This opinion is to clarify Op. No. 86-5 which involves whether Act 6 of 1985 would permit moneys in firemen's and policemen's pension and relief funds to be invested in stocks and bonds. RESPONSE: The investments are not limited to no-load mutual funds, but may be in stocks and bonds under certain

STATE OF ARKANSAS OFFICE OF THE ATTORNEY GENERAL JUSTICE BUILDING, LITTLE ROCK 72201 STEVE CLARK (501) 371-2007 ATTORNEY GENERAL OPINION NO. 86-32 February 6, 1986 Honorable Bud Canada State Senator 106 Meyer Building Hot Springs, AR 71901 RE: Opinion No. 86-5 February, 1986 Dear Senator Canada: This is to clarify this Office's January 8, 1986 Opinion which was in response to the following question: Does Act 6 of 1985 permit moneys in Firemen's and Policemen's Pension and Relief Funds to be invested in stocks and bonds? The Opinion responded "no" but concluded: The only significant change made by Act 6 of 1985- if to provide Policemen's and Firemen's Pension and . Relief Funds, having assets in excess of $500,000.00, the additional options of employing professional investment counsel, and investing in certain no-load mutual funds. , The investment options available to professional _ investment. counsel are not limited to "no-load mutual funds" -- but include "stock8 and bonds!" provided the investment ‘activity complies with "the terms, conditions, limitations _ -and-restrictions imposed by law upon state public employee ~'. retirement plans." [subsection. 6. 20(£)]. The original “Opinion may have left the mistaken impression subsection - - 6.20(g), which specifically authorizes investment in "no-load mutual funds", is the only subsection which authorizes additional investment options. Ark. Stat. Ann. §12- 3806. 20 as amended by Act 6 of 1985 provides: 6. 20 [6.10.] The. board shall be trustees of: the funds of the system suject to the other provisions of this section. The funds of the system shall be invested and reinvested in accordance with the procedure set forth below. In addition, the funds of local fire and police pension and releif funds, as created by Act 491 of 1921 as amended, and Act 250 of 1937 as amended, respectively, with assets in excess of $500,000.00, may also be invested in accordance with the following procedure: (a) From time to time the investment advisor shall © formulate the policy to be followed in future investment activity, and he shall promptly furnish .such policy to the board in writing each time he - ehanges such policy. | (b) The investment advisor shall have full power to hold, purchase, sell, assign, transfer or dispose of any of the moneys or investments of the system pursuant to the provisions of this section and in accordance with the current investment | ' policy filed with the board. (c) At least semi-annually the investment advisor ° | shall file with the board a written report setting | forth, for the period of since its last report, all | investments purchased and sold, all receipts and “disbursements, and any other transactions concerning system moneys. Oe (d) At each regular meeting the board shall - examine each written report received from the vod investment advisor since the last regular meeting. . . {e) Anything herein to the contrary notwithstanding, from time to time the board may . direct a specific investment activity and shall be fully responsible for any such direction. (£) Anything herein to the contrary notwithstanding, investment activity shall be - subject to the terms, conditions, limitations, and ". restrictions imposed by law upon state public © employee retirement plans in the making and “disposing of their investments. |... (g)-, Anything herein to the contrary | notwithstanding, until the assets of the System acs eae amount to at least five million dollars, the funds |. °° .2) of the ‘system not in the checking account may be “invested in shares of no-load mutual funds, each of -:which shall be an open-end diversified investment | - , company registered under the Federal Investment | SO a Company Act of 1940, as amended; the management | | -company of the investment company shall have been in operation for at least ten years and shall have ‘assets under management of more than one-hundred a million dollars; and there is no sales charge for ae purchasing shares of such fund, and no redemption ; ; charge for selling such shares. §6,20 as amended by Act 6 is identical to the original ‘Act (364 of 1981) with the following additions: (1) Subsection (g) [by Act 599 of 1983]; (2) The last sentence of the first paragraph, emphasized above, [by Act 6 of 1985]. Subsections (a) through (f£) are silent as to authorzing any specific type investment, but do grant an investment. ‘counselor great latitude to "hold, purchase, sell, assign, © transfer or dispose of any of the moneys or investments of the system." (Subsection (b)). The "Board" has specific authority to "decide all questions of doubt raised by any provisions" of. Act 364 of 1981. See §7.05(c). Since §6,20 subsections (a) through (f) have, since 1981, been interpreted by the "Board" to allow investment of the "system'! moneys in "stocks and bonds" it is presumed the General Assembly, by adopting Act 6 of 1985, intended to | extend the same > options "to the Fire and Police Pension and Relief Funds", - Subsection.(f) imposes the same investment | restrictions on. these funds=that:apply to "public employment | retirement plans'', which are allowed to invest in-stocks and _ bonds under the "prudent invester rule". See Ark. Stat. | Ann. §12-3307.11. :i\To“interpret Act ‘6 of :1985-to.limit: these - “relief funds" options im-diversifying “their investment activity to "no-load mutual funds" would render subsections (a) through (f£) without any effect. The title of this Act, which supports this "interpretation, is to be considered in determining . legislative intent. (Sutherland Statutory Construction .'§47.03). Glover v. Henry, 231 Ark. .111, 328 S.W.2d 382 .7€1959); Henderson v. Russell, 267 Ark. 140, 589 S.W.i2d 565 1979). This is: especially true where, as here, the body of he Act does. not. expressly identify its purpose, -The title» f Act. 6 indicates it: purpose is to allow such. funds” to: diversify their. investments as follows: aa ae To ‘ALLOW FIRE AND POLICE PENSION. AND RELIEF ~RUNDS WITH $500,000.00 OR MORE IN. ASSETS TO — = DIVERSIFY THEIR INVESTMENT PROGRAMS. other parts: of the Act indicate these "funds" should: be “subject to the same investment limitations as those imposed. on the ''system" under prior law. Act 6 also amended both cs. the Policemen's Pension and Relief Fund Act (Ark. Stat. Ann. $19-1805) and the Firemen's Pension and Relief Fund Act (Ark. Stat. Ann, §19-2223) by adding the following paragraph _to each: Provided, that in those pension and relief funds in which assets exceed $500,000.00, the board of . trustees may employ professional investment counsel to invest the assets subject to the terms, conditions, limitations, and restirctions imposed -by law upon the Arkansas Local Police and Fire Retirement System, as provided by Subsection 6,20 of Section 6 of Act 364 of 1981, as amended, and shall not be limited to interest-bearing bonds. Therefore, in reading this Act, as a whole, reviewing its legislative history, and giving deference to its stated purpose, as the rules of Statutory Construction require, it must be interpreted to allow investment of Policemen's and Firemen's Pension and Relief Funds in "stocks and bonds", ‘The foregoing Opinion, which I hereby approve, was - prepared by Assistant Attorney General David S. Mitchell. Sincerely, - STEVE CLARK Attorney General SC/DSM/15m