Opinion No.

The Honorable Bobby G. Wood State Representative 2806 Harrisburg Road Jonesboro, AR 72401-8789

Dear Representative Wood:

This is in response to your request for an opinion on the following question:

[T]he teacher retirement system plans to take thirty (30) million dollars and put this into the hospitalization plan for retirees.

You have attached correspondence to your request which discusses this plan, and questions its legality. Your question, therefore, concerns the legality of the Teacher Retirement System (TRS) transferring funds away from the TRS into a hospitalization plan for retirees.

It is my opinion that such an action, if undertaken without legislative sanction, would run afoul of A.C.A. § 24-7-403(a) which provides that:

(a) All assets of the system shall be held for the sole purpose of paying benefits and making disbursements in accordance with the provisions of this act and shall be used for no other purpose whatsoever. . . .

Under current law, therefore, this transfer of funds would be contrary to statute. There are, however, two relevant proposals concerning your opinion request which are now being considered by the General Assembly. The first is in the form of House Bill No. 1310. This bill proposes to set up a new "Arkansas Retired Teacher Group Insurance Fund" which would be administered by the TRS and funded by teacher or school district contributions. This bill, however, in no way contemplates TRS trust funds being transferred to develop a hospitalization plan. The second proposal is House Bill No. 2013, which has been introduced to authorize a feasibility study on a similar proposal. This bill creates the "State Employee-Public School Personnel Health Insurance Study Committee," which is to study the feasibility of establishing a unified self-insurance program for providing health insurance for state employees and school personnel. The Committee is to report its findings by July 1, 1994. Again, however, this bill does not authorize the transfer of any funds from the TRS trust fund. Additionally, it appears that the deadline for introducing a bill which would have this effect has passed.

It is my opinion, therefore, that the Teacher Retirement System may not legally take the action you describe under current law, and no pending legislation before the Seventy-Ninth General Assembly authorizes this action. If you have remaining questions about the two bills which have been introduced, I will be pleased to respond to them in the most timely manner possible.

The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General T. Jeff Vining.

Sincerely,

WINSTON BRYANT Attorney General

WB:cyh