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Official Opinion 2012-2

Official Opinion 2012-2

February 7, 2012
To: 

Executive Director
Georgia Firefighters Pension Fund

Re: 

The five percent limitation on alternative investments for the Georgia Firefighters’ Pension Fund is to be based upon the assets’ aggregate historical cost.

This responds to your request for my official opinion on how the limitation within O.C.G.A. § 47-7-127(d) on the amount of the Georgia Firefighters’ Pension Fund’s assets that can be invested in alternative investments is defined. Specifically, you have requested that the following question be answered: "In calculating the amount of alternative investments for determining the 5% cap, is the amount of the investment based on committed amount, the net amount actually paid by the Fund for the current portfolio holdings, or the market value of the investments?"

The Georgia Firefighters’ Pension Fund is the only public fund in the State of Georgia currently approved to invest in alternative investments. Effective July 1, 2010, the General Assembly enacted O.C.G.A. § 47-7-127, entitled "‘Alternative investments’ defined; code of ethics." This statute lists the acceptable forms of alternative investments and the allowed percentages of specific types of alternative investments, defines proprietary information, and sets out reporting requirements for the alternative investments.

Of importance to this opinion is O.C.G.A. § 47-7-127(d), which states as follows:

Alternative investments by the fund may not in the aggregate exceed 5 percent of fund assets at any time. The board shall have the discretion to designate whether any investment that is permitted to be made as an alternative investment pursuant to this Code section and is also permitted to be made as an investment pursuant to Code Section 47-20-83 shall be treated for purposes of the 5 percent limitation and otherwise as an alternative investment made pursuant to this Code section or as an investment made pursuant to Code Section 47-20-83.  If the fund is not in compliance with the limitations imposed by this subsection, it shall make a good faith effort to come into compliance within two years and in any event as soon as practicable thereafter; provided, however, that during any period of noncompliance the fund shall not increase the percentage of its assets committed to be invested in alternative investments but shall be permitted during such period to continue to make investments as required by the then existing commitments of the fund to alternative investments made before the period of noncompliance.

(Emphasis added.) The statute is silent on how the 5 percent limitation on alternative investments in the fund is to be calculated. When interpreting statutes, one "must look for the intent of the legislature and construe statutes to effectuate that intent." City of Roswell v. City of Atlanta, 261 Ga. 657 (1991). "It is an elementary rule of statutory construction that a statute must be construed in relation to other statutes of which it is a part, and all statutes relating to the same subject-matter, briefly called statutes ‘in pari material,’ are construed together, and harmonized wherever possible, so as to ascertain the legislative intendment and give effect thereto." Ryan v. Commr’s of Chatham Cnty., 203 Ga. 730, 731-32 (1948). "[A]ll statutes are presumed to be enacted by the legislature with full knowledge of the existing condition of the law and with reference to it [and] they are to be construed in connection and in harmony with the existing law . . . ." Wigley v. Hambrick, 193 Ga. App. 903, 905 (1989).

It is instructive to review other statutes related to the establishment of the Georgia Firefighters’ Pension Fund. Specifically, O.C.G.A. § 47-7-23 lists the powers and duties of the Board of Trustees of the Georgia Firefighters’ Pension Fund and states in subsection (b) that

[t]he board shall have the full power to invest and reinvest such funds subject to all the terms, conditions, limitations, and restrictions imposed by Article 7 of Chapter 20 of this title, the ‘Public Retirement Systems Investment Authority Law.’ Subject to such terms, conditions, limitations, and restrictions, the board shall have full power to hold, purchase, sell, assign, transfer, and dispose of any of the securities and investments in which any of the funds are invested, including the proceeds of any investments and money belonging to the fund.

(Emphasis added.) Further, O.C.G.A. § 47-7-127(b) and (d) reference the requirements in O.C.G.A. §§ 47-20-82, 47-20-83, and 47-20-84. As Code section 47-7-23 states that the fund is subject to Article 7 of Chapter 20, and the statute in question refers to the statutes making up the Public Retirement Systems Investment Authority Law, it is then necessary to review those particular statutes for guidance in determining how the limitation on alternative investments is to be calculated.

Specifically, O.C.G.A. § 47-20-82, entitled "Investing funds; eligibility; investment limitation," states:

  1. Funds shall invest in or lend their assets on the security of, and shall hold as invested assets, only eligible investments as prescribed in this article.
  2. Eligibility of an investment shall be determined as of the date of its making or acquisition.
  3. Any investment limitation based upon the amount of the fund's assets shall relate to such assets on the basis of the assets' aggregate historical cost.

(Emphasis added.) Thus, O.C.G.A. § 47-20-82(c), as made applicable to the Fund by O.C.G.A. § 47-7-23(b), provides that the five percent limitation in O.C.G.A. § 47-7-127(d) is to be based on the assets’ aggregate historical cost.

Therefore, it is my official opinion that the five percent limitation on alternative investments for the Georgia Firefighters’ Pension Fund is to be based upon the assets’ aggregate historical cost.

Prepared by:

Robin J. Leigh

Assistant Attorney General