Court Opinion

ID: 3461773
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:28:09.131025+00
Date Added: 2024-06-11T12:45:24.638730
License: Public Domain

Dear Mr. Bares:
You requested an opinion of this office concerning the funds that are held and invested by the Louisiana Deferred Compensation Commission (the "Commission"). The Commission is a division of the Louisiana Department of Treasury and operates the Louisiana Public Employees Deferred Compensation Plan (the "Plan") for the purpose of providing a deferred compensation option to state and local government employees. The Plan was established in accordance with La.R.S. 42:1301-1308 and is operating as an eligible non-qualified Internal Revenue Code § 457(b) deferred compensation plan.
The Plan holds assets of state employees in two classifications, generally described as follows:
a. A class of funds that state employees have voluntarily caused to be withheld from their payroll checks and/or have voluntarily rolled over from other qualified retirement plans or individual retirement arrangements; and
b. A "3121" class of funds, which represent mandatory withholdings from the payroll checks of employees who are not covered by an eligible state retirement plan. These funds are contributed to the Plan in lieu of Social Security payments to the federal system under the provisions of Section 3121 of the Internal Revenue Code.
You ask whether the Louisiana Constitution or any other law prohibits the classes of funds maintained by the Commission on behalf of individual state employees from earning negative rates of return. *Page 2 
La.Const. art. X, § 29 contains provisions governing retirement and survivor's benefits for public employees. La.Const. art. X, § 29(E)(5) provides the following:
All assets, proceeds, or income of the state and statewide public retirement systems, and all contributions and payments made to the system to provide for retirement and related benefits shall be held, invested as authorized by law, or disbursed as in trust for the exclusive purpose of providing such benefits, refunds, and administrative expenses under the management of the boards of trustees and shall not be encumbered for or diverted to any other purpose. The accrued benefits of members of any state or statewide public retirement system shall not be diminished or impaired. [Emphasis added.]
We have previously interpreted the above-referenced section to prohibit certain state and statewide retirement systems from earning negative returns on accounts maintained for plan participants.1 However, the Plan and the state and statewide retirement systems are organized under different titles of the Louisiana Revised Statutes.2 Further, the Plan has not been consolidated with or made subject to the public retirement laws. Moreover, we have we not found any other provision of law that would prohibit the classes of funds maintained by the Commission on behalf of individual state employees from earning negative rates of return. Thus, it is the conclusion of this office that neither the Louisiana Constitution nor any other law prohibits the classes of funds maintained by the Commission on behalf of individual state employees from earning negative rates of return.
We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.
  Yours very truly,
  JAMES D. "BUDDY" CALDWELL
  Attorney General
  By:________________
  BENJAMIN A. HUXEN II
  Assistant Attorney General
  JDC/BAH II
1 See Atty. Gen. Op. Nos. 02-0169 and 02-0169A.
2 Title 11 is entitled "Consolidated Public Retirement Systems." It consists, in part, of Subtitles II and III, which are entitled "State Systems" and "Statewide Systems," respectively. Conversely, as previously mentioned, the Plan is contained in Title 42.