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2016 Op. Tenn. Att'y Gen. 1 (2016)

handle is hein.sag/sagtn0177 and id is 1 raw text is: STATE OF TENNESSEE OFFICE OF THE ATTORNEY GENERAL January 5, 2016 Opinion No. 16-01 Assumption of Memphis City Schools' Debts by Shelby County after Transfer of School Operations to County Ouestion The City of Memphis Special School District (Memphis City Schools) carried an unfunded Other Post Employment Benefits (OPEB) liability when it surrendered its charter several years ago. At that time all Memphis City Schools operations were transferred to Shelby County Schools. Under State law, what process is required for Shelby County to assume the OPEB indebtedness of Memphis City Schools that existed when school operations were transferred? Opinion For Shelby County to assume the OPEB indebtedness of Memphis City Schools that existed when school operations were transferred to Shelby County Schools, Tennessee Code Annotated § 49-2-1002(d) requires the county legislative body to adopt, by a vote of a majority of its members, a resolution assuming the OPEB indebtedness owed by Memphis City Schools. ANALYSIS Your question relates to the 2011 transfer of the operations of the Memphis City Schools to the Shelby County Schools following Memphis City Schools' surrender of its charter. At the time of this transition, Memphis City Schools apparently had existing financial obligations related to Other Post Employment Benefits (OPEB).1 You have asked what Tennessee law requires for Shelby County to assume the existing OPEB indebtedness of the now-abolished Memphis City Schools. Tennessee Code Annotated § 49-2-1002(d) sets forth the applicable requirements for assuming the indebtedness. It provides as follows: (d) The county board of education shall operate the schools of any town, city, or special school district transferred to them by authority of § 49-2-502 and this Other Post Employment Benefits (OPEB) is an accounting term created by the Governmental Accounting Standards Board (GASB). OPEB are benefits, other than pensions, that U.S. state and local governments provide to their retired employees; they include principally health care benefits, but may also include life insurance, disability, legal, and other services. See the website of the Governmental Accounting Standards Board at www.gasb.org. GASB Statement 75 (No. 350, June 2015, available at www.gasb.org/jsp/) refers to OPEB as ongoing obligations that must be reported as a liability on the financial statements of the governmental entity subject to the obligations. Accordingly, this opinion assumes that OPEB obligations constitute indebtedness within the meaning of Tenn. Code Ann. § 49-2- 1002(d).