When a firefighter or police officer finishes the DROP deferred-retirement plan, can they continue volunteer service at another Arkansas municipality?

Plain-English summary

David Clark, executive director of the Arkansas Local Police and Fire Retirement System (LOPFI), asked AG Dustin McDaniel about the meaning of "participating municipality" in two related statutes:

• A.C.A. § 24-11-434(c): DROP rules for the LOPFI firefighter pension.
• A.C.A. § 24-11-830(c)(2)(A): DROP rules for LOPFI police officer pension.

Both statutes say that at the end of a DROP period (Deferred Retirement Option Plan), the participant must "terminate employment with all participating municipalities" as a firefighter or police officer. The trigger question: if a firefighter completed DROP at Department A (a municipality with its own local fund offering DROP), could he then accept compensated volunteer service as a firefighter at Department B (a municipality whose firefighters are covered directly by LOPFI rather than a local DROP fund)?

The AG framed three questions:

Q1: What is a "participating municipality"?
The statutes don't define it. The AG, reading the statutory text in isolation and absent any administrative interpretation, thought it more likely than not that "participating municipality" would mean only municipalities with their own local funds offering DROP. That reading would allow a DROP retiree to continue service at a non-DROP municipality.

Q2: If "participating municipality" includes non-DROP municipalities, how would the term be defined?
The AG declined to elaborate definitively, because the statutory text doesn't offer a clear secondary reading. The fallback would be a context-sensitive read: any municipality whose firefighters or police are covered by LOPFI directly, including those without local DROP funds.

Q3: Can a member continue or begin volunteer firefighter or police service following DROP?
This is the practical core. Under the narrower reading of "participating municipality," yes, the member could continue volunteer service at a non-DROP municipality. Under the broader reading LOPFI was using (covering all LOPFI-system municipalities), the member could not.

The AG noted a critical second move: administrative deference. Arkansas courts defer to an administrative agency's interpretation of a statute the agency administers and will not overturn it unless it is "clearly wrong." LOPFI administers these statutes. If LOPFI was reading "participating municipality" broadly, the AG predicted a court "might well defer to and affirm" that interpretation, even if the AG's preferred textual reading is narrower.

The AG closed with a recommendation: legislative clarification is warranted. The statutory ambiguity is significant enough that the question deserves a clean answer from the General Assembly rather than slow accretion via deferred administrative practice.

Currency note

This opinion was issued in 2014. 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 LOPFI statutory framework has continued to evolve.

Common questions

What is DROP?
The Deferred Retirement Option Plan. A LOPFI firefighter or police officer eligible to retire elects to enter DROP: he continues working for a specified period, his benefit checks accumulate in a separate account during that period, and he must terminate employment with covered municipalities at the end of DROP.

Why is the termination requirement at issue?
Because the meaning of "all participating municipalities" determines whether the retiree can take a job (or volunteer position) at a different Arkansas municipality covered by LOPFI. A broad reading bars all such moves; a narrow reading allows moves to municipalities not directly running DROP.

What does "participating municipality" mean in plain English?
The AG read the natural sense as "a municipality whose pension fund is participating in the DROP framework," which would be a local fund offering DROP. LOPFI was apparently reading it more broadly to cover any municipality in the LOPFI system, with or without a local DROP fund.

Why didn't the AG just give a definitive answer?
Two reasons. First, the statute is genuinely ambiguous. Second, the AG anticipated administrative deference would defeat his preferred textual reading if LOPFI's interpretation was reasonable.

What does "legislative clarification is warranted" mean?
The AG's polite signal to the General Assembly to fix the ambiguity directly. AG opinions can resolve some interpretive questions, but where the text is unclear and the agency interpretation may control, only legislation can definitively settle the matter.

Background and statutory framework

The Arkansas Local Police and Fire Retirement System (LOPFI), established under title 24 chapter 11, is a statewide system covering local firefighters and police officers. Some municipalities also have their own local firemen's pension and relief funds, typically for firefighters hired before 1983, which LOPFI administers. DROP, available under both the LOPFI firefighter statutes (§ 24-11-434) and the police officer statutes (§ 24-11-830), lets members continue working past their retirement-eligibility date while their benefit checks accumulate.

The "termination" requirement at the end of DROP serves a policy purpose: DROP is a finite extension, not a perpetual deferral. Without the termination requirement, members could indefinitely defer the actual transition from active service to retirement, undermining the planning function DROP serves. But how broadly the termination requirement should reach (to all LOPFI municipalities, or only DROP-offering ones) is a judgment call about how strict that policy goal should be.

The AG's analysis applies the standard Arkansas approach to ambiguous administrative statutes: textual analysis first, administrative deference second, with legislative recommendation as a third-tier option when the first two leave the question unsettled.

Citations

• A.C.A. § 24-11-434(c) (LOPFI firefighter DROP termination)
• A.C.A. § 24-11-830(c)(2)(A) (LOPFI police officer DROP termination)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

STATE OF ARKANSAS

THE ATTORNEY GENERAL
DustTIN MCDANIEL

Opinion No. 2013-098

February 3, 2014

David B. Clark, Executive Director

Arkansas Local Police and Fire Retirement System
620 West Third Street, Suite 200

Little Rock, Arkansas 72201-2223

Dear Mr. Clark:

This is my opinion on your question about the amount of LOPFI service credit, if
any, due a person who continues compensated volunteer service as a municipal
firefighter after concluding participation in the deferred retirement option plan
(“DROP”) of another municipality’s firemen’s pension and relief fund.

The Arkansas Local Police and Fire Retirement System (“LOPFI’) is a statewide
system that covers local firefighters, among others.' LOPFI also administers some
municipal firemen’s pension and relief funds, which generally cover municipal
firefighters hired before 1983.” Some local funds offer DROP.’ At the end of a
person’s DROP period and subject to exceptions not relevant here, he must
“terminate employment with all participating municipalities” as a firefighter.’

Your question arises from this case: A person began regular paid service in 1978
for a municipal fire department having a local fund (“Department A”). In 1981,

' See generally A.C.A. § 24-10-10] to -620 (Repl. 2002, Supp. 2013).

• See generally A.C.A. §§ 24-11-101 to -301 (local funds generally) and 24-11-801 to -834 (firemen’s
  funds) (both Rep]. 2002, Supp. 2013).

3 Under a DROP, a person eligible to retire may continue to work for a limited time during which his
monthly retirement benefit is paid into an account the balance of which is paid over or annuitized at the end
of the DROP period, See A.C.A. § 24-11-830 (Supp. 2013).

4 A.C.A. § 24-11-830(c)(2)(A).

323 CENTER STREET, SUITE 200 * LiTTLE Rock, ARKANSAS 72201
TELEPHONE (501) 682-2007 * Fax (501) 682-8084
INTERNET WEBSITE * http://www.ag.state.ar.us/

David B, Clark

Executive Director, LOPFI
Opinion No, 2013-098
Page 2

while continuing employment with Department A, he began compensated
volunteer service’ for a municipal fire department then having no pension plan at
all (“Department B”®). Later, he participated in Department A’s DROP,
concluding DROP and his employment with Department A in 2002. He continued
serving with Department B, which instituted LOPFI coverage in 2007. As the law
then permitted,’ Department B elected to include, in the firefighter’s service
history certified to LOPFI, his entire service beginning in 1981.

You ask how much LOPFI service credit, if any, the firefighter is entitled to for
his Department B service.

SUMMARY RESPONSE

The law is not entirely clear and legislative clarification is warranted. In my
opinion, however, it is more likely than not that a court addressing the question in
the absence of any administrative interpretation of the term would construe the
term “participating municipality” to include only municipalities with local funds
offering DROP. Under that construction, Department B is not a “participating
municipality,” the firefighter’s continued service with Department B therefore was
not and is not prohibited, and — assuming all other requirements to receive LOPFI
volunteer service credit are met — the firefighter is entitled to credit for all of his
Department B service.

As noted, however, the law is not entirely clear, and it may be subject to more than
one reasonable interpretation. A court will defer to an administrative agency’s
interpretation of law it is responsible for administering and will not overrule that
interpretation unless it is clearly wrong. Given that rule and the statute’s lack of
clarity, I believe a court addressing the question might well defer to and affirm
LOPFI’s interpretation that the term “participating municipalities” includes more
than just municipalities with local funds offering DROP.

See A.C.A. § 24-10-102(35) (Supp. 2013).

° For convenience’s sake, I use “Department A” or “Department B” to refer to a fire department, the
municipality it protects, or, in the case of Department A, the local fund.

” See A.C.A. § 24-10-501(c) (Repl. 2002).

David B. Clark

Executive Director, LOPFI
Opinion No. 2013-098
Page 3

DISCUSSION

As noted above, at the end of a firefighter’s participation in DROP, he must
“terminate employment with all participating municipalities” as a firefighter.* The
statute does not define the term “participating municipalities,” and “the Attorney
General, as a member of the executive department, cannot provide controlling
definitions of terms where the legislature has elected not to provide them.”

In your request for my opinion, you state your conviction that the “true purpose of
[this provision of] the DROP statute” is to assure that, at the end of the DROP
period, a member is “to terminate all service” as a firefighter. You state that the
term “participating municipalities” accordingly should be interpreted here to mean
all of “those municipalities which participate in . . . firefighters pension plans,” not
just local funds that offer DROP.

As also noted in your request, however, a predecessor in this office opined in 2001
that “participating municipality” means “any municipality that has voted to
participate in the [local fund] DROP program.”'° My predecessor stated that “the
only plausible reference for the word ‘participating’ would be the DROP
program.” He also noted that the local fund DROP statute — the only place in the
statutes governing local funds and LOPFI where the term “participating
municipalities” appears — was enacted separately from other law governing local
funds and LOPFI and had DROP as its sole subject. Finally, my predecessor noted
that an earlier opinion!’ took the term “participating municipalities” to imply that
municipalities with local funds may participate in DROP or not, at their option.
That earlier opinion, in other words, also interpreted the word “participating” to
refer to local fund DROP.

While my predecessor did not mention as much, I note that the statute uses some
form of the word “participate” 16 times in addition to its use in the term

® A.C.A. § 24-11-830(c)(2)(A).
” Op. Att’y Gen. 88-122.
° Op. Att’y Gen. 2001-064,

" Op. Att’y Gen, 98-033.

David B, Clark

Executive Director, LOPFI
Opinion No. 2013-098
Page 4

“participating municipalities,” and that each of those uses is clearly a reference to
participation in a local fund DROP. It is true that each instance refers to a
member’s participation in DROP rather than a local fund’s. But it is difficult for
me to conclude that the General Assembly referred 16 times to participation in a
local fund DROP yet intended, without employing any clarifying language, for the
seventeenth reference to be to participation in something broader.

In a case involving construction of the statute at issue here, the Arkansas Supreme
Court referred to a 1999 opinion of the Attorney General that the statute’s
“terminate employment with all participating municipalities” language meant that
a city could not rehire a firefighter who had completed the city’s local fund
DROP.” In holding that the statutory language meant what the Attorney General
had opined that it meant, the Court noted that “there has been no legislative
clarification of the DROP statute following the Attorney General’s opinion... pls
The same can be said here. As stated above, my predecessor opined in 2001 that
“participating municipality” means “any municipality that has voted to participate
in the [local fund] DROP program.”"* In the nearly 13 years since, the General
Assembly has amended the statute four times but has not clarified what
“participating municipalities’ means or otherwise taken issue with my
predecessor’s opinion.””

A general rule of statutory construction is that pension law should be interpreted
liberally, in favor of those intended to be benefited by the law.'° In this context, it
seems clear that local fund DROP participants are the people intended to be
benefited by the statute. Those people are favored by a narrow definition of
“participating municipalities,” so that post-DROP employment is prohibited only

"2 Jackson v. City of Blytheville Civil Serv. Comm’n, 345 Ark. 56, 43 S.W.3d 748 (2001) (referring to Op.
Att’y Gen. 99-078). The case was decided before the statute was amended to permit continued employment
after completing DROP in certain circumstances. See Act 1372 of 2003 (codified at A.C.A. § 24-II-

830(c)(2)(B)).

'3 Td. at 62.

‘4 Op. Att’y Gen. 2001-064.

'> See Acts 1369, 1371, and 1372 of 2003 and Act 1251 of 2005.

'® See, e.g., Op. Att’y Gen. 2006-138 (citing Jackson, supra note 12, and Looper v. Gordon, 201 Ark. 841,
147 S.W.2d 24 (1941)).

David B. Clark

Executive Director, LOPFI
Opinion No, 2013-098
Page 5

to the extent clearly set forth in the statute. In my view, the statute does not clearly
prohibit post-DROP employment in jurisdictions other than those having local
funds that offer DROP."’

For the reasons stated above, it is more likely than not, in my opinion, that a court
addressing the question in the absence of any administrative interpretation of the
term would construe the term “participating municipality” to include only
municipalities with local funds offering DROP and therefore would hold —
assuming all other requirements to receive LOPFI volunteer service credit are met
— that the firefighter is entitled to credit for all of his Department B service.

It is also my view, however, that the term “participating municipalities” may be
“open to two or more constructions, or... of such obscure or doubtful meaning
that reasonable minds might disagree or be uncertain as to its meaning,” and
therefore ambiguous.'* You and my predecessor, reasonable minds both, disagree
on the term’s meaning. The statute accordingly may be ambiguous with respect to
this narrow question, as my predecessor implied.””

When considering an ambiguous statute, a court will “look to the language of the
statute, the subject matter, the object to be accomplished, the purpose to be served,
the remedy provided, the legislative history, and other appropriate means that shed
light on the subject.””° While I find it impossible to say exactly what object is to
be accomplished or purpose is to be served by the provision at issue, I see no
compelling reason to question your conviction that the statute is intended to
prohibit post-DROP employment with any municipality having any sort of pension
plan for firefighters.”' I have considered, to the extent applicable, the other matters

'? The Jackson court noted an exception to the rule of liberal interpretation of pension laws, applicable
when a different interpretation is necessary to ensure compliance with federal income tax laws. Jackson,
345 Ark. at 62. You have not cited any tax reasons for your proposed interpretation and I assume the
exception is not applicable here.

'® Thomas v. Hall, 2012 Ark. 66, *5, 2012 WL 503879.

'° See Op. Att’y Gen, 2001-064.

” City of Maumelle v. Jeffrey Sand Co., 353 Ark. 686, 694, 120 S.W.3d 55 (2003).

*! One might argue, however, that the statutory exception to the general rule requiring termination of

employment is inconsistent with a supposed statutory purpose of universally prohibiting post-DROP
employment. See A.C.A. § 24-11-830(c)(2)(B).

David B. Clark

Executive Director, LOPFI
Opinion No, 2013-098
Page 6

enumerated in the foregoing quote, and have found nothing that sheds light on the
uncertainty.

In construing any statute, courts also examine other statutes relevant to the subject
matter and give meaning to the entire statutory scheme.”” Here, certain LOPFI
statutes use the word “participation” to describe a public employer’s involvement
with LOPFI in general.”? One might cite those statutes in arguing for a broad
reading of “participating municipalities” in the local fund DROP statute.

Because the statute may be ambiguous and because factors other than the statute’s
language do not compel any particular interpretation, I am — as stated above —
unable to predict with certainty how a court would interpret it, though I have
stated my opinion as to the likely result in the absence of administrative
interpretation. Legislative clarification would be beneficial.

But an agency’s interpretation of a law the agency is charged with administering is
entitled to great deference and will not be overruled by a court unless the
interpretation is clearly wrong.** Given that rule and the statute’s possible
ambiguity, it is my opinion that an administrative interpretation that “participating
municipalities” means “municipalities that participate in . . . firefighters pension
plans” likely would not be held by a court to be clearly wrong.

Assistant Attorney General J. M. Barker prepared this opinion, which I approve.

Sincerely,
(LEK /

DUSTIN McDAMEL

Attorney General

DM:JMB/cyh

2 See e.g., Echols v. State, 2010 Ark. 417, 373 S.W.3d 892.
3 See A.C.A. §§ 24-10-303, 24-10-401(b) (Repl. 2002).

*4 See, e.g, Arkansas Pub, Emp. Ret. Sys. v. Taylor, 2013 Ark.37, = S.W.3d___, 2013 WL 460425.