No.

Opinion

The Honorable C.B. Bledsoe Speaker of the House House of Representative State Capitol Denver, CO 80203

The Honorable Richard F. Mutzebaugh Colorado State Representative State Capitol Denver, CO 80203

Dear Mr. Bledsoe and Mr. Mutzebaugh:

This opinion letter is in response to your February 28, 1990, inquiry about the use of Public Employees' Retirement Association (hereafter, "PERA") retirement funds for lobbying purposes.

QUESTIONS PRESENTED AND CONCLUSIONS

Your request for an attorney general's opinion presents the following questions:

1. Does PERA have the statutory authority to use retirement funds for lobbying purposes?

Yes.

2. Does § 24-51-208, C.R.S. (1987), which requires that the PERA board of trustees be held to the standard of conduct of a fiduciary in the discharge of their functions, preclude the use of retirement funds for lobbying?

No.

3. Would the use of retirement funds for lobbying jeopardize PERA's federal tax status or otherwise violate federal law?

ANALYSIS 1/ and 2/. PERA was created in 1931 by the General Assembly to provide a retirement and disability program for certain public employees and their dependents. It is an instrumentality of the state which is not "subject to administrative direction by any department, commission, board, bureau or agency of the state." Section 24-51-201, C.R.S. (1987). PERA is funded by required deductions from employees' salaries, § 24-51-405, C.R.S. (1987), and by required contributions from employers, § 24-51-401, C.R.S. (1987). It receives no state funding.

The PERA statute is silent on whether lobbying is permitted. Since PERA is not part of state government, it is not bound by the statutory restrictions on lobbyists that apply to the principal departments of state government. Section 24-6-303.5, C.R.S. (1987). Nor is PERA bound by the Governor's May 1988 executive order on lobbying, which also applies only to principal departments. Therefore, PERA is not prohibited from lobbying generally.

PERA funds may be disbursed, subject to approval of the PERA board, for limited purposes including "benefits, health care subsidies, . . . investments . . . and expenses of the association." Section 24-51-209, C.R.S. (1987). The board, which is "held to the standard of conduct of a fiduciary," must carry out its functions "solely in the interest of the members and benefit recipients and for the exclusive purpose of providing benefits and defraying reasonable expenses incurred in performing such duties as required by law." Section 24-51-207(1), C.R.S. (1987). In my view, these statutes implicitly permit expenditures for PERA lobbying efforts as reasonable expenses incurred in the course of protecting the PERA program; indeed, the board's fiduciary duty may well compel such action to protect the interests of PERA members.

3/. For purposes of federal law, PERA is considered a "qualified retirement plan" pursuant to section 401(a) of the Internal Revenue Code. To qualify, the plan must preclude the use or diversion of trust funds "for any purpose other than the exclusive benefit of employees or their beneficiaries."26 U.S.C.A. § 401(a)(2) (1986). As long as PERA lobbying efforts are limited to the purposes permitted by our state statute, PERA would still be considered a "qualified retirement plan." Both state and federal laws would be violated, however, if PERA spent retirement funds to lobby on legislation which is unrelated to the benefit of PERA members or their dependents. As I understand your letter there is no allegation that PERA lobbies on unrelated legislation.

SUMMARY

PERA funds may be expended for lobbying on legislation related to the PERA statute. Such use of PERA funds would not jeopardize PERA's federal tax status or otherwise violate federal or state law.

Sincerely,

DUANE WOODARD Attorney General

LOBBYING RETIREMENT SYSTEM PUBLIC FUNDS

Section 24-51-208, C.R.S. (1987) Section 24-51-209, C.R.S. (1987) Section 24-51-207(1), C.R.S. (1987)

LEGISLATIVE BRANCH House of Representatives

PERA has statutory authority to use retirement funds for lobbying on legislation related to PERA program.