texas_mun._league_v._workers'comp._com'n

74 S.W.3d 377 (2002) TEXAS MU N ICIPAL LEAGUE I N TERGOVER N ME N TAL RISK POOL, Petitioner, v. TEXAS WORKERS' COMPE N SATIO N COMMISSIO N and Subsequent Injury Fund, Respondents. No. 00-1114. Supreme Court of Texas. Argued September 19, 2001. Decided April 4, 2002. *379 William J. Cobb, Robbi B. Hull, Jim David Bickham, Vinson & Elkins, Jack W. Latson, Flahive, Ogden & Latson, Austin, for petitioner. John Cornyn, Attorney General of the State of Texas, Andy Taylor, First Assistant Attorney General, Joseph A. Pitner, Linda Eads, Don Walker, Office of the Attorney General of Texas, Austin, for respondent. Justice BAKER delivered the opinion of the Court in which Chief Justice PHILLIPS, Justice ENOCH, Justice HANKINSON, Justice O'NEIL, Justice JEFFERSON and Justice RODRIGUEZ joined. This case involves the Texas Workers' Compensation Subsequent Injury Fund and the Texas Municipal League Intergovernmental Risk Pool. The issue is whether the Fund and the regulations implementing the Fund are unconstitutional as applied to the Risk Pool, because they either require Texas cities to make gratuitous payments to individuals, associations, or corporations, or because they impose a statewide ad valorem tax. See Tex. Const. art. III, ะ 52(a), art. VIII, ะ 1-e. The trial court determined that sections 403.007(a) and 408.184(c) of the Texas Labor Code and the implementing regulations violate both constitutional provisions. The court of appeals concluded that, because the provisions are analogous to custodial-escheat statutes, they are constitutional. 38 S.W.3d 591. The court of appeals thus reversed the trial court's judgment and rendered judgment in the Texas Workers' Compensation Commission's favor. 38 S.W.3d at 600. We agree the provisions are constitutional, but not for the reasons the court of appeals articulated. Accordingly, we affirm the court of appeals' judgment. I. BACKGROU N D The Texas Municipal League Risk Pool includes more than 1,600 Texas cities providing workers' compensation benefits to their employees through a joint-insurance fund. The cities formed the Risk Pool under the Labor Code, which requires all political subdivisions to provide their employees workers' compensation benefits by (1) becoming a self-insurer, (2) obtaining an insurance policy, or (3) joining with other political subdivisions to self- insure through a joint-insurance fund. Tex. Lab. Code ะะ 504.011, .016. According to its bylaws, the Risk

The Risk Pool charges its member cities contributions based on a "modifier system." Under this system, the Risk Pool's Board of Trustees requires its member cities to contribute a standard rate for each job classification. The cities' contributions go to a common fund, which the Risk Pool uses to pay for its member cities' workers' compensation claims and administrative expenses. The Risk Pool also invests its member cities' contributions and combines any investment returns with the existing funds available for benefits. Every eighteen months, the Risk Pool's Board analyzes each member city's five-year *380 claims history to determine the future contributions the city must make. Depending on each city's claims history, the Board assigns a modifier to adjust each city's contributions. If the city's claims history is good, the Risk Pool offers a discount on contributions and returns money as "equity" to the eligible cities. In 1997, the TWCC directed the Risk Pool to pay its unclaimed death benefits to the Subsequent Injury Fund, as Labor Code sections 403.007(a) and 408.184(c) require. The Risk Pool paid $85,000 before halting its payments. The Risk Pool then sought declaratory relief that Labor Code sections 403.007(a) and 408.184(c), and the rules the TWCC promulgated under those sections, are unconstitutional. Specifically, the Risk Pool claimed the provisions, as applied to the Risk Pool, violate Texas Constitution article III, section 52(a), which prohibits the Legislature from authorizing any state political subdivision to lend its credit or to grant public money to any individual, association or corporation. The Risk Pool also alleged the provisions, as applied to the Risk Pool, violate Texas Constitution article VIII, section 1 e, which prohibits the State from levying an ad valorem tax on any property within the State. The trial court determined that the provisions violated both sections of the Constitution. The court of appeals reversed and rendered in the TWCC's favor. It held that the provisions are not unconstitutional because they operate like custodial-escheat statutes. 38 S.W.3d at 598. The court of appeals reasoned that because the challenged provisions only transfer custody of, and not title to, the Risk Pool's funds, the "escheat" of the unclaimed death benefits can be neither a "lending of credit" that article III, section 52(a) prohibits nor a "recapture of local taxes" that article VIII, section 1 e prohibits. 38 S.W.3d at 598. We granted the Risk Pool's petition for review to consider: (1) whether the challenged provisions operate like custodial-escheat statutes; (2) whether the challenged provisions violate Texas Constitution article III, ะ 52(a); and (3) whether the challenged provisions violate Texas Constitution article VIII, ะ 1-e. II. THE SUBSEQUE N T I N JURY FU N D A. The Subsequent Injury Fund The Fund, originally established in 1947 as the Second Injury Fund, is a special TWCC-administered account in the state treasury. Tex. Lab.Code ะ 403.006(a). The Legislature established the Fund to pay lifetime workers' compensation benefits to injured employees and to encourage employers to hire people with disabilities or preexisting injuries. Miears v. Industrial Accident Bd., 149 Tex. 270, 232 S.W.2d 671 , 673 (1950). Under Labor Code section 402.061, which authorizes the TWCC to adopt regulations to enforce the Texas Workers' Compensation Act, the TWCC has adopted regulations to implement the Fund. 28 Tex. Admin. Code ะะ 132.10-.12. The Fund pays workers' compensation benefits when an injured employee suffers a compensable injury that, when combined with a previous injury's effects, results in a condition that entitles the employee to lifetime benefits. See Tex. Lab.Code ะ 408.162(a). Thus, if an employee suffers a subsequent compensable injury, the employer must pay benefits for that injury only to the extent that the injury would have entitled the employee to benefits had the previous injury not occurred. Tex. Lab.Code ะ 408.162(a). Then, the Fund pays for the claimant's remaining lifetime benefits. Tex. Lab.Code ะ 408.162(b).

A. Applicable Law Escheat is a procedure by which a sovereign state acquires title to abandoned property if no rightful owner appears after a specified time period. Anderson Nat'l Bank v. Luckett, 321 U.S. 233 , 240, 64 S. Ct. 599 , 88 L. Ed. 692 (1944). Escheat statutes can be either absolute or custodial. See Comment, Escheat in Texas: A Current Look at the Intangible Issue, 29 Sw. L.J. 575, 577 (1975). Under absolute-escheat statutes, the state acquires title to property through operation of law or a judicial proceeding. See Ellis v. State, 3 Tex. Civ. App. 170, 21 S.W. 66 , 66 (1893) (operation of law); Tex. Prop.Code ะ 71.001(b) (judicial proceeding). In contrast, custodial-escheat statutes give the state only temporary custody over personal property until the state identifies a true owner. See Travelers Express Co. v. Minnesota, 506 F. Supp. 1379 , 1380 n. 1 (D.Minn.1981); TXO Prod. Corp. v. Oklahoma Corp. Comm'n, 829 P.2d 964 , 971-72 (Okla.1992). Escheat statutes, whether absolute or custodial, are constitutional if they give potential claimants notice after the state acquires the funds and an administrative and judicial hearing to adjudicate claims. See Connecticut Mut. Life Ins. Co. v. Moore, 333 U.S. 541 , 547, 68 S. Ct. 682 , 92 L. Ed. 863 (1948). A state must also use reasonable diligence to discover the potential claimants to the property. See Robinson v. State, 87 S.W.2d 297 , 298 (Tex.Civ.App.-El Paso 1935, writ dism'd). B. Analysis The court of appeals concluded that Labor Code sections 403.007(a) and 408.184(c) are constitutional because they permit the State to take custody of unclaimed property through an "escheat-likeà ¹ °Â°Â°or `custodial taking'à ¹ °Â°Â°procedure." 38 S.W.3d at 598. The court of appeals determined that the challenged provisions are analogous to article 4.08 of the Insurance Code, which, the court of appeals recognized, operates as a true custodial-escheat statute. 38 S.W.3d at 598. We disagree with this analysis. Article 4.08 of the Insurance Code does have custodial-escheat characteristics. This provision requires the State to assume custody over unclaimed life-insurance funds for future eligible claimants' benefits, and it contains detailed notice provisions. See Tex. Ins.Code art. 4.08, ะะ 4-7, 10. However, Labor Code sections 403.007 and 408.184 do not share these characteristics. These provisions' underlying purpose is not for the State to return unclaimed or abandoned property to any rightful claimant at any time, as a true custodial-escheat statute requires. See Travelers Express, 506 F.Supp. at 1380 n. 1. Instead, these provisions' purpose is to provide a means for financing the Fund so that lifetime benefits to workers with multiple injuries are available but individual employers do not have to bear this cost. Tex. Lab.Code ะ 408.162. Additionally, unlike a custodial-escheat statute *383 that requires the State to maintain custody for an eventual rightful owner, the Labor Code presumes that no legal beneficiaries of the death benefits exist after one year. Compare Travelers Express, 506 F.Supp. at 1380 n. 1, with Tex. Lab.Code ะ 403.007(c), and Industrial Accident Bd. v. Texas Employers' Ins. Ass'n, 162 Tex. 244, 345 S.W.2d 718 , 722 (1961). For all practical purposes, the State acquires title to unclaimed death benefits after one year and is not a temporary custodian for a future eligible claimant. Accordingly, we conclude that the challenged provisions are not analogous to a custodial-escheat statute. Therefore, we disagree with the court of appeals' conclusion that the provisions are constitutional on this ground. IV. ARTICLE III, SECTIO N 52(A) The Risk Pool argues that Labor Code sections 403.007(a) and 408.184(c) require it to grant public money to the Fund, which is an individual, association, or corporation. Therefore, the Risk Pool contends, the provisions violate article III, section 52(a) of our Constitution. Furthermore, the Risk Pool contends that the challenged provisions also violate this section because the Fund is not required to pay the Risk Pool's member cities the same benefits as the cities must contribute to the Fund. See City of Tyler v. Texas Employers' Ins. Ass'n, 288 S.W. 409 (Tex. Comm'n App.1926, judgm't adopted). The Risk Pool asserts that the Fund is constitutional only if the

In response, the TWCC argues that the Fund is a TWCC-administered special account and not an individual, association, or corporation within section 52(a)'s meaning. See Martinez v. Second Injury Fund, 789 S.W.2d 267 , 269 (Tex.1990). Furthermore, the TWCC argues that the Risk Pool's contributions to the Fund are not gratuitous grants of public money, because the Risk Pool's member cities receive a return benefit whenever their employees qualify for benefits from the Fund. A. Applicable Law Article III, section 52(a) provides: [T]he Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever .... Tex. Const. art. III, ะ 52(a). We have held that section 52(a)'s prohibiting the Legislature from authorizing a political subdivision "to grant public money" means that the Legislature cannot require gratuitous payments to individuals, associations, or corporations. See, e.g., Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717 , 740 (Tex.1995) (Edgewood IV); Bexar County Hosp. Dist. v. Crosby, 160 Tex. 116, 327 S.W.2d 445 , 447 (1959); Davis v. City of Lubbock, 160 Tex. 38, 326 S.W.2d 699 , 709 (1959); Byrd v. City of Dallas, 118 Tex. 28 , 6 S.W.2d 738 , 740 (1928). A political subdivision's paying public money is not "gratuitous" if the political subdivision receives return consideration. Key v. Commissioners Ct. of Marion County, 727 S.W.2d 667, 668 (Tex. App.-Texarkana 1987, no writ). Moreover, we have determined that section 52(a) does not prohibit payments to individuals, corporations, or associations so long as the statute requiring such payments: (1) serves a legitimate public purpose; and (2) affords a clear public benefit received in return. See Edgewood IV, 917 S.W.2d at 740; Bullock v. Calvert, 480 S.W.2d 367 , 370 (Tex.1972) *384 (citing Davis v. City of Lubbock, 160 Tex. 38, 326 S.W.2d 699 (1959)); Brazos River Auth. v. Carr, 405 S.W.2d 689 , 694 (Tex. 1966); Byrd, 6 S.W.2d at 740. A three-part test determines if a statute accomplishes a public purpose consistent with section 52(a). Specifically, the Legislature must: (1) ensure that the statute's predominant purpose is to accomplish a public purpose, not to benefit private parties; (2) retain public control over the funds to ensure that the public purpose is accomplished and to protect the public's investment; and (3) ensure that the political subdivision receives a return benefit. See Atkinson v. City of Dallas, 353 S.W.2d 275 , 279 (Tex.Civ.App.-Dallas 1961, writ ref'd n.r.e.); Gillham v. City of Dallas, 207 S.W.2d 978, 983 (Tex.Civ.App.-Dallas 1948, writ ref'd n.r.e.). See generally Mike Willatt, Constitutional Restrictions on Use of Public Money and Public Credit, 38 Tex. B.J. 413, 421 (1975). B. Analysis Under article III, section 52(a), the Legislature may not authorize a county, city, town or political subdivision of the State to lend credit or grant public funds. By its terms, section 52(a)'s scope includes each Risk Pool member city, and the TWCC does not dispute that Risk Pool itself qualifies as a political subdivision within section 52(a)'s meaning. For Labor Code sections 403.007(a) and 408.184(c) to violate section 52(a), these provisions must require the Risk Pool to grant public money to "individuals, associations, or corporations." We agree with the TWCC that neither the Fund nor the TWCC qualify as an individual, association or corporation under section 52(a). The Fund is not an association; it is an account in the State treasury. See Martinez, 789 S.W.2d at 269. And, while section 52(a) prohibits granting public money to private individuals or commercial enterprises, it does not prohibit transfers to a state agency like the TWCC. See Edgewood IV, 917 S.W.2d at 740 (citing Byrd, 6 S.W.2d

subscribers. Op. Tex. Atty. Gen. No. DM-326 at 3426. The Attorney General suggested that if the proposed association calculated payments based on the subscribers' actual claims history, the association would have self- insurance characteristics and, therefore, *386 would be constitutional under section 52(a). Op. Tex. Atty. Gen. No. DM-326 at 3426. In City of Tyler, the court considered whether a statute that authorized public employers to subscribe to the Texas Employers' Insurance Association was constitutional. 288 S.W. at 409. The court concluded that the TEIA was a mutual assessable insurance program, because every TEIA subscriber had to pay a proportionate part of any assessment the TEIA levied to finance all the subscribers' losses and expenses. City of Tyler, 288 S.W. at 411-12. The court held that this scheme was unconstitutional as applied to political subdivisions because their obligation to pay assessments to cover the TEIA's losses required them to "lend their credit" within section 52(a)'s meaning. City of Tyler, 288 S.W. at 412. Moreover, the court held that the TEIA unconstitutionally required political subdivisions to become "stockholders in a corporation, association, or company," which section 52(a) also prohibits. City of Tyler, 288 S.W. at 412. Both AG Opinion DM 326 and City of Tyler determined that the insurance programs in those cases operated as mutual assessable insurance programs. Essentially, these programs require their subscribers to pay assessments to the association to insure other subscribers' losses, while at the same time, the subscribers can make claims against the association's funds for their own losses. See also Tex. Ins. Code art. 14.11; Hutchins Mut. Ins. Co. v. Hazen, 105 F.2d 53 , 57 (D.C.Cir.1939); Couch on Insurance 3d ะ 39:17, at 39-21. Each subscriber is charged the same assessment for insurance coverage; thus, each subscriber's policy is to some extent a coverage contract with every other subscriber. See Johnson v. Central Mut. Ins. Ass'n, 346 Mo. 818, 143 S.W.2d 257, 262 (1940). Moreover, each subscriber participates equally in the association's profits and losses. See Ohio Farmers Indem. Co. v. Commissioner, 108 F.2d 665 , 667 (6th Cir.1940); Equitable Life Assurance Soc. v. Bowers, 87 F.2d 687 , 689 (2d Cir.1937). Here, unlike mutual assessable insurance programs, the Fund is an account under the TWCC's control financed with unclaimed death benefits. The Fund does not impose assessments on the Risk Pool's member cities. Cf. Op. Tex. Atty. Gen. No. DM-326 at 3424-26. The member cities do not pay a proportional share of the Fund's losses and expenses, and they do not have to make equal payments to the Fund under an insurance policy. Cf. City of Tyler, 288 S.W. at 411-12. Indeed, if a member city has no unclaimed death benefits in a particular year, it contributes no money whatsoever to the Fund. Moreover, the Fund is not a company or association and does not enroll policyholders. Cf. Ohio Farmers, 108 F.2d at 667; Equitable Life, 87 F.2d at 689. In fact, the Fund has no "members" at all. Therefore, we conclude that the Fund is not an unconstitutional mutual assessable insurance program. We conclude that the challenged provisions do not require the Risk Pool to gratuitously grant public money, because the Risk Pool's member cities receive consideration from the Fund, and the provisions serve a legitimate public purpose with a clear public benefit. See Edgewood IV, 917 S.W.2d at 740. Accordingly, we hold that Labor Code sections 403.007(a) and 408.184(c), as applied to the Risk Pool, do not violate article III, section 52(a). V. ARTICLE VIII, SECTIO N 1-e The Risk Pool argues that Labor Code sections 403.007(a) and 408.184(c) violate the Texas Constitution, article VIII, section 1-e, because the provisions effectively *387 levy a 100% ad valorem tax on propertyà ¹ °Â°Â° in this case unclaimed death benefits. The Risk Pool also argues that the challenged provisions unconstitutionally authorize the State to recapture local tax dollars and redistribute them statewide. The TWCC, on the other hand, contends that the payments to the Fund are not "taxes" at all. Thus, the TWCC argues, the challenged provisions do not authorize the State to levy ad valorem taxes within section 1-e's meaning. Moreover, the TWCC contends that the challenged provisions do not require the State to

A. Applicable Law The Texas Constitution generally authorizes taxes on property in proportion to the property's value. Tex. Const. art. VIII, ะ 1(b). However, our Constitution prohibits the State from levying an ad valorem tax on any property within the State. Tex. Const. art. VIII, ะ 1-e. The Legislature defines a state "tax" as "a tax, fee, assessment, charge, or other amount that the comptroller is authorized to administer." Tex. Tax Code ะ 101.003(13); see also Conlen Grain & Mercantile, Inc. v. Texas Grain Sorghum Producers Bd., 519 S.W.2d 620 , 623 (1975) ("A tax is a burden or charge imposed by the legislative power of the state upon persons or property to raise money for public purposes."). The Risk Pool alleges that the TWCC, through the Subsequent Injury Fund, imposes a state "tax." Moreover, an "ad valorem" tax is a tax on property at a certain rate based on the property's value. See generally 71 Am.Jur.2d State & Local Taxation ะ 20 (1973). An ad valorem tax is a prohibited tax under section 1-e when the State directly imposes it, or when a political subdivision imposes it but the State indirectly controls the tax revenues' levy, assessment, and disbursement so that the political subdivision lacks any meaningful discretion over these factors. See Carrollton-Farmers Branch Indep. Sch. Dist. v. Edgewood Indep. Sch. Dist., 826 S.W.2d 489 , 502 (Tex.1992) ( Edgewood III ). B. Analysis We agree with the Risk Pool's argument that the unclaimed death benefits are "property" under article VIII, section 1-e. The Tax Code defines "property" as "any matter or thing capable of private ownership." Tex. Tax Code ะ 1.04(1). Additionally, "intangible personal property" means a claim, right, or interest that has value but cannot be measured or perceived by the senses and includes an insurance policy, annuity, or pension. Tex. Tax Code ะ 1.04(6). Here, the unclaimed death benefits are capable of private ownership, because there may be beneficiaries who can claim title to the funds. See Tex. Lab.Code ะ 408.182; Tex. Tax Code ะ 1.04(1). Furthermore, the Tax Code expressly includes an insurance policy, annuity or pension as intangible personal property. Tex. Tax Code ะ 1.04(6); see also Brown v. Lee, 371 S.W.2d 694 , 696 (Tex.1963). Workers' compensation death benefits are analogous to life-insurance proceeds, because an employee's beneficiaries receive those benefits upon an employee's compensable death. Compare Tex. Lab.Code ะ 408.182, with Supreme Council of Am. Legion of Honor v. Larmour, 81 Tex. 71 , 16 S.W. 633 , 634 (1891) (life insurance beneficiaries receive money "upon the destruction or injury of something in which the assured has an interest."). Therefore, the unclaimed death benefits are "property" within section 1-e's meaning. However, the challenged provisions are not a "tax" on the unclaimed death benefits. *388 First, the challenged provisions are not a state "tax" as the Tax Code defines that term, because they do not authorize the comptroller to impose a fee, assessment, or charge. Tex. Tax Code ะ 101.003(13). Second, the challenged provisions do not mandate that the Risk Pool or its member cities collect charges from property-owners to generate revenue. See Conlen Grain, 519 S.W.2d at 622-23 (holding that the statute at issue imposed a "tax" because it mandated that grain sorghum processors collect fees from producers for every .5 ton of grain produced). Rather, the challenged provisions only transfer unclaimed benefits that the Risk Pool's member cities have already committed to paying workers' compensation claims. See Tex. Lab.Code ะะ 408.181, 408.182. Finally, the challenged provisions do not permit the State to indirectly control the levy, assessment, and disbursement of the Risk Pool member cities' tax revenues. Edgewood III, 826 S.W.2d at 502. Indeed, the challenged provisions do not enable the State to participate in any way in the cities' local taxing decisions. Therefore, we conclude that the State does not impose a tax to subsidize the Fund. Because we conclude that the challenged provisions do not authorize a "tax," article VIII, section 1-e is not implicated. Consequently, we hold that the challenged provisions, as applied to the Risk Pool, do not violate

This case is governed by the decision in City of Tyler v. Texas Employers' Insurance Association. [7] The question in that case was whether a city could become a subscriber under the former Workmen's Compensation Act. The answer was that it could not because under that Act, an employee would be compensated for an on-the-job injury even though there was no negligence or other culpability on the part of the government employer. The court in City of Tyler explained that the purpose of article III, section 52 of the Texas Constitution is to "prevent the gratuitous appropriation of public money or property." [8] It continued, "a grant in aid of or to any individual, association, or corporation *390 whatsoever [9] is not one of these purposes, but is expressly forbidden." It did not matter that the premiums a city paid would also cover on-the-job injuries caused by its own negligence for which it would be legally liable under the common law or statutes. The fact that under the Act, employees would also be compensated for injuries for which a city had no legal liability was enough to render participation by a city in the workmen's compensation scheme unconstitutional: When the Workmen's Compensation Law is analyzed and fully understood, it is clear that to permit a municipal corporation to become a subscriber to the insurance association therein provided authorizes it to grant public money by way of premiums for insurance in aid of its employà ¹ °s to whom it is under no legal liability to pay. As already pointed out, the act contemplates compensation in the absence of any legal liability other than the acceptance of the plan. Cities and towns have no power to appropriate the tax money of its citizens to such a purpose. It is at best a gratuity, a bonus to the employà ¹ °. The city might as well pay his doctor's fee, his grocer's bill, or grant him a pension. [10] Accordingly, even though a city would receive some consideration for the premiums it paid, which was the coverage of claims by its employees for which it was liable under the common law or statutes, that consideration did not render participation in the Workmen's Compensation Act scheme constitutional. The Texas Constitution has since been amended, in article III, section 60, to permit cities and other political subdivisions of the state to provide workers' compensation insurance or to provide their own insurance risk to "employees of the political subdivision." [11] Accordingly, a political subdivision is no longer prohibited from obtaining or providing workers' compensation benefits to its own employees for injuries for which it would not be legally liable. But that amendment does not permit a political subdivision to fund compensation coverage for employees of other political subdivisions, much less workers in the private sector. And section 60 does not permit a political subdivision to compensate private insurance carriers for losses they sustain. The core holding in City of Tyler remains intact. Political subdivisions have no common-law or contractual obligation to *391 provide benefits to workers other than their own employees or to remunerate private carriers who were required by the Commission to pay benefits for a period of time even though the worker's injury was not compensable. The Legislature is prohibited by section 52(a) from authorizing or requiring a political subdivision to divert public funds for these purposes. The Court says today that as long as a political subdivision receives "sufficient" consideration, even though it is not "equal" to what that political subdivision pays, then the paying out of public funds is constitutional. [12] For this proposition, the Court cites Key v. Commissioners Court of Marion County, [13] a per curiam opinion of a court of appeals that was never reviewed by this Court. But even that meager authority does not support the Court's conclusion. The court of appeals in Key held that a state-created agency could not transfer complete control of the "Christmas Candlelight Tour" or the publication of an historical periodical to a tax-exempt charitable organization. The court reasoned that these projects were "things of value." [14] During the course of its discussion, the court of appeals distinguished cases in which a state entity had contractually retained the services of a private business: Each case cited is readily distinguishable from the present situation. These cases involve contractual agreements

contractually to perform a function beneficial to the public, this obligation might be deemed consideration, and where sufficient consideration exists, Article III, ะ 52(a) of the Texas Constitution would not be applicable to the transaction. [15] In the case before us today, political subdivisions are required to transfer funds that will be used to pay for injuries for which the political subdivisions have no liability. The funds will also be used to compensate private corporations for losses for which the political subdivisions have no liability. The fact that in some cases, employees of a political subdivision may also be compensated does not render this scheme constitutional. Any compensation that may flow to a particular employee of a political subdivision is unlikely to be proportionate to the political subdivision's contribution to the Subsequent Injury Fund. And, in some instances, a political subdivision may make payments to the fund even though none of its employees receive benefits. Moreover, a political subdivision receives no benefit whatsoever from compensating private insurance carriers from the Subsequent Injury Fund. The difference between the Subsequent Injury Fund scheme and the self-insurance functions of the Risk Pool is that assessments on each political subdivision for its share of the self-insurance fund are based on each political subdivision's actual claims experience. They pay no more than their share of the actual claims for which they are legally liable. The opinion of the attorney general cited by the Court explains why a political subdivision cannot constitutionally participate in a workers' compensation scheme that is based on assessments that are not tied to each political *392 subdivision's actual claims history. [16] The reasoning in that opinion applies with equal force to the facts in this case. Finally, the Court's opinion could be read as holding that as long as public money is expended for a public purpose, public money can be given, gratuitously, to an individual or a private corporation. The opinion should not be construed so broadly. I believe that what the Court meant to say, but has not done so as clearly as it could, is that a political subdivision may make expenditures for goods or services or for compensating those that are injured by its actionable negligence as long as those expenditures serve a legitimate public purpose. The Court cites Edgewood Independent School District v. Meno, [17] in concluding that the payments of unclaimed death benefits at issue in this case "provide[ ] a clear public benefit." [18] But in Edgewood, the Legislature required payments to be made by one political subdivision (a school district) to another for public education. That case does not stand for the proposition that public funds can be funneled to an individual or a private corporation so long as the public interest is somehow furthered. When individuals or private entities receive public funds, it must be pursuant to a contract or in satisfaction of an obligation the political subdivision owes to the individual or private entity. None of the 1600 political subdivisions that form the Risk Pool have any contractual or other obligation to workers other than their own respective employees, nor do they have any obligation or even any remote connection with the private insurance carriers who are reimbursed from the Subsequent Injury Fund. * * * * * * The Subsequent Injury Fund serves laudable purposes. However, as currently structured, the means of funding it is unconstitutional as applied to political subdivisions. Accordingly, I must dissent. N OTES [1] Tex. Lab.Code ะะ 403.007(a), 408.184(c). [2] Tex. Admin. Code ะะ 132.10, 132.11, 132.12 (2000).