Can a LOPFI member rely on an old quoted price to buy retirement service credit at the old rate?

Plain-English summary

State Representative Bruce Cozart asked the AG about a police officer who in 2010 had received a quoted price from LOPFI (the Arkansas Local Police and Fire Retirement System) for buying credited service under Ark. Code Ann. § 24-10-506, "with the understanding that the purchase amounts would never change." Rep. Cozart asked two questions: did legislative changes to § 24-10-506 after 2010 that affected actuarial calculations violate the ex post facto clauses of the U.S. and Arkansas constitutions, and did the LOPFI representative's verbal assurance create a contract that bound the system to the 2010 price?

AG Leslie Rutledge said the first question was based on a mistaken assumption. The requirement that the service-credit purchase amount be the "actuarial equivalent" determined "as of the time of the purchase" was added by Act 1455 of 1999 and was already part of the statute in 2010. So there was no relevant post-2010 change in actuarial calculations to test. The AG added that ex post facto analysis applies only to criminal sanctions anyway, per Garrett v. State, 347 Ark. 860 (2002), and Taylor v. The Governor, 1 Ark. 21 (1837); a retirement-system price update is not a criminal sanction.

The second question got the same answer: no. Even if a LOPFI representative had actually told a member that the price would not change, that statement could not create a contract binding the system contrary to § 24-10-506(a)(3)'s clear actuarial-at-time-of-purchase requirement. Under Arkansas State Highway Commission v. Townsend, 313 Ark. 702 (1993), a sovereign is not bound by unauthorized acts of its employees, including misstatements of law. A LOPFI representative had no authority to override a statutory directive that protected the system's actuarial soundness.

Currency note

This opinion was issued in 2016. 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

What does "actuarial equivalent" mean in the LOPFI service-credit context?
The cost of a year of credited service has to be computed by the system's actuary so the cost reflects the value of the benefit the member is buying, as of the moment of purchase. Older quoted prices do not "lock in" because the underlying assumptions (mortality, interest, salary growth, fund performance) change.

When was the "at the time of the purchase" rule added?
Act 1455 of 1999, codified at Ark. Code Ann. § 24-10-506(a)(3). The premise of Rep. Cozart's question (that post-2010 changes were the source of any price update) was therefore wrong as a matter of statutory history.

Why does ex post facto not apply?
The Arkansas Supreme Court in Garrett v. State quoted the 1837 case Taylor v. The Governor: "An ex post facto law declares an offense to be punishable in a manner that it was not punishable at the time it was committed, and relates exclusively to criminal proceedings." Civil retirement-system math is not in that category.

Can a pension representative's verbal promise lock in a price?
No. Under Townsend, the state is not bound by its employees' unauthorized acts, including misstatements of law. The LOPFI representative had no authority to countermand a statutory directive, so any such promise cannot create a contract that overrides the actuarial requirement.

What if the system actually quoted a number in writing in 2010?
The same analysis: the statute itself sets the legal price, and any quoted number that diverges from the actuarial value at the time of an actual purchase has no force against the statute. A quoted estimate, written or oral, is not a binding price guarantee under Arkansas law as the AG read it.

Background and statutory framework

LOPFI is the Arkansas Local Police and Fire Retirement System. Active members can purchase credited service for prior pension-fund-covered service under Ark. Code Ann. § 24-10-506. Subsection (a)(3), as added by Act 1455 of 1999, requires the member to contribute "an amount that is the actuarial equivalent of the value of the credited service to be purchased. This actuarial equivalent would be as of the time of the purchase of credited service and would be determined by the actuary to the system."

The ex post facto framework: Garrett v. State, 347 Ark. 860 (2002), repeats the rule from Taylor v. The Governor, 1 Ark. 21 (1837), that an ex post facto law "relates exclusively to criminal proceedings." Civil enactments, including retirement-system arithmetic, fall outside.

Sovereign estoppel: Arkansas State Highway Commission v. Townsend, 313 Ark. 702 (1993), addressed whether the State could be estopped from enforcing statutory directives based on misstatements by Highway Commission employees about encroachments. The Court held that the employees "had no authority to countermand a statutory directive," and that "a sovereign is not bound by the unauthorized acts of its employees." The AG read that as squarely covering the LOPFI representative scenario.

Citations

Statutes: Ark. Code Ann. § 24-10-506, particularly § 24-10-506(a)(3) (Repl. 2014); Acts 1999, No. 1455, § 1.

Cases: Garrett v. State, 347 Ark. 860, 69 S.W.3d 844 (2002); Taylor v. The Governor, 1 Ark. 21 (1837); Arkansas State Highway Commission v. Townsend, 313 Ark. 702, 858 S.W.2d 66 (1993).

Source

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

Original opinion text

Opinion No. 2016-054
June 17, 2016
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE

The Honorable Bruce Cozart
State Representative
420 Rock Creek Road
Hot Springs National Park, AR 71913

Dear Representative Cozart:

This is in response to your request for my opinion regarding Ark. Code Ann. § 24-10-506, which addresses the purchase of credited service by active members of the Arkansas Local Police and Fire Retirement System (LOPFI).

As background for your specific questions, you refer to a law enforcement officer who "was given purchase amounts to buy the service credit in 2010 per Ark. Code Ann. § 24-10-506, with the understanding that the purchase amounts would never change." You then ask:

1. Do legislative changes made to Ark. Code Ann. § 24-10-506 after 2010, that create changes in actuarial calculations violate the ex post facto clauses of the U.S. Constitution and the Arkansas Constitution?
2. Does a LOPFI representative, who verbally advises a LOPFI member [that] the purchase amounts for buying Other Service Credit will remain the same (under law at the time in 2010), create a legal contract with the member?

RESPONSE

Question 1 - Do legislative changes made to Ark. Code Ann. § 24-10-506 after 2010, that create changes in actuarial calculations violate the ex post facto clauses of the U.S. Constitution and the Arkansas Constitution?

This question appears to be based on a mistaken assumption that the actuarial calculations required by Ark. Code Ann. § 24-10-506 were not part of the statute in 2010. In fact, this change came about in 1999. Act 1455 of 1999 added the following requirement to the other conditions that must be met in order for a member to purchase credited service in LOPFI for prior service covered by a local pension fund:

Provided that the member contributes to the system an amount that is the actuarial equivalent of the value of the credited service to be purchased. This actuarial equivalent would be as of the time of the purchase of credited service and would be determined by the actuary to the system.

Contrary to the premise of your first question, therefore, there were no changes to section 24-10-506 after 2010 in connection with the requisite actuarial calculations. It is consequently unnecessary to respond further to this question.

It may nevertheless be helpful to note, generally, that ex post facto concerns are only raised when criminal sanctions come into play. See Garrett v. State, 347 Ark. 860, 864, 69 S.W.3d 844, 846 (2002) ("In general, 'An ex post facto law declares an offense to be punishable in a manner that it was not punishable at the time it was committed, and relates exclusively to criminal proceedings.' Taylor v. The Governor, 1 Ark. 21 (1837).").

Question 2 - Does a LOPFI representative, who verbally advises a LOPFI member [that] the purchase amounts for buying Other Service Credit will remain the same (under law at the time in 2010), create a legal contract with the member?

Because I cannot act as a factfinder in issuing opinions, I cannot test this question's assumption that a LOPFI representative so verbally advised a member. I can opine, nevertheless, that the answer is "no" because any such verbal advice by a LOPFI representative (even if actually given) must be deemed unauthorized, given the clear requirement under section 24-10-506(a)(3) (beginning in 1999, as discussed above) that the purchase amount be actuarially determined "as of the time of the purchase of credited service." This requirement is dictated by prior case law and principles of actuarial soundness. I do not believe the past conduct of a LOPFI representative could impose any contractual obligation on the system that is counter to section 24-10-506(a)(3), and that might prevent the system from remaining actuarially sound.

Sincerely,
LESLIE RUTLEDGE
Attorney General