PENSIONS ‑- RETIREMENT ‑- PUBLIC EMPLOYEES RETIREMENT SYSTEM ‑- VETERANS ‑- MILITARY SERVICE CREDIT

PENSIONS ‑- RETIREMENT ‑- PUBLIC EMPLOYEES RETIREMENT SYSTEM ‑- VETERANS ‑- MILITARY SERVICE CREDIT

In the case of persons who were members of the Public Employees Retirement System during the period from February 25, 1972, through April 24, 1973, the applicable definition of the term "veteran," for the purposes of obtaining military service credit under RCW 41.40.170, is that which was then contained in RCW 41.06.150 and not the definition of "veteran" which is in RCW 41.04.005.

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                                                                   April 10, 1978

Honorable Robert L. Hollister, Jr.
Director
Department of Retirement Systems
1025 E. Union
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1978 No. 13

Dear Sir:

            This is written in response to your recent request for our opinion on a question which we paraphrase as follows:

            In the case of persons who were members of the Washington Public Employees Retirement System during the period from February 25, 1972, through April 24, 1973, is the applicable definition of the term "veteran," for the purposes of obtaining military service credit under RCW 41.40.170, that which was then contained in RCW 41.06.150 rather than the definition of "veteran" which is in RCW 41.04.005?

            We answer your question in the affirmative.

             [[Orig. Op. Page 2]]                       ANALYSIS

            RCW 41.40.170 governs the eligibility of Plan I members of the Washington Public Employees Retirement System (i.e., those who established membership on or before September 30, 1977) for certain military service credit; i.e., service credit, to be utilized in computing retirement benefits, for limited periods of active federal service in the military or naval forces of the United States.  Within the statute, however, there is contained the following critical proviso:

            ". . .  AND PROVIDED FURTHER, That this section will not apply to any individual, not a veteran within the meaning of RCW 41.04.005, as now or hereafter amended: . . ."

            RCW 41.04.005, in turn, defines the term "veteran" to mean

            ". . . every person, who at the time he seeks . . . benefits . . . has served in any branch of the armed forces of the United States during:

            "(1) Any period of war and such 'period of war' shall include World War I, World War II, the Korean conflict, the Viet Nam era, and the period beginning on the date of any future declaration of war by the congress and ending on the date prescribed by presidential proclamation or concurrent resolution of the congress.  The said 'Viet Nam era' shall mean the period beginning August 5, 1964, and ending on such date as shall thereafter be determined by presidential proclamation or concurrent resolution of the congress; and in addition to this subsection, who, upon termination of said service has

            "(2) Received an honorable discharge; or

            "(3) Received a discharge for physical reasons with an honorable record; or

             [[Orig. Op. Page 3]] "(4) Been released from active military service with evidence of service other than that for which an undesirable, bad conduct, or dishonorable discharge shall be given."

            The problem, however, is that this particular statutory definition of the term "veteran" was only made a part of RCW 41.40.170 in 1973, pursuant to an amendment contained in § 14, chapter 190, Laws of 1973, 1st Ex.Sess. which became effective on April 24, 1973.  Prior to that time, by virtue of an earlier amendment contained in § 3, chapter 151, Laws of 1972, Ex.Sess., the reference in RCW 41.40.170 was to a different definition of the word "veteran" which is contained in RCW 41.06.150 (a part of the state civil service law) and reads as follows:

            ". . . any person who has one or more years of active military service in any branch of the armed forces of the United States or who has less than one year's service and is discharged with a disability incurred in the line of duty or is discharged at the convenience of the government and who, upon termination of such service has received an honorable discharge, a discharge for physical reasons with an honorable record, or a release from active military service with evidence of service other than that for which an undesirable, bad conduct, or dishonorable discharge shall be given: . . ."

            Section 3, chapter 151, Laws of 1972, Ex. Sess., became effective on February 25, 1972.  Therefore, between that date and April 24, 1973, a person who was then a member of the Public Employees Retirement System could obtain military service credit on the basis of being a veteran within the meaning of this last quoted, less restrictive definition ‑ principally in the sense that while RCW 41.04.005,supra, requires designated wartime service in order to qualify as a veteran, RCW 41.06.150 does not.  Now, on the other hand, one must have rendered some military service during one or more of the periods of war listed in RCW 41.04.005 in order to receive any credit for whatever military service (peacetime or wartime) he may have had.1/

             [[Orig. Op. Page 4]]   Given this factual situation the legal issue raised by your request is obvious; i.e., which of the two definitions of the term "veteran" now applies in the case of those persons who were already members of the retirement system prior to the most recent change in the law.  Are those individuals now only eligible for military service credit if they come within the more restrictive definition contained in RCW 41.04.005?  Or is the applicable definition that contained in RCW 41.06.150 as it read during the period between February 25, 1972 and April 24, 1973?

            In our opinion the only legally defensible answer to this question, in the light of numerous decisions of the Washington Supreme Court involving public employees' pension rights, is that those members identified by your question remain entitled to military service credit on the basis of the earlier, 1972, version of RCW 41.40.170.  We have reference, of course, to the landmark case of Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956), together with subsequent decisions by the Supreme Court applying what has since become commonly known as theBakenhus doctrine.  In essence, what the court held in those cases is that public employees' pension rights in this state are contractual in nature and cannot be impaired without violating Article I, § 23 of the state constitution which provides that:

            "No bill of attainder, ex post facto law, or law impairing the obligations of contracts shall ever be passed."

            Under the rule thus adopted the court, in Bakenhus, accordingly held that:

            ". . . 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. . . ."  (p. 701)

            In so concluding the Washington court further placed principal reliance upon two consolidated cases decided by the California supreme court a year earlier,Allen v. Long Beach and Alger v. Long Beach, 45 Cal.2d 128, 287 P.2d 765 (1955), from which it quoted with approval as follows:

             [[Orig. Op. Page 5]] "[1] An employee's vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system.  [Citing cases].  [2] Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change.  [3] To be sustained as reasonable, alterations of employees' pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages.  [Citing cases.] . . ."  45 Cal.2d at 131.

            We would also refer you to two recent opinions of this office, AGLO 1975 No. 46 [[to Robert L. Charette, State Representative, on April 29, 1975, an Informal Opinion, AIR-75546]]and AGLO 1974 No. 27 [[to Lloyd G. Baker, Director, Washington State Employees Retirement System, on March 4, 1974, an Informal Opinion, AIR-74527]], in both of which we applied the Bakenhus approach in ruling that certain amendments to chapter 41.26 RCW, which governs the Washington Law Enforcement Officers and Firefighters Retirement System (LEOFF), could not constitutionally be applied to persons who had attained membership in the system prior to the enactment of those laws.  Thus, in AGLO 1975 No. 46, we said that a certain amended definition of the term "law enforcement officer" which was enacted pursuant to § 1, chapter 120, Laws of 1974, 1st Ex.Sess. could not constitutionally be applied so as to disqualify for continuing membership a person who had earlier become a member of the retirement system on the basis of a prior, less restrictive, statutory definition of the term.  And in AGLO 1974 No. 27 we similarly advised that § 3, chapter 120, Laws of 1974, 1st Ex.Sess., by which the legislature imposed a ceiling (60% of final average salary) on service retirement allowances under chapter 41.26 RCW, could not constitutionally be applied to those individuals who were already members of the system when the amendment took effect.

            In our opinion the reasoning of these two prior attorney general's opinions, based as they are on the Bakenhus doctrine, is equally applicable in the instant case.  Clearly, the 1973 legislature's substitution of a more restrictive reference definition of the term "veteran," for the purposes of RCW 41.40.170,supra, constituted a detrimental or disadvantageous change insofar as persons who were already then members  [[Orig. Op. Page 6]] of the Public Employees Retirement System were concerned.  And, just as was the case in connection with the amendments which were involved in AGLO 1975 No. 46 and AGLO 1974 No. 27, supra, our examination of chapter 190, Laws of 1973, 1st Ex.Sess., in its entirety reveals no sufficiently compensating changes of advantage.  It therefore follows that the more restrictive version of RCW 41.40.170,supra, which emanated from that 1973 legislative enactment, may not constitutionally be applied to those individuals who were already members of the Public Employees Retirement System as of its effective date (i.e., April 24, 1973).