MEMBERSHIP IN PUBLIC EMPLOYEES RETIREMENT SYSTEM

RETIREMENT ‑- PENSIONS ‑- MEMBERSHIP IN PUBLIC EMPLOYEES RETIREMENT SYSTEM

If a person who was previously employed by a state agency but who was not then eligible for membership in the public employees retirement system (PERS) returns to employment on or after October 1, 1977, and then for the first time becomes a member of the retirement system, that person will be covered by the alternative pension benefits of Chapter 295, Laws of 1977, 1st Ex. Sess.

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                                                                 August 18, 1977

Honorable Robert L. Hollister, Jr.
Director, Department of Retirement Systems
1025 East Union
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1977 No. 37

Dear Sir:

            By letter previously acknowledged, you have requested our opinion on a question which we paraphrase as follows:

            If a person who was previously employed by a state agency but who was not then eligible for membership in the public employees retirement system (PERS) returns to employment on or after October 1, 1977, and then for the first time becomes a member of the retirement system, will that person be covered by the alternative pension benefits of Chapter 295, Laws of 1977, 1st Ex. Sess.?

            We answer this question in the affirmative for the reasons set forth in our analysis.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            Your question involves certain provisions of Chapter 295, Laws of 1977, 1st Ex. Sess., by which the legislature significantly altered the pension benefits which will be available to future new members of the public employees retirement system.  By its enactment of §§3 through 15 of that act the legislature established a general level of benefits for persons who become members of the system on or after October 1, 1977, which is substantially lower than that which is applicable to persons obtaining membership before that date.  In some instances, however, persons first obtaining membership at that time will have previously been employed by an "employer" under the retirement law1/ without becoming members because of RCW 41.40.120 which, although initially making membership mandatory for all employees of an employer, then lists more than a dozen exceptions to that rule.  The question, basically, involves the status of those individuals and it arises by reason of the apparently conflicting language of §§ 1 and 2 of the new law which read, respectively, as follows:

            "The legislature finds and determines that those members first employed on or before September 30, 1977, shall not suffer any diminishment or loss of benefits or rights, whether current or prospective as the result of the enactment of this 1977 amendatory act."  (Emphasis supplied)2/

            "Sections 3 through 15 of this 1977 amendatory act shall apply only to thosepersons who are initially employed by an employer on or after October 1, 1977."  (Emphasis supplied)3/

             [[Orig. Op. Page 3]]

            The problem, in essence, is that in § 1 the legislature has spoken of "members" while in § 2 it has spoken of "persons".  Thus, while the inference to be drawn from § 1 is that the new law (with its lower benefits) is to apply to all who have not obtained membership prior to October 1, 1977, the language of § 2 seems to say that it will only apply to such persons as are initially employed on or after that date.  And, in terms of your question, an individual such as is there described would obviously be a "person" who was initially employed prior to October 1, 1977, while at the same time he would not, however, be one who had become a "member" when previously employed because of the applicability to him at that time of one or more of the exceptions listed in RCW 41.40.120,supra.  Therefore, assuming that this individual later returns to work (on or after October 1, 1977) in a different position which is eligible for membership and thus, at that time, first becomes a member of the public employees retirement system, the question presented is whether he will then be eligible for the type of benefits which are available to those who were alreadymembers prior to the critical date, or whether, instead, such individual will only be entitled to the new (lower) level of benefits provided by Chapter 295, supra.

            The fundamental object of all statutory construction and interpretation is to ascertain and give effect to the intention of the legislature.  In re Kurtzman's Estate, 65 Wn.2d 260, 396 P.2d 786 (1964); In re Bale, 63 Wn.2d 83, 385 P.2d 545 (1963).  In determining legislative intent, the general spirit or purpose of the legislation prevails over express but inept language.  Williams v. Pierce County, 13 Wn.App. 755, 537 P.2d 856 (1975);Alderwood Water District v. Pope & Talbot, 62 Wn.2d 319, 382 P.2d 639 (1963).  And in arriving at legislative intent a statutory enactment should be read as a whole and in such a way as to bring the various parts of the law into harmony.  Krystad v. Lau, 65 Wn.2d 827, 400 P.2d 72 (1965); Dando v. King County, 75 Wn.2d 598, 452 P.2d 955 (1969); In re Beard's Estate, 60 Wn.2d 127, 372 P.2d 530 (1962).

            Bearing these rules in mind let us turn to certain other portions of Chapter 295,supra, and particularly, §§ 16 and 21.  By the former, the legislature extensively amended RCW 41.40.010 which constitutes the basic definitional section of the retirement law and spells out the meaning of most of  [[Orig. Op. Page 4]] the operative words used in Chapter 41.40 RCW.  Throughout the course of RCW 41.40.010, as amended, key terms are now defined in different ways for those who "establish membership" in the retirement system on or before September 30, 1977, on the one hand, and those who "establish membership" on or after October 1, 1977, on the other.  See, subsections (4), (8), (9), (12) and (15).  The key factor in each of those definitions is when the individual in question first established membership.

            And by § 21,supra, the legislature similarly keyed in on the establishment of membership when it identified the class of members who, as opposed to being covered by the benefit provisions of the new law, would remain covered by the various preexisting benefit sections of Chapter 41.40 RCW.  Section 21,supra, reads as follows:

            "The provisions of the following sections of this chapter shall apply only to persons who establish membership in the retirement system on or before September 30, 1977:  RCW 41.40.150, 41.40.160, 41.40.170, 41.40.180, 41.40.185, 41.40.190, 41.40.193, 41.40.195, 41.40.200, 41.40.210, 41.40.220, 41.40.230, 41.40.235, 41.40.250, 41.40.260, 41.40.280, 41.40.300, 41.40.310, 41.40.320, and 41.40.330."

            When this section of the law is placed directly next to § 2, supra, however, note what happens if the latter is given a literal reading.  Repeated for ease of reference, § 2 reads as follows:

            "Sections 3 through 15 of this 1977 amendatory act shall apply only to thosepersons who are initially employed by an employer on or after October 1, 1977."  (Emphasis supplied)

            Yet if thenew provisions do not apply to persons first employed prior to October 1, 1977, and at the same time the old provisions listed in § 21 do not apply where such persons did not previously "establish membership," those persons would not be entitled to either the old or new benefits ‑ in short, they would receive no benefits at all.  But such a construction obviously would be painfully absurd  [[Orig. Op. Page 5]] and thus is to be avoided under another well-established rule of statutory construction.  See,e.g.,Wilson v. Lund, 74 Wn.2d 945, 947, 447 P.2d 718 (1968), as well asAlderwood Water District v. Pope & Talbot,supra.

            Moreover, the legislature's emphasis upon membership in every section of the act except § 2,supra, is readily explainable by reference to certain constitutional guarantees which are extended in this state to persons who aremembers of "public employees" pension systems.  The benefits and rights granted persons who are members of such pension systems are contractual in nature and may not be impaired by legislative action.  See, U.S. Constitution, Article I, § 10(1), Washington Constitution, Article I, § 23.  And, as you know, the genesis of that constitutional protection of pension benefits is to be found inBakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956).

            Briefly stated, that case was an action brought by a retired policeman and his wife to compel the City of Seattle and its board of police pension fund commissioners to pay him a certain retirement benefit.  When Mr. Bakenhus became a Seattle police officer, the law provided that a member of the police department was eligible to retire on a pension after 20 years of service if he had attained age 60 or after 25 years of service if he had not reached that age.  The allowable pension was equal to one‑half the salary attached to the rank held by him for the year before his retirement.  In 1937, however, the legislature enacted an amendment which provided that pensions could not exceed $125 per month.  Nevertheless, Mr. Bakenhus claimed that he was entitled to $185 per month since that was equal to one‑half of his salary at the time of retirement.  Our state supreme court, in a landmark decision, agreed and, in the process, established the so-called "contract" theory of pensions, saying:

            ". . .  Under the rule followed there, and the rule which we adopt here, the employee who accepts a job to which a pension plan is applicable contracts for a substantial pension and is entitled to receive the same when he has fulfilled the prescribed conditions.  His pension rights may be modified prior to retirement, but only for the purpose of keeping the pension system flexible and maintaining its integrity. . . ."  48 Wn.2d 7014/

             [[Orig. Op. Page 6]]

            We believe it quite apparent that this is the concept which underlies § 1 of Chapter 295,supra ‑ also here repeated for ease of reference as follows:

            "The legislature finds and determines that those members first employed on or before September 30, 1977, shall not suffer any diminishment or loss of benefits or rights, whether current or prospective, as the result of the enactment of this 1977 amendatory act."  (Emphasis supplied)

            Once again, the individual described by your question had not earlier accepted employment to which a pension plan was applicable, due to the exceptions contained in RCW 41.40.120, supra.  On the other hand, persons who were (or become) members prior to October 1, 1977, had (or will have) accepted employment to which a pension plan (PERS) was applicable.  As to them, benefits cannot be lowered without a corresponding beneficial change.5/   Yet in view of the scope of the foregoing constitutional protections, we know that the legislature could constitutionally require the individual described by your question to accept the lower benefits provided by Chapter 295,supra, whereas the legislature could not do so if that individual had been a "member" of the system prior to October 1, 1977.  In the final analysis, we believe the legislature recognized this fact and acted accordingly.

            In direct answer to your question, therefore, our opinion is as follows:  Any person who first establishes membership in the public employees retirement system on or after October 1, 1977, will be governed by the new benefit levels created by Chapter 295, supra, without regard to the date when a particular individual was first employed by an employer.  We thus answer your question in the affirmative.