Does Texas's retirement system pick specific insurance vendors for state-employee payroll deductions, or just types of coverage?

Plain-English summary

In 1991 Texas gave state employees a new way to pay for extra insurance and similar benefits: a payroll deduction. The law, V.T.C.S. article 6813g, let a worker sign up to have money taken out of each paycheck for a "supplemental optional benefits program," such as permanent life insurance, catastrophic illness coverage, disability insurance, or prepaid legal services, but only if the Employees Retirement System of Texas (ERS) had approved the program first. ERS asked the Attorney General to explain what its job actually was under the new statute, because the law itself said very little.

The opinion answered five questions from the bare words of the statute, since there was no helpful legislative history. First, ERS does have to act: section 3 says ERS "shall designate" programs that promote the interests of the state and its employees, and "shall" is mandatory. The one exception the opinion allowed was the unlikely case where ERS concludes that no program promotes those interests, in which case it need not designate any.

Second and third, the opinion decided what "program" means. ERS had suggested it might only need to bless broad categories of coverage, leaving the choice of company to employees. The Attorney General disagreed. The statute authorizes deductions for a program "approved by" ERS and then sends the money to "the program designated by the employee," which only makes sense if a "program" is a specific offering from a specific company. So ERS has to approve particular vendor programs, not just types of coverage. The statute does not, however, spell out how ERS must do that (no required bidding process, for instance), so the method is left to ERS's discretion.

Fourth, on oversight: the statute does not hand ERS rule-making power, but the opinion read it to impliedly allow ERS to monitor or regulate the programs, because that authority flows naturally from the duty to make sure programs "promote the interests of the state and state agency employees." ERS may do this if it decides it is necessary, but the vague statute does not require it.

Fifth, on fees: section 6 lets the state withhold a fee from the employee's wages just to cover the cost of making the deduction. That is the only fee the legislature authorized. The opinion concluded ERS cannot charge any separate fee for its own costs of designating, approving, or regulating programs, whether against the vendors or against the employees, because naming one fee in the statute signals the exclusion of others.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The supplemental-benefits and ERS deduction provisions in former V.T.C.S. article 6813g have since been recodified (the ERS statutes were moved into the Insurance Code and Government Code), so confirm the current statute before relying on anything described here.

Background and statutory framework

The Executive Director of the Employees Retirement System of Texas asked several questions about ERS's role under V.T.C.S. article 6813g, which authorizes deductions for "supplemental optional benefits programs" from state employees' wages and was enacted in 1991 (Acts 1991, 72d Leg., 2d C.S., ch. 12, § 24.01).

Section 2 provides that, in addition to deductions under the Texas Employees Uniform Group Insurance Benefits Act or other law, a state agency employee may authorize in writing a per-pay-period deduction for coverage under a supplemental optional benefits program, including a program of permanent life insurance, catastrophic illness insurance, disability insurance, or prepaid legal services, that may be made if the program has been approved by ERS under section 3; the written authorization directs the comptroller or, for an institution of higher education, the appropriate financial officer to transfer the withheld funds to the program designated by the employee, and the officer must comply. Section 3 provides that ERS "shall designate supplemental benefit programs that are eligible to receive deductions under Section 2 of this article and that promote the interests of the state and state agency employees." Section 6 provides that the state may withhold from the employee's wages an administrative fee for making the deduction, not to exceed the actual administrative cost or the highest fee charged by the state for a similar deduction, whichever is less.

ERS asked: (1) whether it is required to designate one or more programs; (2) whether "programs" refers to broad types of coverage or individual vendors; (3) whether ERS is authorized or required to take any action beyond designating, such as soliciting bids or approving individual vendors; (4) whether ERS is required to monitor or regulate designated programs; and (5) whether ERS may assess fees to cover administrative costs, and against whom.

Because the statute gives little guidance and there was no helpful legislative history, the opinion relied on the bare statutory language. On the first question, section 3's mandatory "shall" requires ERS to designate programs, provided it concludes they promote the interests of the state and state agency employees (Lewis v. Jacksonville Building & Loan Ass'n, 540 S.W.2d 307, 310 (Tex. 1976) ("shall" is generally mandatory)); in the unlikely event ERS concludes that no program promotes those interests, it is not required to designate any.

On the second and third questions, the opinion concluded that "supplemental benefits programs" refers to particular programs provided by particular vendors, not broad types of coverage, and that ERS must approve particular vendor programs. Section 3 requires designating programs that "promote the interests of the state and state agency employees," and while a broad category of coverage might meet that criterion, particular vendors providing it might not, so section 3 suggests ERS must do more than designate broad types. Section 2 authorizes deductions for a program that "may be made if the program has been approved by the [ERS]" and provides for transfer of withheld funds "to the program designated by the employee," which in context shows "program" means a specific program by a specific vendor; it would make no sense to authorize deductions for broad types of coverage but not for particular vendor programs. The statute does not prescribe any particular method of approval or designation, leaving the method to ERS's discretion.

On the fourth question, although article 6813g grants ERS no rule-making authority, the opinion concluded it impliedly authorizes ERS to monitor or regulate supplemental benefits programs, because that authority is implicit in the section 3 charge to ensure programs "promote the interests of the state and state agency employees" (Stauffer v. City of San Antonio, 344 S.W.2d 158, 160 (Tex. 1961) (administrative agencies have powers necessarily implied from authority or duties expressly imposed)). ERS may regulate or monitor programs if it determines this is necessary to promote those interests, but the vague language cannot fairly be read to require it to do so.

On the fifth question, section 6 authorizes the state to withhold from an employee's wages an administrative fee for making the deduction; the legislature was explicit in authorizing that particular fee and authorized no other. The opinion therefore concluded ERS is not authorized to assess a fee for its administrative costs in designating, approving, or regulating programs against either vendors or participating employees (Ex parte Halsted, 182 S.W.2d 479, 484 (Tex. Crim. App. 1944) (the express mention of one thing is tantamount to the exclusion of all others)).

Common questions

Did ERS have to set up these supplemental benefit deductions at all?
The opinion concluded yes, as long as ERS found that programs promote the interests of the state and its employees, because section 3 uses the mandatory word "shall." Only if ERS concluded that no program promoted those interests would it not have to designate any.

Does ERS approve specific companies or just types of coverage?
Specific programs from specific vendors. The opinion read the statute to require ERS to approve particular vendor programs rather than merely listing broad categories of coverage.

Did the law tell ERS how to choose vendors, like requiring competitive bids?
No. The opinion noted the statute prescribes no method for approval or designation, so how ERS approves programs (including whether to take bids) is left to its discretion.

Can ERS oversee the programs after approving them?
The opinion concluded ERS may monitor or regulate the programs as an implied power, if it decides that is necessary to promote the state's and employees' interests, but the statute does not require it to do so.

Can ERS charge a fee for its work running this program?
No. The opinion concluded that the only authorized fee is the section 6 fee the state withholds from an employee's wages for making the deduction, so ERS may not charge vendors or employees a separate fee for its administrative costs.

Citations

• V.T.C.S. art. 6813g, § 2 (employee-authorized wage deduction for an ERS-approved program; transfer to the program designated by the employee), § 3 (ERS "shall designate" programs that promote the interests of the state and state agency employees), § 6 (administrative fee for making the deduction)
• Acts 1991, 72d Leg., 2d C.S., ch. 12, § 24.01 (enacting article 6813g)
• Lewis v. Jacksonville Building & Loan Ass'n, 540 S.W.2d 307 (Tex. 1976)
• Stauffer v. City of San Antonio, 344 S.W.2d 158 (Tex. 1961)
• Ex parte Halsted, 182 S.W.2d 479 (Tex. Crim. App. 1944)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0193
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1992/dm0193.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; garbled case names were verified against the official reporters. The linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

December 28, 1992

Mr. Charles D. Travis
Executive Director
Employees Retirement System of Texas
P. O. Box 13207
Austin, Texas 78711-3207

Opinion No. DM-193

Re: Whether V.T.C.S. article 6813g requires the Employees Retirement System of Texas to designate broad types of coverage or specific vendors of supplemental optional benefits programs and related questions (RQ-403)

Dear Mr. Travis:

You have asked several questions regarding the role of the Employees Retirement System of Texas (ERS) in implementing V.T.C.S. article 6813g which authorizes deductions for "supplemental optional benefits programs" ("supplemental benefits programs" or "programs") from state employees' wages. Article 6813g was enacted into law in 1991. See Acts 1991, 72d Leg., 2d C.S., ch. 12, § 24.01, at 365. Section 2 of that article provides as follows:

In addition to deductions for coverage under the Texas Employees Uniform Group Insurance Benefits Act . . . or other law, an employee of a state agency may authorize in writing a deduction each pay period from the employee's salary or wage payment for coverage of the employee under a supplemental optional benefits program, including a program of permanent life insurance, catastrophic illness insurance, disability insurance, or prepaid legal services, that may be made if the program has been approved by the [ERS] under Section 3 of this article. The written authorization must direct the comptroller or, if applicable, the appropriate financial officer of an institution of higher education to transfer the withheld funds to the program designated by the employee. The comptroller or financial officer shall comply with the direction.

Section 3 provides:

The [ERS] shall designate supplemental benefit programs that are eligible to receive deductions under Section 2 of this article and that promote the interests of the state and state agency employees.

Section 6 provides:

The state may withhold from the employee's salary or wage payment an administrative fee for making the deduction under this article. The fee may not exceed the actual administrative cost of making the deduction or the highest fee charged by the state for making a similar deduction, whichever amount is less.

With regard to these provisions, you ask the following questions:

1) Whether the ERS is required to designate one or more supplemental benefit programs;
2) Whether the term "programs" refers to broad types of coverage or individual vendors;
3) Whether the ERS is authorized or required to take any action beyond designating the program, such as soliciting bids or approving individual vendors;
4) Whether the ERS is required to monitor or regulate designated programs; and
5) Whether the ERS may assess fees to pay for administrative costs, and against whom such fees may be assessed.

You suggest that article 6813g merely obliges the ERS to designate eligible supplemental benefits programs, if any, and that the ERS is only authorized to designate the broad types of coverage available, rather than individual vendors to provide coverage. You also suggest that article 6813g does not require or authorize the ERS to approve particular vendors or administer any such programs because "[t]he ERS is granted no rule-making authority, nor is there any provision for a bidding process."

We have reviewed article 6813g. The language of the statute provides little guidance, and we are not aware of any legislative history which would provide answers to your questions. Thus, we address your questions relying solely on the bare language of the statute. First, you ask whether the ERS is required to designate any supplemental benefits program. Section 3 which contains the mandatory term "shall" clearly requires the ERS to designate supplemental benefits programs, provided it concludes that they "promote the interests of the state and state agency employees." See Lewis v. Jacksonville Bldg. & Loan Ass'n, 540 S.W.2d 307, 310 (Tex. 1976) (the term "shall" is generally mandatory). Of course, in the unlikely event that the ERS concludes that no supplemental benefits program promotes those interests, it is not required to designate any program.

We address your second and third questions together. You ask if the term "supplemental benefits programs" refers to broad types of coverage or to particular vendors, and if the ERS is required to take any action beyond designating a program, such as soliciting bids or approving individual vendors. As noted above, section 3 requires the ERS to designate supplemental benefits programs "that promote the interests of the state and state agency employees." While a broad category of coverage might meet this criteria, particular vendors providing such coverage might not. Thus, section 3 suggests that the ERS is required to do more than simply designate broad types of coverage.

Furthermore, section 2 authorizes wage deductions for coverage under "a supplemental optional benefits program . . . that may be made if the program has been approved by the [ERS] . . . ." (Emphasis added.) This provision suggests the legislature's intent to authorize deductions for particular programs provided by particular vendors approved by the ERS. It would make no sense to authorize deductions for broad types of coverage, but not authorize deductions for particular programs provided by particular vendors. In addition, we note that section 2 provides for the transfer of "withheld funds to the program designated by the employee." (Emphasis added.) In this context, it is clear that the term "program" refers to a specific program provided by a specific vendor, rather than to broad types of coverage. We conclude that "supplemental benefits programs" refers to particular programs provided by particular vendors as opposed to broad types of coverage, and that the ERS is required to approve particular programs provided by particular vendors. We note, however, that the statute does not prescribe any particular method the ERS must use to approve or designate a program, thus leaving the method of approval and designation to the ERS's discretion.

In answer to your fourth question, although article 6813g does not grant the ERS rule-making authority, we believe it impliedly authorizes the ERS to monitor or regulate supplemental benefits programs. This authorization is implicit in the language in section 3 authorizing the ERS to ensure that programs "promote the interests of the state and state agency employees." See Stauffer v. City of San Antonio, 344 S.W.2d 158, 160 (Tex. 1961) (administrative agencies have powers necessarily implied from authority or duties expressly imposed). Thus, the ERS is authorized to regulate or monitor supplemental benefits programs if it determines that this is necessary to promote the interests of the state and state agency employees. The vague and unspecific language of article 6813g cannot be fairly read, however, to require the ERS to undertake such activities.

With respect to your query about fees, section 6 authorizes the state to withhold from an employee's wages an administrative fee for making the deduction. The legislature has been quite explicit in authorizing this particular fee and has not authorized the assessment of any other fee. Therefore, we conclude that the ERS is not authorized to assess a fee to pay for its administrative costs in designating, approving or regulating supplemental benefits programs against either vendors of such programs or participating employees. See Ex parte Halsted, 182 S.W.2d 479, 484 (Tex. Crim. App. 1944) (recognizing rule of statutory construction that "the express mention of one thing is tantamount to an exclusion of all others").

SUMMARY

Article 6813g, V.T.C.S., requires the Employees Retirement System of Texas (ERS) to designate "supplemental benefits programs" for state employee wage deductions, provided it concludes that such programs "promote the interests of the state and state agency employees." The term "supplemental benefits programs" refers to particular vendors as opposed to broad types of coverage. Article 6813g requires the ERS to approve particular supplemental benefits programs provided by particular vendors. This provision impliedly authorizes the ERS to regulate or monitor supplemental benefits programs if it determines that this is necessary to promote the interests of the state and state agency employees. This provision does not authorize the ERS to assess a fee to pay for its administrative costs against either vendors of supplemental benefits programs or participating employees.

Very truly yours,

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Mary R. Crouter
Assistant Attorney General