Opinion No.

The Honorable Owen Miller State Representative 602 Liberty Street Marked Tree, Arkansas 72365

Dear Representative Miller:

This is in response to your opinion request on the applicability of Act 808 of 1987 to directors of Education Service Cooperatives. More specifically, your request queries whether Act 808 makes the Cooperative directors eligible for the early retirement incentives provided for by Act 187 of 1987.

For the following reasons it is the opinion of this Office that the answer to your question is no.

Act 187 of 1987 was passed to provide certain retirement incentives for persons retiring from the Public Employees Retirement System, the Arkansas State Highway Employees Retirement System, or the State Police Retirement System. The ostensible purpose of Act 187 was to provide incentives so attractive that salary funds freed-up by early retirement would reduce overall State revenues devoted to salaries.

By oversight, Act 187 excluded from early retirement State agency employees who were covered by the Arkansas Teacher Retirement System. Hence, Act 808 of 1987 was passed to provide that any employee of a State agency currently covered by the Arkansas Teacher Retirement System would be eligible for early retirement under Act 187 of 1987.

With this background in mind, you question whether directors of Education Service Cooperatives, which are otherwise members of the Teacher Retirement System, can take advantage of the early retirement incentives of Act 187 by virtue of Act 808.

Dispositive of your inquiry is the initial language in 1.A of Act 808 of 1987 which specifically provides in pertinent part as follows:

Any employee of a State agency who is on the effective date hereof an active member of the Arkansas Teacher Retirement System . . . may elect to become a member and have his credited service in the Arkansas Teacher Retirement System . . . transferred to the Arkansas Public Employees Retirement System. (Emphasis supplied.)

This Office must conclude that directors of Education Service Cooperatives are not employees of State agencies. In Ark. Stat. Ann. 80-489.1 (1985 Cum. Supp.) the Education Service Cooperatives are referred to as "intermediate service units" in the State's elementary and secondary education system. . . . Furthermore, both the aforementioned statute and Ark. Stat. Ann. 80-489.15 (1985 Cum. Supp.) provide for the Cooperative directors to be appointed by the Cooperative Boards and not by any other State agency. Additionally, and most importantly, the directors' salaries are not set by the legislature but by the Cooperative Boards. This point is raised inasmuch as your inquiry relies to some extent on the fact that the directors' salaries are paid in part by State funds.

Clearly, Act 808 of 1987 was intended to remedy the oversight referred to above. The Education Service Cooperatives created by Act 349 of 1985 are not State agencies but cooperative units of local school districts and, as such, not eligible for the retirement incentives provided by Act 187 of 1987.

The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General C. Randy McNair III.