PENSIONS ‑- RETIREMENT ‑- PUBLIC EMPLOYEES' RETIREMENT SYSTEM ‑- TEACHERS' RETIREMENT SYSTEM ‑- LIABILITY OR ADDED PENSION COSTS
(1) It is the level of salary increases which have been granted to all employees of the particular employer, and not merely certain classes of employees of that employer, which is to be looked to, under § 34, chapter 52, Laws of 1982, 1st Ex. Sess., in determining whether a salary increase granted to a particular employee (thereafter retiree) is so excessive as to result in employer liability for increased pension costs.
(2) In the case of an employee who is simultaneously working for two different employers, it is the employer which granted the excessive salary increase (if any) who will be liable for any excess retirement benefit costs under § 34, chapter 52, Laws of 1982, 1st Ex. Sess.
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June 29, 1982
Honorable Joe Taller
Office of Financial
House Office Building
Olympia, Washington 98504 Cite as: AGLO 1982 No. 17
In addition to the questions to which we responded in AGO 1982 No. 6, you requested our opinion on certain other questions relating to public employees' retirement benefits under § 34, chapter 52, Laws of 1982, 1st Ex. Sess. (SB 4640) and the comparable language of § 2, chapter 10, Laws of 1982, 1st Ex. Sess. (SSHB 987). These other questions are as follows:
"1. Assume an employee receives a salary increase during his or her AFC period as a result of a salary survey. Assume further that the increase, though uniform for all employees in a certain job class, is in excess of the average increase granted by the employer for all PERS members. Will the employer incur a cost for excess benefits under SB 4640?
[[Orig. Op. Page 2]]
"2. Assume an employee's AFC period occurred prior to his or her final two years of employment. Assume also that the employee worked for two employers during the AFC period. Which employer(s) is liable for any excess retirement benefit cost under SB 4640?
"3. To what extent are your answers to questions 1 and 2 applicable to TRS 1 and TRS 2 members and their employers?"
We answer these questions in the manner set forth in our analysis.
Once again the full text of § 34, chapter 52, Laws of 1982, 1st Ex. Sess., to which your first two questions refer, reads as follows:
"The department of retirement systems shall make a review of each member employed by an employer being retired on and after July 1, 1982, and whose benefits are determined by RCW 41.40.185. The purpose of the review is to identify any retiree whose average compensation earnable for purposes of determining retirement benefits exceeds the average annual compensation during the two-year period immediately preceding the years used in computing retirement benefits by more than the percentage increase determined in subsection (1) of this section.
"(1) For the retiree's average final compensation period, the basis for making the comparison required by this section shall be a percentage increase equal to one percentage point in excess of each of the average percentage general salary increases granted during such average final compensation period to all employees of that employer who are members of the retirement system under this chapter, adjusted for incremental increases for seniority and/or performance, and staff position changes.
"(2) For all retirees identified in this section, the department shall calculate the increase in the basic retirement benefit which results from any increase in [[Orig. Op. Page 3]] salary granted an employee in excess of the authorized salary increase. The department will then, utilizing tables developed by the state actuary, determine the extra pension cost attributable to exceeding such average and shall bill the retiree's employer, who shall remit the entire amount determined to the retirement system within thirty days, except that the director is empowered to omit billing for an amount less than fifty dollars.
"(3) Any post-retirement increases resulting from the excess benefit identified in subsection (2) of this section shall be billed to the last employer as they occur on the basis set forth in subsection (2) of this section."
The answer to your first question seems clear. It is the level of salary increases which have been granted to all employees of the particular employer‑-and not merely certain classes of employees of that employer‑-which is to be looked to, under the express language of the statute, in determining whether a salary increase granted to a particular employee (thereafter retiree) is so excessive as to trigger the provisions of subsection (2),supra. We can conceive of no basis for any other answer.
As for your second question, we are guided in responding by the rule of construction which instructs that an ambiguous or uncertain act of the legislature is to be construed in light of its apparent underlying purpose. See,e.g., Miller v. Paul Revere Life Insurance Co., 81 Wn.2d 302, 501 P.2d 1063 (1972). Here, it seems evident that the underlying purpose of the legislature was to require those employers responsible for "excessive" salary increases‑-and, hence, increased pensions‑-to pay the costs, to the retirement system, resulting from their action. We therefore conclude, in answer to this question, that it is the employer which granted the triggering salary increase (in a case such as is alluded to therein) that will be liable for any excess retirement benefit costs.1/
[[Orig. Op. Page 4]]
Finally, in response to your third question, we would simply repeat what we said, earlier, in AGO 1982 No. 6. The provisions of § 34, chapter 52, supra, are in all material respects identical to those of § 2, chapter 10, Laws of 1982, 1st Ex. Sess. (SSHB 987). The only difference between the two enactments is that the latter relates to those retiring under RCW 41.32.497 or RCW 41.32.498 as members of the Washington State Teachers' Retirement System. We therefore, again, have no hesitation in advising you that our answers to your first two questions, above, are equally applicable in this instance.
We trust that the foregoing will be of assistance to you.
Very truly yours,
KENNETH O. EIKENBERRY
PHILIP H. AUSTIN
Deputy Attorney General
*** FOOTNOTES ***
1/This conclusion assumes that your question, as above stated, is directed at a situation in which the employee works for two employers simultaneously during what turns out to be the employee's AFC period . One of those employers grants an increase in excess of the subject statutory guidelines. The only logical result in such a case is for the employer that granted the triggering salary increase to bear the increased pension costs. If, however, you are thinking instead of an employee who works successively for two different employers we should caution that a salary increase resulting, simply, from a change in employment is not within the coverage of the statute at all.