STATE EMPLOYEES' RETIREMENT SYSTEM ‑- OASI PLAN -- AMENDMENT --COUNTIES ‑- SUBMISSION ‑- WITHDRAWAL OF APPROVAL ONCE GIVEN
1. County cannot submit plan for extension of OASI coverage to county-employee members of state employees' retirement system.
2. County commissioners cannot withdraw approval of plan for OASI for county-employee members of state employees' retirement system, either before or after referendum.
3. State employees' retirement board cannot amend plan for OASI for members of retirement system after approval by governor.
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November 10, 1955
Honorable J. Chester Gordon
State Representative, 9th District
206-C Administration Building
University of Washington
Seattle 5, Washington Cite as: AGO 55-57 No. 160
You have requested the opinion of this office on three questions arising under chapter 4, Laws ex. sess. 1955, and particularly §§ 1, 3 (3) and 5 thereof as quoted in your letter, authorizing the extension of OASI coverage to members of the public retirement systems in this state, as follows:
"1. May the governing body of a county, or other political subdivision, under the provision of Section 3 (3) above quoted, prepare and present a plan for providing Social Security, comprised of a revised state retirement system plan plus Social Security?
[[Orig. Op. Page 2]]
"2. May the State Retirement Board, under the authority of the provisions quoted, prepare and submit to the Governor a plan which includes revised rates and benefits of the present state retirement system, plus Social Security?
"3. May a political subdivision, such as a county, which has already passed a resolution providing for submission of a plan of supplementation, rescind such resolution, and enact a new resolution providing for a submission of a different plan, under either # 1 or # 2 of the immediate preceding paragraphs, either (1) before the referendum is held, or (2) after the referendum is favorably voted upon."
In our opinion all three questions must be answered in the negative.
1. Attached hereto is a copy of AGO 55-57 No. 115, addressed to the division of municipal corporations in the office of the state auditor on July 15, 1955, indicating that no authority is granted by § 5, chapter 4, Laws ex. sess. 1955, under which any body other than the retirement board could submit a plan for the extension of OASI coverage to members of the state employees' retirement system. While that opinion was given with reference to a port district the rule stated is equally applicable to a county. The legislative provision in this regard is an implicit recognition of the serious complications which might arise if a number of plans for OASI coverage could be put into operation for various members of the same retirement system.
Subsection 3 (3) of chapter 4 establishes a basis upon which a political subdivision may exercise an option to accept or reject OASI coverage under the plan submitted by the retirement board. See AGO 55-57 No. 116, to the prosecuting attorney of King County on July 15, 1955, a copy of which is enclosed. You will note from the references in that opinion and from the language of subsection 3 (3) itself that under our law a county group of members of the state system is deemed a separate retirement system "for the purpose of the [[Orig. Op. Page 3]] referendum". That language would have been unnecessary had the legislature intended to permit each county group to formulate its own plan. Further, under subsection 3 (4) (f) of chapter 4, the county commissioners are to "approve" the proposed plan. The plain implication is that such a plan originates elsewhere. We are thus returned to the point discussed in AGO 55-27 No. 115, supra; that subsection 5 (1) of chapter 4 makes no provision for the creation and submission of a plan by a political subdivision.
The procedure by which the local option provision of 42 U.S.C.A. (1954 supp.) 418 (d) (6) may be put into effect within a state we think has been left by Congress to the state legislature. Thus while the cited section might be construed to permit an individual plan for each political subdivision our legislature saw fit to choose another method. We do not believe that method is inconsistent with the federal statute.
We conclude that a county may not submit such a plan.
2. Your second question is whether the retirement board can submit a plan providing for coordination. The present plan, which has been approved by the governor and several boards of county commissioners, provides for supplementation.
Section 1 of chapter 4 mentions provision in the eventual agreement between the state and federal governments for "supplementation, integration or coordination." Subsection 3 (4) (f) requires approval prior to referendum of
"* * * any necessary structural adjustment to the existing system to conform with the proposed plan."
Supplementation is the addition of OASI coverage to that provided by the existing retirement system without change or diminution in the coverage of the latter. Coordination and integration both involve an alteration of the rates and benefits now effective within the existing retirement system. Such an alteration would be a "structural adjustment". The necessary implication of the language quoted above from § 1 and subsection 3 (4) (f) therefore is that the legislature intended to permit a retirement system to submit a plan for the extension of OASI coverage to its members on the basis of supplementation or integration or coordination.
[[Orig. Op. Page 4]]
The right of the retirement board to revise its present plan depends upon subsection 5 (1) of chapter 4. After authorizing the submission of a plan, the subsection provides that
"* * * Each such plan and any amendment thereof shall be approved by the governor if he finds that such planor such plan as amended, is in conformity with such requirements as are provided in regulations of the governor, * * *" (Emphasis supplied)
We think the placement of this language in the section relating to the gubernatorial approval of plans clearly indicates that it was simply intended to permit a retirement system or subdivision (in the case of a plan for coverage of employees not enrolled in a retirement system) to correct by amendment technical defects which might have caused the governor to reject a plan.
Any other construction, to the effect that the power to amend continues beyond the date of the governor's approval, we think is untenable. A few of the questions which would arise, and which are not answered by the statute, will serve to illustrate the incongruity of such a conclusion. If a plan had been approved by the governor, the county commissioners, and in referendum, would the submission of an amended plan immediately halt further proceedings under the original version? Assuming it would not, would it still be effective to prevent approval by counties which had not yet acted upon that version? In other words, when would this continuing power of amendment be terminated? Conceivably, the retirement board might completely block any attempt to obtain OASI coverage by the submission of amended plans. It seems obvious that the legislature did not intend to grant a power of amendment continuing into the period after the governor's approval. The procedure established consists of several steps, each taken by a different officer, group, or body. Unless a plan can pass from one step to another with the certainty of final action in each step, that procedure would be totally unworkable under the present law.
We conclude that the retirement board cannot now submit an amended plan calling for coordination in lieu of the present plan of supplementation.
[[Orig. Op. Page 5]]
3. Your third question is whether the governing body of a political subdivision may rescind its approval of the present plan either before or after referendum. The relevant statutory provision is subsection 3 (4) (f) of chapter 4, Laws ex. sess. 1955:
"The state legislature, in the case of a referendum affecting the rights and liabilities of state employees covered under the state employees' retirement system and employees under the teachers' retirement system, and in all other cases the local legislative authority or governing body, shall have specifically approved the proposed plan and approved any necessary structural adjustment to the existing system to conform with the proposed plan."
The governing body of a subdivision is given authority to approve a plan. It is given no power to withdraw that approval at a later date.
We have found only one case in point upon analagous facts, New York State Employees' Retirement System v. Board of Supervisors of Tioga County, 157 Misc. 87, 283 N.Y.S. 405; affirmed, under the same title, in 251 App. Div. 198, 296 N.Y.S. 286, and in 278 N.Y. 496, 15 N.E. (2d) 434, by the Appellate Division and Court of Appeals of New York. The statute provided that
"* * * 'officers and employees of any county shall not be included in the state employees' retirement system without the approval of the board of supervisors of any such county. * * * Should the board of supervisors of a county * * * give its approval to the participation of the officers and employees of such county * * * such employees shall be eligible to participation.'"
After a meeting with a representative of the retirement system, the board, on December 15, 1930, by resolution gave its approval. On March 2, 1931, having discovered that the cost to the county would be substantially greater than it had been led to believe, the board by resolution attempted to rescind its previous approval. The retirement system brought mandamus to compel payment of contributions, and the writ was granted. The pertinent part of the decision, at p. 408 of 283 N.Y.S., is as follows:
[[Orig. Op. Page 6]]
"Had the board the power to rescind its action? The county is a municipal corporation. County Law, § 3. A municipal corporation has no power except such as is given to it by the Legislature. Any power thus given may be modified, diminished, or recalled. * * *
"It is evident that the state, by appropriate legislation, attempted to create a retirement system for its officers and employees and those of such counties and municipalities as by appropriate action approved of the inclusion of its officers and employees. Clearly the Legislature intended this system to be permanent. It gave counties, cities, villages, and towns the right of election to come in. It is significant that it gave them no power to withdraw. The apparent purpose being to create a permanent Retirement System, the power to withdraw cannot be implied. If it is, a municipality may repeatedly elect to come in or withdraw. The parties have called our attention to no applicable authorities, but a consideration of the statute and the authorities found, leads us to the conclusion that the defendant county, having adopted the resolution of inclusion, had no power to rescind it. * * *"
To the same effect is the comment in 20 C.J.S. 872, Counties, § 93, which cites several somewhat similar cases.
At least four procedural steps are involved, each depending upon the assent of a different person, group or body: the submission of a plan, approval by the governor, approval by a local governing body, and approval by referendum. The potential confusion, if any link in this chain of concurrence could be withdrawn, is apparent. In view of the number of retirement systems established in this state, it might have been exceedingly difficult for the legislature itself to formulate plans suited to the needs of each such system. However, after approval, the state must be able to rely upon such plans in order to consummate an agreement with the federal authorities.
Practical considerations also bear upon the result. If a withdrawal of approval were allowed prior to referendum, at least three months (the required notice period) would be required for another referendum, during which [[Orig. Op. Page 7]] time the already substantial problem of collecting and providing retroactive contributions, assuming eventual coverage back to January 1, 1955, as is presently contemplated by many subdivisions, would be aggravated. A withdrawal after favorable referendum would require an intervening year prior to another referendum under 42 U.S.C.A. (1954 supp.) 418 (d) (3). Apart from the administrative difficulties involved, such delay would in all probability occasion a considerable loss of creditable service toward OASI coverage in the case of individuals who would soon be eligible for retirement, if not complete deprivation of such coverage.
While it is true that the plan is not "legislation", we think that the situations presented by your question and the Tioga case are sufficiently similar to warrant application of the rule stated there.
We conclude that both parts of your third question must be answered in the negative.
We may point out that a plan of coordination such as is contemplated by your request would require adjustment of the rates and benefits now controlled by statute insofar as the state employees' retirement system is involved; and thus could not be placed in effect without legislation. As we understand it, coordination involves no change in OASI rates or benefits. It is thus the same as supplementation in that respect. Any reduction in overall cost would have to be achieved by a change in the retirement system. While we have not had an opportunity to consult the federal administrative authorities or counsel on this point, it may be possible to accomplish such a change at a subsequent time, without depriving presently eligible members of the system of the immediate benefits of OASI coverage.
We hope the foregoing analysis and discussion will prove helpful to you.
Very truly yours,
A. J. HUTTON, JR.
Assistant Attorney General