Hutto v. South Carolina Retirement System (Lawyers Weekly No. 002-164-12, 25 pp.) (J. Michelle Childs, J.) 4:10-cv-02018; D.S.C.
Holding: Although the S.C. Retirement System is primarily funded by contributions from employers and employees, the state is required to appropriate funds to protect the fiscal integrity of the system. The Retirement System also receives funds directly from the state when South Carolina, as an employer, makes its annual appropriation.
The Retirement System is an arm of the state; therefore, it is entitled to immunity under the Eleventh Amendment. Defendants’ motion to dismiss is granted.
A judgment against the Retirement System has the potential to affect the state treasury. In the event that a monetary award created a shortfall in the Retirement System’s funds, the state might have to make up the difference in accordance with its constitutional duty to ensure the availability of funds in the system to meet obligations.
The Retirement System appears to lack significant political autonomy. State officials from the legislative and executive branches are involved in the administration and operation of the Retirement System through their participation on the S.C. Budget and Control Board. The operation of the Retirement System is also highly regulated by a comprehensive statutory scheme, giving it little operational independence.
It is true that S.C. Code Ann. § 9-1-20 establishes the Retirement System as having “the power and privileges of a corporation” and that S.C. Code Ann. § 9-1-1690 says the full faith and credit of the state is not pledged to meet the Retirement System’s obligations. However, statutory language that establishes a state entity as a corporation does not necessarily operate to waive Eleventh Amendment immunity. Moreover, to the extent § 1690 relieves the state of the Retirement System’s contractual obligations, it does not relieve the state of its constitutional requirement to appropriate funds to “insure the availability of funds to meet all normal and accrued liability of the system on a sound actuarial basis.” S.C. Const. Art. X, § 16.
Case law also suggests that S.C. courts treat the Retirement System as an arm of the state.
Finally, the Retirement System is a state-wide concern.
Given this court’s full analysis of Eleventh Amendment immunity, this case is distinguishable from Almond v. Boyles, 792 F.2d 451 (4th Cir. 1986).
The Eleventh Amendment bars the court from hearing this case.
