Can the UNC Board of Governors limit Optional Retirement Program (ORP) eligibility to senior academic and administrative officers, when the statute speaks generally of 'administrators and faculty with the rank of instructor or above'?
Plain-English summary
The Optional Retirement Program is an alternative to the Teachers and State Employees Retirement System (TSERS) that lets eligible UNC employees direct their retirement contributions into portable annuity contracts rather than into the state pension plan. The General Assembly created ORP in 1971 specifically to help UNC recruit faculty and senior administrators who needed retirement portability when moving between universities.
UNC General Administration Sr. Vice President Roy Carroll wrote on behalf of President Molly Broad to ask whether the Board of Governors had authority to limit ORP participation to "senior academic and administrative officers" plus "faculty who hold the rank of instructor or above." That was narrower than the statutory phrase "administrators and faculty of the University of North Carolina with the rank of instructor or above."
The AG said the rules were valid.
Step 1: Board of Governors has broad implementation authority. The Constitution (Art. IX, § 8) and G.S. 116-11(2) give the BoG general control over UNC. G.S. 116-11(5) lets it fix compensation for senior officers. G.S. 135-5.1(a) says ORP "shall be implemented by the Board of Governors." G.S. 135-5.1(e) lets the BoG provide for ORP administration. So the BoG has general rulemaking authority over the program.
Step 2: The statutory phrase is ambiguous. "Administrators and faculty of the University of North Carolina with the rank of instructor or above" has a clear part and an unclear part. The clear part: only faculty with the rank of instructor or above are eligible. So a junior lecturer below instructor rank is out. The unclear part: which non-faculty administrators count? The statute lists "administrators and faculty" as two distinct categories, which suggests non-faculty administrators are eligible. But the phrase "with the rank of instructor or above" could either apply only to faculty (in which case all administrators are eligible) or to both groups (in which case only administrators holding faculty rank are eligible). Neither reading is implausible.
The AG noted that if the legislature had intended "rank of instructor or above" to apply to both groups, the statute could have said "persons with the rank of instructor or above" or "employees with the rank of instructor or above." The fact that the statute keeps administrators and faculty as separate listed categories suggests they were not both subject to the rank requirement.
Step 3: Where a statute is ambiguous, deference is owed. The AG walked through the standard NC line on agency deference: an agency's construction of an ambiguous statute is entitled to "great consideration" (MacPherson, 1973), is "strongly persuasive" (Shealy, 1960), and may even be "prima facie correct" (Vanderbilt, 1960), unless "clearly erroneous" (Gill, 1912). The most recent application of this rule in the case law was Mark IV Beverage, 1998.
Step 4: The BoG's rules are reasonable. Limiting ORP to senior academic and administrative officers (the highest-ranking administrators) plus faculty with the rank of instructor or above is consistent with the program's purpose of attracting and retaining people who need portability. The BoG's rules are not clearly erroneous, so courts should accept them.
The opinion is a textbook application of the implementing-agency-deference doctrine.
Currency note
This opinion was issued in 1999. 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 ORP still exists and continues to serve UNC faculty and senior administrators. G.S. 135-5.1 has been amended several times since 1999 to address vesting, contribution rates, and other operational details. The basic eligibility framework (faculty plus senior administrators) has remained stable, though specific job categories within "senior administrators" have been refined. Anyone analyzing a current ORP eligibility question should pull the current text of G.S. 135-5.1 plus the BoG's current rules.
Common questions
Q: What's the difference between ORP and TSERS?
A: TSERS is the state pension plan: defined benefit, retire at a certain age and length of service, monthly pension calculated by formula. ORP is a defined-contribution plan: state and employee contributions go into individual annuity accounts (TIAA, Fidelity, others), the employee owns the accounts, and the retirement benefit depends on contributions plus investment returns. ORP is portable; TSERS is not.
Q: Why does portability matter for university recruiting?
A: Academic careers often involve moving between universities. A faculty member who leaves UNC after 8 years has built up some TSERS service credit but cannot transfer it. Under ORP, the same faculty member's annuity contracts go with them. That makes ORP attractive to portable academic professionals.
Q: Could the BoG decide to expand ORP to everyone at UNC?
A: Probably not. The statute clearly limits faculty eligibility to the rank of instructor or above. The BoG cannot extend ORP below that level for faculty. For administrators, the statute is ambiguous, and the BoG has some discretion to define which administrators qualify, but extending to clerical or general staff would likely exceed the statutory text.
Q: What is "agency deference" and why does it favor the BoG here?
A: When a statute is ambiguous, NC courts generally defer to the implementing agency's reasonable interpretation. The rationale is that the agency has subject-matter expertise and the legislature gave the agency administrative authority. The deference is not unlimited (a clearly erroneous interpretation can be set aside), but it is substantial when the agency has acted carefully.
Q: Is this similar to federal Chevron deference?
A: Conceptually yes, though the formulation is different. The NC line on agency deference predates federal Chevron and is rooted in earlier state cases (Gill 1912, Shealy 1960). The U.S. Supreme Court's Loper Bright decision in 2024 substantially curtailed federal Chevron deference, but NC courts' approach to ambiguous-statute interpretation continues under the older formulation.
Q: Could a junior administrator denied ORP sue?
A: They could try, but the 1999 AG opinion forecasts that courts would defer to the BoG's reasonable rules. A successful suit would require showing that the BoG's interpretation is "clearly erroneous," which is a high bar.
Background and statutory framework
The Optional Retirement Program was added to NC's retirement framework in 1971 as part of UNC's recruitment toolkit. By the early 1970s, NC was competing with private universities and other state systems for senior faculty and administrators. Those candidates wanted retirement portability that the existing state pension (TSERS) could not provide.
The 1971 legislation gave the UNC Board of Governors authority to implement an alternative retirement vehicle. The statute was written generally: "administrators and faculty of the University of North Carolina with the rank of instructor or above" could participate. The Board of Governors was given administrative authority to flesh out the details.
By the late 1990s, the BoG's implementing rules had become more granular. In 1998-1999, the BoG adopted formal policies limiting ORP eligibility to "senior academic and administrative officers" and to "faculty who hold the rank of instructor or above." That tightening triggered questions from administrators in lower-ranking roles who thought they should qualify.
The 1999 AG opinion gave the BoG a clean legal basis for its narrowed rules. The opinion's framework (ambiguous statute plus agency deference) has been a stable foundation for BoG rules in the ORP space and in other UNC personnel programs.
Citations
- N.C. Const. art. IX, § 8 (UNC Board of Governors constitutional status)
- N.C. Gen. Stat. § 116-11(2) (general powers of BoG)
- N.C. Gen. Stat. § 116-11(5) (BoG fixes compensation of senior officers)
- N.C. Gen. Stat. § 135-5.1 (Optional Retirement Program)
- N.C. Gen. Stat. § 135-5.1(a) (ORP eligibility language)
- N.C. Gen. Stat. § 135-5.1(e) (BoG administration authority)
- Crowell Constructors, Inc. v. State ex rel. Cobey, 342 N.C. 838, 467 S.E.2d 675 (1996)
- Supply Co. of Durham v. Swain Elec. Co., 328 N.C. 651, 403 S.E.2d 291 (1991)
- MacPherson v. City of Asheville, 283 N.C. 299, 307, 196 S.E.2d 200, 206 (1973)
- Shealy v. Associated Transport, 252 N.C. 738, 742, 114 S.E.2d 702, 705 (1960)
- Petition of Vanderbilt University, 252 N.C. 743, 747, 114 S.E.2d 655, 658 (1960)
- Gill v. Commissioners, 160 N.C. 176, 188, 76 S.E. 203, 208 (1912)
- Mark IV Beverage, Inc. v. Molson Breweries USA, Inc., 129 N.C. App. 476, 500 S.E.2d 439, 445 (1998)
Source
Original opinion text
February 4, 1999
Mr. Roy A. Carroll
Senior Vice President and Vice President for Academic Affairs
The University of North Carolina General Administration
P.O. Box 2688
Chapel Hill, NC 27515-2688
RE: Advisory Opinion; Eligibility for Optional Retirement Program; G.S. § 135-5.1(a)
Dear Mr. Carroll:
On behalf of President Broad, you have written to ask our advice on the Board of Governors' implementation of the Optional Retirement Program (ORP) established under G.S. § 135-5.1. The General Assembly established the ORP in 1971 as an alternative to the Teachers and State Employees Retirement System (TSERS). Under the ORP, the employee's and the State's retirement contributions are not paid into TSERS but rather are used to purchase annuity contracts for the employee. Employees who exercise their option to participate in the ORP retain their interest in those annuity contracts and can continue to make contributions to those contracts even after they leave State employment.
The General Assembly created the ORP to enhance UNC's ability to attract and retain administrators and faculty by providing for retirement benefits that are portable between universities. Consistent with that purpose, G.S. § 135-5.1(a) specifically states that the University shall implement the ORP "for the benefit of administrators and faculty of The University of North Carolina with the rank of instructor or above." The Board of Governors has recently adopted policies and rules that provide that eligibility for participation in the ORP is limited to "senior academic and administrative officers" and "faculty who hold the rank of instructor or above." Questions have arisen about the Board of Governors' authority to implement those rules and policies. You have asked for our advice regarding the Board of Governors' authority in this area and the propriety of its policies and rules defining eligibility to participate in the ORP.
The Board of Governors is the constitutionally established agency with responsibility for the general control, supervision, management, and governance of all the affairs of the constituent institutions of the University of North Carolina. Constitution of North Carolina, Art. IX, Sec. 8; G.S. § 116-11(2). Among its specific powers, the Board of Governors is authorized to fix the compensation of all senior academic and administrative officers. G.S. § 116-11(5). With respect to the ORP, G.S. § 135-5.1 expressly provides that the ORP "shall be implemented by the Board of Governors" (G.S. § 135-5.1(a)) and that the Board of Governors "may provide for the administration of . . . and may perform or authorize the performance of the functions necessary for . . . administration" of the ORP. G.S. § 135-5.1(e).
In light of these constitutional and statutory provisions, it is our opinion that the Board of Governors has the general authority to adopt policies and rules reasonably necessary to implement and administer the ORP. Whether that authority includes the power to adopt policies and rules defining eligibility for participation in the ORP requires an understanding of the role of administrative agencies in the construction and interpretation of statutes.
The primary objective of all statutory construction is to ascertain legislative intent in order to assure that both the purpose and the intent of the legislature are carried out. Crowell Constructors, Inc. v. State ex rel. Cobey, 342 N.C. 838, 843, 467 S.E.2d 675, 678 (1996); Supply Co. of Durham v. Swain Elec. Co., 328 N.C. 651, 403 S.E.2d 291 (1991). Absent any ambiguity in the language of a statute, it is the duty of the courts to construe the legislative intent behind administrative statutes and to apply the words of the statute according to their plain and definite meanings. Id. But when the language of a statute is ambiguous, the interpretation of the agency responsible for the administration may be helpful and is entitled to great consideration when the courts are called upon to construe the statute. The Court of Appeals recently summarized the significance of an implementing agency's construction of a statute as follows:
While the construction of a statute by the agency charged with its enforcement is not binding on this Court, it is relevant and is entitled to due consideration. MacPherson v. City of Asheville, 283 N.C. 299, 307, 196 S.E.2d 200, 206 (1973). Our Supreme Court has recognized the significance of an agency's interpretation, regarding it as "strongly persuasive," Shealy v. Associated Transport, 252 N.C. 738, 742, 114 S.E.2d 702, 705 (1960), and even "prima facie correct," Petition of Vanderbilt University, 252 N.C. 743, 747, 114 S.E.2d 655, 658 (1960). The Court has stated that:
[t]he construction placed upon a statute by the officers whose duty it is to execute it is entitled to great consideration, especially if such construction has been made by the highest officers in the executive department of the Government or has been observed and acted upon for many years; and such construction should not be disregarded or overturned unless it is clearly erroneous.
Gill v. Commissioners, 160 N.C. 176, 188, 76 S.E. 203, 208 (1912) (citation omitted).
Mark IV Beverage, Inc. v. Molson Breweries USA, Inc., 129 N.C. App. 476, 500 S.E.2d 439, 445 (1998).
In light of those principles of statutory construction and the role agencies play in implementing authorized programs, the determinative issue here is whether G.S. § 135-5.1(a) plainly and definitely identifies those University employees eligible to participate in the ORP, or whether the language of the statute on that point is ambiguous. If the statute plainly and definitely describes the employees eligible to participate in the ORP, then any rule of the Board of Governors that differs from the plain language of the statute is ineffective. However, if the statute's definition of eligible employees is ambiguous, then the law provides that courts should accept the Board of Governors' rules clarifying eligibility to participate in the ORP as long as these rules are not clearly erroneous. Id.
The particular statutory language at issue here is that portion of G.S. § 135-5.1(a) which states that the University shall implement the ORP "for the benefit of administrators and faculty of The University of North Carolina with the rank of instructor or above." This portion of the statute clearly states the General Assembly's intent to restrict participation in the ORP to "administrators and faculty of The University of North Carolina." Moreover, the statute's reference to both "administrators" and "faculty" clearly indicates that the General Assembly intended to permit persons who were not faculty to participate in the ORP. However, it is not at all clear which non-faculty employees of the University the General Assembly intended to include among the "administrators" eligible to participate in the ORP. Nor, is it clear that the General Assembly intended to limit participation in the ORP to those "administrators" who hold "the rank of instructor or above." Arguably, if the General Assembly had intended to limit participation in the ORP to administrators who hold "the rank of instructor or above," there would have been no reason for the statute to distinguish between administrators and faculty in the first place. The statute would simply have stated that "persons" or "employees" with the rank of instructor or above could participate in the ORP.
In light of the words and syntax of G.S. § 135-5.1(a), it is our opinion that the legislative intent expressed in this portion of the statute is ambiguous. In light of that ambiguity and the Board of Governors' obligations to implement and administer the ORP, it is our opinion that the policies and rules that the Board of Governors has adopted to clarify the description of persons eligible to participate in the ORP are reasonable. Therefore, consistent with well-established precedents and rules of statutory construction, it is our opinion that the courts will accept the Board of Governors' policies and rules as reasonable interpretations of G.S. § 135-5.1(a) and reject any legal challenge to the legitimacy of those policies and rules.
signed by:
Thomas J. Ziko
Special Deputy Attorney General
Alexander M. Peters
Special Deputy Attorney General