Advisory Opinion 2005-01A

Dear Mr. Childers:

This is in response to your request for an opinion on behalf of the Georgia Department of Community Health (GDCH) regarding the applicability of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") to Georgia's State Health Benefit Plan (SHBP). Specifically, you request an advisory opinion concluding that the status of the SHBP as a "governmental plan" within the meaning of section 3(32) of ERISA would not be adversely affected if it were extended to cover the employees of Georgia's Agricultural Commodities Commissions (ACCs).

The following summary is based on facts and representations in your correspondence, and information we received from the ACCs in support of your request. In accordance with section 45-18-2 of the Official Code of Georgia, the Department of Community Health established the SHPB to provide to employees and retired employees of the state, among other benefits, group health insurance against the financial costs of hospitalization, surgery, and medical treatment and care. The GDCH's Public Employee Health Benefits Division is responsible for the day-to-day operations of the SHBP. The SHBP covers over 300,000 state employees, school system employees, and retirees. The SHBP is considering including the employees of the Georgia's ACCs in the plan. You represent that the ACCs currently have a total of 16 employees who would be included as participants in the SHBP. For purposes of this opinion, we assume, without examining the issue, that the SHBP as currently structured and operated is a "governmental plan" within the meaning of ERISA § 3(32).

The Georgia Agricultural Commodities Promotion Act provides that the purpose of the ACCs is to implement Article VII, Section III, Paragraph II(b) of the Georgia Constitution. The Georgia Constitution provides that the purpose of the ACCs is to promote the production, marketing, sale, use and utilization, processing, and improvement of agricultural products. The financing of the cost of ACC programs has been expressly found by the Georgia Legislature to be an exercise of the authority vested in the Georgia General Assembly. Ga. Code Ann. § 2-8-2. Each ACC, according to the Georgia Code, is "confirmed as a public corporation and instrumentality of the State of Georgia." Ga. Code Ann. §§ 2-8-14. The Georgia Commissioner of Agriculture (Commissioner) has the authority to collect and disburse the ACC's funds. Ga. Code Ann. § 2-8-16. Each ACC's dealings with respect to contracts and actions in court proceedings are as a public corporation and an instrumentality of the State of Georgia. Ga. Code Ann. § 2-8-15. At the request of the Georgia Department of Agriculture, the State Attorney General represents the ACCs in legal matters. Under section 47-2-312 of the Georgia Code, the ACCs are "declared to be adjuncts of the Georgia Department of Agriculture," and the ACC's employees are subject to Georgia's merit system of personnel administration and are permitted to participate in Georgias state employees retirement system.

Each ACC is governed by a board comprised of nine members. The Commissioner, who is a publicly elected official, sits as an ex officio member on each ACC's board and has "supervisory jurisdiction" over the administration and enforcement of various Georgia laws governing the ACCs. Ga. Code Ann. §§ 2-8-12, 2-8-14. The Agriculture Committee of the Georgia Senate elects one ex officio member, and the Agriculture Committee of the General Assembly of the State of Georgia elects another ex officio member. Id. An additional ex officio member is the president of the Georgia Farm Bureau Federation. Id. The remaining members are appointed by the ex officio members from a list of nominees submitted by the producers of the affected agricultural commodity. Id. Ex officio members are also entitled to vote on matters pertaining to the organization of the ACC. Id. By statute, each board member of the ACCs shall be a public officer. Id.

ERISA § 4(b)(1) provides that Title I of ERISA does not apply to an employee benefit plan that is a "governmental plan" as defined in ERISA § 3(32). ERISA § 3(32) defines the term "governmental plan," in pertinent part, as "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing."  The terms "political subdivision," "agency," and "instrumentality," are not defined in ERISA, nor are there any regulations under ERISA that interpret those terms. The specific facts and circumstances of the relationship between the particular entity and the government must be examined to determine whether the entity is a political subdivision or agency or instrumentality as required in § 3(32).

Based on the above-described information you submitted regarding the structure, governance, and operation of the ACCs, it is the view of the Department that the ACCs are "agencies" or "instrumentalities" of state government for purposes of ERISA § 3(32). Accordingly, assuming the SHBP is currently a "governmental plan" excluded from Title I coverage by ERISA § 4(b)(1), it is the opinion of the Department that amending the SHBP to permit participation of the ACC's employees would not adversely affect the status of the SHBP as a "governmental plan" within the meaning of ERISA § 3(32).

This letter constitutes an advisory opinion under ERISA Procedure 76-1, 41 Fed. Reg. 36281 (1976), and is issued subject to the provisions of that procedure, including section 10 thereof, relating to the effect of advisory opinions. Further, this letter expresses no opinion as to any particular tax treatment of the SHBP under the Internal Revenue Code, as administered by the Internal Revenue Service.