subject to Subchapter A of Chapter 2254, Government
Code; or
• a service of a state agency employee; or
• a consulting service or service of a consultant as defined by Subchapter B of
Chapter 2254, Government Code; or
• service of a public utility.
• “State agency” means:
• a department, commission, board, office, or other agency in the executive branch
of state government created by the state constitution or a state statute; or
• the supreme court, the court of criminal appeals, a court of appeals, or the
Texas Judicial Council; or
• a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior
college.
The Texas Building and Procurement Commission or a state agency that procures goods
or services shall give preference to goods or services produced in an economically
depressed or blighted area if:
• the goods or services meet state specifications regarding quantity and quality; and
• the cost of the good or service does not exceed the cost of other similar products
or services that are not produced in an economically depressed or blighted area.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2155.001 (Vernon 2000), §�2151.002(2), 2155.450 (Vernon Supp. 2004).

§�6.020 Electrical items


In this section, “state agency” means:
• a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
• the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or
the Texas Judicial Council; or
• a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public junior
college.

170 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

Neither the Texas Building and Procurement Commission nor a state agency may
purchase an electrical item that does not meet the applicable safety standards of the
federal Occupational Safety and Health Administration.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2151.002(2) (Vernon Supp. 2004), §�2158.181 (Vernon 2000).

USAS Purchase Voucher Requirements

A state agency must retain in its files documentation that the item meets the safety
standards of the Occupational Safety and Health Administration. Upon request, the
agency must make this documentation available to the Comptroller during a pre-payment
or a post-payment audit.

§�6.022 Energy-saving devices, measures, or products


A. Chapter 447, Government Code
In this subsection, “energy-saving or water-saving device or measure” means a
device or measure that directly reduces energy or water costs or the energy or water
consumption of equipment, including a lighting, heating, ventilation, or air
conditioning system, without materially altering the quality of the equipment.
If the state energy conservation office approves, a state agency that reduces its
energy or water expenses may use any funds saved by the agency from appropriated
utility funds to purchase an energy-saving or water-saving device or measure.
A state agency, according to the recommendations of an energy and water audit,
may purchase energy-saving or water-saving devices or measures from appropriated
utility funds if the savings in utility funds projected by the audit will offset the
purchase.
Sources for this subsection: TEX. GOV’T CODE ANN. §�447.008
(Vernon Supp. 2004).

B. State Purchasing and General Services Act


In this subsection,
• “Energy savings performance contract” means a contract for energy or
water conservation measures to reduce energy or water consumption or
operating costs of governmental facilities in which the estimated savings in
utility costs resulting from the measures is guaranteed to offset the cost of the
measures over a specified period.
• “State agency” means:
• a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
• the Supreme Court, the Court of Criminal Appeals, a Court of Appeals,
or the Texas Judicial Council; or
• a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public
junior college.

State of Texas Purchase Policies and Procedures Guide July 2004 171
Chapter 6 – Miscellaneous Expenditures or Requirements

Notwithstanding any other provision of Chapter 2166, Government Code, a state


agency may enter into an energy savings performance contract in accordance with
the State Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2166.406
(Vernon Supp. 2004). The agency may enter into the contract without the consent of
the Texas Building and Procurement Commission (TBPC).

A state agency may enter into an energy savings performance contract only with a
person who is experienced in the design, implementation, and installation of the
energy or water conservation measures addressed by the contract. The person must
guarantee the amount of savings to be realized by the contracting agency under the
contract.

An energy savings performance contract may cover a period of more than one year if
the contracting state agency finds that the amount the agency would spend on
energy or water conservation measures will not exceed the amount to be saved in
energy, water, wastewater, and operating costs over fifteen years from the date of
installation. The agency’s contractual obligation, including costs of design,
engineering, installation, and anticipated debt service, in any year during the term
of the contract beginning after the final date of installation may not exceed the total
energy, water, wastewater, and operating cost savings, as determined by the agency,
divided by the number of years in the contract term.

A contract authorized under Chapter 2166, Government Code, may include the
installation or implementation of the items listed in State Purchasing and General
Services Act, TEX. GOV’T CODE ANN. §�2166.406(a) (Vernon Supp. 2004).

TBPC shall give preference to energy efficient products in purchases made under
Subtitle D of Title 10, Government Code,63 if:
• the products meet state specifications regarding quantity and quality; and
• the cost of the product is equal to or less than the cost of other similar products
that are not energy efficient.
Sources for this subsection: State Purchasing and General Services Act,
TEX. GOV’T CODE ANN. §§�2151.002(2), 2166.406(a)-(b), (d), (f), (h)
(Vernon Supp. 2004), §�2155.442 (Vernon 2000).

63
Subtitle D of Title 10, Government Code, is commonly known as the State Purchasing and General Services
Act. State Purchasing and General Services Act, TEX. GOV’T CODE ANN. §�2151.001 (Vernon 2000).

172 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

C. Section 2113.301, Government Code


In this subsection:
• “Appropriated money” means money appropriated by the legislature
through the General Appropriations Act.
• “Institution of higher education” has the meaning provided by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
• “State agency” means:
• a department, commission, board, office, or other entity in the executive
branch of state government; or
• the supreme court, the court of criminal appeals, another entity in the judicial
branch of state government with statewide authority, or a court of appeals; or
• a university system or an institution of higher education.
• “State facility purpose” means a purpose related to:
• the maintenance of a state-owned or state-leased building or facility; or
• a project as defined by TEX. GOV’T CODE ANN. §�2166.001(4)
(Vernon Supp. 2004), including a project described by
TEX. GOV’T CODE ANN. §�2166.003 (Vernon 2000).
• “University system” has the meaning assigned by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004).
• “Utility cost savings contract” means a contract under Subchapter I of
Chapter 2166, Government Code, or other law that guarantees utility cost
savings for energy conservation measures to reduce energy or water
consumption or to reduce operating costs of governmental facilities.
Before a state agency may use appropriated money to make a capital expenditure

for a state facility purpose, the agency must determine in accordance with

TEX. GOV’T CODE ANN. §�2113.301(e) (Vernon Interim Supp. 2004) whether the

expenditure could be financed with money generated by a utility cost savings

contract. If practicable to do so, the agency must finance the expenditure with

money generated by the contract. If it is not practicable to do so, then the agency

must provide justification to the comptroller for the expenditure.

The requirements described in this subsection do not apply to an institution of

higher education.

The requirements described in this subsection do not apply to a capital expenditure


for a state facility purpose that requires expeditious action to:
• prevent a hazard to life, health, safety, welfare, or property; or
• avoid undue additional costs to the state.
Sources for this subsection: TEX. GOV’T CODE ANN. §�2113.001
(Vernon Supp. 2004), §�2113.301(a)-(g) (Vernon Interim Supp. 2004).

D. Education Code authorization for institutions of higher education


In this subsection, “energy savings performance contract” means a contract for
energy or water conservation measures to reduce energy or water consumption or
operating costs of institutional facilities in which the estimated savings in utility costs
resulting from the measures is guaranteed to offset the cost of the measures over a
specified period.

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Chapter 6 – Miscellaneous Expenditures or Requirements

The governing board of an institution of higher education may enter into an energy
savings performance contract in accordance with TEX. EDUC. CODE ANN. §�51.927
(Vernon Supp. 2004). The contract may include installation or implementation of the
items listed in Section�51.927(a), Education Code.
The governing board of an institution of higher education may enter into an energy
savings performance contract for a period of more than one year only if the board
finds that the amount the institution would spend on the energy or water
conservation measures will not exceed the amount to be saved in energy, water,
wastewater, and operating costs over 15 years from the date of installation. The
institution’s contractual obligation during any particular year may not exceed the
total energy, water, wastewater, and operating cost savings as determined by the
board, divided by the number of years in the contract term.
Any energy savings performance contract involving an institution of higher
education must include a guarantee, from the provider of the energy or water
conservation measures, of the amount of savings to be realized by the institution
under the contract.
Any contract under Section 51.927, Education Code, must be let according to the
procedures established for professional services by TEX. GOV’T CODE ANN. §�2254.004
(Vernon 2000).64
Sources for this subsection: TEX. EDUC. CODE ANN. §�51.927(a)-(b), (f), (h)-(i)
65
(Vernon Supp. 2004).

USAS Purchase Voucher Requirements


1. If a purchase of an energy-saving device or measure is made under the second
paragraph of Subsection (A) of this section, then a copy of the approval of the
purchase by the state energy conservation office must be available to the Comptroller
during a pre-payment or a post-payment audit, if requested by the Comptroller.
2. If a purchase of an energy-saving device or measure is made under the third
paragraph of Subsection (A) of this section, then a copy of the energy audit
recommendations and repayment schedule must be available to the Comptroller
during a pre-payment or a post-payment audit as evidence of the projected savings,
if requested by the Comptroller.

64
This requirement was added by Chapter 1319 of the 77th regular legislative session. See the immediately
preceding footnote.
65
Section 51.927, Education Code, was amended by Chapter 1319 of the 77th regular legislative session.
See the two immediately preceding footnotes above about the contracts covered by Chapter 1319.

174 July 2004 State of Texas Purchase Policies and Procedures Guide
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§�6.024 Entertainment
In this section, “entertainment expenses” means expenses for items like food,
traveling, theatre tickets, and parties for persons who are not state officers or
employees. The term does not include alcohol or alcoholic beverages.
A state agency may constitutionally pay for entertainment expenses if the payment
furthers a state purpose that is connected with the agency’s statutory responsibilities.
Source: Op. Tex. Att’y Gen. No. MW-206 (1980).
Cross reference: Chapter 2: Alcohol.

USAS Purchase Voucher Requirements


A state agency must retain in its files documentation that shows the proper public purpose
served by paying for the entertainment expenses and the link between the expenses and the
agency’s statutory responsibilities. Upon request, the documentation must be made
available to the Comptroller during a pre-payment or a post-payment audit.

§�6.026 Federal funds


A. General discussion
A state agency may accept a payment or grant of funds from the United States if the
agency has specific or implied statutory authority to do so.
If a state agency or institution named in the General Appropriations Act (GAA) has
statutory authority to accept funds from the United States, then the funds are
appropriated to the receiving agency or institution. The agency or institution may
expend the funds for the purposes for which federal grant, allocation, aid, payment,
or reimbursement was made.
Except for an institution of higher education, federal funds may not be expended for
a strategy or function unless it was reviewed by the 78th Legislature and the
strategy or function:
• is authorized by specific language in the GAA; or
• encompassed in an agency’s budget structure as established in the GAA.
The preceding paragraph (including its two bullets) does not apply to an entity or
appropriation in Article X of the GAA.
Upon deposit in the state treasury, funds received from the United States become
state moneys and are subject to all the limitations and restrictions that apply to
state moneys unless there is a clear manifestation of congressional intent for those
limitations and restrictions not to apply. If that intent is clearly manifested, then a
determination must be made about whether the congress pre-empted state law or
simply enacted a condition for the state’s acceptance of funds from the United States
that the state may reject if it forgoes accepting those funds.
Sources for this subsection: Article IX, Section 8.02(a), (b)(2) and Article X,
Section�2(a) of the General Appropriations Act; Op. Tex. Att’y Gen. Nos. JC­
161 (1999), DM-331 (1995), DM-288 (1994), JM-772 (1987), JM-716 (1987), MW-395
(1981), MW-191 (1980), H-1318 (1978), H-777 (1976), M-125 (1967), C-530 (1965).

State of Texas Purchase Policies and Procedures Guide July 2004 175
Chapter 6 – Miscellaneous Expenditures or Requirements

B. Acceptance of federal funds by the Comptroller


The Comptroller may accept federal money for a state agency not otherwise
restricted by statute or by rider or special provision in the GAA if the agency
certifies to the Comptroller that the agency will be responsible for compliance with
applicable federal and state law.
The Comptroller is required to execute instruments necessary to accept money, gifts,
or assets authorized by federal law to be paid to the state in lieu of taxes or as a gift
by the Secretary of Housing and Urban Development or any federal agency. The
funds received must be deposited in the general revenue fund.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�403.012, 403.0121
(Vernon 1998).
Cross reference for this section: Chapter 6: Gifts and donations to state agencies.

§�6.028 Federal government, purchases from the


In this section:
• “Goods” means supplies, materials, or equipment.
• “State agency” means:
– a department, commission, board, office, or other agency in the executive
branch of state government created by the state constitution or a state
statute; or
– the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or the
Texas Judicial Council; or
– a university system or an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), except a public
junior college.
The Texas Building and Procurement Commission (TBPC) or the governing body of an
institution of higher education may negotiate purchases of goods of any kind needed by
a state agency or the institution with the appropriate agency of the federal government.
The body may act either directly or through TBPC or another state agency.
The price of goods that are purchased from the federal government may not exceed the
fair market value of the goods.
Sources: State Purchasing and General Services Act, TEX. GOV’T CODE ANN.
§�2151.002(2) (Vernon Supp. 2004), §�2155.001(1), (Vernon 2000),
§�2155.084(a)-(b) (Vernon Supp. 2004).

USAS Purchase Voucher Requirements

A state agency must retain in its files documentation showing that the price of goods
purchased from the federal government does not exceed their fair market value. Upon
request, the agency must make the documentation available to the Comptroller during a
pre-payment or a post-payment audit.

176 July 2004 State of Texas Purchase Policies and Procedures Guide
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§�6.030 Fee rate increases


The General Appropriations Act (GAA) says that none of the funds appropriated by the
GAA may be expended by an agency that increases the rate of a fee assessed by the
agency unless it provides notice to the payer of the fee that the fee rate was set by the
agency or its governing board and not mandated by the Legislature.
The preceding paragraph does not apply to an entity or appropriation in Article X of the GAA.
Sources: Article IX, Section 6.32 and Article X, Section 2(a) of the General
Appropriations Act.

§�6.032 Gifts to state agencies and institutions of higher


education
A. Requirements of Chapter 575, Government Code
In this subsection:
• “Gift” means a donation of money or property that has a value of at least $500.
• “State agency” means a board, commission, council, committee, department,
office, agency, or other governmental entity in the executive or judicial branch
of state government. The term does not include an institution of higher
education as defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
A state agency that has a governing board may accept a gift only if:
• the agency has the authority to accept the gift; and
• a majority of the board, in an open meeting, acknowledges the acceptance of
the gift not later than the 90th day after the date the gift is accepted.
A state agency that accepts a gift must record the name of the donor, a description of
the gift, and a statement of the purpose of the gift in:
• the minutes of the governing board of the agency; or
• appropriate agency records, if the agency does not have a governing board.
A state agency may not accept a gift from a person who is a party to a contested case
before the agency until the 30th day after the date the decision in the case becomes
final under the Administrative Procedure Act, TEX. GOV’T CODE ANN. §�2001.144
(Vernon 2000). In this paragraph, “contested case” has the meaning assigned by the
Administrative Procedure Act, TEX. GOV’T CODE ANN. §�2001.003(1) (Vernon 2000).
Sources for this subsection: TEX. GOV’T CODE ANN. §§�575.001-575.005
(Vernon Supp. 2004).

B. Requirements of Chapter 2255, Government Code


The information provided in this subsection applies only to a state agency that is
authorized by statute to accept money from a private donor or for which a private
organization exists that is designed to further the purposes and duties of the agency.
A state agency shall adopt rules governing the relationship between:
• the donor or organization; and
• the agency and its employees.

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Chapter 6 – Miscellaneous Expenditures or Requirements

The rules shall govern all aspects of conduct of the agency and its employees in the
relationship, including:
• administration and investment of funds received by the organization for the
benefit of the agency; and
• use of an employee or property of the agency by the donor or organization; and
• service by an officer or employee of the agency as an officer or director of the
donor or organization; and
• monetary enrichment of an officer or employee of the agency by the donor or
organization.
The rules may not conflict with or supersede a requirement of a statute regulating:
• the conduct of an employee of a state agency; or
• the procedures of a state agency.
In this subsection, “state agency” means a department, commission, board, office,
or other agency in the executive branch of state government created by the
constitution or a statute of this state, including a university system or an institution
of higher education as defined by TEX. EDUC. CODE ANN. §�61.003
(Vernon Supp. 2004).
Source for this subsection: TEX. GOV’T CODE ANN. §�2255.001 (Vernon 2000).

C. Attorney general opinions


A state agency may accept a gift or donation of money or property only if the agency has
specific statutory authority to do so. A provision in the General Appropriations Act (GAA)
may not constitutionally authorize a state agency to accept gifts or donations.
Even if a state agency has specific authority to accept gifts or donations, that authority
does not necessarily extend to accepting gifts or donations of real property.
Upon deposit in the state treasury, a gift or donation becomes state money and is subject
to all the limitations and restrictions that apply to state money.
A state agency may not expend a gift or donation of money or use a gift or donation of
property for any function or activity that the agency does not have statutory authority to
conduct.
Sources for this subsection: Op. Tex. Att’y Gen. Nos. JM-942 (1988), JM-684 (1987),
JM-459 (1986), JM-185 (1984), MW-373 (1981), MW-206 (1980), H-1309 (1978), H-1180
(1978), H-120 (1973), WW-708 (1959), WW-534 (1958), O-4681 (1942); Tex. Att’y Gen.
LO-90-41 (1990), R-2680 (1951).

D. Deposits of gifts or donations of money


In this subsection, “state agency” means an office, institution, or other agency that is in
the executive branch of state government, has authority that is not limited to a
geographical portion of the state, and was created by the constitution or a statute of this
state. The term does not include an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
A state agency must deposit a gift or donation of money in the state treasury unless
a law specifically provides otherwise.
Sources for this subsection: State Funds Reform Act, TEX. GOV’T CODE ANN.
§�404.092 (Vernon 1998), §§�404.093-404.094 (Vernon Supp. 2004).

178 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

E. Acceptance of gifts by the commissioner of the General Land Office


In this subsection, “person” includes an individual, a corporation, an organization,
a government or governmental subdivision or agency, a business trust, an estate, a
trust, a partnership, an association, and any other legal entity.
Unless a law provides otherwise, the commissioner of the General Land Office may accept
gifts, devises, or bequests of money, real property, or personal property on behalf of the
state if the commissioner determines the acceptance would be in the best interests of the
state. Real property accepted by the commissioner becomes public free school land unless
the person making the gift, devise, or bequest of the property provides that the property is
to be possessed, administered, or used by a particular state agency, board, commission,
department, or other particular state entity.
Sources for this subsection: TEX. NAT. RES. CODE ANN. §�31.065(a)
(Vernon 2001); Code Construction Act, TEX. GOV’T CODE ANN. §�311.005(2)
(Vernon 1998).

F. Solicitation and acceptance of gifts by the Office of the Governor


The Office of the Governor may solicit and accept gifts, grants, and donations of
money or property on behalf of the state for any lawful purpose.
Source for this subsection: TEX. GOV’T CODE ANN. §�401.102
(Vernon Supp. 2004).

G. Gifts of real property

In this subsection, “state agency” means:

• a board, commission, department, institution, office, or other agency in the


executive branch of state government that is created by the constitution or a
statute of this state, including an institution of higher education as defined by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004), other than a public
junior college; or
• the Supreme Court, the Court of Criminal Appeals, a Court of Appeals, or other
agency in the judicial branch.
A state agency may not accept a gift or devise of real property without statutory
authority or other legislative authorization.
An institution of higher education, as defined by TEX. EDUC. CODE ANN. §�61.003
(Vernon Supp. 2004), may accept a gift or devise of real property from a private
entity to establish scholarships or professorships or to be held in trust for other
educational purposes only if done consistently with rules adopted by the Texas
Higher Education Coordinating Board.
Sources for this subsection: TEX. GOV’T CODE ANN. §�658.001(2)
(Vernon Supp. 2004), §§�2204.002, 2204.003 (Vernon 2000).

H. Requirements of the General Appropriations Act


In this subsection, “state agency” includes66 the legislative branch of state government.
The GAA appropriates each bequest or gift of money to the state agency designated
by the grantor for the purposes specified by the grantor, but only if the agency has
specific authority to accept gifts. The unexpended balance of the appropriation that
remains at the beginning of a biennium or at the end of the first fiscal year of a
biennium is appropriated for use during that biennium.

66
The definition of “include” in Section 1.002 does not apply here.
State of Texas Purchase Policies and Procedures Guide July 2004 179
Chapter 6 – Miscellaneous Expenditures or Requirements

A state agency may not transfer a gift or bequest to a private or public development
fund or foundation unless the donor or the representative of the donor’s estate gives
written permission for the transfer.
Source for this subsection: Article IX, Section 8.01(a), (c)-(d) of the General
Appropriations Act.
Cross reference for this section: Chapter 6: Federal funds.

§�6.034 Grants
A. General discussion
A “grant” is an expenditure of funds from the state treasury to a person or entity
that does not directly provide consideration or a benefit to the state in exchange for
the funds. In this section, “grant” includes a “grant-in-aid.”
The state may impose limitations and requirements on a grant recipient’s expenditure of
grant money without necessarily converting the grant into a service contract or some
other type of agreement. The test for determining whether an expenditure is a grant is
not whether any strings are attached to the expenditure. Rather, the test is whether the
state directly receives any consideration or benefits from the person or entity receiving
the money.
The appropriation year determination procedures apply to grants unless the funds
used to pay the grants are not appropriated.

B. Requirements of the General Appropriations Act


The information provided in this subsection applies only to funds appropriated by
the General Appropriations Act (GAA).
The GAA says that a state agency shall distribute grants on a reimbursement or an as-
needed basis unless:
• otherwise provided by statute; or
• the agency determines that another distribution method is necessary for the
purposes of the grant.
Source for this subsection: Article IX, Section 6.31(a) of the General
Appropriations Act.
Cross reference for this section: Chapter 8: Appropriation year
determination.

§�6.036 Honoraria and speaking fees


State agencies occasionally want to pay persons for speaking before the agencies. These
payments are often referred to as “honoraria.”
If an honorarium is, in a particular case, an honorary gift or a gratuitous payment
instead of being compensation for services rendered, then a state agency may not
constitutionally pay an honorarium. If an honorarium is, in a particular case, a
euphemism for a payment to a person for services rendered, then a state agency may
constitutionally pay an honorarium.
Sources: TEX. CONST. art. III, §�51; art. VIII, §�3; art. XVI, §�6(a).
Cross reference: Chapter 2: Legislators.

180 July 2004 State of Texas Purchase Policies and Procedures Guide
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USAS Purchase Voucher Requirements


1. A state agency must retain in its files documentation showing the services rendered and
how the payment of the honorarium would be constitutional.
2. Upon request, the documentation described in requirement #1 must be made available
to the Comptroller during a pre-payment or a post-payment audit.
3. The Comptroller object code that corresponds to the services rendered must be used.

§�6.038 Information Resources, Department of


In this section:
• “Major information resources project” has the meaning assigned by the
Information Resources Management Act, TEX. GOV’T CODE ANN. §�2054.003(10)
(Vernon Supp. 2004).
• “Quality assurance team” means the quality assurance team established
under the Information Resources Management Act, TEX. GOV’T CODE ANN.
§�2054.158 (Vernon Supp. 2004).
• “State agency” means a department, commission, board, office, council,
authority, or other agency in the executive or judicial branch of state
government that is created by the constitution or a statute of this state. The
term includes an institution of higher education or a university system as
defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
A state agency shall submit a copy of its biennial operating plan and of any
amendments to its plan, as approved by the Legislative Budget Board (LBB), to the
governor, the state auditor, and the Department of Information Resources not later
than the 30th day after the date LBB approves the plan or amendments, as applicable.
If a state agency does not comply with this requirement, then the governor may direct
the Comptroller to deny the agency access to the agency’s appropriations that relate to
the management of information resources.
A state agency may not spend appropriated funds for a major information resources
project unless approved by:
• the LBB in the agency’s biennial operating plan; and
• the quality assurance team.
Sources: Information Resources Management Act, TEX. GOV’T CODE ANN.
§§�2054.003(13), (16), 2054.103, 2054.118(a) (Vernon Supp. 2004), §�2054.104
(Vernon 2000).
Cross references: Chapter 6: Property transfers, interagency; Chapter 6:
Information resources projects; Chapter 6: Telecommunications.

USAS Purchase Voucher Requirements

A state agency must retain in its files a copy of the Department of Information Resources’
approval of each major information resource project of the agency. Upon request, the
agency must make the copy available to the Comptroller during a pre-payment or a
post-payment audit.

State of Texas Purchase Policies and Procedures Guide July 2004 181
Chapter 6 – Miscellaneous Expenditures or Requirements

§�6.040 Information resources projects


A. Reporting to the Legislative Budget Board
In this subsection:
• “Major information system” includes:
– one or more computers that in the aggregate cost more than $100,000; and
– a service related to computers, including computer software, that costs
more than $100,000; and
– a telecommunications apparatus or device that serves as a voice, data, or
video communications network for transmitting, switching, routing,
multiplexing, modulating, amplifying, or receiving signals on the network
and costs more than $100,000.
• “State agency” means a department, commission, board, office, council,
authority, or other agency in the executive or judicial branch of state
government that is created by the constitution or a statute of this state. The
term includes an institution of higher education or a university system as
defined by TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
• “Telecommunications” means any transmission, emission, or reception of signs,
signals, writings, images, or sounds of intelligence of any nature by wire, radio,
optical, or other electromagnetic systems. The term includes all facilities and
equipment performing those functions that are owned, leased, or used by state
agencies and branches of state government.
A state agency shall provide written notice to the Legislative Budget Board (LBB) of a
contract for a major information system. The notice must be on a form prescribed by the
LBB and filed not later than the tenth day after the date the agency enters into the
contract.
Sources for this subsection: Information Resources Management Act,
TEX. GOV’T CODE ANN.§�2054.003 (13)-(14)(Vernon Supp. 2004), §�2054.008
(Vernon 2000).

B. Review and approval requirements of the General Appropriations Act


In this subsection, “major information resources project” has the meaning

assigned by TEX. GOV’T CODE ANN. §�2054.003(10) (Vernon Supp. 2004).

The General Appropriations Act (GAA) says that a state agency may not expend
funds appropriated by the GAA for a major information resources project unless it
has been reviewed and approved by the quality assurance team (QAT). QAT is
composed of representatives of the Legislative Budget Board and the state auditor.
QAT may waive the project review requirements for a project.
None of the preceding in this subsection applies to an entity or appropriation in
Article�X of the GAA.
Sources for this subsection: Article IX, Section 9.02(a)-(b) and Article X,
Section 2(a) of the General Appropriations Act.
Cross reference for this section: Chapter 6: Information Resources,
Department of.

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§�6.042 Insurance
A. Insurance as part of compensation
Under the Texas constitution, a state agency may purchase any type of insurance
that names an officer or employee as the insured and that does not directly benefit
the state if the agency provides the insurance as part of the officer’s or employee’s
compensation.
A state agency, however, must have specific statutory authority to provide
insurance as part of compensation unless the agency has complete statutory
discretion to determine the types and amount of compensation for its officers
and employees.
The group health insurance plans for state officers and employees are the best
examples of insurance being part of compensation.
Sources for this subsection: Op. Tex. Att’y Gen. Nos. MW-276 (1980), MW-156
(1980), H-602 (1975), WW-731 (1959), O-2469 (1940).

USAS Purchase Voucher Requirements

1. When a state agency purchases insurance as part of an officer’s or employee’s


compensation, the Comptroller may require the agency to cite the agency’s statutory
authority to provide insurance as part of compensation. The Comptroller may require
the citation to be provided during a pre-payment or a post-payment audit.

2. Comptroller object code 7204 must be used.

B. Liability insurance
In this subsection, a liability insurance policy is a contract between an insurer
(usually an insurance company) and an insured (the state or a state employee). The
contract obligates the insurer to pay the amount of money that the insured is legally
required to pay to a third person because of the occurrence of a specified event. The
amount that the insurer would be obligated to pay under the policy is always
specified in the policy and may be expressed in various ways, e.g., $100,000 per
occurrence, $50,000 per person. The events that trigger an insurer’s obligation to
pay depend upon the terms of the policy and may cover a wide range of occurrences,
such as an automobile accident.

1. General discussion
Except as discussed later in this subsection, a state agency may not purchase
any type of liability insurance unless:
• the agency has specific statutory authority for the purchase; and
• the agency has a specific appropriation for the purchase; and
• the agency could be held liable under Texas law for the occurrences against
which the insurance would protect the agency.
These requirements apply regardless of whether money in or outside the state
treasury is used to purchase the insurance.

State of Texas Purchase Policies and Procedures Guide July 2004 183
Chapter 6 – Miscellaneous Expenditures or Requirements

The State Office of Risk Management (SORM) is required to purchase insurance


coverage for a state agency subject to Chapter 501, Labor Code, 67 except for an
institution subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996), 68 under
any line of insurance other than health or life insurance. A state agency subject
to Chapter�501, except for an institution subject to Section 501.022, may not
purchase property, casualty, or liability insurance coverage without the
approval of the Risk Management Board (RMB). The RMB is required, by rule
adopted not later than December 1, 2002, to develop an implementation
schedule for the purchase of insurance by the SORM as described in this
paragraph. In addition, the RMB is required to phase in, by line of insurance,
the requirement that a state agency purchase coverage only through the SORM.
The requirements discussed in this paragraph took effect September 1, 2002.

Sources for this subdivision: TEX. CONST. art. III, §�51; TEX. LAB. CODE ANN.
§�412.011(c)(2), (d)-(e) (Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S.,
ch. 1017, §�3.01(a), (b)(1), 2001 Tex. Gen. Laws 2226, 2233; Senate Concurrent
Resolution No. 3, 37th Leg., 2d C.S., 1921; Op. Tex. Att’y Gen. Nos. JM-625 (1987),
JM-547 (1986), MW-276 (1980), H-1318 (1978), H-742 (1975), H-70 (1973), C-193
(1963), V-722 (1948), O-5824 (1944), O-4315 (1942), O-1418 (1939), O-1100A (1940),
O-1100 (1939). See Op. Tex. Att’y Gen. No. DM-346 (1995) (opinion “temporarily”
withdrawn by the attorney general on July 31, 1996, to give the legislature the
opportunity to enact general legislation about liability insurance purchases by
state agencies).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a state agency purchases
a type of liability insurance that is not discussed in another subdivision of this subsection.
1. A state agency must retain in its files documentation that shows how the
requirements discussed in this subdivision have been met. Upon request, the agency
must make this documentation available to the Comptroller during a pre-payment or
a post-payment audit.
2. Comptroller object code 7204 must be used.

2. Texas Tort Claims Act


In this subdivision, “state government” means an agency, board,
commission, department, or office that: (1) was created by the constitution or
a statute of this state; and (2) has statewide jurisdiction. The term does not
include a district or authority created under TEX. CONST. art. XVI, §�59.

67
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
68
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

184 July 2004 State of Texas Purchase Policies and Procedures Guide
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A unit of state government may purchase insurance policies to protect the unit
and the unit’s employees against claims under the Texas Tort Claims Act (TTCA)
only to the extent that the unit is authorized or required to do so under law. The
state may not require an employee to purchase liability insurance as a condition
of employment if the state is insured by a liability insurance policy.
Sources for this subdivision: Texas Tort Claims Act, TEX. CIV. PRAC. &

REM. CODE ANN. §§�101.001(6), 101.027(a), (c) (Vernon Supp. 2004); Op. Tex. Att’y

Gen. Nos. JM-889 (1988), JM-625 (1987), JM-552 (1986), H-900 (1976), H-681 (1975),

H-158 (1973), M-1257 (1972). See Texas Tort Claims Act, TEX. CIV. PRAC. & REM.

CODE ANN. §�101.001(2) (Vernon Supp. 2004) (definition of “employee”).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a state agency purchases
insurance to protect against liability arising under the TTTCA.
1. If funds appropriated by the General Appropriations Act (GAA) are being used to
purchase the insurance, then the Comptroller may require the agency to describe who
would be protected by the insurance. If persons other than appointed board or
commission members and executive management staff would be protected, then the
agency must cite the law other than the GAA that appropriated the funds unless the
coverage of those persons is at no extra cost to the agency.
2. If the TTCA applies, then the Comptroller may require the agency during a pre-payment
or a post-payment audit to cite the TTCA as the statutory authority for the purchase.
3. Comptroller object code 7204 must be used.

3. Operation of motor vehicles, items of power equipment, aircraft, motorboats,


and watercraft
In this subdivision, “insurable item” means a motor vehicle, an item of power
equipment, an aircraft, or a motorboat or other watercraft of any type or size.
TEX. GOV’T CODE ANN. §�612.002 (Vernon 1994) authorizes a state agency that
owns or operates an insurable item to purchase insurance to protect the agency’s
officers and employees from liability that arises out of the operation,
maintenance, or use of the item. The section does not, however, authorize a state
agency to purchase insurance to protect the agency or the state against liability.
If a state agency requires its employees to maintain liability insurance for their
operation of insurable items instead of the agency purchasing the insurance for
them, then the employees are entitled to receive additional compensation equal
to the cost of the insurance.
The customary personal injury and property damage liabilities may be insured
against if the insurance relates to the use, operation, and maintenance of
insurable items. Uninsured/underinsured motorists insurance, medical
payments insurance, automobile collision insurance, or premises defects
insurance may not be purchased under Section 612.002.

State of Texas Purchase Policies and Procedures Guide July 2004 185
Chapter 6 – Miscellaneous Expenditures or Requirements

A state agency probably will have difficulty purchasing a liability insurance policy
that covers only the insurable items and liabilities mentioned in Section 612.002.
A state agency that incidentally receives coverage beyond that specified in Section
612.002 at no cost to the agency is not prohibited from receiving the coverage.
Section 612.002 authorizes a state agency to purchase liability insurance to cover
the operation of state-owned or leased insurable items. A state agency may not,
however, purchase insurance under those sections to cover insurable items used
by the agency (not leased) but owned by an outside entity.
A state agency may use funds appropriated by the GAA for operations to
purchase insurance under Section 612.002 without the necessity for a specific
appropriation. A state agency may not, however, purchase an unreasonable
amount of insurance.
Insurance purchased under Section 612.002 must be approved by the
commissioner of insurance as to form and the attorney general as to liability
before a state agency may purchase the insurance.
A state agency may not purchase insurance under Section 612.002 from a
company that is not authorized to do business in this state.
The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code,69 except for an institution subject to TEX. LAB. CODE ANN.
§�501.022 (Vernon 1996),70 under any line of insurance other than health or life
insurance, including the insurance discussed in this subdivision. A state agency
subject to Chapter 501, except for an institution subject to Section 501.022, may not
purchase property, casualty, or liability insurance coverage without the approval of
the RMB. The RMB is required, by rule adopted not later than December 1, 2002, to
develop an implementation schedule for the purchase of insurance by the SORM as
described in this paragraph. In addition, the RMB is required to phase in, by line of
insurance, the requirement that a state agency purchase coverage only through the
SORM. The requirements discussed in this paragraph took effect September 1, 2002.
Sources for this subdivision: TEX. GOV’T CODE ANN. §�612.002 (Vernon 1994);
TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e) (Vernon Supp. 2004); Act of
May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1), 2001 Tex. Gen. Laws 2226,
2233; Act of May 28, 1993, 73rd Leg., R.S., ch. 685, §§�1.23, 1993 Tex. Gen. Laws
2559, 2572-2573 (transferring certain duties from the State Board of Insurance to
the commissioner of insurance and the Texas Department of Insurance); Op. Tex.
Att’y Gen. Nos. JM-889 (1988), JM-551 (1986), H-158 (1973), M-1257 (1972), M-1215
(1972), M-559 (1970), M-501 (1969).

69
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
70
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

186 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when a state agency purchases
insurance or provides extra compensation to its employees so they may purchase insurance
under Section 612.002.
1. If Section 612.002 applies, then a state agency must retain in its files documentation
that provides the statutory authority for the purchase. Upon request, the agency must
make this documentation available to the Comptroller during a pre-payment or a post-
payment audit.
2. Approval from the attorney general and the commissioner of insurance is required for
payment. The attorney general must electronically approve the voucher submitted to the
Comptroller for payment of the insurance. The approval letter from the commissioner of
insurance must be maintained in the agency’s files and, upon request, must be made
available to the Comptroller during a pre-payment or a post-payment audit.
3. A state agency that provides extra compensation to its employees so they may purchase
insurance must retain in its files documentation showing that those employees:
a. are employed by the agency; and
b. are required as a regular part of their duties to operate state-owned motor
vehicles, aircraft, motorboats, or watercraft; and
c. are required by the agency to maintain liability insurance as a prerequisite to
the operation of the state-owned motor vehicles, aircraft, motorboats, or
watercraft.
4. Upon request, the documentation required by voucher requirement #3 must be made
available to the Comptroller during a pre-payment or a post-payment audit.
5. Comptroller object code 7216 must be used.

4. Officers and employees of the Texas Department of Transportation


In this subdivision, “equipment” includes an automobile, a motor truck, a
trailer, an aircraft, a motor grader, a roller, a tractor, a tractor power mower,
and other power equipment.
The Texas Department of Transportation (TxDOT) may purchase insurance to
protect the officers and employees of TxDOT from liability arising from a claim
against TxDOT arising from the use, operation, or maintenance of equipment that is
used or may be used in connection with the laying out, construction, or maintenance
of the roads, highways, rest areas, or other public grounds in this state.
The insurance may be purchased only from a reliable insurance company
authorized to do business in this state. The form of the insurance must be approved
by the commissioner of insurance, and the coverage must be approved by the
attorney general.
Liability insurance to protect TxDOT’s officers and employees also may be
purchased under TEX. GOV’T CODE ANN. §�612.002 (Vernon 1994), §�612.003
(Vernon Supp. 2004), which are discussed elsewhere in this subsection.
Sources for this subdivision: TEX. TRANSP. CODE ANN. §§�201.106(a), (e), (g)
(Vernon Supp. 2004); Act of May 28, 1993, 73rd Leg., R.S., ch. 685, §§�1.23, 1993
Tex. Gen. Laws 2559, 2572-2573 (transferring certain duties from the State
Board of Insurance to the commissioner of insurance and the Texas
Department of Insurance); Op. Tex. Att’y Gen. Nos. M-536 (1969), M-501 (1969).

State of Texas Purchase Policies and Procedures Guide July 2004 187
Chapter 6 – Miscellaneous Expenditures or Requirements

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when the TxDOT purchases

insurance to protect its officers and employees from liability arising out of the use,

operation, and maintenance of equipment.

1. If Section 201.106 applies, then TxDOT must retain in its files documentation that
provides the statutory authority for the purchase. Upon request, TxDOT must make this
documentation available to the Comptroller during a pre-payment or a post-payment audit.
2. Approval from the attorney general and the commissioner of insurance is required for
payment. The attorney general must electronically approve the voucher submitted to the
Comptroller for payment of the insurance. The approval letter from the commissioner of
insurance must be maintained by TxDOT in its files and, upon request, made available to
the Comptroller during a pre-payment or a post-payment audit.
3. Comptroller object code 7216 must be used.

5. Peace officers and fire fighters

In this subdivision:

• “Motor vehicle” means any motor vehicle for which motor vehicle automobile
insurance is written under Subchapter A of Chapter 5, Insurance Code.
• “Person” includes an individual, a corporation, an organization, a government
or governmental subdivision or agency, a business trust, an estate, a trust, a
partnership, an association, and any other legal entity.
The state is required to provide for insuring peace officers and fire fighters in the
employ of the state against liability to third persons arising out of the operation,
maintenance, or use of any motor vehicle owned or leased by the state. To satisfy this
requirement, the state may self-insure or reimburse peace officers and fire fighters for
the actual cost of extended automobile liability insurance endorsements obtained by
them. The extended endorsements must cover the operation and use of vehicles by
peace officers and fire fighters in the scope of their employment. The amount of the
insurance must be at least the amount required by the Texas Motor Vehicle Safety
Responsibility Act to provide evidence of financial responsibility.
The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code, 71 except for an institution subject to TEX. LAB. CODE ANN.
§�501.022 (Vernon 1996),72 under any line of insurance other than health or life
insurance, including the insurance discussed in this subdivision. A state agency
subject to Chapter 501, except for an institution subject to Section 501.022, may not
purchase property, casualty, or liability insurance coverage without the approval of
the RMB. The RMB is required, by rule adopted not later than December 1, 2002, to
develop an implementation schedule for the purchase of insurance by the SORM as
described in this paragraph. In addition, the RMB is required to phase in, by line of
insurance, the requirement that a state agency purchase coverage only through the
SORM. The requirements discussed in this paragraph took effect September 1, 2002.

71
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
72
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the

direction and control of the board of regents of Texas Tech University and Texas Tech University Health

Sciences Center.

188 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

Sources for this subdivision: TEX. GOV’T CODE ANN. §�612.001 (Vernon Supp.
2004); Code Construction Act, TEX. GOV’T CODE ANN. §�311.005(2) (Vernon 1998);
TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e) (Vernon Supp. 2004); Act of May 27,
2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1), 2001 Tex. Gen. Laws 2226, 2233.

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when a state agency reimburses a
peace officer or fire fighter for the purchase of automobile liability insurance to protect from
liability to third persons arising out of the operation, maintenance, or use of motor vehicles
owned or leased by the state.
1. If Section 612.001 applies, then a state agency must retain in its files documentation
that provides the statutory authority for the purchase. Upon request, the agency must
make this documentation available to the Comptroller during a pre-payment or a post-
payment audit.
2. Comptroller object code 7204 must be used.

6. Day care programs for children


A state agency may purchase insurance to cover liability arising from the

agency’s operation of an integrated day-care program: (a) for children with

mental illness or developmental disabilities; or (b) for children who participate in

early childhood intervention programs; or (c) for other children.

The SORM is required to purchase insurance coverage for a state agency subject

to Chapter 501, Labor Code, 73 except for an institution subject to TEX. LAB.
CODE ANN. §�501.022 (Vernon 1996), 74 under any line of insurance other than
health or life insurance, including the insurance discussed in this subdivision. A
state agency subject to Chapter 501, except for an institution subject to Section
501.022, may not purchase property, casualty, or liability insurance coverage
without the approval of the RMB. The RMB is required, by rule adopted not later
than December 1, 2002, to develop an implementation schedule for the purchase
of insurance by the SORM as described in this paragraph. In addition, the RMB
is required to phase in, by line of insurance, the requirement that a state agency
purchase coverage only through the SORM. The requirements discussed in this
paragraph took effect September 1, 2002.
Sources for this subdivision: TEX. GOV’T CODE ANN. §�612.003(b)

(Vernon Supp. 2004); TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)

(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a),

(b)(1), 2001 Tex. Gen. Laws 2226, 2233.

73
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
74
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

State of Texas Purchase Policies and Procedures Guide July 2004 189
Chapter 6 – Miscellaneous Expenditures or Requirements

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a state department or

agency purchases insurance to protect against liability arising from the department’s or

agency’s operation of an integrated day care program for children.

1. If required by the Comptroller, the state department or agency must retain in its files

documentation that provides the statutory authority to operate an integrated day care

program for children. Upon request, the department or agency must make this

documentation available to the Comptroller during a pre-payment or post-payment

audit.

2. Comptroller object code 7204 must be used.

7. Work programs for individuals who are mentally ill or developmentally


disabled
A state agency that operates a habilitative or rehabilitative work program for individuals
who are mentally ill or developmentally disabled may purchase from the proceeds of the
program insurance to cover liability arising from the operation of the program if a
contractor under the program will not accept indemnification provisions by the state as
sufficient.
The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code,75 except for an institution subject to TEX. LAB. CODE ANN.
§�501.022 (Vernon 1996),76 under any line of insurance other than health or life
insurance, including the insurance discussed in this subdivision. A state agency
subject to Chapter 501, except for an institution subject to Section 501.022, may not
purchase property, casualty, or liability insurance coverage without the approval of
the RMB. The RMB is required, by rule adopted not later than December 1, 2002, to
develop an implementation schedule for the purchase of insurance by the SORM as
described in this paragraph. In addition, the RMB is required to phase in, by line of
insurance, the requirement that a state agency purchase coverage only through the
SORM. The requirements discussed in this paragraph took effect September 1, 2002.
Sources for this subdivision: TEX. GOV’T CODE ANN. §�612.003(c)

(Vernon Supp. 2004); TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)

(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a),

(b)(1), 2001 Tex. Gen. Laws 2226, 2233.

8. Officers and employees of state agencies that operate state-owned

aircraft

The State Aircraft Pooling Board (SAPB) shall purchase liability insurance to
protect officers and employees of each state agency from loss arising from the
operation of state-owned aircraft. The insurance must be on a form approved by
the State Board of Insurance.

75
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon 1996) (definition of “state agency” for purposes of
Chapter 501, Labor Code).
76
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon Supp. 2002) are the agencies subject to

the direction and control of the board of regents of Texas Tech University and Texas Tech University Health

Sciences Center.

190 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

The GAA says the following. The cost of the insurance purchased under the
preceding paragraph must be prorated according to SAPB’s instructions among the
appropriations to each agency operating a state-owned aircraft. The Comptroller is
required to transfer necessary amounts from agencies operating aircraft to SAPB for
the purchase of the insurance.
Sources for this subdivision: State Aircraft Pooling Act, TEX. GOV’T CODE ANN.
§�2205.045 (Vernon 2000); Article IX, Section 5.08(e) of the General Appropriations
Act. See TEX. INS. CODE ANN. §�31.007 (Vernon 2002) (a reference in law to the State
Board of Insurance often means the commissioner of insurance)

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when the SAPB purchases
insurance to protect its officers and employees against liability arising out of the operation
of state-owned aircraft.
1. The SAPB must retain in its files documentation that states who will be covered by
the insurance and a copy of the insurance policy purchased. Upon request, SAPB
must make this documentation available to the Comptroller during a pre-payment
or a post-payment audit.
2. Comptroller object code 7204 must be used.

9. Risk retention groups


In this subdivision:
• “Governmental unit” means a state agency or institution or an entity acting
on behalf of a state agency or institution.
• “State agency or institution” includes an institution of higher education.
A governmental unit may form or become a member of a risk retention group
formed under the Liability Risk Retention Act of 1986 to obtain insurance against
an insurable risk. A state agency or institution may make a payment under a risk
retention group agreement from any source, including a legislative appropriation.
Sources for this subdivision: TEX. GOV’T CODE ANN. §§�2259.001(1), (4),
2259.061-2259.062 (Vernon 2000); 15 U.S.C.S. §§�3901-3906 (Law. Co-op. LEXIS through
Pub. L. No. 108-98, approved December 19, 2003 (with a gap of Pub. L. No. 108-173)).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a state agency purchases
liability insurance as a member of a risk retention group formed under the Liability Risk
Retention Act of 1986.
1. A state agency must retain in its files documentation that states whether the agency is a
member of a risk retention group that complies with the Liability Risk Retention Act of
1986. Upon request, the agency must make this documentation available to the
Comptroller during a pre-payment or post-payment audit.
2. A state agency must retain in its files documentation that fully describes the type of
liability insurance being purchased and whether the purchase complies with the Liability
Risk Retention Act of 1986. Upon request, the agency must make this documentation
available to the Comptroller during a pre-payment or post-payment audit.
3. Comptroller object code 7204 must be used.

State of Texas Purchase Policies and Procedures Guide July 2004 191
Chapter 6 – Miscellaneous Expenditures or Requirements

10. District attorneys


A district attorney may purchase liability insurance or similar coverage from a
self-insurance fund or risk retention group operating under TEX. GOV’T CODE ANN.
§§�2259.031-2259.063 (Vernon 2000). The insurance may protect against claims
arising only from the performance of official duties. The insurance may be
purchased with state or county funds appropriated or allocated for the expenses of
the district attorney’s office or from accounts maintained by the district attorney.
The insurance may protect only the district attorney and the district attorney’s
staff members.
Source for this subdivision: TEX. GOV’T CODE ANN. §�41.012 (Vernon Supp. 2004).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a district attorney
purchases liability insurance or similar coverage from a self-insurance fund or risk
retention group operating under TEX. GOV’T CODE ANN. §§�2259.031-2259.063
(Vernon 2000).
1. If Section 41.012 or Sections 2259.031-2259.063 apply, then the district attorney must
retain in its files documentation that provides a citation of the law that provides
statutory authority for the reimbursement. Upon request, the district attorney must
make this documentation available to the Comptroller during a pre-payment or post-
payment audit.

2. Comptroller object code 7204 must be used.

11. Members, appointees, and employees of the Texas Water Development Board
The Texas Water Development Board (TWDB) may purchase for its members,
appointees, and employees liability insurance in any amounts and from any
insurers TWDB considers advisable. TWDB may pay the premiums on the
insurance.
Source for this subdivision: TEX. WATER CODE ANN. §�6.108 (Vernon 2000).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when the TWDB purchases
liability insurance for its members, appointees, and employees.

1. If Section 6.108 applies, then the TWDB must retain in its files documentation that
provides the citation of the section as the statutory authority for the purchase; a
description of the type of insurance purchased; and the names of the persons who will
be covered by the insurance. Upon request, TWDB must make this documentation
available to the Comptroller during a pre-payment or post-payment audit.

2. Comptroller object code 7204 must be used.

192 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

12. Atomic energy reactors and experiments in the field of nuclear science
The governing board of a state institution of higher education that is or will be
constructing and operating an atomic energy reactor or otherwise performing
experiments in the field of nuclear science in cooperation with and licensed by
the Atomic Energy Commission or its successor in function, or any other
governmental agency, may purchase liability insurance in any amount not to
exceed $250,000 and pay the premium from funds appropriated for that purpose.
Source for this subdivision: TEX. EDUC. CODE ANN. §�51.901(a) (Vernon 1996).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when a state institution of
higher education purchases liability insurance for its operation of an atomic energy
reactor or its performance of experiments in the field of nuclear science.

1. If Section 51.901(a) applies, then the institution must retain in its file
documentation that provides a citation of the section as the statutory authority for
the purchase and a description of the type of insurance purchased. Upon request,
the institution must make this documentation available to the Comptroller during a
pre-payment or a post-payment audit.

2. Comptroller object code 7204 must be used.

13. Texas State Technical College System


The board of regents of the Texas State Technical College System (TSTCS)
may procure the liability insurance coverage required by the United States to
protect the United States and its agencies against the possibility of liability in
connection with property owned by the United States and loaned to the
system under the National Industrial Reserve Act of 1948.
Source for this subdivision: TEX. EDUC. CODE ANN. §�135.57 (Vernon Supp. 2004).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when the board of regents
of the TSTCS procures liability insurance to protect the United States and its
agencies.
1. If Section 135.57 applies, then TSTCS must retain in its files documentation
that provides a citation of the section as the authority for the procurement and
a description of the type of insurance purchased. Upon request, TSTCS must
make this documentation available to the Comptroller during a pre-payment
or a post-payment audit.
2. Comptroller object code 7204 must be used.

State of Texas Purchase Policies and Procedures Guide July 2004 193
Chapter 6 – Miscellaneous Expenditures or Requirements

14. Texas Department of Housing and Community Affairs


The governing board of the Texas Department of Housing and Community Affairs
may purchase from department funds liability insurance for the director, board
members, officers, and employees of the department. The board may purchase the
insurance in an amount the board considers reasonably necessary to insure against
reasonably foreseeable liabilities and to provide for all costs of defending against
those liabilities, including court costs and attorney’s fees.
Source for this subdivision: TEX. GOV’T CODE ANN. §�2306.076 (Vernon 2000).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when the governing board of
the Texas Department of Housing and Community Affairs purchases liability insurance to
protect the director, board members, officers, and employees against reasonably foreseeable
liabilities and to provide for paying the costs of defending against those liabilities,
including court costs and attorney’s fees.
1. If Section 2306.076 applies, then the department must retain in its files documentation
that provides a citation of the section as the authority for the purchase and a
description of the type of insurance purchased. Upon request, the department must
make this documentation available to the Comptroller during apre-payment or a post-
payment audit.
2. Comptroller object code 7204 must be used.

15. Prepaid Higher Education Tuition Board


The Prepaid Higher Education Tuition Board (PHETB) may purchase liability
insurance covering the board and the board’s employees and agents.
Source for this subdivision: TEX. EDUC. CODE ANN. §�54.618(b)(11)

(Vernon Supp. 2004).

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when the PHETB purchases
liability insurance covering the board or its employees and agents.
1. If Section 54.618(b)(11) applies, then PHETB must retain in its files documentation
that provides a citation of the section as the authority for the purchase and a
description of the type of insurance purchased. Upon request, the agency must make
this documentation available to the Comptroller during a pre-payment or a post-
payment audit.
2. Comptroller object code 7204 must be used.

194 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

16. Board members, state officials, and executive management staff


In this subdivision:
• “Board” includes a board, commission, council, committee, or other group of
individuals.
• “Person” includes an individual, a corporation, an organization, a
government or governmental subdivision or agency, a business trust, an
estate, a trust, a partnership, an association, and any other legal entity.
• “State agency” means:
– a department, board, commission, committee, council, agency, office, or
other entity in the executive, legislative, or judicial branch of state
government, the jurisdiction of which is not limited to a geographical
portion of the state; or
– an institution of higher education as defined by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004); or
– a Court of Appeals as described by TEX. GOV’T CODE ANN. §�22.201
(Vernon Supp. 2004).77
A state agency governed by a board may purchase or acquire liability insurance
to protect members of the board and the agency’s executive management staff. A
state agency governed by an appointed or elected official may purchase or
acquire liability insurance to protect the official and the agency’s executive
management staff.
The insurance may protect against any type of liability to third persons that may
be incurred while conducting agency business and may provide for all costs of
defending against that liability, including court costs and attorney’s fees.
A state agency may use any available funds to purchase or acquire the
insurance. A specific statement by the Legislature that a particular
appropriation of funds may be used to purchase or acquire insurance is not a
prerequisite to using funds to purchase or acquire the insurance.
For the purposes of TEX. GOV’T CODE ANN. §�659.012 (Vernon Supp. 2004), the
cost of insurance purchased or acquired by a Court of Appeals under TEX. GOV’T
CODE ANN. §�612.004 (Vernon Supp. 2004) is not included in determining the
salary of a justice serving on the court.78
To the extent of irreconcilable conflict between Section 612.004 and TEX. CIV.
PRAC. & REM. CODE ANN. §�104.009 (Vernon Supp. 2004), the former prevails
because it was enacted into law later than the other statute.

77
The addition of a court of appeals to the definition of “state agency” was effective September 1, 1999.
Act of May 25, 1999, 76th Leg., R.S., ch. 1251, §�3, 1999 Tex. Gen. Laws 4329.
78
This paragraph was effective September 1, 1999. Id.

State of Texas Purchase Policies and Procedures Guide July 2004 195
Chapter 6 – Miscellaneous Expenditures or Requirements

The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code,79 except for an institution subject to TEX. LAB. CODE ANN.
§�501.022 (Vernon 1996),80 under any line of insurance other than health or life
insurance, including the insurance discussed in this subdivision. A state agency subject
to Chapter 501, except for an institution subject to Section 501.022, may not purchase
property, casualty, or liability insurance coverage without the approval of the RMB.
The RMB is required, by rule adopted not later than December 1, 2002, to develop an
implementation schedule for the purchase of insurance by the SORM as described in
this paragraph. In addition, the RMB is required to phase in, by line of insurance, the
requirement that a state agency purchase coverage only through the SORM. The
requirements discussed in this paragraph took effect September 1, 2002.
Sources for this subdivision: TEX. GOV’T CODE ANN. §�612.004 (Vernon Supp. 2004);

Code Construction Act, TEX. GOV’T CODE ANN. §�311.005(2) (Vernon 1998);

TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e) (Vernon Supp. 2004); Act of May 27, 2001,

77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1), 2001 Tex. Gen. Laws 2226, 2233.

17. Directors’ or officers’ liability insurance: general law


A state agency, institution, or department may purchase a directors’ and officers’

liability insurance policy applicable to damages for conduct described under

TEX. CIV. PRAC. & REM. CODE ANN. §�104.002 (Vernon 1997) and other conduct

customarily covered under directors’ and officers’ liability insurance policies for

the benefit of:

• a director or officer of the agency, institution, or department; or


• a member of a governing board, commission, or council of the agency,

institution, or department; or

• a member of the executive staff of the agency, institution, or department.


An insurance policy purchased under Section 104.002 must have a deductible applicable
to the liability of the agency, institution, or department in an amount equal to the
amount of the limits of liability established under TEX. CIV. PRAC. & REM. CODE ANN.
§�104.003 (Vernon Supp. 2004). The deductible applicable to an individual’s liability
may be set at a lower amount.
To the extent of irreconcilable conflict between TEX. CIV. PRAC. & REM. CODE ANN.
§�104.009 (Vernon Supp. 2004) and TEX. GOV’T CODE ANN. §�612.004
(Vernon Supp. 2004),81 Section 612.004 prevails because it was enacted into law later
than the other statute.
Source for this subdivision: TEX. CIV. PRAC. & REM. CODE ANN. §�104.009

(Vernon Supp. 2004).

79
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
80
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.
81
As added by Act of May 28, 1997, 75th Leg., R.S., ch. 1035, §�78, 1997 Tex. Gen. Laws 3845, 3863-4.

196 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

18. Institutions of higher education and their employees


In this subdivision:
• “Governing board” has the meaning assigned by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004).
• “Institution of higher education” has the meaning assigned by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
The governing board of an institution of higher education may purchase
insurance insuring the institution and its employees against any liability, risk,
or exposure. The board may pay the cost of the insurance from any funds of the
institution.
Source for this subdivision: TEX. EDUC. CODE ANN. §�51.966

(Vernon Supp. 2004).

19. Texas Treasury Safekeeping Trust Company


In this subdivision:
• “Advisory board” means the Texas Treasury Safekeeping Trust
Company investment advisory board.
• “Trust company” means the Texas Treasury Safekeeping Trust
Company.

The trust company may purchase or otherwise acquire insurance to protect


members of the advisory board and the trust company staff. The insurance
may protect against any type of liability to third persons that may be incurred
while conducting trust company business. In addition, the insurance may
provide for all costs of defending against that liability, including court costs
and attorney’s fees. Section 404.116, Government Code, does not authorize the
trust company to purchase or acquire insurance to protect against any type of
liability that is not described in the preceding two sentences.

Sources for this subdivision: TEX. GOV’T CODE ANN. §§�404.101(1), (4),

404.116 (Vernon Supp. 2004).

State of Texas Purchase Policies and Procedures Guide July 2004 197
Chapter 6 – Miscellaneous Expenditures or Requirements

C. Foster grandparent programs


A state agency that receives federal grant funds for a foster grandparent program
may spend those funds to insure the persons and property of foster grandparents as
required by the grant.
The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code,82 except for an institution subject to TEX. LAB. CODE ANN.
§�501.022 (Vernon 1996),83 under any line of insurance other than health or life
insurance, including the insurance discussed in this subdivision. A state agency
subject to Chapter 501, except for an institution subject to Section 501.022, may not
purchase property, casualty, or liability insurance coverage without the approval of
the RMB. The RMB is required, by rule adopted not later than December 1, 2002, to
develop an implementation schedule for the purchase of insurance by the SORM as
described in this paragraph. In addition, the RMB is required to phase in, by line of
insurance, the requirement that a state agency purchase coverage only through the
SORM. The requirements discussed in this paragraph take effect September 1, 2002.
Sources for this subsection: TEX. GOV’T CODE ANN. §�612.003(a) (Vernon Supp. 2004);
TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e) (Vernon Supp. 2004); Act of May 27, 2001,
77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1), 2001 Tex. Gen. Laws 2226, 2233.

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a state department or

agency purchases insurance to protect the person and property of foster grandparents.

1. The department or agency must retain in its files documentation that provides its

statutory authority to sponsor a foster grandparent program. Upon request, the

department or agency must make this documentation available to the Comptroller

during a pre-payment or post-payment audit.

2. Comptroller object code 7204 must be used.

D. Buildings and contents insurance


1. General discussion
Unless a state agency has statutory authority and a specific appropriation to
purchase insurance on buildings and their contents, the agency may not do so
because the state is self-insured. The statutory authority may be specific or implied.
Institutions of higher education may not use local funds to purchase insurance on a
building or its contents without both a specific appropriation and statutory authority
for that purpose. The University of Texas System may, however, purchase insurance
for revenue-producing buildings and for buildings which generate revenues that are
pledged for the retirement of bonds. The system may purchase the insurance even if
it does not have a specific appropriation for that purpose.

82
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
83
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the

direction and control of the board of regents of Texas Tech University and Texas Tech University Health

Sciences Center.

198 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

The SORM is required to purchase insurance coverage for a state agency subject
to Chapter 501, Labor Code,84 except for an institution subject to TEX. LAB. CODE
ANN. §�501.022 (Vernon 1996),85 under any line of insurance other than health or
life insurance. A state agency subject to Chapter�501, except for an institution
subject to Section 501.022, may not purchase property, casualty, or liability
insurance coverage without the approval of the RMB. The RMB is required, by
rule adopted not later than December 1, 2002, to develop an implementation
schedule for the purchase of insurance by the SORM as described in this
paragraph. In addition, the RMB is required to phase in, by line of insurance, the
requirement that a state agency purchase coverage only through the SORM. The
requirements discussed in this paragraph took effect September 1, 2002.
Sources for this subdivision: TEX. LAB. CODE ANN. §�412.011(c)(2),

(d)-(e) (Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a),

(b)(1), 2001 Tex. Gen. Laws 2226, 2233; Senate Concurrent Resolution No. 3, 37th

Leg., 2d C.S., 1921; Senate Concurrent Resolution No. 102, 62nd Leg., 1971 Tex. Gen.

Laws 3889; Op. Tex. Att’y Gen. Nos. DM-197 (1993), JM-551 (1986), JM-547 (1986),

H-681 (1975), M-1257 (1972), O-6246 (1944), O-4207 (1941), O-3000 (1941), O-2325

(1940), O-1100 (1939), O-201 (1939).

2. Purchasing insurance to qualify for federal disaster assistance funds


An agency of the state may purchase property damage insurance to cover state
facilities if necessary to qualify for federal disaster assistance funds.
Source for this subdivision: TEX. GOV’T CODE ANN. §�418.172(a) (Vernon 1998).

3. Property of institutions of higher education


In this subdivision:
• “Governing board” has the meaning assigned by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004).
• “Institution of higher education” has the meaning assigned by

TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).

The governing board of an institution of higher education may purchase


insurance covering the losses of any institutional property. The board may pay
the cost of the insurance from any funds of the institution.
Source for this subdivision: TEX. EDUC. CODE ANN. §�51.966 (Vernon Supp. 2004).

84
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
85
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

State of Texas Purchase Policies and Procedures Guide July 2004 199
Chapter 6 – Miscellaneous Expenditures or Requirements

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when the governing board of an
institution of higher education purchases buildings and contents insurance or property
damage insurance.

1. An institution must retain in its files documentation that provides the statutory
authority and specific appropriation for the purchase of the insurance. The University
of Texas System, however, is not required to cite a specific appropriation for the
purchase. Upon request, the institution must make this documentation available to the
Comptroller during a pre-payment or post-payment audit.

2. Comptroller object code 7204 must be used.

E. Insurance on property other than buildings and contents


1. General discussion
A state agency must have a specific appropriation and statutory authority to
purchase insurance on state property other than buildings and their contents.
The statutory authority may be specific or implied.
An institution of higher education, however, may purchase fidelity, burglary,
theft, or hold-up insurance out of local funds even if the institution does not have
a specific appropriation for that purpose.
The SORM is required to purchase insurance coverage for a state agency subject
to Chapter 501, Labor Code,86 except for an institution subject to TEX. LAB. CODE
ANN. §�501.022 (Vernon 1996),87 under any line of insurance other than health or
life insurance. A state agency subject to Chapter�501, except for an institution
subject to Section 501.022, may not purchase property, casualty, or liability
insurance coverage without the approval of the RMB. The RMB is required, by
rule adopted not later than December 1, 2002, to develop an implementation
schedule for the purchase of insurance by the SORM as described in this
paragraph. In addition, the RMB is required to phase in, by line of insurance, the
requirement that a state agency purchase coverage only through the SORM. The
requirements discussed in this paragraph took effect September 1, 2002.
Sources for this subdivision: TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)

(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1),

2001 Tex. Gen. Laws 2226, 2233; Gen. Nos. V-1423 (1952), O-3000 (1941), O-2130

(1940), O-842 (1939).

86
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
87
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

200 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when a state agency purchases
insurance on property other than buildings and their contents, aircraft owned or leased by
the state, and freight and mail in transit.
1. A state agency must retain in its files documentation that provides the statutory
authority and specific appropriation for the purchase. An institution of higher
education, however, is not required to cite a specific appropriation for a purchase of
fidelity, burglary, theft, or hold-up insurance if local funds are used. Upon request, the
agency must make this documentation available to the Comptroller during a pre­
payment or post-payment audit.
2. Comptroller object code 7204 must be used.

2. Aircraft owned or leased by the state


The SAPB may purchase insurance to protect the board from loss due to damage,
loss, theft, or destruction of aircraft owned or leased by the state. The insurance
must be on a form approved by the commissioner of insurance.
The SAPB shall purchase liability insurance to protect the officers and
employees of each state agency from loss arising from the operation of
state-owned aircraft.88 The insurance must be on a form approved by the
commissioner of insurance.
The Texas Board of Criminal Justice may purchase insurance to protect the
TDCJ from loss due to the damage, loss, theft, or destruction of department
aircraft. The insurance must be on a form approved by the commissioner of
insurance.
Sources for this subdivision: TEX. GOV’T CODE ANN. §�496.052 (Vernon 1998);
State Aircraft Pooling Act, TEX. GOV’T CODE ANN. §�2205.045 (Vernon 2000); Act of
May 28, 1993, 73rd Leg., R.S., ch. 685, §�1.23, 1993 Tex. Gen. Laws 2559, 2572-2573.

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when the SAPB or the Texas
Board of Criminal Justice purchases insurance to protect the respective board from loss
due to damage, loss, theft, or destruction of aircraft.

1. The approval letter from the commissioner of insurance must be maintained in the
agency’s files and, upon request, must be made available to the Comptroller during a
pre-payment or a post-payment audit.

2. Comptroller object code 7204 must be used.

88
This sentence applies only to a travel expense incurred after August 31, 1999. Act of May 11, 1999,
76th Leg., R.S., ch. 280, §�22, 1999 Tex. Gen. Laws 1170, 1175.

State of Texas Purchase Policies and Procedures Guide July 2004 201
Chapter 6 – Miscellaneous Expenditures or Requirements

3. Freight and mail in transit


A state agency may purchase insurance from the carrier of freight or mail to protect
those items while in transit. The insurance is an additional cost of transportation or
postage. A specific appropriation for that purpose is not necessary.
Source for this subdivision: Op. Tex. Att’y Gen. No. JM-547 (1986).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when a state agency purchases
insurance from the carrier of freight or mail to protect those items while in transit.

1. A state agency must retain in its files documentation that states the insurance is for
freight or mail in transit. Upon request, the agency must make this documentation
available to the Comptroller during a pre-payment or a post-payment audit.

2. Comptroller object code 7204 must be used.

4. Property loaned to the Texas State Technical College System by the United States
The board of regents of the TSTCS may procure the property insurance required
by the United States to protect the United States and its agencies against the
possibility of loss in connection with property owned by the United States and
loaned to the system under the National Industrial Reserve Act of 1948.
Source for this subdivision: TEX. EDUC. CODE ANN. §�135.57

(Vernon Supp. 2004).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when the TSTCS purchases insurance
to protect the United States and its agencies from the loss of property loaned to TSTCS.

1. TSTCS must retain in its files documentation that states the insurance is to protect the
United States and its agencies against the loss of property loaned to TSTCS under the
National Industrial Reserve Act of 1948. Upon request, TSTCS must make this
documentation available to the Comptroller during a pre-payment or post-payment audit.

2. Comptroller object code 7204 must be used.

5. Property of institutions of higher education

In this subdivision:

• In this subdivision, “governing board” and “institution of higher


education” have the meanings assigned by TEX. EDUC. CODE ANN. §�61.003
(Vernon Supp. 2004).
The governing board of an institution of higher education may purchase
insurance covering the losses of any institutional property. The board may pay
the cost of the insurance from any funds of the institution.
Source for this subdivision: TEX. EDUC. CODE ANN. §�51.966 (Vernon Supp. 2004).

202 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

F. Workers’ compensation insurance


A state agency or institution of higher education may not purchase workers’
compensation insurance for its employees unless the agency or institution has specific
statutory authority for the purchase. The workers’ compensation statutes now in
effect indicate that the state is self-insuring for workers’ compensation benefits.
Sources for this subsection: TEX. CONST. art. III, §�59; TEX. LAB. CODE ANN.
§§�502.022, 503.022, 505.012 (Vernon 1996); Op. Tex. Att’y Gen. Nos. JM-497
(1986), H-681 (1975), M-1257 (1972), V-619 (1948), O-5315 (1943), O-779 (1939).

USAS Purchase Voucher Requirements

The following USAS purchase voucher requirements apply when a state agency or an

institution of higher education purchases workers’ compensation insurance.

1. An agency or institution must retain in its files documentation that proves compliance
with the requirements described in this subsection. Upon request, the agency or
institution must make this documentation available to the Comptroller during a pre­
payment or post-payment audit.

2. Comptroller object code 7204 must be used.

G. Volunteers
In this subsection, “governmental entity” means a state agency or other
governmental entity supported in whole or in part by funds received from the state.
A governmental entity may establish a volunteer program in compliance with TEX.
GOV’T CODE ANN. §�2109.001-2109.006 (Vernon 2000) that provides for an insurance
program to protect volunteers in the performance of volunteer services.
The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code, 89 except for an institution subject to TEX. LAB. CODE ANN.
§�501.022 (Vernon 1996),90 under any line of insurance other than health or life
insurance. A state agency subject to Chapter�501, except for an institution subject to
Section 501.022, may not purchase property, casualty, or liability insurance
coverage without the approval of the RMB. The RMB is required, by rule adopted
not later than December 1, 2002, to develop an implementation schedule for the
purchase of insurance by the SORM as described in this paragraph. In addition, the
RMB is required to phase in, by line of insurance, the requirement that a state
agency purchase coverage only through the SORM. The requirements discussed in
this paragraph took effect September 1, 2002.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�2109.001(1),
2109.004(b)(2) (Vernon 2000); TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)
(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a),
(b)(1), 2001 Tex. Gen. Laws 2226, 2233.

89
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
90
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

State of Texas Purchase Policies and Procedures Guide July 2004 203
Chapter 6 – Miscellaneous Expenditures or Requirements

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a governmental entity

purchases insurance to protect the entity’s volunteers in the performance of volunteer

services.

1. The governmental entity must retain in its files documentation that completely

describes the type of insurance purchased and name the insured and beneficiaries.

2. The governmental entity must retain in its files documentation that cites the statutory

authority for the governmental entity to have volunteers.

3. The following statement must be included in the governmental entity’s supporting


documentation for insurance purchased to protect volunteers:
The governmental entity has established a volunteer program that complies
with TEX. GOV’T CODE ANN. §§�2109.001-2109.006 (Vernon 2000). The
program provides for the entity to establish an insurance program to protect
volunteers in the performance of volunteer services.
4. Upon request, the governmental entity must make documentation available to the

Comptroller during a pre-payment or a post-payment audit to prove compliance with

the requirements described in this subsection.

5. Comptroller object code 7204 must be used.

H. Purchasing insurance with federal funds


A state agency may purchase any kind of insurance with federal funds if the
following conditions are met. First, the federal government must require the
purchase of the insurance. Second, the federal funds must have been appropriated to
the agency for expenditure in compliance with the federal government’s
requirements. Third, the agency must have statutory authority to expend federal
funds in compliance with the federal government’s requirements.
The SORM is required to purchase insurance coverage for a state agency subject to Chapter
501, Labor Code, 91 except for an institution subject to TEX. LAB. CODE ANN. §�501.022
(Vernon 1996), 92 under any line of insurance other than health or life insurance. A state
agency subject to Chapter�501, except for an institution subject to Section 501.022, may not
purchase property, casualty, or liability insurance coverage without the approval of the
RMB. The RMB is required, by rule adopted not later than December 1, 2002, to develop an
implementation schedule for the purchase of insurance by the SORM as described in this
paragraph. In addition, the RMB is required to phase in, by line of insurance, the
requirement that a state agency purchase coverage only through the SORM. The
requirements discussed in this paragraph took effect September 1, 2002.
Sources for this subsection: TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)
(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1),
2001 Tex. Gen. Laws 2226, 2233; Op. Tex. Att’y Gen. Nos. DM-148 (1992), H-1318
(1978), M-581 (1971), C-530 (1965).

91
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
92
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the

direction and control of the board of regents of Texas Tech University and Texas Tech University Health

Sciences Center.

204 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a state agency purchases
insurance with federal funds.
1. A state agency must retain in its files documentation shows how the three conditions
discussed in this subsection have been met. Upon request, the governmental entity must
make documentation available to the Comptroller during a pre-payment or a post-payment
audit to prove compliance with the requirements described in this subsection.
2. Comptroller object code 7204 must be used.
I. Insurance purchased under a lease agreement
Notwithstanding anything to the contrary in this section, a state agency may
purchase any type of insurance if:
• the purchase is required by a valid lease agreement between the agency and a
private person or entity; and
• the beneficiary of the insurance is the private person or entity.
The insurance is part of the consideration paid under the lease agreement.
The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code,93 except for an institution subject to TEX. LAB. CODE ANN.
§�501.022 (Vernon 1996),94 under any line of insurance other than health or life
insurance. A state agency subject to Chapter�501, except for an institution subject to
Section 501.022, may not purchase property, casualty, or liability insurance coverage
without the approval of the RMB. The RMB is required, by rule adopted not later than
December 1, 2002, to develop an implementation schedule for the purchase of insurance
by the SORM as described in this paragraph. In addition, the RMB is required to phase
in, by line of insurance, the requirement that a state agency purchase coverage only
through the SORM. The requirements discussed in this paragraph take effect
September 1, 2002.
Sources for this subsection: TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)
(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1),
2001 Tex. Gen. Laws 2226, 2233.

USAS Purchase Voucher Requirements


The following USAS purchase voucher requirements apply when a state agency purchases
insurance under a lease agreement.
1. The state agency must retain in its files documentation that states whether the
purchase was required by a valid lease agreement between the agency and a private
person or entity and identify the beneficiary of the insurance.
2. Upon request, the state agency must make documentation available to the Comptroller
during a pre-payment or a post-payment audit to prove compliance with the
requirements described in this subsection.
3. Comptroller object code 7350 must be used.

93
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
94
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

State of Texas Purchase Policies and Procedures Guide July 2004 205
Chapter 6 – Miscellaneous Expenditures or Requirements

J. Medical malpractice insurance


1. Certain institutions of higher education
In this subdivision, “board of regents” means the board of regents of The
University of Texas System, The Texas A & M University System, Texas
Tech University, or the University of North Texas.
A board of regents may purchase medical malpractice insurance from an
insurance company authorized to do business in this state as the board
considers necessary to carry out the purposes of Subchapter A of Chapter 59,
Education Code. The funds appropriated from the general revenue fund to
The University of Texas System, The Texas A & M University System, the
Texas Tech University Health Sciences Center, or the University of North
Texas Health Science Center at Fort Worth may not be used to purchase the
insurance.
The SORM is required to purchase insurance coverage for a state agency
subject to Chapter 501, Labor Code,95 except for an institution subject to TEX.
LAB. CODE ANN. §�501.022 (Vernon 1996),96 under any line of insurance other
than health or life insurance. A state agency subject to Chapter�501, except for
an institution subject to Section 501.022, may not purchase property, casualty,
or liability insurance coverage without the approval of the RMB. The RMB is
required, by rule adopted not later than December 1, 2002, to develop an
implementation schedule for the purchase of insurance by the SORM as
described in this paragraph. In addition, the RMB is required to phase in, by
line of insurance, the requirement that a state agency purchase coverage only
through the SORM. The requirements discussed in this paragraph took effect
September 1, 2002.
Sources for this subdivision: TEX. EDUC. CODE ANN. §§�59.04, 59.06

(Vernon 1996); TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e) (Vernon Supp. 2004);

Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1), 2001 Tex. Gen.

Laws 2226, 2233.

2. Department of State Health Services


The General Appropriations Act says that the Department of State Health
Services (TDoH) may pay the professional liability premiums for a physician, a
dentist, a hygienist, a nurse, or another medical person who provides medical
and dental care in TDoH’s clinical operations.

95
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
96
The institutions subject to TEX. LAB. CODE ANN. §�501.022 (Vernon 1996) are the agencies subject to the
direction and control of the board of regents of Texas Tech University and Texas Tech University Health
Sciences Center.

206 July 2004 State of Texas Purchase Policies and Procedures Guide
Chapter 6 – Miscellaneous Expenditures or Requirements

The State Office of Risk Management (SORM) is required to purchase insurance


coverage for a state agency subject to Chapter 501, Labor Code,97 under any line of
insurance other than health or life insurance. A state agency subject to Chapter
501 may not purchase property, casualty, or liability insurance coverage without
the approval of the Risk Management Board (RMB). The RMB is required, by rule
adopted not later than December 1, 2002, to develop an implementation schedule
for the purchase of insurance by the SORM as described in this paragraph. In
addition, the RMB is required to phase in, by line of insurance, the requirement
that a state agency purchase coverage only through the SORM. The requirements
discussed in this paragraph took effect September 1, 2002.
Sources for this subdivision: TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)

(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1),

2001 Tex. Gen. Laws 2226, 2233; Rider 21 in the appropriations to the Department

of Health in the General Appropriations Act.

K. Veterinary malpractice insurance


The board of regents of The Texas A & M University System may purchase
veterinary malpractice insurance from an insurance company authorized to do
business in this state as the board considers necessary to carry out the purpose of
Subchapter B of Chapter 59, Education Code. The insurance is additional
compensation to the professional staff of the Texas Veterinary Medical Diagnostic
Laboratory. Funds appropriated from the general revenue fund to the laboratory
may not be used to purchase the insurance.
The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code,98 under any line of insurance other than health or life
insurance. A state agency subject to Chapter 501 may not purchase property,
casualty, or liability insurance coverage without the approval of the RMB. The RMB
is required, by rule adopted not later than December 1, 2002, to develop an
implementation schedule for the purchase of insurance by the SORM as described in
this paragraph. In addition, the RMB is required to phase in, by line of insurance,
the requirement that a state agency purchase coverage only through the SORM. The
requirements discussed in this paragraph took effect September 1, 2002.
Sources for this subsection: TEX. EDUC. CODE ANN. §§�59.24, 59.26, 59.28
(Vernon 1996); TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e) (Vernon Supp. 2004);
Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1), 2001 Tex. Gen. Laws
2226, 2233.

L. Texas Economic Development and Tourism Office


The Texas Economic Development and Tourism Office may procure insurance and
pay premiums on insurance of any type and from insurers as the office considers
necessary and advisable to accomplish any of the office’s purposes.

97
See TEX. LAB. CODE ANN. §�501.001(6) (Vernon Supp. 2004) (definition of “state agency” for purposes of
Chapter�501, Labor Code).
98
Id.

State of Texas Purchase Policies and Procedures Guide July 2004 207
Chapter 6 – Miscellaneous Expenditures or Requirements

The SORM is required to purchase insurance coverage for a state agency subject to
Chapter 501, Labor Code,99 under any line of insurance other than health or life
insurance. A state agency subject to Chapter 501 may not purchase property, casualty, or
liability insurance coverage without the approval of the RMB. The RMB is required, by
rule adopted not later than December 1, 2002, to develop an implementation schedule for
the purchase of insurance by the SORM as described in this paragraph. In addition, the
RMB is required to phase in, by line of insurance, the requirement that a state agency
purchase coverage only through the SORM. The requirements discussed in this
paragraph took effect September 1, 2002.
Sources for this subsection: TEX. GOV’T CODE ANN. §§�481.001(4), 481.021(a)(5)
(Vernon Supp. 2004); TEX. LAB. CODE ANN. §�412.011(c)(2), (d)-(e)
(Vernon Supp. 2004); Act of May 27, 2001, 77th Leg., R.S., ch. 1017, §�3.01(a), (b)(1),
2001 Tex. Gen. Laws 2226, 2233.

M. Centers established under Chapter 153, Education Code


In this subsection:
• “Center” means an office, department, or other organizational unit
established under Chapter 153, Education Code.
• “Governing board” has the meaning assigned by TEX. EDUC. CODE ANN.
§�61.003 (Vernon Supp. 2004).
• “Institution of higher education” has the meaning assigned by TEX. EDUC.
CODE ANN. §�61.003 (Vernon Supp. 2004).
To the extent authorized by its governing board, an institution of higher education,
through a center established under Chapter 153, may acquire insurance and pay
premiums on insurance of any kind and in amounts considered necessary and
advisable to accomplish the purposes of Chapter 153.
Sources for this subsection: TEX. EDUC. CODE ANN. §§�153.001(1)-(3), 153.004(a)6)
(Vernon 2002).

§�6.044 Interagency transaction vouchers


For detailed information about interagency transaction vouchers, please see Accounting
Policy Statement Number 014.

§�6.046 Interlocal Cooperation Act


In this section:
• “Administrative functions” means functions normally associated with the
routine operation of government, including tax assessment and collection,
personnel services, purchasing, records management services, data processing,
warehousing, equipment repair, and printing.
• “Council of governments” means a regional planning commission created
under Chapter 391, Local Government Code.

99
Id.

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• “Governmental functions and services” means all or part of a function or


service in any of the following areas:
• police protection and detention services; or
• fire protection; or
• streets, roads, and drainage; or
• public health and welfare; or
• parks and recreation; or
• library and museum services; or
• records center services; or
• waste disposal; or
• planning; or
• engineering; or
• administrative functions; or
• public funds investment; or
• comprehensive health care and hospital services; or
• other governmental functions in which the contracting parties are mutually
interested.
• “Interlocal contract” means a contract or agreement under the Interlocal
Cooperation Act (ICA) that may be to:
• study the feasibility of the performance of a governmental function or service
by an interlocal contract; or
• provide a governmental function or service that each party to the contract is
authorized to perform individually.
• “Local government” means:
• a county, municipality, special district, other political subdivision of this state
or another state; or
• a local government corporation created under Subchapter D, Chapter 431,
Transportation Code; or
• a political subdivision corporation created under Chapter 304, Local

Government Code; or

• a combination of two or more entities described in the three preceding bullets.


• “Political subdivision” includes any corporate and political entity organized
under state law.
• “State agency” means:
• a department, board, bureau, commission, court, office, authority, council, or
institution; or
• a university, college, or any service or part of a state institution of higher
education; or
• a local workforce development board created under TEX. GOV’T CODE ANN.
§�2308.253 (Vernon 2000); or
• any statewide job or employment training program for disadvantaged youth
that is substantially financed by federal funds and that was created by
executive order before January 1, 1987.

State of Texas Purchase Policies and Procedures Guide July 2004 209
Chapter 6 – Miscellaneous Expenditures or Requirements

The ICA authorizes a local government to contract or agree with another local

government to perform certain governmental functions and services in accordance with

the ICA.

An interlocal contract may be to:


• study the feasibility of the performance of a governmental function or service
by an interlocal contract; or
• provide a governmental function or service that each party to the contract is
authorized to perform individually.
An interlocal contract must:
• be authorized by the governing body of each party to the contract; and100
• state the purpose, terms, rights, and duties of the contracting parties; and
• specify that each party paying for the performance of governmental functions
or services must make those payments from current revenues available to the
paying party.
An interlocal contractual payment must be in an amount that fairly compensates the

performing party for the services or functions performed under the contract.

An interlocal contract may be renewed annually.


A party to an interlocal contract may contract with a state agency. With two exceptions, the
ICA does not specifically authorize a state agency to contract with a local government
absent a contract between that local government and another local government.
• The first exception is the authorization for a local government, including a
council of governments, to contract with the state or a state agency, including
the Texas Building and Procurement Commission (TBPC), to purchase goods
and services.
• The second exception is the authorization for a local government, including a
council of governments, to contract with the state or a state agency, including
TBPC, to purchase goods and any services reasonably required for the
installation, operation, or maintenance of the goods. This bullet does not apply
to services provided by firefighters, police officers, or emergency medical
personnel.
A contract between a state agency and a local government must relate to the contract

between the local government and another local government.

A governmental entity of this state or another state that makes purchases or provides

purchasing services under an interlocal contract for a state agency must comply with

Chapter 2161, Government Code,101 in making the purchases or providing the services.

Sources: Interlocal Cooperation Act, TEX. GOV’T CODE ANN. §§�791.003,


791.011(a), (b)(1), (c)-(g), 791.025(a)-(b), (d) (Vernon Supp. 2004); Interagency
Cooperation Act, TEX. GOV’T CODE ANN. §�771.002(1) (Vernon Supp. 2004);
TEX. GOV’T CODE ANN. §�2151.003 (Vernon Supp. 2004) (a statutory reference to
the General Services Commission means the Texas Building and Procurement
Commission). See Op. Tex. Att’y Gen. Nos. JC-530 (2002), JC-219 (2000)
(the Interlocal Cooperation Act does not provide a mechanism for a local
government to delegate a power it does not have to another entity).

100
There is one exception that is not relevant here.
101
Chapter 2161, Government Code, relates to historically underutilized businesses.

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§�6.048 Intra-agency payments


An intra-agency payment occurs when a state agency pays another state agency within
its own system. Intra-agency payments usually are made between agencies in a
university system that has several branches or locations. Intra-agency payments may
be for any kind of good or service. Intra-agency payments are frequently deposited into
a local fund or account by the receiving agency.
Intra-agency payments do not need the approval of the Texas Building and
Procurement Commission.

USAS Purchase Voucher Requirements


1. The Comptroller object code used must relate to the good or service purchased.
2. The transaction must be submitted on an interagency transaction voucher (ITV) if
the paying state agency uses funds in the state treasury to make the payment and
the receiving state agency deposits those funds back into the state treasury. For this
purpose, “state treasury” means any funds that state law requires to be paid on a
warrant issued or an electronic funds transfer initiated by the Comptroller.

§�6.050 Investments
A. General discussion
A state agency may not invest state funds in any investment vehicle unless the
agency has specific constitutional or statutory authority to do so. Any investment of
state funds must comply with applicable constitutional provisions and statutes.

USAS Purchase Voucher Requirements


1. If required by the Comptroller, the state agency must cite the agency’s specific
constitutional or statutory authority to invest state funds.

2. If required by the Comptroller, a clear description of the type of investment must be


provided to the Comptroller.

3. Upon request, the state agency must make documentation available to the
Comptroller during a pre-payment or a post-payment audit to prove compliance with
the requirements described in this subsection and with all applicable constitutional
provisions and statutes.

State of Texas Purchase Policies and Procedures Guide July 2004 211
Chapter 6 – Miscellaneous Expenditures or Requirements

B. Public Funds Investment Act


In this subsection:
• “Funds” means public funds in the custody of a state agency that: (a) are not
required by law to be deposited in the state treasury; and (b) the agency has
authority to invest.
• “Institution of higher education” has the meaning assigned by
TEX. EDUC. CODE ANN. §�61.003 (Vernon Supp. 2004).
– that is created under the Government Code to invest funds jointly on behalf
of: (a) at least two state agencies; or (b) at least one state agency and at least
one local government; and
– whose investment objectives are, in order of priority: (a)�preservation and
safety of principal; and (b) liquidity; and (c)�yield.
• “Local government” means: (a) a municipality; or (b) a county; or (c) a school
district; or (d) a district or other authority created under TEX. CONST. art. III,
§�52(b)(1) or (2) or TEX. CONST. art. XVI, §�59; or (e) a fresh water supply
district; or (f) a hospital district; or (g) a political subdivision, authority, public
corporation, body politic, or instrumentality of the state; or (h) any nonprofit
corporation acting on behalf of any of those entities.
• “Public funds” means funds that a state agency collects under general law
and that are designated to a public purpose. The term does not include funds
that are collected or voluntarily contributed for the sole benefit of the
contributors and for which a state agency is merely the custodian.
• “Public retirement system” has the meaning assigned by TEX. GOV’T CODE ANN.
§�802.001(3) (Vernon 1994).
• “State agency” means an office, department, commission, board, or other
agency that is part of any branch of state government, an institution of higher
education, and any nonprofit corporation acting on behalf of any of those
entities.
Notwithstanding the preceding definitions, this subsection does not apply to:
• a public retirement system; or
• state funds invested under TEX. GOV’T CODE ANN. §�404.024 (Vernon Supp. 2004);
or
• an institution of higher education that has total endowments of at least $95
million in book value on May 1, 1995; or
• funds invested by the Veterans’ Land Board under Chapter 161, 162, or 164,
Natural Resources Code; or
• registry funds deposited with the county or district clerk under Chapter 117,
Local Government Code; or
• a deferred compensation plan that qualifies under either Section 401(k) or 457
of the Internal Revenue Code of 1986; or
• an investment donated to a state agency for a particular purpose or under
terms of use specified by the donor.
The Public Funds Investment Act (PFIA) does not authorize any state agency to

invest its funds or the funds under its control. The PFIA applies to a state agency

only if the agency has statutory authority outside the PFIA to invest funds.

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A state agency may invest its funds and funds under its control through an
investment pool only if the governing body of the agency authorizes investment in
the pool. The pool may not accept the agency’s funds or invest them unless the
pool has furnished the agency’s investment officer or other authorized
representative an offering circular or similar disclosure instrument that complies
with TEX. GOV’T CODE ANN. §�2256.016(b) (Vernon 2000). The pool may maintain
its eligibility to accept the agency’s funds and invest them only if the pool
complies with TEX. GOV’T CODE ANN. §�2256.016(c) (Vernon 2000).
The governing body of a state agency or of an investme