The Municipal Association of South Carolina plans to appeal a state Supreme Court ruling issued today that said a trust organized by the association created to help South Carolina municipalities cover future retiree benefits was unconstitutional, said Howard Duvall, executive director of the association.
The association has 15 days to petition for a rehearing.
The ruling said the city of Charleston invested in an illegal trust to get around a constitutional prohibition on investing in stock. The $29.3 billion South Carolina Retirement Systems is allowed to invest in stock, but the court said the state constitution forbids stock investments for municipalities. Mr. Duvall said the association, which has a $7 million fund with 11 local governments that includes Charleston and other cities, is not invested in corporate equities, but in U.S. Treasury securities.
The municipalities have used the trust to attempt to comply with new federal accounting rules requiring them to hold additional cash reserves for future health benefits and other retiree perks, Mr. Duvall said.