Could Texas let a heavily state-funded private nonprofit use the state telecommunications system to lower its long-distance costs?

Texas AG Opinion JM-330: State Telecommunications for a Nonprofit

Plain-English summary

A Texas senator asked whether the State Purchasing and General Services Commission could let a private foundation use the state telecommunications system under article 601b, section 10.07. The statute authorized contracts with legislative houses and agencies, counties, cities, districts, other political subdivisions, and certain "agencies" outside the definition of state agency. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

The foundation was a nonprofit serving children with multiple disabilities. The request said it was "99 percent state funded," primarily dealt with state agencies, and incurred about 95 percent of its long-distance costs communicating with those agencies. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

JM-330 applied the rule that a general word following a list is limited to things of the same general class as the listed items. Because every listed section 10.07 entity had governmental status, the word "agencies" did not extend to a private nonprofit corporation. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Public funding and possible state savings did not change the result. The opinion said accepting that theory would allow "every organization receiving public funds" to use the system, contrary to section 10.07's limiting language. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

The foundation's public service also did not make it governmental. JM-330 described it as "a private nonprofit corporation created for a private, as distinguished from a purely public, purpose" and concluded that it was not an agency within section 10.07. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

The commission had no alternative authority to make the contract. The opinion said that when a statute granted an administrative agency power and prescribed the method for exercising it, "the prescribed method excludes all others and must be followed." Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Currency note

This opinion was issued in 1985. 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.

Common questions

Did receiving almost all of its funds from government contracts make the foundation a government agency?

No. JM-330 said public funding was insufficient to give the private organization the governmental status required by section 10.07. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Did the potential to save state money authorize the arrangement?

No. The opinion recognized the proposed savings but said statutory language was "the best evidence of the legislative intent" and did not include every publicly funded organization. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Why did the word "agencies" not include the foundation?

It followed a list of governmental entities. Under the cited construction rule, the general term was restricted to entities of the same governmental nature or class. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Did the foundation's status under the Open Records Act decide the telecommunications issue?

No. JM-330 said receipt of public funds was sufficient to subject the foundation to the Open Records Act but "insufficient to confer" the governmental status required by section 10.07. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Could the commission rely on an implied power outside section 10.07?

No. The opinion treated section 10.07 as the only contracting authority for use of the state telecommunications system and found no separate route around its limits. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Background and statutory framework

Article 601b, section 10.07, identified the non-state-agency governmental entities that could contract for the state telecommunications system. Section 1.02(2) separately defined state agencies in the executive branch, specified courts, and public higher-education institutions. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

JM-330 examined the constitutional and statutory origins of the listed entities. Legislative houses, counties, municipalities, and special-purpose districts had constitutional status, while legislative agencies were created by statute. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

The state telecommunications system's cost-reduction purpose did not enlarge the eligible class. The opinion kept purpose subordinate to section 10.07's text and applied administrative-law limits from Cobra Oil & Gas Corp. v. Sadler, 447 S.W.2d 887 (Tex. 1968). Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Citations and references

• V.T.C.S. article 601b, sections 1.02(2), 10.03, and 10.07
• V.T.C.S. article 1396-1.01 et seq.
• V.T.C.S. article 6252-17a, section 2(1)(F)
• V.T.C.S. articles 5429b, 5429c, and 5429g
• Farmers' & Mechanics' National Bank v. Hanks, 137 S.W. 1120 (Tex. 1911)
• Sabine Pilots Ass'n v. Lykes Brothers Steamship, Inc., 346 S.W.2d 166 (Tex. Civ. App. - Austin 1961, no writ)
• Miller v. Davis, 150 S.W.2d 973 (Tex. 1941)
• University Interscholastic League v. Payne, 635 S.W.2d 754, 756-57 n.4 (Tex. App. - Amarillo 1982, writ dism'd)
• Cobra Oil & Gas Corp. v. Sadler, 447 S.W.2d 887 (Tex. 1968)

Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0330
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1985/jm0330.pdf

Original opinion text

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

The Attorney General of Texas

July 11, 1985

Honorable Oscar H. Mauzy
Chairman
Committee on Jurisprudence
Texas State Senate
P. O. Box 12068, Capitol Station
Austin, Texas 78711

Opinion No. JM-330

Re: Whether the state may provide telecommunication services to a private foundation

Dear Senator Mauzy:

You have asked whether article 601b, section 10.07, V.T.C.S., authorizes the State Purchasing and General Services Commission (hereinafter the "Commission") to contract with a private foundation for the utilization of the state telecommunications system. This statute provides:

The commission may contract with each house of the legislature, legislative agencies, counties, cities, districts, and other political subdivisions and agencies not within the definition of "state agency," for utilization of the state telecommunications system.

Section 1.02(2) of article 601b, V.T.C.S., defines "state agency" as:

(A) any department, commission, board, office, or other agency in the executive branch of state government created by the constitution or a statute of this state;

(B) the Supreme Court of Texas, the Court of Criminal Appeals of Texas, a court of civil appeals, or the Texas Civil Judicial Council; or

(C) a university system or an institution of higher education as defined in Section 61.003, Texas Education Code, as amended, other than a public junior college.

Section 1.02(2) outlines three classes of governmental entities. The entities included in section 10.07 are those governmental entities not included in the definition of state agency under section 1.02(2).

You inform us that the foundation is a nonprofit organization which provides education and care for multi-handicapped children. The foundation is 99 percent state funded, and deals primarily with state agencies such as the Texas Department of Human Resources, the Texas Department of Mental Health and Mental Retardation, and the Texas Rehabilitation Commission. You also inform us that apparently 95 percent of the foundation's long distance costs are incurred in communicating with these state agencies. Finally, your letter advises that if the foundation could cut the cost of long distance bills, it would save the state money. We assume that the foundation was organized under the Texas Non-Profit Corporation Act. See generally V.T.C.S. art. 1396-1.01 et seq. The answer to your first question depends on whether the foundation is an entity within the meaning of section 10.07 with which the commission may contract.

Section 10.07 enumerates particular types of entities which are followed by the general term "agencies." V.T.C.S. art. 601b, §10.07. It is this term which is ambiguous and we must resort to rules of statutory construction. When general words follow the enumeration of a particular class of persons or things, the general words will be construed as applicable only to persons or things of the same general nature or class as those enumerated. This rule is based on the supposition that if the legislature had intended the general words to be used in an unrestricted sense, it would have made no mention of the particular classes. See Farmers' & Mechanics' National Bank v. Hanks, 137 S.W. 1120 (Tex. 1911); see also 53 Tex. Jur. 2d Statutes §155 (1964). The term "agencies" is restricted by the specific terms preceding it.

It is clear that all of the enumerated entities in section 10.07 have some form of governmental status under the constitution and statutes of this state. Houses of the legislature, counties, municipalities and districts are created and authorized by the Texas Constitution. See Tex. Const. art. III, §1 (houses of the legislature); art. XI, §1 (counties); art. XI, §§4 & 5 (municipalities); art. XVI, §59 (special purpose districts); art. IX, §§4-11 (special purpose districts). Legislative agencies are created by the statutes. See V.T.C.S. art. 5429b, §1 (legislative council); art. 5429c (legislative budget board); see generally art. 5429g, §1 (definition of legislative agency). Therefore, we must ascertain whether the foundation has a governmental status for the purposes of section 10.07.

One of the main purposes for the creation of the state telecommunications system was to reduce the cost of telephone services to the state government. Cf. V.T.C.S. art. 601b, §10.03. Since 99 percent of the foundation's funds are received as a result of governmental contracts with state agencies and other governmental sources, you suggest that it would be reasonable to conclude that the organization's utilization of the state communication system would have the effect of reducing governmental spending. However, such a conclusion would have the effect of allowing every organization receiving public funds to utilize the state telecommunications system. This practice would, however, be contrary to the expressed limiting words in section 10.07. The statutory language is the best evidence of the legislative intent. Sabine Pilots Ass'n v. Lykes Brothers Steamship, Inc., 346 S.W.2d 166 (Tex. Civ. App. - Austin 1961, no writ).

The receipt of public funds is sufficient to subject the foundation to the Open Records Act. See V.T.C.S. art. 6252-17a, §2(1)(F). We believe, however, that this fact is insufficient to confer upon this private organization a governmental status of the class within the meaning of section 10.07.

The foundation provides a vital service to the state. The foundation operates six of 43 licensed residential treatment centers in Texas. Because the Texas Department of Human Resources (TDHR) is named managing conservator of several thousand children each year by the state courts, the foundation's facilities are among those used by TDHR as a placement source. Although the foundation assists in fulfilling this public purpose, it is a private nonprofit corporation created for a private, as distinguished from a purely public, purpose. See Miller v. Davis, 150 S.W.2d 973 (Tex. 1941). It is not a governmental agency. Cf. University Interscholastic League v. Payne, 635 S.W.2d 754, 756-57 n.4 (Tex. App. - Amarillo 1982, writ dism'd).

Accordingly, we conclude that the foundation is not an entity with which the Commission may contract for the utilization of the state telecommunications system.

You also ask whether, regardless of section 10.07, the Commission may "nonetheless contract with the foundation for utilization of the state telecommunications system." We think not. The State Purchasing and General Services Commission is an administrative agency created by statute. V.T.C.S. art. 601b et seq. The Supreme Court has held that where power is granted to an administrative agency and the method by which it is exercised is prescribed, the prescribed method excludes all others and must be followed. Cobra Oil & Gas Corp. v. Sadler, 447 S.W.2d 887 (Tex. 1968). Section 10.07 is the only authority by which the Commission may contract with the foundation and for the reasons stated above, we conclude that the Commission may not contract with the foundation for the utilization of the state telecommunications system.

SUMMARY

Article 601b, section 10.07, V.T.C.S., does not authorize the State Purchasing and General Services Commission to contract with a private nonprofit corporation for the utilization of the state telecommunications system.

Very truly yours,

JIM MATTOX
Attorney General of Texas

TOM GREEN
First Assistant Attorney General

DAVID R. RICHARDS
Executive Assistant Attorney General

ROBERT GRAY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Tony Guillory
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
Colin Carl
Susan Garrison
Tony Guillory
Jim Moellinger
Jennifer Riggs
Nancy Sutton