If an occupational licensing board, like the Cosmetic Art Examiners, is subject to the State Personnel Act and the State Budget Act, can it still enroll employees in the Teachers' and State Employees' Retirement System even though the 1983 General Assembly froze licensing-board participation after July 1, 1983?

Plain-English summary

The Executive Secretary of the State Board of Cosmetic Art Examiners asked the AG whether Chapter 412 of the 1983 Session Laws, which froze occupational licensing-board participation in the Teachers' and State Employees' Retirement System (TSERS), applied to her board. The argument from her side was that Chapter 412 was really intended for private nonprofit associations like the Symphony Society and the Art Society and for those licensing boards that operate outside the State Personnel Act and the State Budget Act. The Cosmetic Art Examiners were subject to both Acts. Did the 1983 freeze still reach them?

The 1990 AG said yes, it did.

The reasoning is a clean walk through three layers of statute.

The TSERS general definitions. G.S. § 135-1(11) defines "employer" broadly to include the State, local educational authorities, the universities, and "any other agency of and within the State by which a teacher or other employee is paid." G.S. § 135-1(10) makes membership mandatory for full-time State employees, agents, or officers. Read in isolation, those definitions cover the staffs of occupational licensing boards.

The 1959 carve-out. Chapter 1012 of the 1959 Session Laws enacted G.S. § 135-1.1, which applied specifically to "any State board or agency charged with the duty of administering any law relating to the examination and licensing of persons to practice a profession, trade or occupation." For those boards, TSERS coverage was opt-in: the governing board had to adopt a resolution to cover its employees, agree to pay employer contributions out of board funds, and collect and forward employee contributions. So from 1959 to 1983, licensing boards were a special category with an elective coverage path, not the mandatory rule.

The 1983 freeze. Chapter 412 of the 1983 Session Laws amended G.S. § 135-1.1 in two surgical ways. It added "on or before July 1, 1983" after "elect," meaning the election deadline closed on that date. And it added "so employed prior to July 1, 1983" after "employees," meaning that even boards that had elected coverage could only cover employees hired before that date. Going forward, new licensing-board hires were locked out of TSERS.

The Cosmetic Art Examiners argument. The board's question was whether Chapter 412 was meant to apply only to certain private nonprofit associations (Symphony, Art Society, etc.) and to licensing boards that operate outside the Personnel and Budget Acts. The thought was that licensing boards inside those Acts function more like normal state agencies, so they should fall under the general TSERS rules rather than the licensing-board freeze.

Why the argument fails. The AG read the statutes line by line:

• Chapter 412 itself says nothing about the Personnel Act or Budget Act. It just amends § 135-1.1 directly.
• G.S. § 135-1.1, before and after the 1983 amendment, applies to "any State board or agency charged with the duty of administering any law relating to the examination and licensing of persons to practice a profession, trade or occupation." "Any" means any.
• No provision in the Retirement System statutes (Article 1 of Chapter 135) ties TSERS coverage to coverage under the Personnel or Budget Acts. The two regimes are simply not linked.
• The State Personnel Act (Chapter 126) and the State Budget Act (Chapter 143, Article 1) do not say that coverage under those Acts entitles an agency to enroll its employees in TSERS.

The plain-meaning rule. Citing State ex rel. Martin v. Preston (1989), the AG concluded that where the statute is plain, there is no room for interpretive workarounds. Section 135-1.1 says "any" licensing board, and that is what it means.

The result. The Cosmetic Art Examiners and other licensing boards subject to the Personnel and Budget Acts could not enroll any employee hired on or after July 1, 1983 in TSERS. The 1983 freeze was a hard freeze, with no Personnel-Act or Budget-Act exception.

Currency note

This opinion was issued in 1990. 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. The Retirement System statutes in Chapter 135 have been amended many times since 1990, including reorganizations affecting licensing boards and new participation provisions. Anyone evaluating current TSERS participation by a licensing board's employees should consult current Chapter 135 and current Retirement Systems Division guidance.

Historical context: what the AG concluded

The opinion belongs to a 1980s-1990s state pattern of trimming TSERS participation for entities that were not really part of the core state workforce. Independent licensing boards collect their own license fees, set their own pay scales, and operate at arm's length from the General Fund. The Symphony Society and Art Society are similar: they receive some state support but are operationally private. Chapter 412 was the General Assembly's way of saying that as of mid-1983, the path into TSERS for these peripheral entities was closing.

The Cosmetic Art Examiners board fell into a hybrid zone. It administered a licensing law (which made § 135-1.1 the operative provision) but was also subject to the Personnel Act and the Budget Act (which made it look more like a regular state agency). The AG's job was to decide which classification controlled. The answer was: the licensing-administration classification, because § 135-1.1 says so on its face.

The reasoning also reflects a structural choice. The General Assembly could have written exceptions into § 135-1.1 for licensing boards within the Personnel and Budget Acts but did not. The omission was treated as deliberate. The AG declined to add an exception by interpretation that the legislature had not added by text.

For board administrators in 1990 the takeaway was operational. Employees hired before July 1, 1983 who were enrolled under the pre-amendment opt-in could continue in TSERS. Employees hired on or after July 1, 1983 had to look elsewhere for retirement coverage (typically a private 401(k) or defined-contribution arrangement the board chose to set up).

Common questions

Which boards does G.S. § 135-1.1 apply to?

"Any State board or agency charged with the duty of administering any law relating to the examination and licensing of persons to practice a profession, trade or occupation." That captures cosmetic art examiners, real estate, accountancy, nursing, pharmacy, and similar professional and trade licensing boards.

Could a licensing board still cover pre-1983 employees in TSERS after the 1983 amendment?

Yes, but only those hired before July 1, 1983, and only if the board had a properly adopted resolution under the pre-amendment opt-in. The freeze ran forward, not backward.

What about the Symphony Society and the Art Society?

Chapter 412 also amended G.S. § 135-27 to put the Symphony and Art Society (alongside other private-association employers) under a parallel July 1, 1983 freeze. The framework is similar even though the statute is different.

Could the legislature reopen TSERS to new licensing-board hires after 1983?

Yes, by statute. The 1990 AG opinion describes the law as it then stood and recommends following its plain meaning. The legislature retained the power to amend § 135-1.1 again at any time.

Did this opinion affect employees already in TSERS?

No. The opinion addresses prospective enrollment for new hires. Employees who were validly enrolled before the 1983 freeze and remained employed continued under the same TSERS coverage they had.

Background and statutory framework

The TSERS coverage rules. G.S. § 135-1(10) (mandatory membership for State employees), G.S. § 135-1(11) (definition of employer including State and other state-affiliated agencies).

The licensing-board carve-out. G.S. § 135-1.1 (originally enacted by Sess. L. 1959, c. 1012). Provides an opt-in path for licensing boards through a governing-board resolution, employer-contribution funding, and employee-contribution collection.

The 1983 freeze. Chapter 412 of the 1983 Session Laws amended § 135-1.1 to set a July 1, 1983 deadline for the election and to limit coverage to employees employed before that date. The Act also amended § 135-27 to apply a parallel freeze to certain private nonprofit associations.

The unrelated administrative regimes. Chapter 126 (State Personnel Act) and Chapter 143, Article 1 (State Budget Act) govern personnel administration and budgeting. Neither act ties TSERS participation to its coverage.

The plain-meaning rule. State ex rel. Martin v. Preston, 325 N.C. 438, 385 S.E.2d 473 (1989).

Citations

• G.S. § 135-1(10), G.S. § 135-1(11)
• G.S. § 135-1.1
• G.S. § 135-27
• G.S. Chapter 126 (State Personnel Act)
• G.S. Chapter 143, Article 1 (State Budget Act)
• Sess. L. 1983, c. 412 (Reg. Sess. 1983), §§ 1–6
• Sess. L. 1959, c. 1012 (enacting G.S. § 135-1.1)
• State ex rel. Martin v. Preston, 325 N.C. 438, 385 S.E.2d 473 (1989)

Source

• Landing page: https://ncdoj.gov/opinions/state-departments-institutions-and-agencies-retirement-occupational-licensing-boards/

Original opinion text

Requested By: Vicky Goudie, Executive Secretary, State Board of Cosmetology

Question: Is Chapter 412 of the 1983 Session Laws, removing certain entities from participation in the Teachers' and State Employees' Retirement System, applicable to occupational licensing boards which are subject to the State Personnel Act and the State Budget Act?

Conclusion: Yes.

The Teachers' and State Employees' Retirement System, hereinafter "the Retirement System," generally includes as employers "the State of North Carolina," local educational authorities, the universities, "or any other agency of and within the State by which a teacher or other employee is paid." G.S. § 135-1(11). Individuals generally must be members of the Retirement System if they are full-time employees, agents or officers of the State "or any of its departments, bureaus and institutions other than educational, whether such employees are elected, appointed or employed. . . ." G.S. § 135-1(10).

Although these general provisions might otherwise be considered to include occupational licensing boards and their employees, there has for many years been a specific provision pertaining to participation of the employees of occupational licensing boards in the Retirement System. Chapter 1012 of the 1959 Session Laws enacted G.S. § 135-1.1, which applies to "[a]ny State board or agency charged with the duty of administering any law relating to the examination and licensing of persons to practice a profession, trade or occupation. . . ." That statute authorized the governing board to adopt a resolution to provide for coverage of its employees in the Retirement System, conditioned on payment of employer contributions from board funds and on collection and forwarding of employee contributions. Id. Thus, for many years independent occupational licensing boards could elect to cover their employees by adopting the kind of resolution required in G.S. § 135-1.1, in contrast to the mandatory coverage for other State agencies' employees.

In 1983, the General Assembly amended G.S. § 135-1.1 to insert the words "on or before July 1, 1983" after the word "elect" so that a licensing board was required to make such an election no later than July 1, 1983, and to insert the words "so employed prior to July 1, 1983" after the word "employees" so that the licensing board could only cause persons employed before that date to be covered. Sess. L. 1983, c. 412, s. 3 (Reg. Sess. 1983).

The same act made other changes in the Retirement System laws. It deleted the Symphony Society and the Art Society as employers within the meaning of G.S. § 135-1(11) and employees of those two entities as employees within the meaning of G.S. § 135-1(10). Sess. L. 1983, c. 412, ss. 1, 2 (Reg. Sess. 1983). It made changes in G.S. § 135-27 concerning participation in the Retirement System of employees of certain private associations related to state government, such as the State Employees' Association and the North Carolina Education Association, among others, and included the Art Society with this group of employers, which already included the Symphony Society. Like occupational licensing boards, these entities could only elect coverage for their employees before July 1, 1983, and can only cover persons employed before that date. Sess. L. 1983, c. 412, §§ 4-6 (Reg. Sess. 1983).

The question has been raised whether Chapter 412 of the 1983 Session Laws is applicable to occupational licensing boards, such as the Cosmetic Art Board and a few others, which are subject to the Personnel Act and/or the State Budget Act. The suggestion was made that Chapter 412 was intended only to apply to certain private nonprofit associations, the Symphony Society, the Art Society, and occupational licensing boards which are not subject to the Personnel Act and the Budget Act. Unfortunately, review of the legislation itself and of relevant statutory provisions does not support that proposition.

Nothing in Chapter 412 of the 1983 Session Laws refers in any way to coverage of the entities, and their employees, by the State Budget Act or the State Personnel Act. Nothing in Article 1 of Chapter 135, governing the Retirement System, or specifically in G.S. § 135-1.1, before or after the 1983 amendment, refers to coverage of occupational licensing boards, or any other agencies whatsoever, or their employees, by the State Personnel and State Budget Acts. Retirement System coverage and participation is not directly linked anywhere, in any respect, to coverage by the State Personnel Act or the State Budget Act. Nothing in the State Personnel Act, G.S. Chapter 126, or in the State Budget Act, G.S. Chapter 143, Article 1, suggests that coverage by either or both of those acts entitles an agency to cause its employees to participate in the Retirement System. The plain language of G.S. § 135-1.1, both before and after the 1983 amendment, applies to "[a]ny State board or agency charged with the duty of administering any law relating to the examination and licensing of persons to practice a profession, trade or occupation. . . ." (emphasis added). There is no expression of any intent to exclude occupational licensing boards covered by the State Personnel Act and the State Budget Act from the terms of G.S. § 135-1.1.

When the words of a statute or constitutional provision are plain, there is no room for interpretation to discover a legislative intention which is not expressed in the plain meaning of the words. See, e.g., State ex rel. Martin v. Preston, 325 N.C. 438, 449, 385 S.E.2d 473 (1989). There is no basis for looking beyond Chapter 412 of the 1983 Session Laws, and the provisions it amends, to interpret the meaning of that enactment and of G.S. § 135-1.1, as amended by it. Since there is no provision elsewhere in the statutes governing the Retirement System, or in the Personnel Act or Budget Act, requiring a different result, those occupational licensing boards subject to the Personnel Act and the Budget Act are also subject to G.S. § 135-1.1, just as are the occupational licensing boards not subject to the Personnel and Budget Acts. An occupational licensing board, even one such as the Cosmetic Arts Board and several others subject to the Personnel and Budget Acts, is not entitled to have any of its employees, who were employed on or after July 1, 1983, covered by and participating in the Retirement System.

Lacy H. Thornburg, Attorney General

Norma S. Harrell, Special Deputy Attorney General