Could a Louisiana port district keep paying insurance for a worker who left before qualifying for retirement?

Plain-English summary

The St. Bernard Port, Harbor and Terminal District asked whether it could keep paying a worker's hospitalization and life insurance premiums after he left work to receive Social Security benefits. The worker participated in the Louisiana State Employees' Retirement System but was not yet eligible to retire from it.

The AG distinguished retirement from termination. The district could contribute to insurance for employees, including retirees, but this worker would leave state service without becoming a retiree. With no obligation to pay a former worker's premiums, the district's payment would be a prohibited donation of public funds under the constitutional provision discussed in the opinion.

Currency note

This opinion was issued in 2000. 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.

Common questions

Did starting Social Security make this worker a district retiree?
No. The opinion said he was not eligible to retire under the state retirement system and therefore would simply terminate employment.

Could the port district pay insurance premiums for its actual retirees?
The AG said political subdivisions could pay all or part of health and life insurance premiums for employees, including retirees.

Why did the AG reject payments after this worker left?
The opinion said he would no longer be a public employee, and the district had no obligation to pay his premiums. It treated the expenditure as a prohibited donation.

Background and statutory framework

The opinion cited Article 7, Section 14 of the Louisiana Constitution. It explained that Section 14(A) prohibited donations of public funds, while Section 14(B) specifically authorized contributions to pension and insurance programs for public employees. Its conclusion depended on the worker's lack of retirement eligibility under the state system.

Citations and references

• Article 7, Section 14 of the Louisiana Constitution: public funds and employee benefits.
• Op. Atty. Gen. Nos. 99-149 and 97-234: prior opinions cited for employee insurance premiums.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/00-0203

Original opinion text

May 31, 2000
OPINION NUMBER 00-203

Mr. Robert J. Scafidel, Ed.D.
Executive Director
St. Bernard Port, Harbor and Terminal District
P. O. Box 1331
Chalmette, Louisiana 70044-1331

Dear Mr. Scafidel:

We received your request for an opinion regarding the authority of the St. Bernard Port, Harbor and Terminal District to continue to pay the hospitalization and life insurance premiums of an employee after the employee “retires” or leaves his employment with the District to receive social security benefits. It is our understanding from your request that this employee participates in the Louisiana State Employees’ Retirement System but is not yet eligible for retirement. The employee is insured with State Employees Group Benefit Program.

Our office has opined on numerous occasions that a political subdivision of the state may pay all or any portion of the health insurance and/or life insurance premiums for its employees. Employees include retirees. Op. Atty. Gen. Nos. 99-149 and 97-234. The District is a political subdivision of the state of Louisiana. The issue then becomes whether or not this employee of the District is in fact a retiree of the District. You indicate that the employee is “retiring” from his employment with the District so that he may receive social security benefits. Because this employee does not meet the eligibility requirements of the state retirement system, he is not actually retiring from state service. Rather, he is simply terminating his employment.

It is important to note that Article 7, Sect. 14(A) of the Louisiana Constitution prohibits the donation, loan, or pledge of public funds of the state or any political subdivision thereof to or for any person, association, or corporation. The jurisprudence has interpreted this provision to mean that the state or any political subdivision thereof may not expend public funds when it is under no obligation to do so. Section 14(B) specifically authorizes the contribution of public funds to pension and insurance programs for the benefit of public employees.

Mr. Robert J. Scafidel, Ed.D.

Page 2

OPINION NUMBER 00-203
Page -2-

It is our opinion that if this employee, who is ineligible to retire as provided by the Louisiana State Employees’ Retirement System, leaves his employment with the District, he is no longer a “public employee”. As such, the expenditure of public funds by the District to pay the health and life insurance premiums of this individual, when it is under no obligation to do so, would be tantamount to a donation of public funds which is expressly prohibited by the constitution.

We trust that this adequately responds to your request. If you have any questions or need additional information, please feel free to contact us. With kindest regards,

Yours very truly,

RICHARD P. IEYOUB
ATTORNEY GENERAL

BY:
TINA VICARI GRANT
Assistant Attorney General

RPI:TVG:jv

OPINION NUMBER 00-203

Page 3

54 INSURANCE
90-A-2 PUBLIC
90-A-2(g) RETIREMENT - STATE EMPLOYEES
Art. 7, Section 14 of the Louisiana Constitution

The St. Bernard Port, Harbor and Terminal District may
not continue to pay the insurance premiums of an
employee if the employee, who is ineligible for
retirement with the state retirement system, terminates
his employment.

DATE RECEIVED: 5/16/00
DATE RELEASED: May 31, 2000

TINA VICARI GRANT, ASSISTANT ATTORNEY
GENERAL