Donahue v. Public School Employees' Retirement System
Donahue v. Public School Employees' Retirement System
Concurring Opinion
CONCURRING OPINION BY
I concur in the result. However, it is a long-standing principle that courts should not address a constitutional question if the case can be decided on non-constitutional grounds. West v. Hampton Township Sanitary Authority, 661 A.2d 459 (Pa. Cmwlth. 1995). Instead of addressing the constitutional question here,- I would decide the case on the standing issue, dismissing the petition for review because the retirees lack standing to challenge the 2001 amendments to the Public School Employees’ Retirement Code, 24 Pa. C.S. §§ 8101-8535.
Opinion of the Court
OPINION BY
Patricia Donahue and Madeleine F. Pierucci, retired public school teachers, filed a petition for review in our original jurisdiction asserting a class action for a judgment declaring unconstitutional the 2001 amendments to the Public School Employees’ Retirement Code, 24 Pa.C.S. §§ 8101-8585, and the State Employees’ Retirement Code, 71 Pa.C.S. §§ 5101-5956. Donahue and Pierucci assert that the Act of May 17, 2001, P.L. 26 (Act 2001-9) discriminates against persons who retired before the Act’s effective date of July 1, 2001, because it does not afford them the same increase in retirement benefits provided to those persons still employed and contributing to the respective retirement systems. Presently before the court are the preliminary objections of the respondents, the two retirement systems, their boards of trustees, Barbara Hafer as Commonwealth Treasurer and the Chair of the Board of Trustees for the Public School Employees’ Retirement System (PSERS) and Nicholas J. Maiale, Chair of the Board of Trustees for the State Employees’ Retirement System (SERS). Respondents assert a demurrer and challenge the standing of the two retired teachers to challenge the amendments to the State Employees’ Retirement Code.
Donahue and Pierucci retired in 1999 after each of them had worked as public school teachers for more than thirty years. They began receiving annuity benefits according to the statutory provisions then in effect. In 2001, the legislature enacted Act 2001-9, amending both the Public School and State Employees’ Retirement Codes to allow current employees to increase the amount of their contributions and receive an increased amount upon re
In their complaint, Donahue and Pieruc-ci, pointing to the statute’s policy statement, contend that the legislature amended the retirement systems in order to share with members the unexpectedly good investment earnings that the systems had recently enjoyed.
Any lawfully enacted legislation enjoys a presumption of constitutionality which can be overcome only if the challenger establishes by a clear, palpable, and plain demonstration that the statute violates a constitutional provision. James v.
[T]here are three different types of classifications calling for three different standards of judicial review. The first type — classifications implicating neither suspect classes nor fundamental rights — will be sustained if it meets a “rational basis” test. In the second type of cases, where a suspect classification has been made or a fundamental right has been burdened, another standard of review is applied: that of strict scrutiny. Finally, in the third type of cases, if “important,” though not fundamental rights are affected by the classification, or if “sensitive” classifications have been made, the United States Supreme Court has employed what may be called an intermediate standard of review, or a heightened standard of review.
James, 505 Pa. at 145, 477 A.2d at 1305-06 (citations omitted). The three-tiered standard for reviewing equal protection claims is the same under both State and federal Constitutions. Id. at 144, 477 A.2d at 1305.
Harper v. State Employees’ Retirement System, 538 Pa. 520, 649 A.2d 643 (1994) and Rybak v. State Employees’ Retirement Board, 154 Pa.Cmwlth. 586, 624 A.2d 286 (1993), aff'd., 538 Pa. 476, 649 A.2d 431 (1994), involved claims quite similar to those brought here, specifically, equal protection challenges to amendments to the pension system under which different classes of State legislators were subject to different levels of contributions and benefits based upon their dates of service. Both this court and our Supreme Court found the rational basis test to be the correct standard for such an inquiry.
Thus we turn to the applicable test, whether the legislature had a rational basis for applying the amended retirement plans only to those currently in service and not to those already retired. Donahue and Pierucei challenge Act 2001-9 on the ground that it institutes a scheme for distribution of outstanding earnings on pension fund contributions to which they and other retirees contributed and, therefore, deserve to share. However, the amend
Accordingly, the respondents’ preliminary objection in the nature of a demurrer is sustained and the petition for review is dismissed.
ORDER
AND NOW, this 21st day of October, 2008, the preliminary objection in the nature of a demurrer to the petition for review in the above captioned matter is hereby SUSTAINED and the petition for review is DISMISSED.
Judge SMITH-RIBNER concurs in the result only.
. Act 2001-9 created a new membership class in the Public School Employees' Retirement System known as class T-D. New and active members of the System could elect class T-D membership prior to the date specified in the Act. Following such an election, the employee’s contribution increased from 5% to 6.25% arid the multiplier applied to the member’s final average salary in order to calculate his retirement annuity increased from 2 to 2.5 resulting in a benefit increase of approximately 25%. Act 2001-9 similarly amended classes of service in the State Employees’ Retirement System to permit an election that resulted in increased contributions and an increased benefit at retirement.
. Section 1(2) of Act 2001-9 states:
Over the past two decades, both pension funds have experienced investment returns well in excess of expectations. As a result, State and school district contributions have decreased dramatically to less than 1% of payroll for next year. At the same time, employee contributions range from 5% to 6.25% of payroll. The outstanding investment performance has resulted in the pension funds being over 123% funded, compared to current needs. The 4% statutory interest rate the employees receive on their pension accounts has consistently been eclipsed by the actual average returns of the funds over the last two decades and also has been less than available private market interest rates. The fact that employees have been and are projected to continue to contribute at a rate that is materially greater than the employers due to the more than 100% funded status of the plans raises the issue of the extent to which employees should be provided additional benefits. The increase in benefits for State and school district employees provided herein will in effect allow them for the first time to share in the outstanding investment performance of the funds. To date, that experience has only benefited the employers through reduced contributions to the funds. Even with the increases in benefits provided herein, both pension funds are projected to maintain minimal employer contribution rates and at the same time maintain a fully funded status. For at least the next decade, members are projected to continue to contribute at a rate substantially in excess of that required from employers.
.Respondents also contend that complainants, who are members of the Public School Employees’ Retirement System, lack standing to challenge amendments to the State Employees’ Retirement System. While we note that this objection is well-founded, we need not address this issue in light of our decision on the demurrer.
. The court in Harper specifically disavowed the equal protection analysis voiced by the three judge plurality opinion in Klein v. State Employees’ Retirement System, 521 Pa. 330, 555 A.2d 1216 (1989), instead quoting with approval the concurring opinion of Chief Justice Nix. Harper, 538 Pa. at 524-25, 649 A.2d at 644-45. Thus petitioners’ reliance on Klein is misplaced.
. Under Article II, §§ 1 and 8 of the Pennsylvania Constitution, the legislature is vested with the sole power to amend the retirement codes and is vested with sole authority to establish the compensation for its own members.
. Section 1(3) of Act 2001-9 states:
A major change in the manner in which benefits are funded is warranted. Currently, gains or losses related to the funding for benefits are spread over a 20-year time frame. Under this proposed change, these gains or losses will now be spread over a shorter time frame, that being ten years, increasing intergenerational equity by reducing the time elapsed between the service of the members of the systems and the related funding. A similar policy was enacted in 1991 when 30-year funding for the two funds was reduced to 20-year funding.
. Inasmuch as Donahue and Pierucci cannot prevail in their contention that the amendments to PSERS and SERS under Act 2001-9 violate either the federal or State Constitutions, we need not address respondents’ argument that the federal constitutional claims can only be pursued in an action pursuant to 42U.S.C. § 1983.
Reference
- Full Case Name
- Patricia DONAHUE, Madeleine F. Pierucci, Petitioners, v. PUBLIC SCHOOL EMPLOYEES’ RETIREMENT SYSTEM OF the COMMONWEALTH of Pennsylvania, Board of Trustees of the Public School Employees’ Retirement System of the Commonwealth of Pennsylvania, State Employees’ Retirement System of the Commonwealth of Pennsylvania, Board of Trustees of the State Employees’ Retirement System of the Commonwealth of Pennsylvania, Honorable Barbara Hafer, Treasurer of the Commonwealth of Pennsylvania and Chair of the Board of Trustees of the Public School Retirement System of Pennsylvania, Nicholas J. Maiale, Chair of the Board of Trustees of the State Employees’ Retirement System, Respondents
- Cited By
- 6 cases
- Status
- Published