Opinion
Argued June 10, 1987.
November 12, 1987.
State Employees' Retirement Board — Contribution rate — Summary judgment — Break in state employment — State Employees' Retirement Code, 71 Pa. C. S. §§ 5101-5956 — Statutory construction — Withdrawal of retirement accumulations — Active and inactive members.
1. Amendments to the State Employees' Retirement Code, 71 Pa. C. S. § 5501.1, requiring active members in the State Employes' Retirement System to contribute additional amounts to the retirement fund have been held to be an unconstitutional impairment of the right to contract for both vested and nonvested members of the System. [85]
2. In considering a motion for summary judgment pleadings and other documents of record will be considered. [87]
3. To obtain summary judgment the moving party must establish that there exists no genuine issue of material fact and that the party is entitled to judgment as a matter of law. [87]
4. Membership in the State Employes' Retirement System is not necessarily terminated by a cessation of employment, and membership may be retained by an employe leaving state employment by leaving the accumulated contributions in the retirement fund. [88-9]
5. Words in a statute must be given their plain and obvious meaning when clear and unambiguous and cannot be ignored under the pretext of pursuing the spirit of the legislation. [89]
6. Employees who were members of the State Employes' Retirement System prior to the enactment of legislation requiring increased contributions to the retirement fund cannot constitutionally be subjected to that increase even if there is a break in their state service if they maintained their membership in the System by leaving their accumulated contributions in the retirement fund. [89]
7. Former employe members of the State Employes' Retirement System who withdraw their accumulated contributions from the retirement fund may properly be subjected to legislatively increased contribution rates upon their return to state service even though they subsequently repurchase credit for their previous state service. [89-90]
8. Under provisions of the State Employees' Retirement Code, 71 Pa. C. S. §§ 5101-5956, separated employes remain active members of the State Employes' Retirement System by continuing their contributions to the retirement fund or are inactive members by simply leaving their accumulated contributions in the fund, and employes in those categories who were employed prior to the enactment of legislatively increased contribution rates are not subject to those increases upon their return to state service. [91]
Argued June 10, 1987, before President Judge CRUMLISH, JR., Judges CRAIG, MacPHAIL, BARRY and COLINS.
Original Jurisdiction Nos. 2064 C.D. 1983, 2133 C.D. 1983 and 2160 C.D. 1983, in case of American Federation of State, County and Municipal Employees, AFL-CIO, by its Trustee Ad Litem, Edward J. Keller v. Commonwealth of Pennsylvania, The Honorable Richard Thornburgh, Governor of the Commonwealth of Pennsylvania; State Employees' Retirement Board, Robert L. Cusma, Executive Director of the State Empoyees' Retirement Board, and R. Budd Dwyer, Treasurer of the Commonwealth of Pennsylvania; in case of Joint Bargaining Committee of the Pennsylvania Social Services Union and Pennsylvania Employment Security Employees' Association, Locals 668 and 675, SEIU, AFL-CIO, by its Trustee Ad Litem, Andrew L. Stern and Harry Beshgetoorian; Pennsylvania Social Services Union, by its Trustee Ad Litem, Andrew L. Stern; Frank Catanese, individually and on behalf of others similarly situated and Lillian Swartz, individually and on behalf of others similarly situated v. Commonwealth of Pennsylvania, The Honorable Richard Thornburgh, Governor of the Commonwealth of Pennsylvania, et al., and in case of Dennis J. Solecki and Lea F. Barbush, as individuals, on behalf of themselves and all others similarly situated v. Commonwealth of Pennsylvania, The Honorable Richard Thornburgh, Governor of the Commonwealth of Pennsylvania et al.
Petitioners and respondents filed cross-motions for summary judgment in Commonwealth Court of Pennsylvania, seeking enforcement of Order dated March 7, 1984. ( 80 Pa. Commw. 611) . Held: Partial summary judgment granted to petitioners. Partial summary judgment granted to respondents.
Stuart W. Davidson, with him, Lee W. Jackson, Alaine S. Williams, and Richard Kirschner, Kirschner, Walters, Willig, Weinberg Dempsey, for petitioners, American Federation of State, County and Municipal Employees, AFL-CIO, by its Trustee Ad Litem, Edward J. Keller, and petitioners Dennis J. Solecki and Lea F. Barbush, et al.
Bruce M. Ludwig, Stephen A. Sheller Associates, for petitioners, Joint Bargaining Committee of Pennsylvania Social Services Union, Pennsylvania Employment Security Employees' Association, et al., and petitioners Frank Catanese and Lillian Swartz, et al.
James J. Kutz, Deputy Attorney General, with him, Allen C. Warshaw, Senior Deputy Attorney General, Chief Litigation Section, LeRoy S. Zimmerman, Attorney General, for respondents, Commonwealth of Pennsylvania, The Honorable Richard Thornburgh, Governor of the Commonwealth of Pennsylvania, et al.
Nicholas Joseph Marcucci, Attorney-in-charge, and Andrew H. Cline, Deputy General Counsel, Office of General Counsel, for respondent, State Employees' Retirement Board, et al.
Gary M. Lightman, with him, Anthony C. Busillo, II, Mancke, Lightman Wagner, for respondents, State Police Lodges of the Fraternal Order of Police.
Petitioners and respondent State Employees' Retirement Board (Board) in these three consolidated matters cross-motion for summary judgment on a motion for enforcement of our March 7, 1984 Order in AFSCME v. Commonwealth, 80 Pa. Commw. 611, 472 A.2d 746 (1984), aff'd sub nom. Association of Pennsylvania State College and University Faculties v. State System of Higher Education, 505 Pa. 369, 479 A.2d 962 (1984), directing in part that:
The American Federation of State, County and Municipal Employees (AFSCME) filed the original suit and was joined at the preliminary injunction stage by the Joint Bargaining Committee of the Pennsylvania Social Services Union and Dennis J. Solecki.
Respondents, jointly and severally, together with their agents and representatives, are hereby permanently enjoined from collecting pension contributions from employees who were members of the State Employes' Retirement System prior to the enactment of Act 31 of 1983, in excess of the five (5%) percent basic contribution rate. . . .
80 Pa. Commw. at 618, 472 A.2d at 749 (emphasis in original).
We held in that opinion that Section 7 of Act 31 of 1983, 71 Pa. C. S. § 5505.1 (Act 31), which requires active members in the State Employes' Retirement System (SERS) to contribute an additional 1 1/4% of their salary to the SER Fund, was an unconstitutional impairment of the right to contract for both vested and nonvested members.
State Employees' Retirement Code, 71 Pa. C. S. §§ 5101-5956.
In Catania v. Commonwealth (Catania I), 498 Pa. 684, 695, 450 A.2d 1342, 1347 (1982), our Supreme Court held that an employee who has complied with all conditions necessary to receive a retirement allowance cannot be affected adversely by subsequent legislation which changes the terms of the retirement contract.
In Catania v. State Employees' Retirement Board (Catania II), 71 Pa. Commw. 393, 455 A.2d 1250 (1983), this Court held that pre-vesting changes which subject the employee to a net detriment are constitutionally unacceptable.
In implementing our Order, however, the Board issued a management directives which mandated the collection of pension contributions at the 6 1/4% rate from employees who were members of the SERS prior to the enactment of Act 31 but who were separated from their employment for more than fourteen days and who were later reinstated or re-employed. The Board collects the additional member contributions from these formerly "separated" members regardless of whether they maintained their contributions in the SER Fund or withdrew their money during their break in service. Dissatisfied with this practice, AFSCME filed the enforcement motion in which it alleged that the Board was improperly applying the higher employee contribution rate to the following SERS members:
Management Directive 570.9, as amended.
(1) Employees who have been suspended, terminated or discharged from employment and have subsequently been returned to employment because of an arbitration award, civil service order, court order, lawsuit, or settlement of a claim for reinstatement;
(2) Employees who have been separated from their employment and subsequently returned to work pursuant to statutory or contractual provisions such as recall rights;
(3) Employees who have been on extended authorized leaves of absence with or without pay;
(4) Employees who have been separated from employment either voluntarily or involuntarily and who subsequently returned in a manner or method reinstating their accrued seniority rights including credit for prior service; and
(5) Employees who have been separated either voluntarily or involuntarily from their employment and who have subsequently returned to active pay status but who maintained their member's status throughout the separation period.
Petitioners seek summary judgment to compel the Board to comply with our prior Order as it pertains to all employees who were members of the retirement system prior to the enactment of Act 31. The Board moves for summary judgment because it contends that our March 7, 1984 Order applied to only active members who had never experienced a break in their employment with the Commonwealth. We grant Petitioners partial summary judgment and partial summary judgment to the Board.
In ruling on a motion for summary judgment, a court must consider not only the pleadings but other documents of record, such as exhibits. Council 13, AFSCME, by its Trustee Ad Litem, Edward J. Keller v. Commonwealth, 108 Pa. Commw. 155, 529 A.2d 1188 (1987). However, for summary judgment to be entered, the moving party must establish that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. McKenna v. State Employees' Retirement Board, 54 Pa. Commw. 338, 421 A.2d 1236 (1980) aff'd, 495 Pa. 324, 433 A.2d 871 (1981). Because we find no material issue of fact in dispute, it is appropriate to enter summary judgment herein.
Petitioners principally contend that the retirement contract is controlled by the State Employees' Retirement Code, 71 Pa. C. S. § 5101-5956, which dictates that membership not be linked to continuous employment.
The Board counters that members whose employment terminates are no longer in the class covered in our Order; that after a fourteen-day break in service, the "rehired" employee forms a new employment contract which includes the obligation to pay additional pension contributions. It reasons, therefore, that the contractual right to accrue retirement benefits formed at the start of employment is dependent upon continuous state employment. We disagree.
The Retirement Code defines the term "member" to include "active member, inactive member, annuitant, or vestee." 71 Pa. C. S. § 5102. The Code specifically defines each group of members as follows:
This definition of "member" was enacted in 1974 and was not amended by Act 31 of 1983.
'Active member.' A State employee, or a member on leave without pay, for whom pickup contributions are being made to the fund.
'Inactive member.' A member for whom no pickup contributions are being made but who has accumulated deductions standing to his credit in the fund and who is not eligible to become or has not elected to become a vestee or has not filed an application for an annuity.
'Annuitant.' Any member on or after the effective date of retirement until his annuity is terminated.
'Vestee.' A member with ten or more eligibility points who has terminated State service and has elected to leave his total accumulated deductions in the fund and to defer receipt of an annuity.
Further, the Code provides that an employee who terminates employment may discontinue membership in the SERS by withdrawing total accumulated deductions in lieu of other benefits, 71 Pa. C. S. § 5701, or may elect to become a "full coverage member" by paying the lump sum required, 71 Pa. C. S. § 5907(f) (emphasis added). Thus, membership in the SERS does not necessarily terminate with a cessation of employment.
Where words of the statute are clear and unambiguous, the Commonwealth Court is not empowered to disregard the letter of the statute under the pretext of pursuing its spirit; rather, the statute must be given its plain and obvious meaning. Wilderness Industries of Maryland, Inc. v. State Board of Motor Vehicle Manufacturers, Dealers and Salesmen, 58 Pa. Commw. 127, 427 A.2d 1235 (1981).
We hold that our prior March 7, 1984 Order applies to all employees who were members of the SERS prior to the enactment of Act 31 and who, in spite of a break in service, maintained their membership by leaving their accumulated contributions in the retirement fund.
Thus, we conclude that employees who have been separated but who return to work pursuant to judicial or administrative order, arbitration award, settlement agreement or recall procedures (categories (1) and (2), supra), are inactive members as defined by the Code, insofar as they leave their accumulated contributions in the retirement fund. Likewise, employees on paid or unpaid leave retain active membership status as long as they either continue making pickup contributions or leave their contributions in the fund (category (3), supra). The Board in its own definition of the last category ((5), supra), includes those employees who have maintained their membership status during their period of separation. Thus, these employees are protected by our prior Order.
On the other hand, former employee-members who withdraw their accumulated contributions from the retirement fund but who subsequently repurchase credit for their previous state service pursuant to Sections 5504 and 5907(d) of the Code, (category 4, supra), do not fall within the Code's definition of active or inactive member, annuitant or vestee, and therefore are not covered by our prior AFSCME Order.
§ 5907. Rights and Duties of State employees and members
§ 5504. Member contributions for the purchase of credit for previous State Service or to become a full coverage member (a) Amount of contributions.
(b) Certification and method of payment.
(d) Credit for previous service or change in membership status.
Accordingly, we grant partial summary judgment to Petitioners enforcing our prior Order to the extent that separated employees are active members of the system by virtue of continuing their contributions, or who are inactive members by virtue of maintaining accumulated deductions in the fund. We grant partial summary judgment to the Board as it applies to separated employees who have withdrawn their accumulated deductions prior to returning to state employment.
ORDER
Upon consideration of petitioners' and respondents' cross-motions for summary judgment on petitioners' joint motion for enforcement of our March 7, 1984 Order in AFSCME v. Commonwealth, 80 Pa. Commw. 611, 472 A.2d 746 (1984), we grant partial summary judgment to petitioners, and their motion for enforcement as to those SERS members contained in paragraph twelve, categories one, two, three and five of petitioners' joint motion for enforcement.
We grant partial summary judgment to respondents and deny the motion for enforcement as to those SERS members contained in paragraph twelve, category four of petitioners' joint motion for enforcement.