July 19, 1988

Robert C. Riter, Jr., Chairman 
South Dakota Department of Labor Employees Retirement Board 
P.O. Box 280 
Pierre, South Dakota 57501

Official Opinion No. 88-29

Authority of Department of Labor Employees Retirement Board to administer Retirement Program established pursuant to SDCL 61‑2‑15

Dear Mr. Riter:

You have requested an official opinion from this Office on the authority of  the Employees Retirement Board, created by Chapter 386, Laws of 1987, "An Act to establish a board to administer the retirement program for certain employees of the department of labor."

You state the Board is uncertain of the nature and extent of the authority and responsibilities granted to it pursuant to SDCL § § 61-2-15, -15.1 and -15.2.

Specifically you inquire regarding whether the Board itself is empowered to make the determinations regarding the type of investments which should be used for the funds in the retirement plan;  whether the Board is empowered to make decisions regarding eligibility for participation, and if eligibility is determined either contribution amounts or benefit amounts, and decide other substantive issues which may be presented to it.  You further ask whether the Board's function is merely to oversee the Department of Labor's operation and administration of the plan, or to actually administer the plan itself.

In my opinion, by the adoption of Chapter 386, Laws of 1987, the Legislature totally supplanted the authority of the Secretary of Labor to administer the retirement plan originally created by Chapter 104, Laws of 1961.

BACKGROUND OF THE PROGRAM

Originally, there existed an Unemployment Compensation Commission (SDC  1939, §  17.0803), whose duty it was to administer the "fund" established as the unemployment compensation fund (SDC 17.0802(9)).  There were two coordinate divisions of the Commission;  the State Employment Service Division and the Unemployment Compensation Division.

The Commission appointed the officers, accountants, attorneys and others;  delegated them authority and power, and administered the provisions of Chapter 17.08.  By Chapter 94, Laws of 1951, these duties were assumed by the Commissioners of Employment Security, and finally under Chapter 359, Laws of 1978, by the Secretary of Labor.

In 1961, Chapter 104 amended SDC 1960 Supp. 17.0805, the basic authority statute of the Commissioner, to give him authority to "... contract for a retirement program for the personnel of the Department...."  In 1968, by Chapter 90, the hospital insurance program was added to this authorization.

These sections were codified in SDCL as 61-2-15.  Chapter 33, Laws of 1980, amended the state retirement system chapter to exclude from that system, members of the now Department of Labor's retirement system who were employed prior to July 1, 1980, and who elected to remain with the previous system. That Chapter also required all new employees to become members of the State Retirement System, established pursuant to SDCL 3-12.  It further provided that members of the "Labor" system might elect to join the State Retirement System and yet continue to accrue benefits under their former program without  those benefits being counted as other public benefits.  It mandated, however, that they could not use prior credited service for accruing further longevity in the State system but might use the same for vesting, family benefits and disability coverage.  (SDCL § §  3‑12-95, 3-12-95 and 3-12-62.1.)

Until 1987, the special retirement program originally set up for the Employment Security employees in 1961, continued under the administration of the Secretary of Labor (SDCL 61-2-16).

In 1987, by the adoption of Chapter 386, the Legislature created the South Dakota Department of Labor Employee's Retirement Board.  The Board's duty, pursuant to section 1 of the Act, is to "administer the retirement program provided by SDCL 61-2-15."  SDCL 61-2-15 being the authority of the Department of Labor to "establish and contract for a retirement program for eligible employees."  The original Employment Security Commission, the Commissioner, and the Secretary of Labor were each consecutively given the authority to "administer" Title 61, including the retirement program.  Now the Employee's Retirement Board is required to "administer the retirement program provided by § 61‑2‑15."

While it might be considered a repeal by implication by some, I do not consider it as such since that implies two irreconcilably repugnant acts. Matter of Bode's Estate, 273 N.W.2d 180 (S.D. 1979).  By adopting Chapter 386, Laws of 1987, the Legislature has merely removed the administration of  this program from the Secretary of Labor and vested the power of administration in the Employees Retirement Board.  The South Dakota Supreme Court held in Lien v. Rowe, 77 S.D. 422, 92 N.W.2d 922 (1958):  "An amendment is usually designed either to alter the operation and effect of earlier provisions or to clarify their meaning."  92 N.W.2d at  924.  Here the purpose of the amendment is intended to "alter the operation" of the administration of the special retirement system by removing its control from the Secretary of Labor, who previously administered it under SDCL 61-2-16, and vesting it in the newly created Board.

In my opinion, the Board is now required to do anything and everything constituting the "administration" of the retirement program.  This would include all those things heretofore "administered" by the Secretary of Labor.

It has been suggested that SDCL 61-2-18 may impose on the Secretary of Labor the obligation to make recommendations on changes in contribution or benefit rates to protect the "solvency of the fund."  This section, however, deals with the term "fund" as defined in SDCL 61-1-1(6) and means the unemployment compensation fund established by Title 61 and not the retirement program.

You inquired regarding the Board's duties under SDCL 61-2-15.2 to report annually to the Retirement Laws Committee, created by SDCL 2-6-8, regarding the financial and actuarial status of the retirement program and upon the  benefits provided under that program.  SDCL 2-6-8 merely establishes a legislative oversight committee.  This committee is to study the retirement and pension laws applicable to employees;  appraise, evaluate, and make recommendations for revisions in financial provisions and methods concerning the various funds (SDCL 2-6-11);  and to present legislative drafts to effect sound and equitable public employees' retirement programs.  In order to function effectively, this Committee needs input from all public retirement programs;  hence the reporting requirement.

In my view, your board is required to make substantive as well as procedural decisions concerning the retirement program should the need arise. I do not find the statutes inconsistent in this regard.

Respectfully submitted,

Roger A. Tellinghuisen
Attorney General