lhmotableJames E. (Pete)Laney OpinionNo. JM-691 Chai?lUaU .StateAffairsCommittee Re: Designationof agent,broker Texas Rouse of Representatives or company for Optional Rrtire- P. 0. Box 2910 ment investmentsor annuities Austin, Texas 70769
Dear Representative Laney:
You ask if participantsin an Optional RetirementProgram (ORP) authorieedby chapter 36 of Title llOB, V.T.C.S.,may designatethe agent, broker, or company throughwhich investmentsor annuitiesmay be arranged. You suggestthat they may do so and that their choice is limitedonly by the provisionsof sections401(g) and 403(b) of the federal Internal Revenue Code of 1954, as it existed on January 1, 1981.
The 1981 date is fixed by section36.002 of Title 1lOB:
(a) The optionalretirementprogramestablished as provided by this subtitle shall provide for contributionsto any type of investmentauthorized in Section 403(b) of the federal InternalRevenue Code of 1954, 42 U.S. Code, as it 'existed on January 1, 1981. and for the purchase of fixed or variable retirement annuities that meet the requirementsof that sectionand Section 401(g) of the federalInternalRevenue Code of 1954, 42 U.S. Code, as amended.
(b) Participationin the optional retirement program is an alternativeto active membershipin the retirementsystem.
As amended by Acts 1981. 67th Leg., 1st C. S., ch. 18. 135. at 195. 207.
It has been argued thet section 36.004 of Title llOB, set out below, allows the governing board of an institution of higher education to provide for contributionsto any federally authorised type of investmentand to arrange the purchase of annuity contracts from "any insurance or annuity,company that is qualified to do business in this state," without restriction. It is said that the language of section 36.004 "indicatesthat a participantshould be
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allowedfreedomof choice in selectingthe vendor from which he or she wishesto purchasean authorizedinvestment[or] annuity."
Section 36.004, amended in 1981 by the same act that amended section36.002,reads in its entirety:
(a) A governing board may provide for con- tributionsto any type of investmentauthorizedin Section 403(b) of the federal Internal Revenue Code of 1954, 42 U.S. Code, as it existed on January 1, 1981, and may arrange the purchase of annuity contracts from any insurance or annuity company that is qualifiedto do business in this state.
(b) If a governing board has more than one component institution,agency, or unit under its jurisdiction,the governingboard may provide a separate optional retirement program for each component or may place two or more components under a singleprogram.
V.T.C.S.Title llOB,PublicRetirementSystems,136.004.
ye do not read this languageas indicatingthat a participanthas any right to choose OptionalRetirementProgramvendors. The statute conferscertainauthorityou "a governingboard." The most that might be argued from this language, in our opinion, is that it does not preventa governingboard from consideringthe wishes of a participant in selectingOptionalRetirementProgramvendors.
It is also suggestedthat 1985 amendmentsto articles6228a-5and 6252-3b,V.T.C.S..demonstratea legislativeintent that participants in an Optional Retirement Program have such a right because the categoriesof employeas affected overlap. Article 6228a-5 reads in pertinentpart:
Section 1. Local Boards of Education of the Public Schoolsof this State, the GoverningBoards of the state-supportedinstitutions of higher education,the CoordinatingBoard, Texas College and University System, the Central