Dear President Jenkins:
Reference is made to your recent request for an opinion of this office regarding retirement incentive plans.
According to your correspondence, Louisiana State University and the Louisiana State University Board of Supervisors are considering implementation of a retirement incentive plan to encourage the retirement of employees who are otherwise eligible for retirement. You advise that LSU is considering offering a cash option to employees to encourage the employees to retire now, rather than at a future date. Specifically, this office is being asked to examine whether La. Const. Art. VII, §14 or any state law prohibits such a plan.
It is our understanding that the LSU Board believes implementation of a retirement incentive plan for individuals already eligible for retirement will reduce expenditures for the University. In the Board's opinion, such a plan would allow the University to avoid the costs associated with continued employment of eligible employees, including the cost of additional retirement contributions, accrued leave and holiday time, and certain other benefits. Pertinently, your letter states:
"LSU believes that the direct value it receives by the retirement of these individuals far outweighs the cost of the incentive payment. Additionally, great value is derived from the ability of the University to maximize its resources, institute programmatic changes, and adjust academic functions to remain within available resources."
As you are aware, La. Const. Art. VII, § 14 generally prohibits the State and its agencies from donating its funds, credit, property or things of value to or for any person, association or corporation, public or private. In our opinion, an incentive retirement plan such as the one you have described would not violate this constitutional provision, as it is our opinion that a payment pursuant to such a plan would not constitute a donation in either the vernacular or constitutional sense of the word. In accord: Attorney General's Opinion No. 89-576.
We agree with your assessment that LSU would not be making a donation to an employee who chooses to participate in such a retirement incentive plan. Rather, LSU would be entering into an agreement with the employee, which agreement appears to be in the nature of a purchase of the value of the employee's continued right to employment at LSU.
Please be further advised that our research did not reveal any state statutory provision that specifically prohibits LSU from implementing an incentive retirement plan.
We trust the foregoing to sufficiently answer you questions, but if we can be of further assistance, please do not hesitate to contact us.
Very truly yours,
RICHARD P. IEYOUB Attorney General
By: ______________________________ JEANNE-MARIE ZERINGUE BARHAM Assistant Attorney General
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