Opinion
No. A03-304.
Filed: November 18, 2003.
Teachers Retirement Association
Richard A. Williams, Williams Iversen, P.A., (for relator)
Mike Hatch, Attorney General, Jon K. Murphy, Assistant Attorney General, (for respondent)
Considered and decided by Stoneburner, Presiding Judge, Willis, Judge, and Shumaker, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
OPINION
Relator appeals, by writ of certiorari, a decision of respondent Teacher's Retirement Association (TRA) Board that she is not entitled to service credit for the period during which she was on leave with pay pursuant to a settlement agreement between relator and Independent School District #13 (ISD 13). Relator argues that because TRA provided an estimate of the value of her pension benefit at the time of her marriage dissolution, and because she relied on that estimate in entering into a marital termination agreement, TRA is estopped from denying the service credit she seeks. TRA argues that estoppel does not apply because it has no authority under the governing statute to authorize credit for relator's leave. We agree and affirm.
FACTS
TRA administers the pension plan for Minnesota's licensed teachers under the authority of Minn. Stat. ch. 354 (2002) and the fiduciary duties and standards of Minn. Stat. ch. 356A (2002). The TRA pension plan is a tax-qualified "governmental" plan under federal law. See 29 U.S.C. § 1002(32); 26 U.S.C. § 414(d); AFSCME Councils 6, 14, 65 and 96, AFL-CIO v. Sundquist, 338 N.W.2d 560, 565-66, n. 5 (Minn. 1983), appeal dismissed, 466 U.S. 933, 104 S.Ct. 1902 (1984). The TRA Board is composed of elected and appointed members and its duties include deciding issues related to TRA service credit and pension benefits. Minn. Stat. §§ 354.06, subd. 1, .07, subd. 1 (2002).
Relator Dr. Julie Archer-Kath was employed by ISD 13 and participated as a beneficiary in the TRA pension program. In 1998, relator settled a discrimination action against ISD 13. The settlement agreement provided that relator would be considered to be on leave with pay for the school years 1998-99 and 1999-2000 and would receive her regular salary and benefits, after which she would be considered to be on an extended leave of absence without pay through June 2005. Relator was required to execute an "irrevocable" letter of resignation to be deposited with the district court that would become effective on the occurrence of certain events, including any attempt by relator to be reinstated to any position with ISD 13. The agreement provided that "[s]aid resignation as provided herein will be immediately accepted by ISD No. 13 at the time of approval of this Settlement Agreement and Release," but ISD 13 retained the right to allow relator to withdraw the letter of resignation.
Under the agreement, ISD 13 was required to provide TRA with a copy of the Board minutes and resolution approving the settlement agreement and file a leave reporting form with TRA reporting relator to be on extended leave without pay from July 1, 2000 through June 30, 2005, and reporting that relator had no reinstatement rights. ISD 13 did not provide the required documents and did not report to TRA that relator was on a leave of absence during the 1998-99 and 1999-2000 school years as required by Minn. Stat. § 354.52, subd. 4a (2002). Through the 1999-2000 school year, ISD 13 continued to report relator's salary and made contributions on her behalf to TRA as if she was still teaching. And relator continued to make contributions to the TRA through the 1999-2000 school year. Relator understood the settlement agreement as permitting ISD 13 to recall her to perform services during the 1998-99 and 1999-2000 school years, if it chose to do so. At some point in the 1999-2000 school year, after obtaining permission from ISD 13, relator became employed by another school district.
Relator's marriage was dissolved in 2001. In connection with the dissolution, she requested information from TRA that would permit her to determine the present value of her pension benefits. TRA responded by letter purporting to set out the pension benefits to which relator was entitled. An actuary verified the information and determined that relator's pension was approximately 90% of the marital value of relator's spouse's pension. Based on this information, relator entered into a marital termination agreement under which she and her spouse each gave up any right in the other's pension benefits. The dissolution decree stated the present value of relator's pension as $344,781 based on a retirement credit of 30 years of service.
During an audit in July 2002, TRA discovered that two school districts were making contributions for relator for the 1999-2000 school year. TRA then reviewed, for the first time, the "leave with pay" provision of relator's settlement agreement with ISD 13. TRA staff concluded that the 1998-99 school year and 34% of the 1999-2000 school year did not qualify for service credit because it was paid as part of the settlement agreement terminating relator's employment with ISD 13 and therefore was a "severance" payment, excluded from TRA's statutory definition of "salary" under Minn. Stat. § 354.05, subd. 35a (2002). The remainder of the 1999-2000 school year, when relator was working for another school district, qualified for TRA credit. TRA informed relator of its determination in August 2002.
Relator asked TRA to reconsider the staff's decision. TRA's Executive Director affirmed the staff's decision, informing relator that the leave payments she received were "severance" payments, not "salary" since they were contingent on her termination of employment at the end of the leave period and were not paid for the performance of services. Relator petitioned the TRA Board for review of the Executive Director's decision under Minn. Stat. § 354.071, subd. 3 (2002). After a hearing, the board voted unanimously to affirm the Executive Director's decision on the ground that the law does not provide for service credit for leave-with-pay compensation, which must be considered severance pay. Relator then initiated this appeal by writ of certiorari.
DECISION
The scope of review of the TRA Board's quasi-judicial decisions is limited to determining whether the decision was arbitrary, oppressive, unreasonable, fraudulent, under erroneous theory of law, or without supporting evidence. McDermott v. Minn. Teachers Ret. Fund, 609 N.W.2d 926, 928 (Minn.App. 2000); Stang v. Minn. Teachers Ret. Ass'n Bd. of Trustees, 566 N.W.2d 345, 347 (Minn.App. 1997). The interpretation of statutes is a question of law reviewed de novo. Brookfield Trade Ctr. Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998); In re Twedt, 598 N.W.2d 11, 12 (Minn.App. 1999).
Relator argues that promissory estoppel prevents the TRA Board from denying service credits from ISD 13 through the end of the 2000 school year. Relator relies on Christensen v. Minneapolis Mun. Employees Ret. Bd., in which the supreme court stated that a public employee's interest in a pension is best characterized in terms of promissory estoppel. 331 N.W.2d 740, 747 (Minn. 1983). Christensen held that Minn. Stat. § 422A.156 (1982), imposing a minimum age requirement for pension eligibility, is invalid as an unconstitutional impairment of contractual obligations to the extent that it applied to persons already retired at the time of its enactment. Id. at 752. In this case, however, there has not been a legislative change that affects relator's entitlement to service credit.
We conclude that this case is governed by the much more analogous case of Axelson v. Minneapolis Teachers' Ret. Fund Ass'n, 544 N.W.2d 297 (Minn. 1996). In that case, the TRA led Axelson to believe that he could purchase service credit for a leave for Peace Corps service, but when he attempted to do so, the TRA said it was without authority to allow service credit for such a leave. Id. at 298-99. Axelson sued the TRA basing his claim on promissory estoppel. Id. at 299. The supreme court noted the Christensen holding that the protectable right of a public employee to an offered pension is determined by applying promissory estoppel but went on to note that "[t]his court has held, however, that `[w]here an agency has no authority to act, agency action cannot be made effective by estoppel.'" Id. at 299-300. Therefore before analyzing whether relator has established the elements of promissory estoppel, we would first need to conclude that the TRA has authority to grant the service credits relator seeks.
The types of leave for which service credit can be granted are set out in Minn. Stat. §§ 354.092 .096 (2002). Under the statute, only sabbatical leave, parental leave, extended leave of absence without salary, medical leave, and family leave may result in service credit, and even in these types of leave, service credit may only be granted if the school district certifies the leave to the TRA on forms specified by the executive director, and the teacher must have the unconditional right to full reinstatement at the end of the leave. See id.
The next issue is whether relator has the type of salary/leave under which she is eligible for service credits. The TRA Board affirmed the TRA Executive Director's determination that the payments received by relator must be characterized as "severance" payments which are specifically excluded from TRA's definition of salary and therefore ineligible for service credits. See Minn. Stat. § 354.05, subd. 35(b)(5). Relator objects to this characterization of the payments, relying on Rosinski v. Teachers Ret. Ass'n Bd. of Trustees, 495 N.W.2d 14 (Minn.App. 1993). In that case, a school principal was placed on an unrequested leave of absence for the 1989-90 school year based upon a medical evaluation. Id. at 15. The school district and Rosinski executed a settlement agreement extending his paid leave of absence until July of 1991. Id. at 16. Under the agreement, he received full salary but waived all rights to reinstatement and the school district retained the exclusive discretion to determine whether Rosinski would be allowed to return to work. Id. In June 1991, Rosinski submitted a letter of resignation to the District and applied for retirement benefits the following month. Id. The TRA classified the payments as severance pay and denied Rosinski service credit for the 1990-91 school year. Id. This court reversed the TRA, concluding that the payments did not constitute severance pay under Minn. Stat. § 454.05, subd. 35, but instead should be characterized as sick-leave benefits. Id. at 18. Rosinski does not support relator's argument because Rosinski's payments were held to be for a type of leave, medical leave, for which service credit is authorized by the governing statute. In this case, even if the payments to relator do not constitute severance payments, relator has not shown that they constitute payments for any type of leave for which the statute authorizes service credit.
Relator argues that because the statute does not expressly address the type of leave she was granted, the TRA has the discretion to develop a policy about how to treat this type of leave. But Axelson holds otherwise. Axelson v. Minneapolis Teachers Ret. Fund Ass'n., 544 N.W.2d at 301. Axelson also argued that the TRA board had discretionary authority to allow him to purchase service credits under its general authority to determine benefit eligibility, arguing that pension and retirement acts are "entitled to a liberal construction to insure the beneficial purposes intended." Id. (quoting Mattson v. Flynn, 216 Minn. 354, 361 13 N.W.2d 11, 15 (1944). The supreme court rejected this argument concluding that "where there is no express authority permitting a member to purchase retirement service credits for leaves of this kind, we will not without more find the authority implied." Id. For the same lack of express authority to award service credit for relator's type of leave, we conclude that the TRA is without discretion to award such credit.
Relator's is not among the types of leave listed for which service credit may be granted, the leave was not certified to the TRA by ISD 13, and relator did not have the unconditional right to full reinstatement at the end of the leave. Therefore, we agree with the TRA that the governing statute does not give TRA authority to grant credit for relator's leave and therefore the issue of promissory estoppel cannot apply.