Can a Texas state agency buy fire or property insurance for its own buildings?

Plain-English summary

The Texas Surplus Property Agency runs warehouses (in Houston, Lubbock, and San Antonio) where it receives, stores, and hands out surplus federal and state property. Back in 1984 the state auditor had told the agency to insure its buildings, and in 1985 it bought fire and casualty coverage. But in 1991 the Comptroller refused to pay an insurance bill, taking the position that a state entity cannot buy fire insurance on its buildings without both statutory authority and a specific appropriation. So the agency's director asked the Attorney General two things: can the agency buy property insurance for its warehouses, and is the state itself obligated to act as a self-insurer for fire or casualty damage to the buildings?

The Attorney General answered no to both. On the first question, the opinion concluded that a state agency may not purchase property insurance unless the legislature specifically authorizes it, and nothing in the agency's own enabling statute (V.T.C.S. art. 6252-6b) or in federal surplus-property law gave it that authority. The agency therefore could not spend appropriated money to insure its warehouses.

That conclusion came out of a long line of older Attorney General opinions, going back to a 1921 Senate Concurrent Resolution that announced a state policy of "self-insuring" its buildings. The opinion was candid about a wrinkle: a concurrent resolution is not actually a law (the Texas Constitution requires laws to pass as bills), and the self-insurance fund the 1921 resolution called for was never actually set up. Even so, the Attorney General concluded the no-insurance-without-authorization rule reflected real state policy, because the same idea shows up across many later enactments, like the constitutional higher-education building fund (which lets the legislature step in only for fire or natural disaster), the state's self-insured handling of employee workers' compensation, the legislature's repeated refusal to fund Tort Claims Act insurance, and a narrow, federally-driven disaster-insurance authority added in 1975.

On the second question, the opinion concluded there was no state self-insurance fund standing behind agency buildings. Instead, when state property is destroyed or damaged by fire, flood, or storm, the legislature has historically repaired or replaced it through special appropriations passed for that purpose. Because deciding whether to appropriate money is a legislative function, it is up to the legislature, not an automatic insurance-style entitlement, whether any particular damaged building gets fixed.

Currency note

This opinion was issued in 1993. 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 statutes the opinion cited have since been recodified (for example, V.T.C.S. art. 6252-6b and art. 8309g were repealed and moved into the Government Code and Labor Code), and the state's risk-management and self-insurance arrangements have changed, so confirm current law before relying on anything described here.

Background and statutory framework

The Texas Surplus Property Agency was created under V.T.C.S. article 6252-6b and made responsible for receiving, warehousing, and redistributing surplus federal property under the Federal Property and Administrative Services Act of 1949 (40 U.S.C. § 484(j)), as well as surplus state property (V.T.C.S. art. 6252-6b, § 4(a), (b), (n)). The agency operated warehouses in Houston, Lubbock, and San Antonio. After the state auditor's 1984 recommendation, the agency obtained fire and casualty insurance in 1985. In January 1991 the Comptroller of Public Accounts refused to pay an insurance voucher, stating that "a state entity may not purchase fire insurance for its buildings and the contents therein unless it has both explicit or implied statutory authority and a specific appropriation for that purpose."

The no-insurance-without-authorization rule. Attorney General Opinion JM-551 (1986) had determined that state policy prevented a state agency from purchasing insurance on state buildings or their contents unless legislation expressly authorized it. That conclusion rested on Senate Concurrent Resolution No. 3 of 1921, which declared a policy of self-insuring state buildings (S.C.R. 3, Acts 1921, 37th Leg., 2d C.S., at 369), and on a long line of AG opinions following it (among them M-1257 (1972), C-193 (1963), V-722 (1948), and several 1939-1944 opinions), along with limited exceptions where authority existed (JM-547 (1986), insuring mail in transit as an added cost of postage; M-581 (1970), insurance bought with federal funds appropriated for that purpose).

The resolution is not law, but the policy is real. The opinion acknowledged that the 1921 concurrent resolution is not itself state law: article III, section 30 of the Texas Constitution requires laws to be passed by bill rather than by resolution, so a resolution lacks the force of a statute (Saunders v. State, 341 S.W.2d 173, 178 (Tex. Crim. App. 1960); Caples v. Cole, 102 S.W.2d 173, 176-77 (Tex. 1937); Conley v. Texas Division of United Daughters of the Confederacy, 164 S.W. 24, 26 (Tex. Civ. App.-Austin 1913, writ ref'd)). The opinion also noted that the self-insurance fund the resolution proposed was never actually adopted, and that the General Services Commission confirmed no such fund was ever established. Even so, the Attorney General concluded the much-reiterated prohibition does express state policy, pointing to several enactments that embody it:

• Article VII, section 17(j) of the constitution, which bars certain higher-education institutions that draw on a special building fund from also receiving general revenue for construction, except that the legislature may appropriate general revenue to replace the uninsured loss of a building in the case of fire or natural disaster.
• The state's self-insured treatment of state-employee injuries compensable under the workers' compensation statute for state employees (V.T.C.S. art. 8309g, § 2).
• The Texas Tort Claims Act, which authorizes governmental units to buy insurance against claims under the Act (Civ. Prac. & Rem. Code § 101.027(a)), even though the legislature has consistently barred the use of appropriated funds for that purpose.
• The Texas Disaster Act of 1975, which authorized state agencies to purchase property-damage insurance only under limited circumstances (Gov't Code § 418.172(a)), an authorization the opinion observed was no broader than necessary to qualify for federal disaster assistance.

No authority for this agency. The opinion found no basis in V.T.C.S. article 6252-6b for concluding the legislature intended the Surplus Property Agency to buy property insurance, and concluded that neither federal law nor the regulations under it authorized the agency to do so. A federal rule provides that a state agency is not required to carry insurance on federal surplus personal property as a condition of acquiring it for distribution (41 C.F.R. § 101-44.205(c)); that rule governs how insurance proceeds are distributed where a state has insurance, and was not relevant to the question. The opinion therefore concluded the agency had no authority to purchase property insurance to cover its warehouses.

No self-insurance fund; repairs come from appropriations. On the second question, the opinion concluded there was no state self-insurance fund to cover state property. Quoting JM-551, it described the state's policy of making "special appropriations to repair and replace facilities and equipment destroyed or damaged by . . . fire, flood, windstorm, and hurricane," citing examples such as a 1983 supplemental appropriation to repair fire damage to the capitol and 1981 appropriations for hurricane and wind damage at several universities. The cost of repairing or replacing damaged state property is thus funded by special legislative appropriation, not by insurance proceeds or a self-insurance fund. Because appropriating state money is a legislative function (Bullock v. Calvert, 480 S.W.2d 367 (Tex. 1972)), it is within the legislature's power to decide whether to appropriate money to repair or replace any particular property (see Tex. Const. art. III, §§ 1, 35; art. VIII, § 6).

Common questions

Could the Texas Surplus Property Agency insure its warehouses in 1993?
No. The opinion concluded the agency had no statutory authority to purchase property insurance, so it could not spend appropriated funds to insure its warehouses.

Why couldn't a state agency just buy insurance like a private business?
The opinion explained that, as a matter of long-standing state policy reflected across many statutes and earlier AG opinions, Texas state agencies may not buy property insurance on state buildings unless the legislature specifically authorizes it. The starting point was a 1921 resolution declaring the state would self-insure.

Did the 1921 self-insurance resolution have the force of law?
The opinion said no. A concurrent resolution is not a statute, because the Texas Constitution requires laws to pass by bill, and the self-insurance fund the resolution proposed was never actually created. The opinion treated the resolution as evidence of policy, not as binding law.

If a state building burned down, how did the state pay to rebuild it?
The opinion described the historical practice: the legislature passed special appropriations to repair or replace damaged state property. There was no self-insurance fund, and whether to appropriate the money was up to the legislature.

Citations

• V.T.C.S. art. 6252-6b, § 4(a), (b), (n) (Texas Surplus Property Agency duties); 40 U.S.C. § 484(j) (Federal Property and Administrative Services Act of 1949)
• Tex. Const. art. III, § 30 (laws passed by bill, not resolution); art. VII, § 17(j) (higher-education building fund; fire/natural-disaster exception); art. III, §§ 1, 35; art. VIII, § 6 (legislative appropriation power)
• V.T.C.S. art. 8309g, § 2 (state self-insured for employee workers' compensation); Civ. Prac. & Rem. Code § 101.027(a) (Tort Claims Act insurance); Gov't Code § 418.172(a) (Texas Disaster Act of 1975); 41 C.F.R. § 101-44.205(c) (federal surplus personal property); 42 U.S.C. § 5154 (federal disaster assistance)
• Senate Concurrent Resolution No. 3, Acts 1921, 37th Leg., 2d C.S., at 369 (state self-insurance policy)
• Saunders v. State, 341 S.W.2d 173 (Tex. Crim. App. 1960)
• Caples v. Cole, 102 S.W.2d 173 (Tex. 1937)
• Conley v. Texas Division of United Daughters of the Confederacy, 164 S.W. 24 (Tex. Civ. App.-Austin 1913, writ ref'd)
• Bullock v. Calvert, 480 S.W.2d 367 (Tex. 1972)
• Attorney General Opinions JM-639, JM-417, JM-551, JM-547, JM-889, M-1257, M-581, H-900, C-193, V-722, and others cited as a line of authority

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0197
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1993/dm0197.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

January 25, 1993

Mr. Marvin J. Titzman
Executive Director
Texas Surplus Property Agency
P. O. Box 8120
San Antonio, Texas 78208-0120

Opinion No. DM-197

Re: Whether the Texas Surplus Property Agency is authorized to obtain fire and casualty insurance to protect agency buildings, and related questions (RQ-53)

Dear Mr. Titzman:

On behalf of the Texas Surplus Property Agency, you ask whether the agency is authorized to obtain fire and casualty insurance to insure its warehouses.

The Texas Surplus Property Agency was created pursuant to V.T.C.S. article 6252-6b and given responsibility for receiving, warehousing, and redistributing surplus federal property pursuant to the Federal Property and Administrative Services Act of 1949, title 40 of the United States Code section 484(j). V.T.C.S. art. 6252-6b, § 4(a), (b); see Attorney General Opinions JM-639 (1987); JM-417 (1985) (discussing duties of Texas Surplus Property Agency). It is also responsible for warehousing and redistributing surplus state property. V.T.C.S. art. 6252-6b, § 4(n). Pursuant to this statutory authorization, the agency operates warehouses in Houston, Lubbock, and San Antonio.

In August 1984, the state auditor recommended that the agency obtain insurance to cover the buildings it owned. In March 1985, the Texas Surplus Property Agency obtained fire and casualty insurance to cover its warehouses. In January 1991, the Comptroller of Public Accounts advised the agency that a voucher submitted to the comptroller requesting payment for fire and casualty insurance would not be paid. The comptroller stated that "a state entity may not purchase fire insurance for its buildings and the contents therein unless it has both explicit or implied statutory authority and a specific appropriation for that purpose." The comptroller concluded that there was no such authority in the present case.

Attorney General Opinion JM-551 (1986) determined that state policy prevented a state agency from purchasing insurance policies on state buildings or their contents, unless legislation expressly authorized the purchase. The opinion relied on Senate Concurrent Resolution No. 3 of 1921 which stated that it was the policy of the state to self-insure its buildings through a state self-insurance fund and to thereafter prohibit state agencies from obtaining property insurance to cover state buildings. S.C.R. 3, Acts 1921, 37th Leg., 2d C.S., at 369. A long line of attorney general opinions have relied on this concurrent resolution to reach the same conclusion. See Attorney General Opinions JM-551 at 5; M-1257 (1972); C-193 (1963); V-722 (1948); O-6246, O-5824 (1944); O-3000 (1941) (relying on Attorney General Opinions O-201, O-184 (1939)); C-1762 (1940); O-1100, O-842, O-201, O-184 (1939); see also Attorney General Opinions JM-547 (1986) (state agency may insure mail in transit; cost is an additional cost of postage); M-581 (1970) (Texas Employment Commission may purchase property insurance for buildings with funds granted by federal government and appropriated by legislature for this purpose).

The concurrent resolution is not state law. Article III, section 30 of the Texas Constitution requires that laws must be passed by a bill rather than a resolution; therefore a resolution does not have the same force and effect as a law introduced by a bill. See Saunders v. State, 341 S.W.2d 173, 178 (Tex. Crim. App. 1960); Caples v. Cole, 102 S.W.2d 173, 176-77 (Tex. 1937); Conley v. Texas Division of the United Daughters of the Confederacy, 164 S.W. 24, 26 (Tex. Civ. App.-Austin 1913, writ ref'd). Moreover, the proposed self-insurance scheme, which was the basis for the concurrent resolution's policy that "no insurance policies shall be taken out upon any of the public buildings of this state," was never adopted. We have found no Texas statute that establishes a state self-insurance fund, and the General Services Commission has confirmed that the state has never established the self-insurance fund proposed in the concurrent resolution.

[Concurrent resolution text reproduced in the original, declaring it the policy of the State that the State shall carry its own insurance upon State buildings and contents, that no insurance policies shall be taken out upon any of the public buildings of this State, and providing that at the end of each two-year period approximately one per cent of the value of all public buildings owned by the State be set aside as a sinking fund until ten per cent of the total value of all such buildings has been accumulated, that fund to be invested in school bonds in the school districts of the State. Acts 1921, 37th Leg., 2d C.S., at 369 (emphasis added).]

We conclude, however, that the much-reiterated prohibition against the purchase of property insurance by state agencies in the absence of specific legislative authorization does express state policy. This policy is reflected in article VII, section 17 of the Texas Constitution, which establishes a special fund to be used by specified institutions of higher education for land acquisition, building construction, and other related purposes. The institutions of higher education that benefit from the special fund are barred from receiving additional general revenue funds

for acquiring land . . . , for constructing or equipping buildings or other permanent improvements, or for major repair and rehabilitation of buildings or other permanent improvements, except that:

(1) in the case of fire or natural disaster the legislature may appropriate from the general revenue an amount sufficient to replace the uninsured loss of any building or other permanent improvement . . . .

Tex. Const. art. VII, § 17(j).

Moreover, the legislature has determined that the state shall not purchase insurance even to cover certain liabilities toward third parties. The state is self-insuring with respect to injuries of state employees compensable under the workers' compensation statute for state employees. V.T.C.S. art. 8309g, § 2. The Texas Tort Claims Act authorizes governmental units to purchase insurance to protect the unit and its employees against claims under the act, Civ. Prac. & Rem. Code § 101.027(a), but the legislature has consistently barred the use of appropriated funds for this purpose. See Acts 1991, 72d Leg., 1st C.S., ch. 19, art. V, § 53, at 1032; Attorney General Opinions JM-889 (1988); JM-551 (1986); H-900 (1976).

Similarly, under the Texas Disaster Act of 1975 the legislature authorized state agencies to purchase property damage insurance under limited circumstances: Gov't Code § 418.172(a).¹ It is noteworthy that the legislature adopted an authorization to purchase property insurance that is no broader than necessary to qualify for federal disaster assistance.

In summary, the policy expressed in the concurrent resolution is embodied in various enactments concerning the purchase of insurance by state agencies. We cannot ignore this evidence of legislative intent. Accordingly, we conclude that the Texas Surplus Property Agency may not purchase property insurance to cover its warehouses in the absence of statutory authorization. We find no basis in the language of article 6252-6b, V.T.C.S., for concluding that the legislature intended the Texas Surplus Property Agency to be able to purchase property insurance. Nor does the federal law or regulations adopted thereunder authorize the agency to purchase property insurance to carry out its responsibilities in distributing surplus federal property. A federal rule applicable to the agency provides that a state agency is not required to carry insurance on federal surplus personal property as a condition for acquiring it to distribute to eligible recipients. 41 C.F.R. § 101-44.205(c). The rule governs the distribution of the proceeds of property insurance where the state has it. It is not relevant to your question. Accordingly, the Texas Surplus Property Agency does not have authority to purchase property insurance to cover its warehouses.

You also ask whether the State of Texas is obligated to act as a self-insurer to cover fire or casualty damage to agency buildings. As previously discussed, there is no state self-insurance fund to cover state property. In Attorney General Opinion JM-551 at 5, this office stated that it is the policy of this state to make "special appropriations to repair and replace facilities and equipment destroyed or damaged by . . . fire, flood, windstorm, and hurricane." See Acts 1983, 68th Leg., ch. 3, at 7 (supplemental appropriation to repair and renovate areas of capitol damaged by fire); Acts 1981, 67th Leg., chs. 628, 585, 83 (appropriations to Pan American University for hurricane damage, to North Texas State University for wind damage, and to Texas Forest Service of the Texas A & M University System for windstorm damage). Thus, the cost of repairing or replacing damaged state property is funded by special legislative appropriation, rather than by insurance proceeds or a self-insurance fund. Appropriation of state money is a legislative function, Bullock v. Calvert, 480 S.W.2d 367 (Tex. 1972), and it is within the legislature's power to decide whether an appropriation should be made to repair or replace particular property. See generally Tex. Const. art. III, §§ 1, 35; art. VIII, § 6.

¹ We do not have sufficient information to determine whether section 418.172(a) authorizes the Surplus Property Agency to obtain property insurance. See 42 U.S.C. §§ [first section number illegible in scan], 5154; 56 Fed. Reg. 64558 (1991) (Interim Rule - to be codified at 44 C.F.R. 206).

SUMMARY

State agencies may not purchase property insurance without legislative authorization. The Texas Surplus Property Agency does not have authority to spend appropriated funds to purchase property insurance to cover its warehouses.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General