Could St. Charles Parish invest its post-employment benefits trust in securities allowed by Louisiana’s trust statute?

Plain-English summary

St. Charles Parish asked which investment rules applied to a trust it had created to fund post-employment benefits. In August 2015, the Attorney General concluded that a trust established under La. R.S. 33:5161 could use the investment choices in La. RS. 33:5162(A), subject to the restrictions in that statute’s Subsections B and C. The parish was not limited to the investments available under the general political-subdivision rule in La. R.S. 33:2955.

The AG distinguished two earlier opinions about benefit trusts. Those trusts had been established under federal tax provisions, without relying on the Louisiana statute that specifically authorized political subdivisions to create and invest post-employment benefit trusts. The office had applied the general investment rule to those arrangements. For St. Charles Parish’s statutory trust, the more specific trust provisions controlled.

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.

Common questions

Did the AG allow every investment listed for a post-employment benefits trust?

The AG allowed the securities listed in La. RS. 33:5162(A) for St. Charles Parish’s trust, subject to the restrictions and limits in Subsections B and C. It did not approve an investment outside that statutory list.

Why did earlier AG opinions limit other benefit trusts to the general investment rule?

The earlier opinions concerned trusts established without the specific authority in La. R.S. 33:5161. The AG said their investment analysis under La. R.S. 33:2955 therefore did not decide the rule for a trust created under the later, specific statute.

Did the opinion decide investment rules for every parish fund?

No. Its conclusion concerned funds held in a trust created under La. R.S. 33:5161 for post-employment benefits.

Background and statutory framework

The opinion said La. R.S. 33:5161 authorized political subdivisions to establish post-employment benefits funds and trusts. La. RS. 33:5162 supplied the investment list and limits for those trusts. The AG compared those specific provisions with the general investment rule in La. R.S. 33:2955 and applied the trust provisions to St. Charles Parish’s arrangement.

Citations

• La. R.S. 33:5161 (authority for post-employment benefits trusts).
• La. RS. 33:5162 (investments for those trusts).
• La. R.S. 33:2955 (general investment rule discussed in earlier opinions).

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/15-0067

Original opinion text

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DEPARTMENT OF JUSTICE
P.O. BOX 94005
BATON ROUGE
70804-9005
JAMES D. HBUDDY" CALDWELL
ATTORNEY GENERAL

AUG 03 2015
OPINION 15-0067

90-A-1 PUBLIC FUNDS & CONTRACTS
Tiffany K. Clark
lao Const, art. VII, Sec. 14
St. Charles Parish Council Secretary lao R.S. 33:5161
P.O. Box 302
St. Charles Parish may invest funds held in trust pursuant to
Hahnville, LA 70057
La. R.S. 33:5161 in any or all of the types of investments set
forth in La. R.S, 33:5162(A), SUbject to the restrictions and limitations set forth in Subsection Band C thereof.
Dear Ms. Clark,

On behalf of the St. Charles Parish Council, you have asked for our opinion regarding post-employment benefit trusts established pursuant to La. RS. 33:5161.

La. RS. 33:5161(A)(1) specifically provides that '[njotwithstandinq any other provision of the law to the contrary, a political subdivision may establish, by ordinance or resolution, post-employment benefits funds." Further, La. RS. 33:5161(B) authorizes political subdivisions "to establish, by ordinance or resolution, one or more trusts or to participate in a multiemployer trust to hold and invest the assets of post-employment benefits funds."

Any investment of the funds held in a trust created pursuant to La. RS. 33:5161 (B) must be in accordance with La. RS. 33:5162, which authorizes the investment of funds placed into trust pursuant to La. RS. 33:5161 in specifically enumerated securities.

Specifically, you ask whether such a trust may invest those funds in any or all of the securities set forth in La. RS. 33:5162(A), subject to the restrictions and limitations set forth in Subsection Band C thereof, or whether such investment is limited to the obligations authorized by La. RS. 33:2955.

Prior opinions of this office have stated that political subdivisions may only invest funds contained in a trust dedicated to providing post-employment benefits pursuant to La.
RS. 33:2955. La. Atty. Gen. Op. Nos. 07-0066 and 15-0012. However, no prior opinion has specifically discussed a trust established pursuant to La. RS. 33:5161.

In La. Atty. Gen. Op. No. 07-0066, this office determined that public bodies may independently establish and employ irrevocable trusts that hold monies for future

Page 2

Ms. Tiffany K. Clark
Opinion 15-0067
Page 2

payment of post-employment benefits other than pensions. There, we recognized that political subdivisions have the authority to invest those funds under La. RS. 33:2955.

In La. Atty. Gen. Op. No. 15-0012, we opined that the Capital Area Ground Water Conservation District may establish either a trust under Section 115 of the Internal Revenue Code or a Voluntary Employee Beneficiary Association trust under Section 501 (c)(9) of the Internal Revenue Code for the purpose of funding post-retirement health benefits of its employees. However, we cautioned that the funds contained in trust may only be invested in accordance with the provisions of La. R.S. 33:2955.

The trusts established in the prior opinions discussed above were established as irrevocable trusts under the Internal Revenue Code and not pursuant to any specific Louisiana statute. Generally, the investment of funds belonging to a political subdivision is governed by La. RS. 33:2955. However, La. RS. 33:5161 and 5162 were enacted in 2007 by Act No. 202, § 1 and specifically authorize the creation of trusts to hold and invest the assets of post-employment benefit funds of political subdivisions. Accordingly, any trust specifically established by Chapter 17 of Title 33 of the Louisiana Revised Statutes is governed exclusively by La. RS. 33:5161 and 5162.

St. Charles Parish has created a trust pursuant to La. R.S. 33:5161 for the purpose of funding post-employment benefits. La. RS. 33:5162 specifically authorizes "a trust created pursuant to this Chapter. .." to invest funds in a more expanded list of securities than La. RS. 33:2955. Therefore, it is the opinion of this office that St. Charles Parish may invest those funds held in a trust created pursuant to La. RS. 33:5161 in any of the securities set forth in La. RS. 33:5162(A), subject to the restrictions and limitations set forth in Subsection Band C thereof.

We hope this sufficiently answers your inquiry; however, if we may be of further assistance, please do not hesitate to contact our office.

Yours very truly,

JAMES D. "BUDDY" CALDWELL
Attorney General

By: (fRa:ll!~LPAtt
Assistant Attorney General