Opinion No.

Ms. Cathyrn E. Hinshaw Executive Director Arkansas Fire Police Pension Review Board P.O. Drawer 34164 Little Rock, AR 72203

Dear Ms. Hinshaw:

This is in response to your request for an opinion on whether a member who is still actively working but who is on the Deferred Retirement Option Plan ("DROP") should hold an "active" position or a "retired" one on the local firemen's pension board of trustees.

RESPONSE

It is my opinion that a fire fighter who has elected to participate in DROP, but who is still actively working because he is within the five-year period between this election of DROP and his actual retirement, should hold a "retired" position on the local pension board.

My predecessor opined that participants in the DROP program for police officers are to be considered retired for purposes of board membership (see Op. Att'y Gen. 97-116). It was also previously opined that participants in the DROP program for fire fighters are to be considered retired for purposes of voting for board members (see Op. Att'y Gen.97-007). I concurred in those conclusions in Attorney General Opinion99-085. Although the question regarding board membership has not, until now, been asked with specific reference to fire fighters, (see Op. 97-116, supra, regarding police officers), I believe the same conclusion pertains. A DROP participant's position and his interest in the pension fund are more like that of a regular retired member than an active member. This follows from the fact that, as stated in Opinion 99-085, DROP participants have a "specific present interest in payments that are currently being made out of the pension fund for their specific benefit. In contrast, active members have only a future, general interest in the soundness of the fund." Id. at 2.

It should perhaps be noted in this regard that I am aware of the 1999 amendment to the provisions in both the police and the fire DROP programs pertaining to municipal matching contributions. See Acts 1999, No. 1457, codified at A.C.A. §§ 24-11-434 and 24-11-830 (Supp. 1999). In accordance with the 1999 amendment, the matching contributions for DROP participants in a municipality with a population of 20,000 or less will now be credited in full to the pension fund. See A.C.A. §§ 24-11-434(d)(2)(B) (Supp. 1999) (policemen's pension and relief fund) and 24-11-830(d)(2)(B) (Supp. 1999) (firemen's pension and relief fund). The pension fund board of trustees in a municipality with a population of 20,000 or more has the option of crediting the municipal matching contributions in this manner.Id. at subsection (d)(2)(A). Prior to this amendment, the employer's contribution was divided, with half being paid into the pension fund and half into the officer's DROP account.

Notwithstanding this amendment, the status of DROP participants with respect to the pension fund and their level of interest in the fund remain more akin to that of retired members when viewing the total package of contributions or payments on their behalf. See Op. 99-085.

Assistant Attorney General Elisabeth A. Walker prepared the following opinion, which I hereby approve.

Sincerely,

MARK PRYOR Attorney General

MP:EAW/cyh