The 1987 Legislature created the Department of Labor Employees Retirement Board to administer a retirement program established under SDCL 61-2-15. What is the scope of the Board's authority? Does it merely oversee the Department of Labor's administration of the plan, or does it actually administer the plan itself, including investment decisions, eligibility determinations, contribution and benefit amounts?
Plain-English summary
South Dakota has had a separate retirement plan for Department of Labor employees since 1961. It started life as the Unemployment Compensation Commission's plan, originally authorized by Chapter 104 of the Laws of 1961. The plan covered Employment Security Division and State Employment Service Division employees, separate from the broader State Retirement System that covers most other state employees.
The administration of this special plan migrated over the decades. Originally the Unemployment Compensation Commission ran it. Chapter 94 of the 1951 laws moved administration to the Commissioners of Employment Security. Chapter 359 of the 1978 laws moved it to the Secretary of Labor. Throughout, administration was by an executive officer who handled investments, eligibility, contribution rates, benefit levels, and the other administrative work of running a pension plan.
In 1987, the Legislature changed the pattern. Chapter 386 of the 1987 laws created the South Dakota Department of Labor Employees Retirement Board, a multi-member governance body, and assigned it the duty to "administer the retirement program provided by SDCL 61-2-15."
The Board's members were uncertain how much of the Secretary of Labor's old role they had inherited. Mr. Riter asked AG Tellinghuisen to clarify whether the Board was a true administrator (with full investment, eligibility, and rate-setting authority) or a mere oversight committee (with the Secretary of Labor still actually running things).
Tellinghuisen ruled for full transfer. The 1987 Chapter 386 supplanted the Secretary of Labor's authority entirely. The Board now does "anything and everything constituting the 'administration' of the retirement program."
His reasoning was structural and textual. The original authority statute (SDCL 61-2-15) had said the Department of Labor "may establish and contract for a retirement program for the personnel of the Department." SDCL 61-2-16 had then said the Secretary of Labor administered the plan. Chapter 386 of 1987 left SDCL 61-2-15's authority statement intact but, by its terms, vested administration in the new Board. The Secretary of Labor's role under SDCL 61-2-16 was effectively superseded for purposes of the retirement plan.
Tellinghuisen cited Matter of Bode's Estate for the doctrine that repeal by implication requires "two irreconcilably repugnant acts," and Lien v. Rowe for the proposition that "an amendment is usually designed either to alter the operation and effect of earlier provisions or to clarify their meaning." Chapter 386 was an amendment that altered the operation: it removed administration from the Secretary and gave it to the Board. The Secretary's residual statutory duties on the unemployment compensation fund (SDCL 61-2-18) remained untouched, but those relate to a different "fund" as defined in SDCL 61-1-1(6) and do not concern the retirement program.
The opinion concluded with a procedural note. SDCL 61-2-15.2 requires the Board to report annually to the Legislature's Retirement Laws Committee on the financial and actuarial status of the retirement program. SDCL 2-6-8 created that committee, and SDCL 2-6-11 lays out its oversight duties. The reporting requirement is for legislative oversight, not for shifting administrative authority back to the Secretary. The Board administers; the Committee reviews.
Currency note
This opinion was issued in 1987. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The South Dakota Department of Labor and its retirement program have undergone reorganization since 1987, including merger with parts of the Department of Regulation. SDCL Title 61 has been amended multiple times. Current questions about state Department of Labor employee retirement should be verified against current SDCL Title 61 statutes and the modern South Dakota Retirement System rules rather than relied upon from this 1987 opinion.
What the opinion meant at the time
For the new Department of Labor Employees Retirement Board, the opinion was empowering. The Board had real authority, not just oversight authority. It needed to staff up, hire actuaries and investment managers, and make decisions on contribution rates and benefit levels. The Secretary of Labor was no longer the locus of those decisions.
For the Secretary of Labor, the opinion clarified that the special retirement plan was no longer the Secretary's responsibility. The Secretary kept the unemployment compensation fund and the broader Department of Labor operations but stepped out of pension-plan administration.
For Department of Labor employees in the plan, the opinion provided assurance that someone was clearly responsible for the plan going forward. The 1987 Chapter 386 had created some ambiguity about whether the Board was administrative or advisory; Tellinghuisen's opinion settled the matter as administrative.
For the Retirement Laws Committee, the opinion clarified its own role. It would receive annual reports and exercise legislative oversight but would not direct the Board's administrative decisions.
For the broader state retirement system (administered separately under SDCL chapter 3-12), the opinion reinforced the doctrine that the Department of Labor special plan was indeed a distinct, separately-administered system. Pre-1980 Department of Labor employees who had elected to remain in the special plan (per Chapter 33 of 1980) continued to be governed by the special plan and its Board, not by the State Retirement System.
Common questions
Q: Why does the Department of Labor have its own retirement plan?
A: Historical accident, more than design. The Unemployment Compensation Division and State Employment Service Division had federal funding through the Wagner-Peyser Act and federal-state cooperative arrangements. That federal funding stream supported a separate retirement plan, distinct from the general state retirement system. As Department reorganizations happened over the decades, the special plan persisted as a vestige.
Q: What is "repeal by implication"?
A: A doctrine that says when two statutes conflict, the later statute repeals the earlier to the extent of the conflict, even if the later statute does not say so expressly. Courts disfavor implied repeals and require the two statutes to be "irreconcilably repugnant" before applying the doctrine. Tellinghuisen avoided the implied-repeal label by characterizing Chapter 386 as an amendment that "altered the operation" rather than as a repeal.
Q: What does the Retirement Laws Committee do?
A: It is a legislative oversight body that reviews state retirement and pension programs, makes recommendations for revisions, and presents legislative drafts to ensure sound and equitable retirement programs. It does not run any plan; it provides legislative oversight and policy guidance.
Q: Could the Board contract out administration?
A: The opinion does not address this directly. As administrator, the Board would have the usual power to engage actuaries, investment managers, recordkeepers, and other service providers. Whether it could delegate core administrative discretion (eligibility decisions, benefit calculations) is a separate question that would depend on fiduciary duty principles and statutory delegation rules.
Q: What happens if the plan becomes underfunded?
A: The Board would have to address the solvency through some combination of higher contributions, lower benefits, or different investment strategy. The Retirement Laws Committee's annual review would surface solvency issues at the legislative level. SDCL 61-2-18, by its terms, is limited to the unemployment compensation fund and does not provide a Secretary-of-Labor remedy for the retirement plan.
Background and statutory framework
South Dakota's state employee retirement systems have evolved through several institutional structures. The main system (SDCL chapter 3-12) covers most state employees. Specialty systems have included judicial retirement, law enforcement retirement, and the Department of Labor employees retirement plan. The Department of Labor plan is the smallest of these, covering only employees of the Department's Unemployment Insurance and Employment Service divisions and their predecessor agencies.
The 1980 Chapter 33 partially merged the Department of Labor plan with the State Retirement System. New hires were folded into the SRS, but pre-1980 employees could elect to remain with the Department of Labor plan. The election was an ongoing feature: a pre-1980 employee could join SRS but continue to accrue benefits under the prior plan, with various cross-credit rules in SDCL 3-12-95 and 3-12-62.1.
The 1987 Chapter 386 was a governance reform. The Legislature wanted the special plan governed by a board rather than by a single executive officer (the Secretary of Labor) who had other priorities. Boards provide diversification of perspective, continuity across administrative changes, and protection against single-point-of-failure decisions.
Tellinghuisen's opinion confirmed that the governance reform was substantive, not cosmetic. The Board ran the plan. The Secretary of Labor was out of pension-plan administration. The Retirement Laws Committee provided legislative oversight. Each institutional actor had a clear role.
Source
Original opinion text
Authority of Department of Labor Employees Retirement Board to administer Retirement Program established pursuant to SDCL 61-2-15
Dear Mr. Riter:
You have requested an official opinion from this Office on the authority of the Employees Retirement Board, created by Chapter 386, Laws of 1987, "An Act to establish a board to administer the retirement program for certain employees of the department of labor."
You state the Board is uncertain of the nature and extent of the authority and responsibilities granted to it pursuant to SDCL §§ 61-2-15, -15.1 and -15.2.
Specifically you inquire regarding whether the Board itself is empowered to make the determinations regarding the type of investments which should be used for the funds in the retirement plan; whether the Board is empowered to make decisions regarding eligibility for participation, and if eligibility is determined either contribution amounts or benefit amounts, and decide other substantive issues which may be presented to it. You further ask whether the Board's function is merely to oversee the Department of Labor's operation and administration of the plan, or to actually administer the plan itself.
In my opinion, by the adoption of Chapter 386, Laws of 1987, the Legislature totally supplanted the authority of the Secretary of Labor to administer the retirement plan originally created by Chapter 104, Laws of 1961.
BACKGROUND OF THE PROGRAM
Originally, there existed an Unemployment Compensation Commission (SDC 1939, § 17.0803), whose duty it was to administer the "fund" established as the unemployment compensation fund (SDC 17.0802(9)). There were two coordinate divisions of the Commission; the State Employment Service Division and the Unemployment Compensation Division.
The Commission appointed the officers, accountants, attorneys and others; delegated them authority and power, and administered the provisions of Chapter 17.08. By Chapter 94, Laws of 1951, these duties were assumed by the Commissioners of Employment Security, and finally under Chapter 359, Laws of 1978, by the Secretary of Labor.
In 1961, Chapter 104 amended SDC 1960 Supp. 17.0805, the basic authority statute of the Commissioner, to give him authority to "... contract for a retirement program for the personnel of the Department...." In 1968, by Chapter 90, the hospital insurance program was added to this authorization.
These sections were codified in SDCL as 61-2-15. Chapter 33, Laws of 1980, amended the state retirement system chapter to exclude from that system, members of the now Department of Labor's retirement system who were employed prior to July 1, 1980, and who elected to remain with the previous system. That Chapter also required all new employees to become members of the State Retirement System, established pursuant to SDCL 3-12. It further provided that members of the "Labor" system might elect to join the State Retirement System and yet continue to accrue benefits under their former program without those benefits being counted as other public benefits. It mandated, however, that they could not use prior credited service for accruing further longevity in the State system but might use the same for vesting, family benefits and disability coverage. (SDCL §§ 3-12-95, 3-12-95 and 3-12-62.1.)
Until 1987, the special retirement program originally set up for the Employment Security employees in 1961, continued under the administration of the Secretary of Labor (SDCL 61-2-16).
In 1987, by the adoption of Chapter 386, the Legislature created the South Dakota Department of Labor Employee's Retirement Board. The Board's duty, pursuant to section 1 of the Act, is to "administer the retirement program provided by SDCL 61-2-15." SDCL 61-2-15 being the authority of the Department of Labor to "establish and contract for a retirement program for eligible employees." The original Employment Security Commission, the Commissioner, and the Secretary of Labor were each consecutively given the authority to "administer" Title 61, including the retirement program. Now the Employee's Retirement Board is required to "administer the retirement program provided by § 61-2-15."
While it might be considered a repeal by implication by some, I do not consider it as such since that implies two irreconcilably repugnant acts. Matter of Bode's Estate, 273 N.W.2d 180 (S.D. 1979). By adopting Chapter 386, Laws of 1987, the Legislature has merely removed the administration of this program from the Secretary of Labor and vested the power of administration in the Employees Retirement Board. The South Dakota Supreme Court held in Lien v. Rowe, 77 S.D. 422, 92 N.W.2d 922 (1958): "An amendment is usually designed either to alter the operation and effect of earlier provisions or to clarify their meaning." 92 N.W.2d at 924. Here the purpose of the amendment is intended to "alter the operation" of the administration of the special retirement system by removing its control from the Secretary of Labor, who previously administered it under SDCL 61-2-16, and vesting it in the newly created Board.
In my opinion, the Board is now required to do anything and everything constituting the "administration" of the retirement program. This would include all those things heretofore "administered" by the Secretary of Labor.
It has been suggested that SDCL 61-2-18 may impose on the Secretary of Labor the obligation to make recommendations on changes in contribution or benefit rates to protect the "solvency of the fund." This section, however, deals with the term "fund" as defined in SDCL 61-1-1(6) and means the unemployment compensation fund established by Title 61 and not the retirement program.
You inquired regarding the Board's duties under SDCL 61-2-15.2 to report annually to the Retirement Laws Committee, created by SDCL 2-6-8, regarding the financial and actuarial status of the retirement program and upon the benefits provided under that program. SDCL 2-6-8 merely establishes a legislative oversight committee. This committee is to study the retirement and pension laws applicable to employees; appraise, evaluate, and make recommendations for revisions in financial provisions and methods concerning the various funds (SDCL 2-6-11); and to present legislative drafts to effect sound and equitable public employees' retirement programs. In order to function effectively, this Committee needs input from all public retirement programs; hence the reporting requirement.
In my view, your board is required to make substantive as well as procedural decisions concerning the retirement program should the need arise. I do not find the statutes inconsistent in this regard.
Respectfully submitted,
Roger A. Tellinghuisen
Attorney General