Can the Texas Office of Fire Fighters' Pension Commissioner charge volunteer fire departments a fee to help administer their retirement fund?

TX AG Opinion GA-0272: Can the fire pension office charge a fee?

Plain-English summary

The Commissioner of the Office of Fire Fighters' Pension Commissioner asked whether her office could start charging participating fire departments an administrative fee to help cover the cost of paying out pensions under the Texas Local Fire Fighters' Retirement Act (TLFFRA) for departments whose volunteer firefighters had merged into the statewide TSESRA retirement system. The Fund's actuary had found the statewide system was not actuarially sound, and the governing Board wanted more money available to pay down that shortfall, including by amending an administrative rule that currently barred billing departments for these administrative costs.

The opinion said no. State agencies can only exercise powers the legislature actually gave them, either expressly or by clear implication from an express grant, and cannot invent a new power just because it would be convenient. Looking at the statute that creates and funds the pension system, the opinion found it names specific funding sources: the state must contribute enough each year to keep the fund actuarially sound (capped at one-third of what governing bodies contribute), the Commissioner may draw on additional state funds only in an emergency, and administrative expenses may be paid only from income the fund earns on its own investments. Nowhere does the statute say the Commissioner can bill participating departments an administrative fee, and the opinion found no basis to read that power in by implication either. Because charging such a fee would require authority the legislature simply never granted, the opinion concluded the Commissioner could not adopt it, no matter how useful it might be for shoring up the fund's finances.

Currency note

This opinion was issued in 2004. 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.

Who this opinion affected (as of 2004)

The Office of Fire Fighters' Pension Commissioner and its governing Board: The opinion concluded neither had authority under article 6243e.3 to charge participating departments an administrative fee for TLFFRA pension payments, closing off that route for addressing the fund's actuarial shortfall without new legislation.

Participating fire departments in the TSESRA system: The opinion confirmed departments could not be billed for the administrative costs of paying out their merged TLFFRA pensions under the statute and rules as they then stood, since 34 Tex. Admin. Code § 301.9(c) already provided governing entities were not billed for those costs.

State legislators considering how to fund the pension system's shortfall: The opinion made clear that expanding the Commissioner's funding sources to include departmental administrative fees would require a legislative change, since the existing statute's funding provisions did not support the Board's proposed rule amendment.

Common questions

Why couldn't the Texas Fire Fighters' Pension Commissioner just start charging departments a fee to fix the fund's shortfall?
Because this 2004 opinion found that state agencies can only use powers the legislature actually granted them, and the statute governing this pension fund lists specific, limited funding sources, state contributions capped at one-third of governing body contributions, emergency state funds, and the fund's own investment income, none of which include a departmental administrative fee.

Does a state agency need explicit statutory authority to charge a new fee?
Yes, according to the case law this opinion relies on, a state agency may exercise only powers expressly conferred or necessarily implied from an express grant, and cannot claim a new power simply because it would be administratively convenient.

Was there already a rule addressing whether departments get billed for pension administration costs?
Yes. The opinion noted that 34 Tex. Admin. Code section 301.9(c) already provided that governing entities are not billed for administrative costs associated with the Commissioner's payment of TLFFRA pensions, which the Board wanted to amend but which this opinion found the underlying statute did not support changing.

Background and statutory framework

In 1977 the Texas Legislature created the Volunteer Fire Fighters' Relief and Retirement Fund, later renamed in 1997 to the Texas Statewide Emergency Services Retirement Act (TSESRA), codified at article 6243e.3 of the Revised Civil Statutes. Under that statute, the Fire Fighters' Pension Commissioner administers the Texas Statewide Emergency Services Personnel Retirement Fund, while a separate State Board of Trustees sets policy for the fund's administration. Departments whose volunteer firefighters previously had pensions under the separate Texas Local Fire Fighters' Retirement Act could elect to merge those TLFFRA pensions into the statewide TSESRA system, becoming "participating departments" under the statute.

The statute specifies exactly how the fund is financed and how its administrative costs may be paid. Section 2(d) requires the state to contribute enough each year to keep the fund actuarially sound, but caps the state's contribution at one-third of what governing bodies (the local sponsors of participating departments) contribute in that year; if the state hits that one-third cap, the fund is presumed actuarially sound. Section 19(e) lets the Commissioner request and administer additional state funds, but only in an emergency. Section 21(a) limits payment of the fund's administrative expenses to income the fund itself earns through investment, while section 21(b) lets the Board adopt rules necessary for administering the fund, a rulemaking power that does not itself expand the fund's underlying financing sources.

Applying the general administrative-law principle that a state agency may exercise only powers expressly granted or necessarily implied from an express grant, and may not manufacture a new power just because doing so would serve the agency's purposes, the opinion examined article 6243e.3's funding provisions and found no express or implied authority for the Commissioner to charge participating departments an administrative fee. Because the fund was reported actuarially unsound and the Board wanted more revenue to amortize the shortfall, it had proposed amending 34 Tex. Admin. Code section 301.9(c), which currently exempts governing entities from being billed for TLFFRA pension administration costs, to allow such fees. The opinion concluded that proposed rule change would exceed the statute's grant of authority, since a rule cannot create funding authority the underlying statute does not provide.

Citations

Statutes:

• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 1(10) (Vernon 2003)
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 1A
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 2(a)
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 2(d)
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 19
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 19(e)
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 21
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 21(a)
• Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 21(b)
• 34 Tex. Admin. Code § 301.9(c) (2004)
• Act of May 20, 1977, 65th Leg., R.S., ch. 269, 1977 Tex. Gen. Laws 710, 710
• Act of May 22, 1997, 75th Leg., R.S., ch. 724, 1997 Tex. Gen. Laws 2381, 2382

Cases:

• Pub. Util. Comm'n v. City Pub. Serv. Bd. of San Antonio, 53 S.W.3d 310, 316 (Tex. 2001)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0272
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2004/ga0272.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

November 22, 2004

Ms. Lisa Ivie Miller
Commissioner
Office of Fire Fighters' Pension Commissioner
Post Office Box 12577
Austin, Texas 78711

Opinion No. GA-0272

Re: Whether the Office of Fire Fighters' Pension Commissioner may charge an administrative fee to participating departments in its retirement system (RQ-0230-GA)

Dear Commissioner Miller:

You ask whether the Office of Fire Fighters' Pension Commissioner (the "Commissioner") may charge "participating departments an administrative fee for the payment of Texas Local Fire Fighters' Retirement Act . . . pensions administered by the TSESRA [Texas Statewide Emergency Services Retirement Act] Board of Trustees and the Commissioner."[1]

We understand your question to concern those participating departments whose members elected to merge their Texas Local Fire Fighters' Retirement Act (the "TLFFRA") volunteer fire fighters' pensions into the TSESRA system. See Request Letter, supra note 1, at 1. "'Participating department' means a public entity that performs fire, rescue, or emergency medical services and participates in the pension system under [article 6243e.3]." Tex. Rev. Civ. Stat. Ann. art. 6243e.3, § 1(10) (Vernon 2003). In 1977, the Texas Legislature created the Volunteer Fire Fighters' Relief and Retirement Fund in order to provide a pension system for volunteer fire fighters. See Act of May 20, 1977, 65th Leg., R.S., ch. 269, 1977 Tex. Gen. Laws 710, 710 (Revised Civil Statutes, article 6243e.3). The short title was amended in 1997 to the Texas Statewide Emergency Services Retirement Act. See Act of May 22, 1997, 75th Leg., R.S., ch. 724, 1997 Tex. Gen. Laws 2381, 2382. Under the authority of the TSESRA, the Commissioner administers the Texas Statewide Emergency Services Personnel Retirement Fund (the "Fund"). See Tex. Rev. Civ. Stat. Ann. art. 6243e.3, §§ 1A, 19 (Vernon 2003). The State Board of Trustees (the "Board") establishes and oversees policy for the administration of the Fund. See id. § 21.

You inform us that in November 2003 the Fund's actuary "reported that the TSESRA system is not actuarially sound." Request Letter, supra note 1, at 2. In order to "increase the amount of money available to amortize unfunded actuarial accrued liabilities," the Board would like "the Commissioner to charge participating departments an administrative fee for the payment [of TLFFRA pensions]." Id. at 1-2. Section 301.9(c) of the Texas Administrative Code currently provides that governing entities "are not billed for administrative costs associated with the Fire Fighters Pension Commissioner payment of TLFFRA pensions." 34 Tex. Admin. Code § 301.9(c) (2004). You state that, "the Board would like to amend 34 TAC 301.9(c) to allow for an assessment of administrative fees for the payment of TLFFRA pensions." Request Letter, supra note 1, at 2.

The TSESRA directs the duties of both the Board and the Commissioner. See Tex. Rev. Civ. Stat. Ann. art. 6243e.3, §§ 19, 21 (Vernon 2003). Although the statute allows the Board to "establish rules necessary for the administration of the fund," id. § 21(b), the Board is limited to paying administrative expenses from "income earned by investment of the fund." Id. § 21(a). The Commissioner "may request and administer additional state funds in an emergency." Id. § 19(e). The Fund is a trust fund within the state treasury. See id. § 2(a). Article 6243e.3, section 2(d) provides for the actuarial soundness of the Fund:

The state shall contribute the sum necessary to make the fund actuarially sound each year. The state's contribution may not exceed the amount of one-third of the total of all contributions by governing bodies in one year. If the state contributes one-third of the total contributions of the governing bodies in one year, the fund shall be presumed actuarially sound.

Id. § 2(d).

A state agency may exercise only those powers expressly conferred, together with those that may necessarily be implied from the powers expressly granted. See Pub. Util. Comm'n v. City Pub. Serv. Bd. of San Antonio, 53 S.W.3d 310, 316 (Tex. 2001). A state agency may not exercise what is effectively a new power on the theory that such an exercise is expedient for the agency's purposes. See id. Article 6243e.3 of the Revised Civil Statutes provides sources of funding. See Tex. Rev. Civ. Stat. Ann. art. 6243e.3, §§ 2(d) (Vernon 2003) (requiring the state to contribute sums to make the Fund actuarially sound), 19(e) (providing for emergency funding from the state), 21(a) (limiting payment of administrative expenses to "income earned by investment of the fund"). It does not expressly authorize the Commissioner to assess administrative fees. Nor, in our opinion, may the authority to do so be inferred from any provision of article 6243e.3. As a result, we conclude that the Office of Fire Fighters' Pension Commissioner may not charge an administrative fee to participating departments in its retirement system.

SUMMARY

The Office of Fire Fighters' Pension Commissioner may not charge an administrative fee to participating departments in its retirement system.

Yours very truly,

BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee

Footnotes

[1] Letter from Lisa Ivie Miller, Commissioner, Office of Fire Fighters' Pension Commissioner, to Honorable Greg Abbott, Texas Attorney General (May 20, 2004) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].