If a Arkansas police officer or firefighter in the LOPFI DROP loses his job early, can he transfer to another LOPFI-covered position?

Plain-English summary

State Representative Dan Douglas asked the AG about the interplay between two provisions of the Arkansas Local Police and Fire Retirement System (LOPFI) statute. Section 24-10-504 generally lets former LOPFI members re-enter covered employment after retiring, with previous credited service restored. But that same section specifically excludes participants in the LOPFI Deferred Retirement Option Plan (DROP) from re-employment. The question: can a DROP participant whose covered employment is terminated before the maximum seven-year DROP period concludes transfer to another LOPFI-covered position?

Attorney General Leslie Rutledge concluded the answer is no. The DROP statute has no provision authorizing such a transfer, and the LOPFI Board's Rule 32 confirms it: "Members enrolled in DROP are not eligible to return to LOPFI-covered service as provided in A.C.A. 24-10-504." Once a DROP participant's employment ends, by termination or by completing the maximum seven years, retirement benefits commence, the former DROP participant ceases to be a LOPFI member, and there is no statutory route back into covered employment.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

How LOPFI DROP works

LOPFI was created in 1981 and generally covers police officers and firefighters first employed after the system's operative date. The Deferred Retirement Option Plan (DROP), added in 2003, is available to LOPFI members who have at least 28 years of service or who are at least age 55 with at least 20 years of service.

When a member enrolls in DROP:

• He stops accruing service credit (Ark. Code Ann. § 24-10-702(c)).
• He continues to work and receive his regular salary.
• A percentage of the monthly retirement benefit he would have received had he actually retired is paid into his "plan account" with interest credited annually (Ark. Code Ann. §§ 24-10-703(c), 24-10-704(b)).
• The maximum DROP duration is seven years (Ark. Code Ann. § 24-10-706(a)).
• "At the conclusion of a member's participation in the plan, the member shall terminate employment ... and shall start receiving the member's monthly retirement benefit" (Ark. Code Ann. § 24-10-706(b)).

Termination is the trigger for the deferred benefit, whether the seven years run out or the member's employment ends earlier for any reason. The DROP account is then either paid as a lump sum or annuitized (Ark. Code Ann. § 24-10-705).

Why no transfer is allowed

The general re-employment option in Ark. Code Ann. § 24-10-504(c)(2)(A)(i) is structured as an exception that lets retired former members re-enter covered employment. The same provision expressly excludes DROP participants from that exception. The LOPFI Board's Rule 32 reinforces the exclusion.

The AG searched the LOPFI statutes for any other provision that could authorize a DROP participant to transfer to another LOPFI-covered position after termination. She found none. Under the general system rule, "[u]pon a member's retirement, he or she shall cease to be a member." A DROP participant whose employment ends has retired in the relevant statutory sense, so the member status that would allow re-entry into covered service is gone.

Common questions

What if the DROP participant was fired and would prefer to keep working? The opinion does not provide an alternative. The statute treats the end of DROP employment as the moment benefits begin and member status ends. The participant has the choice to draw the DROP account (lump sum or annuity) and to receive the monthly retirement benefit, but cannot return to LOPFI-covered work.

Could the legislature change this?
Yes. The exclusion is statutory, not constitutional. Legislators who wanted to allow DROP participants to transfer between LOPFI employers after termination could amend Ark. Code Ann. § 24-10-504(c)(2) and the DROP provisions. Until then, the AG's reading bars it.

Did the AG answer the questions about transferring before termination or a waiting period? No. The AG treated both questions as moot after concluding that a participant whose employment had ended could not transfer to another LOPFI-covered position. The opinion does not address work outside LOPFI.

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Official summary

(Q1) Section 24-10-504 permits a former LOPFI member to reenter covered employment after becoming a retirant with previous credited service restored and increased by the period of reemployment. However, section 24-10-504 prohibits a participant in the LOPFI DROP from reentering covered employment after becoming a retirant. Is a DROP participant whose covered employment has been terminated before the conclusion of the maximum years of DROP participation prohibited from transferring from one LOPFI covered position to another LOPFI covered position? (Q2) If the answer to the previous question is "no," is a DROP participant who fears his or her covered employment with a LOPFI employer may be terminated before the conclusion of the maximum years of DROP participation prohibited from transferring from one LOPFI covered position to another LOPFI covered position? (Q3) If the answer to either of the previous questions is "no," is a DROP participant required to remain unemployed for a specified amount of time before transferring to another LOPFI covered position? RESPONSE: In my opinion, there is no provision for transferring to another LOPFI-covered position after the DROP participant's employment has been terminated. It is therefore my opinion that the answer to your first question is "yes," such a transfer is prohibited. Questions 2 and 3 are consequently moot.

Original opinion text

Opinion No. 2015-104
December 16, 2015
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE
The Honorable Dan M. Douglas
State Representative
6251 SW Regional Airport Blvd
Bentonville, AR 72712-9449
Dear Representative Douglas:
This is in response to your request for my opinion on the following questions concerning the Deferred Retirement Option Plan (DROP) of the Arkansas Local Police and Fire Retirement System (LOPFI): (1) Is a DROP participant whose covered employment has been terminated before the conclusion of the maximum years of DROP participation prohibited from transferring from one LOPFI covered position to another LOPFI covered position? (2) If the answer to the previous question is "no," is a DROP participant who fears his or her covered employment with a LOPFI employer may be terminated before the conclusion of the maximum years of DROP participation prohibited from transferring from LOPFI covered position to another LOPFI covered position? (3) If the answer to either of the previous questions is "no," is a DROP participant required to remain unemployed for a specified amount of time before transferring to another LOPFI covered position? 323 CENTER STREET, SUITE 200 · LITTLE ROCK, ARKANSAS 72201 TELEPHONE (501) 682-2007 · FAX (501) 682-8084 ARKANSASAG.GOV The Honorable Dan M. Douglas State Representative Opinion No. 2015-104 Page 2 RESPONSE In my opinion, there is no provision for transferring to another LOPFI-covered position after the DROP participant's employment has been terminated. It is therefore my opinion that the answer to your first question is "yes," such a transfer is prohibited. Questions 2 and 3 are consequently moot. DISCUSSION In certain circumstances, retired former members of LOPFI can reenter "covered employment"' and again become members of LOPFI.2 But participants in LOPFI DROP are specifically excluded from this "re-employment option."3 A rule of the LOPFI board also states that "[m]embers enrolled in DROP are not eligible to return to LOPFI-covered service as provided in A.C.A. 24-10-504."4 I have found no other provision similar to this "re-employment option" that would authorize a DROP participant to transfer to another LOPFI-covered position after his employment has been terminated. I must therefore conclude that such a transfer is prohibited. Under the LOPFI DROP,5 a person who is eligible to retire may elect to continue to work for a limited time during which the receipt of retirement benefits is 1 "Covered employment" means "employment as a police officer or firefighter in a position covered by the system." Ark. Code Ann. § 24-10-102(11) (Rep I. 2014). 2 See Ark. Code Ann. § 24-10-504(c)(2) (Rep!. 2014). 3 Id. at§ 24-I0-504(c)(2)(A)(i) (stating in rel~vant part that "the former member may again become a member with previous credited service restored and increased by the period of reemployment, but only if the former member ... [w]as not a participant in the [DROP] under§ 24-10-701.") (Emphasis added). 4 LOPFI Rules and Regulations, Rule #32 (last amended June 4, 2015). The LOPFI board is vested with "[t]he general administration and the responsibility for the proper operation of the
[system] and for making effective the provisions of this chapter .... " Ark. Code Ann. § 24-10- 201 (a) (Rep!. 2014). 5 LOPFI DROP is codified at Ark. Code Ann.§§ 24-10-701-709 (Repl. 2014 and Supp. 2015). The LOPFI system was created in 1981 and generally covers police officers and firefighters first employed after the "operative date" of the system, as well as system administrative staff. Ark. Code Ann. § 24-10-301 (Repl. 2014). See also Ark. Code Ann. § 24-10-102(22) (Repl. 2014) The Honorable Dan M. Douglas State Representative Opinion No. 2015-104 Page 3 deferred.6 This retirement option is available to LOPFI members who have at least 28 years of service, or members who are at least age 55 and have at least 20 years of service. 7 There is no additional accrual of service credit once a LOPFI member enrolls in DROP.8 Under the terms of the plan, the member continues to work and receive a salary, but a certain percentage of the monthly retirement benefit to which the member would have been entitled if he had actually retired is paid into the member's "plan account,"9 with interest credited annually. 10 The maximum period of participation in LOPFI DROP is seven years. 11 A LOPFI member may therefore participate in DROP for fewer than seven years, with DROP participation ending (and benefits being paid) in conjunction with the termination of employment: At the conclusion of a member's participation in the plan, the member shall terminate employment with the employer and shall start receiving the member's monthly retirement benefit that would have been received if the member had retired at the time the member elected to participate in the plan. 12 The LOPFI DROP participant thus receives his deferred benefit when employment terminates.13 The requirement that the member "terminate employment" "[a]t the (defining "member"). The DROP option was added to the system in 2003. See Acts 2003, No. 1734. 6 Ark. Code Ann.§ 24-10-70l(a) (Supp. 2015). 7 Ark. Code Ann.§ 24-10-70l(a). 8 Ark. Code Ann. § 24-10-702( c) (Supp. 2015). 9 Ark. Code Ann. § 24-10-703( c) (Rep I. 2014) (the percentage paid into the account depends upon the member's years of service). 10 Ark. Code Ann.§ 24-10-704(b) ((Rep!. 2014). 11 Ark. Code Ann. § 24-10-706(a) (Rep!. 2014) ("The duration of participation in the [DROP] for active paid service police officers and firefighters shall not exceed seven (7) years."). 12 Id. at 24-10-706(b). 13 The DROP account into which retirement benefits have been paid is either paid over in a lump sum or annuitized, at the DROP participant's option. Ark. Code Ann.§ 24-10-705 (Rep!. 2014). The Honorable Dan M. Douglas State Representative Opinion No. 2015-104 Page 4 conclusion of . . . participation in [DROP]" makes it clear that the member who continues to work for the full seven-year period must leave employment at the end of the seven years. If employment ends earlier-whether voluntarily or involuntarily-the benefits will be paid, as employment will have terminated. Retirement benefits therefore commence at the point the LOPFI DROP participant's employment is terminated, regardless of when termination occurs (whether before or after seven years), and regardless of whether it is voluntary. Participation in LOPFI DROP has concluded at that point and the former DROP participant ceases to be a member of the system, consistent with the general system requirement that "[ u ]pon a member's retirement, he or she shall cease to be a member."14 No provision is made for the former DROP participant's return to LOPFI-covered employment. Indeed, as noted above, LOPFI DROP participants are specifically excluded from the "re-employment option" available to fonner members who have retired. Nor has my research yielded any other provision similar to the re-employment option that would provide authority for a DROP participant to transfer to another LOPFI-covered position after his employment has been terminated. I must therefore conclude that the answer to your first question is "yes," such a transfer is prohibited. Your remaining questions are consequently moot. Sincerely,
~e
Attorney General
14 Ark. Code Ann.§ 24-10-504(b)(l) (Repl. 2014).