Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1954 No. 308 -
Attorney General Don Eastvold


The OASI contribution fund is a special and separate fund in the sense that legislative appropriation is unnecessary to authorize transfer of the moneys in the fund to the Federal Treasury.

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                                                               September 1, 1954

Honorable Peter R. Giovine
Acting Commissioner
Employment Security Department
P.O. Box 367
Olympia, Washington                                                                                                Cite as:  AGO 53-55 No. 308

Dear Sir:

            We have previously acknowledged your letter requesting our opinion on the following questions:

            1. Is the Old Age and Survivors' Insurance contribution fund a special and separate fund in the sense that an appropriation by the Legislature is not required to authorize transfer of moneys in the fund to the Federal Old Age and Survivors' Insurance Trust Fund?

            2. If the answer to the first question is in the affirmative, may the auditor issue warrants on the moneys in the fund and the treasurer redeem same for the remainder of this biennium without further appropriation?

            In our opinion, both questions may be answered in the affirmative.


            The Old Age and Survivors' Insurance coverage for those political subdivisions  [[Orig. Op. Page 2]] who so elect was established by the legislature in 1951 in order to extend to the employees of the state and its political subdivisions the basic protection afforded others under this program.  The Commissioner of the Employment Security Department was designated by the Governor to administer the program and, as such, has the responsibility of collecting contributions and transferring them to the Federal Old Age and Survivors' Insurance Trust Fund.  In 1951 and 1953 the legislature appropriated $1,000,000 and $720,000, respectively, to authorize said transfer, the latter amount not being sufficient to cover contributions for the Third and Fourth Quarters of 1954.

            The question is, whether the legislature provided for a special fund which is to be expended as directed by the legislature without a specific appropriation; or a state fund within the prohibition of Article VIII, § 4, of the Washington State Constitution, as amended.

            Consideration and examination of subject legislative act, which is found in chapter 184 of the Session Laws of 1951 (RCW chapter 41.48), is necessary to properly analyze this question.  The legislature authorized the Governor to enter into an agreement with the Federal Security Administrator, for the purposes of this act, among which is the transfer of contributions to the Secretary of the Treasury.  Pertinent provisions are:

            Section 6 (a), chapter 184, Laws of 1951 (RCW 41.48.060).

            "There is hereby established a special fund to be known as the OASI contribution fund. * * *  Subject to the provisions of this act, the governor is vested with full power, authority and jurisdiction over the fund, * * * and may perform any and all acts whether or not specifically designated, which are necessary to the administration thereof * * *" (Emphasis ours)


            Section 6 (b), chapter 184, Laws of 1951 (RCW 41.48.060).

            "The OASI contribution fund shall be established and held separate and apart from any other funds  [[Orig. Op. Page 3]] or moneys of the state and shall be used and administered exclusively for the purpose of this act.  * * *"

            A further provision of this section is that withdrawals from the fund shall be made solely for payments to be made to the Secretary of the Treasury under the Governor's agreement; payment of refunds, or refunds of overpayments to the political subdivision.

            Section 6 (d), chapter 184, Laws of 1951 (RCW 41.48.060), provides that:

            "The treasurer of the state shall be ex-officio treasurer and custodian of the OASI contribution fund and shall administer such fund in accordance with the provisions of this act and the directions of the governor * * *"

            Our Supreme Court has considered similar funds with respect to the application of the constitutional prohibition cited above, which states in part as follows:

            "No moneys shall ever be paid out of the treasury of this state, or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; * * *"

            InState ex rel. Washington Toll Bridge Authority v. Yelle, 195 Wash. 636, the court held that tolls exacted for the use of a bridge, which were paid to the state treasurer as a suitable custodian, were not state funds and were segregated from all state funds; hence, they were not within the contemplation of the Constitution, Article VIII, § 4.  In the later case of State ex rel. State Retirement Board v. Yelle, 31 Wn. (2d) 87, the Supreme Court found that the legislature intended the funds established by the State Employees' Retirement Act should not constitute a state or public fund but, rather, a special fund of a proprietary nature which should be available for disbursement at all times without the necessity of a biennial appropriation.  The court stated at page 106:

            "The mere fact that the state treasurer may be made the custodian of a particular fund and may be required to render certain services with respect to  [[Orig. Op. Page 4]] such fund, does not of itself make the moneys so received and held by himstate funds in the state treasury.  * * *"

            and further, at page 111:

            "Since, as hereinbefore determined, the legislature had the power to provide for the creation, collection, and administration of special funds for special purposes, without making them state or public funds, the situation resolves itself into the question whether the legislature, in passing the retirement system act, intended to create a state fund subject to the constitutional restriction, or whether, on the contrary, it intended simply to set up aspecial, proprietary fund to be expended as directed by the legislature, without a specific appropriation.

            "The legislative intent is of course to be determined from reading the act itself, construing the terms and provisions therein according to their ordinary meaning, and giving consideration to the purposes and objects sought to be accomplished by the legislative enactment."

            Thus, the constitutional prohibition in question does not apply if the legislative intent was to provide for a separate, special fund for certain specified purposes.

            It is our opinion that the legislature clearly evidenced its intention that the Old Age and Survivors' Insurance contribution fund be a special and separate fund by specifically so stating; and, thus, if we follow the reasoning of our Supreme Court in the above cases, no legislative appropriation is required biennially to authorize transfer of the Old Age and Survivors' Insurance funds to the Federal Treasury.

            In answer to the second question, we believe it follows that if the appropriation was an unnecessary act on the part of the legislature in 1953, the fact that there was an appropriation made does not alter the nature of the fund so as to  [[Orig. Op. Page 5]] prohibit the issuing and redeeming of warrants drawn on this particular fund for the remainder of this biennium.  It appears that when the appropriation is exhausted, we are left in the same position as though no appropriation had been made at the beginning of this biennium; and disbursements can be made accordingly.

            From the foregoing we conclude that, under the present act, moneys may be disbursed from the Old Age and Survivors' Insurance contribution fund without the necessity of a legislative appropriation, both in this and future bienniums.

Very truly yours,

Attorney General

Assistant Attorney General