REQUESTED BY: Dear Senator DeCamp:
In your letter of February 20, 1980, you inform us of your observation that the Business List Chain Letter Scheme is identical in almost every respect to the concept of Social Security. In that regard you first inquire about the status of the litigation brought by this Office against this Chain Letter and second ask what steps would be necessary for the State to take to withdraw from participation in the Social Security program.
With respect to this litigation an action has been filed in the Lancaster County District Court seeking a permanent injunction. Some but not all of the defendants have been identified and served. The discovery process is expected to begin after March 15, 1980, with the actual litigation beginning after the completion of discovery.
As to your question concerning the State's withdrawal from the Social Security program, your attention is directed to 42 U.S.C. § 418(g)(1) wherein it is provided:
"Upon giving at least two years' advance notice in writing to the Secretary, a State may terminate, effective at the end of a calendar quarter specified in the notice, its agreement with the Secretary either
"(A) in its entirety, but only if the agreement has been in effect from its effective date for not less than five years prior to the receipt of such notice; or
"(B) with respect to any coverage group designated by the State, but only if the agreement has been in effect with respect to such coverage group for not less than five years prior to the receipt of such notice.
". . .
"(3) If any agreement entered into under this section is terminated in its entirety, the Secretary and the State may not again enter into an agreement pursuant to this section. If any such agreement is terminated with respect to any coverage group, the Secretary and the State may not thereafter modify such agreement so as to again make the agreement applicable with respect to such coverage group."
We would be of the opinion that it would be necessary for the Legislature to pass legislation directing that notice be given to the Secretary of the Treasury indicating the State's desire to terminate its Social Security coverage. We would be further of the opinion that if the Legislature were to take such a step its effect would be to eliminate Social Security coverage of all employees of State Government and of its many political subdivisions. You will note from the Federal Law set out above that any such termination requires two years advance notice. You will also note that once termination is accomplished such a decision is irrevocable and Social Security coverage could not at a future date be reinstated.
Finally, if the decision to terminate Nebraska's coverage in its entirety is reached by the Legislature, the sections of Nebraska law pertaining to Social Security, section68-601, R.R.S. 1943 through section 68-632, R.R.S. 1943, should also be repealed.