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Dear Ms. Woods:

You have requested the opinion of this office as to whether operational expenses paid to bus operators pursuant to LSA-R.S.17:497 can be used for purposes of contributions to the School Employee Retirement System.

LSA-R.S. 17:497 provides for compensation for operational expenses incurred by school bus operators. This compensation constitutes a reimbursement for expenses and is paid separately from the minimum salary set for such employees. LSA-R.S. 17:496 F.

LSA-R.S. 11:1001 et seq. establishes the School Employees' Retirement System. This retirement system provides allowances and other benefits for school bus operators. (LSA-R.S. 11:1001 A). Retirement System members' contributions to the system are based on and deducted from the "earnable compensation" of each member.

LSA-R.S. 11:1002(12) defines earnable compensation as:

"Earnable compensation" means the full amount earned by an employee for a given pay period. Earnable compensation shall not include overtime, operating expenses, the cost of insurance paid by the employer, or any allowance for expenses authorized and incurred as an incident of employment, nor payments in lieu of sick or annual leave. Contributions made by the employer under the provisions of this Chapter shall not be considered as a part of the employee's rate of pay or compensation notwithstanding the provisions of any other law. (Emphasis added).

It is clear from the statutory language that operating expenses earned under LSA-R.S. 17:497 are not considered earnable compensation for purposes of the School Employees' Retirement System. In fact, this office has previously stated that LSA-R.S. 17:497's compensation does not constitute earnings.

Attorney General Opinion number 81-847 addressed whether a disability retiree who owns his own bus could be paid operational expenses and, if so, whether his disability benefits could be offset by the operational expenses he receives. In answer to these questions we stated that operational expenses were not considered to be income for purposes of the retirement system. Further, because operational expenses should not be considered as earnings, they could not be used to offset his disability retirement benefits.

You stated in your opinion request that operational compensation is subject to income tax withholdings under the Internal Revenue Code and that it is included in gross wages and salary reported on Form W-2. Hence, it should be noted at this time, that the opinion expressed herein should not be interpreted as having any bearing on the determination of whether LSA-R.S. 17:497's compensation is considered "income" for purposes of the federal tax laws.

Therefore, it is the opinion of this office that retirement system contributions may not be paid out of operational expense compensation paid to school bus operators pursuant to LSA-R.S.17:497.

I hope that this sufficiently answers your inquiry. If you require any further information, please feel free to contact this office.

Yours very truly,

RICHARD P. IEYOUB Attorney General

BY: BETH A. CONRAD Assistant Attorney General

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