PENSIONS ‑- FIREMEN ‑- LAW ENFORCEMENT OFFICERS ‑- COMPUTATION OF TWO PERCENT COST OF LIVING PENSION INCREASES

PENSIONS ‑- FIREMEN ‑- LAW ENFORCEMENT OFFICERS ‑- COMPUTATION OF TWO PERCENT COST OF LIVING PENSION INCREASES

In view of the enactment of chapter 181, Laws of 1973, 1st Ex. Sess., establishing a $300 per month minimum with respect to the pensions payable to certain retired municipal firemen and law enforcement officers and their survivors, this figure now constitutes the minimum basis to be used in computing the annual two percent cost of living pension increases provided for in RCW 41.16.145, RCW 41.18.104, and RCW 41.26.250.

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                                                                February 11, 1974

Honorable Gordon L. Walgren
State Senator, 23rd District
Legislative Building
Olympia, Washington 98504

                                                                                                                   Cite as:  AGO 1974 No. 5

Dear Sir:

            By letter previously acknowledged you have requested an opinion of this office on a question which we paraphrase as follows:

            In view of the enactment of chapter 181, Laws of 1973, 1st Ex. Sess., establishing a $300 per month minimum with respect to the pensions payable to certain retired municipal firemen and law enforcement officers and their survivors, does this figure now constitute the minimum basis to be used in computing the annual two percent cost of living pension increases provided for in RCW 41.16.145, RCW 41.18.104, RCW 41.26.250 and RCW 41.26.260?

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

                                                                     ANALYSIS

            Prior to the enactment of chapter 181, Laws of 1973, 1st Ex. Sess., the minimum amount of pension payable to certain retired municipal firemen and law enforcement officers, and/or  [[Orig. Op. Page 2]] their survivors, was $150 per month.  See, RCW 41.16.090 as well as RCW 41.20.050, 41.20.060, 41.20.080 and 41.20.085.  By its passage of this 1973 amendatory act the legislature increased these minimums to $300 per month and, in addition, it established a similar, $300 per month, minimum for those retired firemen and their survivors who are covered by chapter 41.18 RCW.

            Your question involves the relationship between these new pension minimums and the annual two percent cost of living pension increases which are provided for in RCW 41.16.145, RCW 41.18.104, RCW 41.26.250 and RCW 41.26.260.  The relevant language of each of these four statutes, which originated as §§ 33, 34, 35 and 38 of chapter 209, Laws of 1969, Ex. Sess., is as follows:

            RCW 41.16.145:

            "The amount of all benefits payable under the provisions of RCW 41.16.080, 41.16.120, 41.16.130 and 41.16.140 as now or hereafter amended, shall be increased annually as hereafter in this section provided.  The present benefits payable under RCW 41.16.080, 41.16.120, 41.16.130 and 41.16.140 on July 1, 1969 shall be increased two percent each year using as a basis for such two percent increase, the amount of present benefit payable and not the amount of the future benefit payable which will hereafter be increased by the provisions of this section."  (Emphasis Supplied.)

            RCW 41.18.104:

            "The amount of all benefits payable under the provisions of RCW 41.18.040, 41.18.080 and 41.18.100as now or hereafter amended, shall be increased annually as hereafter in this section provided.  The present benefits payable under RCW 41.18.040, 41.18.080 and 41.18.100 on July 1, 1969 shall be increased two percent each year using as a basis for such two percent increase, the amount of the present benefit payable and not the amount of the future benefit payable which will hereafter be increased by the provisions of this section."  (Emphasis Supplied.)

            RCW 41.26.250:

            "All benefits presently payable pursuant to the provisions of RCW 41.20.050, 41.20.060 and 41.20.080 as such RCW sections existed prior to the  [[Orig. Op. Page 3]] effective date of the amendment of such RCW sections by sections 1, 2, 3, chapter 191, Laws of 1961 to persons who retired prior to the effective date of the said 1961 amendatory act, shall be increased annually as hereafter in this section provided.  On July 1, 1969 such presently payable benefits shall be increased two percent each yearusing as a basis for such two percent increase, the amount of the present benefit payable and not the amount of the future benefit payable which will hereafter be increased by the provisions of this section."  (Emphasis Supplied.)

            RCW 41.26.260:

            "All benefits presently payable pursuant to the provisions of RCW 41.20.085 which are not related to the amount of current salary attached to the position held by the deceased member, shall be increased annually as hereafter in this section provided.  On July 1, 1969 such presently payable benefits shall be increased two percent each yearusing as a basis for such two percent increase, the amount of the present benefit payable and not the amount of the future benefit payable which will hereafter be increased by the provisions of this section."  (Emphasis Supplied.)

            For the purpose of illustrating the problem involved in your request let us assume the hypothetical case of a retired fireman who, on July 1, 1969, was receiving a service retirement pension under RCW 41.16.080 in the amount of $200 per month ‑ or $50 per month more than the minimum then in effect.  On that date, by virtue of RCW 41.16.145, supra, he received a four dollar per month cost of living increase ‑ and this increase was duplicated on July 1 of each ensuing year through 1972, so that as of April 25, 1973, when chapter 181, supra, became effective1/ his pension amounted to $216 per month.  On that date, however, his pension was increased by virtue of this 1973 amendatory act to $300 per month ‑ the new minimum level.

             [[Orig. Op. Page 4]]

            Query:  Is this retired fireman now entitled to receive an annual cost of living pension increase of $6 per month, (i.e., two percent of $300)?

            Although the first two of the four statutes above quoted contain, in their respective first sentences, the phrase "as now or hereafter amended" while the other two do not, this factor is of no assistance to us in coming to an answer to your question.  On the one hand, neither § 1 nor § 2 of chapter 181, Laws of 1973, 1st Ex. Sess., which established $300 per month minimums for retired firemen or their survivors under chapters 41.16 or 41.18 RCW, did so by amending any of the statutes cited in RCW 41.16.145 or RCW 46.18.104.  Instead, they did so in the case of chapter 41.16 RCW by an amendment to another section of that chapter, RCW 41.16.090; and in the case of chapter 41.18 RCW by the addition of a new section thereto.  On the other hand, while §§ 3 ‑ 6 of chapter 181, which established this same minimum for retired police officers or their survivors, did expressly amend the several sections of chapter 41.20 RCW that are listed in the first sentences of RCW 41.26.250 and 41.26.260,supra, it is those two statutes, among the four involved, that do not use the words "as now or hereafter amended."

            At this point, we must attempt to find the legislative intent in providing the cost of living increases in the statutes we are considering.  The apparent legislative purpose is disclosed, we feel, by considering the types of pensions which arenot affected by the increases.

            RCW 41.16.145 provides, in relevant part, as follows:

            ". . .  The increased benefits authorized by this section shall not affect any benefit payable under the provisions of chapter 41.16 RCW in which the benefit payment is attached to a current salary of the rank held at time of retirement."  (Emphasis Supplied.)

            RCW 41.18.104, likewise provides that:

            ". . .  The increased benefits authorized by this section shall not affect any benefit payable under the provisions of chapter 41.18 RCW in which the benefit payment is attached to a current salary of the rank held at time of retirement."  (Emphasis Supplied.)

             [[Orig. Op. Page 5]]

            Thirdly, RCW 41.26.250,supra, states that:

            "All benefits presently payable pursuant to the provisions of RCW 41.20.050, 41.20.060 and 41.20.080as such RCW sections existed prior to the effective date of the amendment of such RCW sections by sections 1, 2, 3, chapter 191, Laws of 1961 to persons who retired prior to the effective date of the said 1961 amendatory act, shall be increased annually as hereafter in this section provided. . . ."  (Emphasis Supplied.)

            And finally, RCW 41.26.260 provides, in relevant part, as follows:

            "All benefits presently payable pursuant to the provisions of RCW 41.20.085which are not related to the amount of current salary attached to the position held by the deceased member, shall be increased annually . . ."  (Emphasis Supplied.)

            The obvious purpose of each of the underscored portions of these statutes is to not apply the two percent to those pensions which are based upon an "escalator clause";2/ i.e., a provision whereby the pension is based upon thecurrent salary being paid employees in the position the retiree once held so that the pension increases after retirement whenever that current salary increases.  The assumption underlying such pensions is that salaries will normally keep pace with inflation and, hence, the retirees involved will thereby be protected from its effects.

            Therefore, since the "escalator" pensions which already contained a device to combat inflation were not affected by RCW 41.16.145, RCW 41.18.104, RCW 41.26.250 and RCW 41.26.260, supra, we may assume that by attaching the two percent increase to those other pensions which were affected by these 1969 statutes the legislature was attempting to come up with an alternative method of dealing with this problem.  This is particularly apparent when these statutes are read in parimateria  [[Orig. Op. Page 6]] with other pension statutes, in accordance withHanson v. Seattle, 80 Wn.2d 242, 247, 493 P.2d 775 (1972), in which the court said:

            ". . .  It is further well established, that pension statutes are to be construed as a whole and together with related acts with the view of promoting the objects and purposes of the lawmaking body, and their force and effect are not to be confined or restricted to the literal terms of the statute.  Subsidiary provisions contained in pension acts must be construed consistently with the objects and purposes of the act.  See 62 C.J.S. Municipal Corporations § 588 (d) (1951); 70 C.J.S.Pensions § 2 (1951)."

            All of the other major pension systems which have been established by the legislature provide annual cost-of-living increases, as follows:

            1.         Judicial Retirement System ‑ annual compounded increase not to exceed three percent.  RCW 2.10.170.

            2.         Teachers Retirement System ‑ annual compounded increase not to exceed three percent.  RCW 41.32.499.

            3.         Public Employees' Retirement System ‑ annual compounded increase not to exceed three percent.  RCW 41.40.195

            4.         State Patrol Retirement System ‑ annual noncompounded increase of two percent.  RCW 43.43.260.

            5.         Law Enforcement Officers' and Fire Fighters' Retirement System ‑ annual compounded increases equal to increase in Consumer Price Index ‑ Seattle, Washington area ‑ no percentage limitation.  RCW 41.26.240.

            In view of these other legislative attempts to protect pension recipients from the ravages of inflation, the legislature's decision by chapter 181,supra, to raise the minimum pensions for retired police officers and firemen which we are discussing from $150 to $300 must be seen as a recognition of the failure of the two percent increases provided by RCW 41.16.145, RCW 41.18.104,  [[Orig. Op. Page 7]] RCW 41.26.250, and RCW 41.26.260 to keep pace with inflation.  With this in mind, the question to be asked is this:  Did the legislature intend that future two percent increases would be based upon the benefit which was being received in July of 1969, or on the new minimum established by chapter 181?  We believe it intended the latter ‑ but not, however, before certain potential arguments against this conclusion are considered and dismissed.

            As we have noted above, RCW 41.26.250, provides that:

            "All benefits presently payable pursuant to the provisions of RCW 41.20.050, 41.20.060 and 41.20.080as such RCW sections existed prior to the effective date of the amendment of such RCW sections by sections 1, 2, 3, chapter 191, Laws of 1961 to persons who retired prior to the effective date of the said 1961 amendatory act, shall be increased annually . . ."  (Emphasis Supplied.)

            At first glance, this language might be thought to forever tie the increase provided by this section to the benefit levels existing prior to the 1961 amendments.  However, as we have shown above, the sole purpose of this language was to prevent the increase from being paid on "escalator" pensions.

            The second problem involves the respective second sentences of the four statutes, each of which directly addresses the question of what basis is to be used in computing the annual two percent increases therein provided by stating that the "present benefits payable" (RCW 41.16.145 and RCW 41.18.104), or the "presently payable benefits" (RCW 41.26.250 and 41.26.260)

            ". . . shall be increased two percent each year using as a basis for such two percent increase, the amount of the present benefit payable and not the amount of the future benefit payable which will hereafter be increased by the provisions of this section."

            Shortly after the enactment of chapter 209, Laws of 1969, Ex. Sess., in which the above language originated, this office was asked for an opinion as to its meaning in the context, particularly, of § 35 of that act ‑ now  [[Orig. Op. Page 8]] RCW 41.26.260, supra.  Specifically, we were asked:

            "Is the two percent per year post-retirement pension increase which is provided for by § 35, chapter 209, Laws of 1969, Ex. Sess., with respect to 'all benefits presently payable pursuant to the provisions of RCW 41.20.085 which are not related to the amount of current salary attached to the position held by the deceased member' to be computed on the basis of the pension benefit payable on the effective date of the 1969 amendment rather than that which was payable at the time chapter 209, Laws of 1969, Ex. Sess., was passed by the legislature?"

            The reason for this question was that RCW 41.20.085 itself had been amended by another section of chapter 209 (§ 26) so as to remove a previous proviso under which certain pensions provided for in that statute were to be reduced ". . . by the amount of any pension such surviving spouse may be receiving under social security or any other pension grant."  Accordingly, in a given case to which the proviso was applicable before its removal, the "amount payable pursuant to RCW 41.20.085" would have been lower on the date that chapter 209 was signed by the governor (May 9, 1969) than it was on July 1, 1969, when this acttook effect in accordance with § 45.  Thus, the precise issue raised, as stated on page 11 of AGO 1969 No. 12 [[ (to F. Pat Wanamaker, State Representative on July 15, 1969)]], copy enclosed, was whether the word "presently," as used in § 35 (RCW 41.26.260), supra, "refers to the effective date of the act rather than to the date the amendatory act was passed by the legislature."

            For reasons which are explained in full on pp. 11 ‑ 13 of that 1969 opinion we answered that question in the affirmative; i.e., in favor of the first of these two alternatives.  In essence, we said that the word "presently" means "as of the effective date" of chapter 209 rather than some other date before that date.

            The effective date of the act was July 1, 1969.  The effective date of the two percent increase was also July 1, 1969.  Since the law does not recognize parts of days,3/ the increase and the authority for the increase became effective simultaneously.  Therefore,  [[Orig. Op. Page 9]] without the added phrase "and not the amount of the future benefit payable which will hereafter be increased by the provisions of this section," each of the four statutes here involved would seemingly have allowed both an immediate and future compounding of that annual percentage increase; e.g., a $200 per month pension payable on July 1, 1969, would have immediately become a $204 per month pension and, in the same instant, a $208.08 per month pension ‑ after which, in ensuing years it would have gone to $212.24, and then to $216.48, etc., etc.  With this in mind the question to be asked, we think, is this:  Did the legislature, by using the phrase "present benefits payable" in contradistinction to "the future benefit payable which will hereafter be increased by the provisions of this section" mean to tie these annual postretirement pension increases forever to the dollar amounts that were payable under the various statutes involved as of July 1, 1969, regardless of any subsequent legislation having the effect ‑ unless by express amendment in the case of RCW 41.16.145 or RCW 41.18.104 ‑ of increasing those amounts?  Or did it, instead, simply intend to preclude a compounding of these annual 2% increases?

            While most certainly not entirely free from doubt, we believe that it is more likely than not that a court in reviewing these questions would hold that the legislative purpose in adding this language was merely to prevent compounding.  Accord, sections 17 and 18 of chapter 257, Laws of 1971, Ex. Sess., wherein, in expressly declaring the increases to be retroactive in the case of persons who had retired prior to 1969, the legislature said:

            ". . .  The manner of calculatingthe retroactive benefits payable to individual beneficiaries under chapter 37, Laws of 1970 ex. sess. and this 1971 amendatory act shall be to calculate the amount of benefit being received by such individual beneficiary on July 1, 1969; then to multiply that result times two percent times the number of full years that have elapsed following the retirement of the employee; then to add the result so reached to the said amount being received on July 1, 1969, prior to the statutory increase of that date, which total amount is to be paid each month for the next ensuing year until July 1, at  [[Orig. Op. Page 10]] which time an additional two percent shall be added and the process shall be repeated as provided in RCW 41.18.104."  (Emphasis Supplied.)

            We find, therefore, that the legislature intended the two percent increases provided for in the 1969 statutes here under consideration should not (1) be applied to escalator pensions, or (2) be compounded.  However, in the absence of anything further, we do not find an intent not to allow future increases to be computed on a new base established by new minimum pension levels established subsequent to and outside of these statutes.  Moreover, such a construction, in our view, would be in contradiction to the court's admonition inHanson v. Seattle,supra,

            ". . . that pension statutes are to be construed as a whole and together with related acts with the view of promoting the objects and purposes of the lawmaking body, and their force and effect are not to be confined or restricted to the literal terms of the statute. . . ."