Court Opinion

ID: 3261125
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:32:17.43362+00
Date Added: 2024-06-11T13:09:20.860488
License: Public Domain

The Honorable Jim Milum State Representative 607 Skyline Drive Harrison, AR 72601-2309
Dear Representative Milum:
You have requested an Attorney General opinion in response to the following question:
  If a school employee does not exercise his/her option to exclude himself/herself from membership in the Arkansas Teacher Retirement System, but is excluded, and then membership is established in the system at a later date and the employee purchases credit for those excluded years of service, is it legal for the public school district for which he/she works to expend school district funds to pay for his/her employer matching contributions for the years of credit purchased during the excluded years?
It is my opinion that it is legal for a school district to expend school district funds to pay the employer contributions for an eligible employee who was involuntarily excluded from the Arkansas Teacher Retirement System (assuming that the school district in question had the money to make the contributions during the time period of the exclusion).1
You have not stated the specific factual situation under which the employee in question was excluded from membership in the Arkansas Teacher Retirement System. I must note that the question of whether any particular exclusion was voluntary is a question of fact that I am not authorized to determine. Such a determination would require a review of all the relevant circumstances under which the exclusion occurred. A review of this nature could reveal that some exclusions might have been appropriate. A similar review would be necessary in connection with the question of eligibility.
Nevertheless, your question appears to indicate that the employee about whom you have inquired was eligible for membership and did not choose to be excluded. If this was, in fact, the situation, the employee should not have been excluded and, but for this wrongful exclusion, the school district would have been making contributions on behalf of the employee during that time of exclusion. Indeed, the district would have been required by law to do so. Under Arkansas law, eligible school district employees are required, as a condition of employment, to participate in the Arkansas Teacher Retirement System, unless they affirmatively exercise the option not to participate. A.C.A. § 24-7-501.
Moreover, school districts are required by law to make contributions on behalf of all eligible employees who have not exercised the option not to participate. A.C.A. § 24-7-401. In fact, a failure to make timely contributions on behalf of all eligible employees can result in an interest penalty being imposed upon the school district by the system. A.C.A. § 24-7-411.
State law does not address the requirements for re-establishing credited service in a situation where an employee was involuntarily excluded from participation. In the absence of explicit guidance on this issue, I conclude, on the basis of the school district's obligation under the law to make contributions on behalf of all eligible employees, that it is legal for the school district to use school district funds to pay the employer contributions that it would have made during the period of wrongful and involuntary exclusion, assuming that the funds were available to make the contribution during the time period of the exclusion. I reiterate that the question of whether any particular exclusion was voluntary, and the question of whether a particular individual is eligible for participation in the system, are questions of fact that can only be determined on a case-by-case basis, considering all the relevant circumstances.
Assistant Attorney General Suzanne Antley prepared the foregoing opinion, which I hereby approve.
Sincerely,
MARK PRYOR Attorney General
1 Although a question could be raised as to whether A.C.A. § 6-24-402 would prohibit the use of school funds to pay for a debt incurred in another year, it is my opinion that this statute would not apply to a situation in which the funds were available (but were not used) to pay the debt at the time it was incurred.