Employees' Retirement System, Etc. v. Oden
Employees' Retirement System, Etc. v. Oden
Opinion
This appeal involves the interpretation of section
An action was filed in the Montgomery County Circuit Court by appellees, Morris E. Oden and Lewis D. Wooley, former Jefferson County court employees, who had become state employees by virtue of the Implementation Act. The complaint charged that section
There is substantial agreement between the parties as to the material facts of the *Page 6
case. Appellees, Oden and Wooley, became employees of the state on October 1, 1977, by virtue of the Implementation Act. Prior to that date, they had been employees of Jefferson County, Alabama, assigned to the circuit court. Mr. Oden had been employed since 1948, and Mr. Wooley since 1959. Under the Implementation Act, appellees, not being members of a local retirement system, automatically became members of ERS. §
Under section
Appellant, ERS, determined that the "contribution" requirements of section
This formula was used to determine the state's contribution for the "free" five-year prior service credit provided by the statute. More importantly, this formula (14.63% X salary X years credit desired) was used to determine the amount required of appellees to purchase additional prior service credit. This meant that Oden would have to pay $41,820.53, and Wooley would have to pay $34,394.18 in order to receive their additional credit. The statute required that this entire amount of additional contribution be paid within ninety days of October 1, 1977.
The trial court's determination that section
(a) Any employee who was in service on October 1, 1974, whose membership in the employees' retirement system of Alabama was contingent upon his own election and who elected not to become a member, may apply for and be admitted to membership with all prior service credit, as otherwise provided for in article 1 of this chapter, at any time prior to October 1, 1976; provided, that said employee pays to the secretary-treasurer of the employees' retirement system of Alabama on or before October 1, 1976, a sum equal to the total contributions which he would have made as a member during his service as an employee from October 1, 1945, or the date of entry of his employing unit, to the date of his application for membership, plus compound interest of eight percent on such contributions.
The trial court held that, although the retirement benefits available to appellees under section
Only minimum rationality must be shown between a state's objective and the classification where there is no "fundamental right" or "suspect class" involved. See McDonald v. Board ofElection,
McGowan v. Maryland,The constitutional safeguard is offended only if the classification rests on grounds wholly irrelevant to the achievement of the State's objective. State legislatures are presumed to have acted within their constitutional power despite the fact that, in practice, their laws result in some inequality. A statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it.
In the instant case, there seems to be a valid distinction in the classes of employees involved. Employees under section
The trial court further determined that section
The legislative intent as manifested in section
Furthermore, it is not constitutionally objectionable for the legislature to delegate to a board, commission, or administrative agency the duty of determining an amount necessary for a certain purpose. Norton v. Lusk,
[T]he only concern of courts is to ascertain whether the will of Congress has been obeyed. This depends not upon the breadth of the definition of the facts or conditions which the administrative officer is to find but upon the determination whether the definition sufficiently marks the field within which the Administrator is to act so that it may be known whether he has kept within it in compliance with the legislative will.
. . . . .
Yakus v. United States,Only if we could say that there is an absence of standards for the guidance of the Administrator's action, so that it would be impossible in a proper proceeding to ascertain whether the will of Congress has been obeyed, would be justified in overriding its choice of means for effecting its declared purpose. . . .
The legislature, and permissibly so, left the details of computing the specific amount required to provide the benefits under the statute to the agency with expertise in the area. The very nature of the benefits provided make it difficult to establish a fixed and simple formula by which to compute the amounts necessary to fund the system. The cost of providing benefits to an employee is not known until the employee dies. Therefore, the total cost to ERS, and accordingly, the contribution required of the state and the employee, is not known and must be estimated. Skilled and experienced actuaries are required to evaluate the assets and liabilities of ERS and to compute the proper level of funding required to preserve the system. The fact that employee and state contributions cannot be reduced to a certainty is due to the nature of the benefits provided and not to lack of specificity on behalf of the legislature in enacting the statute. Although the legislature provided for obtaining prior service credit, the benefits involved are the same as those presently afforded members of ERS. Accordingly, the cost to appellees of receiving prior service credit should be based upon contribution rates prevailing at the time the credit is given. Since the employees are presently paying for benefits to be received in the future, past contribution rates are immaterial. Although the cost to the individual appellees is substantial, ERS is duty bound to take action guaranteed to insure the integrity and solvency of the state employees' pension fund.
The legislature has expressed its will in a sufficient manner to guide ERS, particularly in light of previous standards established in section
The last sentence of section
Moreover, we cannot say that the determination of appellees' contribution was arbitrary and capricious. ERS relied upon the services of a consulting actuary, Mr. Donald M. Overholser, in computing such costs. Appellees argue that Mr. Overholser's computation of the cost to them was arbitrary because he did not conduct an actuarial study as to employees in the class as appellees in respect to factors such as age, sex, length of service, and health, and arrived at his conclusion as the result of a half-hour telephone conversation with Dr. Walsh, Deputy Secretary of ERS. However, Mr. Overholser testified that he spent a substantial amount of his time dealing with the actuarial problems of ERS and was familiar with the costs and assets of the agency. Moreover, he testified that the percentage rates used to compute appellees' cost did take into consideration factors such as age, health, life expectancy, etc.
Section
Accordingly, we conclude that section
REVERSED AND RENDERED.
TORBERT, C.J., and BLOODWORTH, MADDOX, FAULKNER, JONES, ALMON, SHORES, EMBRY and BEATTY, JJ., concur.
. . . BENEFITS FOR ELIGIBLE EMPLOYEES COVERED BY UNFUNDED LOCAL RETIREMENT PROGRAMS OR EMPLOYEES NOT PREVIOUSLY COVERED BY RETIREMENT PLANS. — Eligible employees who have participated in unfunded local retirement programs or who have not participated in retirement programs with units of local government shall be granted prior service credit by the employees' retirement system of Alabama, based on length of previous court employment, to a maximum of five years. The secretary-treasurer of the employees' retirement system of Alabama shall authorize and direct the comptroller to pay the cost of granting such prior service credit in such amounts as determined to be necessary, and the comptroller shall pay such amounts as necessary for both employer and employee contributions into the employees' retirement fund on account of such eligible employee under the same rules and regulations applicable to other members of the employees' retirement system. In addition to the five-year prior service credit described above, any eligible employee may purchase prior service credit, not to exceed actual years served, by direct payment to the employees' retirement system, within 90 days after October 1, 1977, in such amount as determined to be necessary by the employees' retirement system for the prior service credit desired.
§
Reference
- Full Case Name
- Employees' Retirement System of Alabama, a Corp. v. Morris E. Oden and Lewis D. Wooley.
- Cited By
- 14 cases
- Status
- Published