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AGLO 1976 No. 12 - February 18, 1976
AGO Opinion Header Image
Slade Gorton | 1969-1980 | Attorney General of Washington

COLLEGES AND UNIVERSITIES ‑- PENSIONS ‑- RETIREMENT ‑- COMPUTATION OF SUPPLEMENTARY RETIREMENT BENEFITS FOR ACADEMIC EMPLOYEES

Creditability of service under coverage of the teachers' retirement system in computing supplementary retirement benefits for academic employees of colleges and universities under RCW 28B.10.400(3) and RCW 28B.10.415; prohibition against payment of benefits by teachers' retirement system based on any post-July 1, 1955, service for which credit is also allowed in the computation of supplementary retirement benefits for such academic employees; inclusion of teachers' retirement benefits or social security payments as a part of the basic retirement allowance for such academic employees for the purpose of determining the maximum amount of the supplementary retirement benefits which may be paid to those employees.

                                                                   - - - - - - - - - - - - -

                                                                February 18, 1976

Honorable Frank J. Warnke
State Representative, 30th District
Legislative Building
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1976 No. 12

Dear Sir:

            By letter previously acknowledged you have requested our opinion on several questions pertaining to RCW 28B.10.400 and related statutes authorizing the governing boards of the various state institutions of higher education to provide annuity or retirement income plans for designated faculty members or other employees of those institutions.  We paraphrase your questions as follows:

            (1) If an institution of higher education provides a supplementary payment, as it is authorized to do under RCW 28B.10.400(3) and RCW 28B.10.415, may the guaranteed amount upon which such supplementary payment is computed be based in part on years of higher education service under coverage of the Washington teachers' retirement system (TRS) as well as on years under TIAA/CREF?

            (2) If the answer to question (1) above is in the affirmative, does RCW 41.32.340 or any other provision of law prohibit pension payments by the teachers' retirement system based on service which also entitles a retiree to increased supplementary payments under RCW 28B.10.400(3) and RCW 28B.10.415?

            (3) If a retiree from an institution of higher education has both TRS service and service under TIAA/CREF, do the relevant statutes require that the TRS benefit be offset for purposes of calculating the amount of any supplemental payment to be paid to such retiree under RCW 28B.10.400(3)?

            (4) Is federal social security an "annuity or retirement income plan," within the meaning of that phrase as used in RCW 28B.10.400(3) so that social security benefits are to be offset against the guaranteed amount, however computed, in determining the supplementary benefit payable to a retiree?

            We answer questions (1) and (2) in the affirmative as qualified in our analysis and questions (3) and (4) in the negative for the reasons set forth therein.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            We begin with a reference to the relevant statutes.  First to be noted is RCW 28B.10.400 which initially provides that:

            "The boards of regents of the state universities, the boards of trustees of the state colleges, and the state board for community college education are authorized and empowered:

            "(1) To assist the faculties and such other employees as any such board may designate in the purchase of old age annuities or retirement income plans under such rules and regulations as any such board may prescribe. . . .

            ". . ."

            Although this statute does not specify any particular plan or plans to be thus provided by any given institution, in actuality all of them have entered into contracts with what is commonly referred to as TIAA/CREF, a nation-wide pension program for college level teachers to which you have also referred in your first two questions.

            Passing over subsection (2) of RCW 28B.10.400, which then authorizes the various boards to provide for the actual retirement, at age sixty-five or later, of their respective faculties or other designated employees, the next provision to be noted is RCW 28B.10.400(3) which further empowers those boards:

            "(3) To pay to any such retired person or his surviving spouse, each year after his retirement, an amount which, when added to the amount of such annuity or retirement income plan received by him or his surviving spouse in such year, will not exceed fifty percent of the average annual salary paid to such retired person for his highest two consecutive years of full time service at an institution of higher education:  Provided,however, That if such retired person prior to his retirement elected a supplemental payment survivors option, any such supplemental payments to such retired person or his surviving spouse shall be at actuarially reduced rates: . . ."

             [[Orig. Op. Page 3]]

            This authorization, however, is then qualified by RCW 28B.10.415 which provides that:

            "The boards of regents of the state universities, the boards of trustees of state colleges, or the state board for community college education shall not pay any amount to be added to the annuity or retirement income plan of any retired person who has served for less than ten years in one or more of the state institutions of higher education.  In the case of persons who have served more than ten years but less than twenty-five years no amount shall be paid in excess of four percent of the amount authorized in subdivision (3) of RCW 28B.10.400 as amended in section 1, chapter 149, Laws of 1973 1st ex. sess., multiplied by the number of years of full time service rendered by such person."

            The last statute to be noted before turning to your questions is RCW 28B.10.417, which deals, particularly, with those faculty members or other employees of a state higher educational institution who have been designated for coverage under a retirement plan formulated under RCW 28B.10.400, supra, but who were, at the time of that designation, members of the Washington state teachers' retirement system (TRS) under chapter 41.32 RCW.  This statute, which is of particular significance because of the scope of your first three questions, says that:

            "(1) A faculty member or other employee designated by the board of trustees of his respective state college as being subject to an annuity or retirement income plan and who, at the time of such designation, is a member of the Washington state teachers' retirement system, shall retain credit for such service in the Washington state teachers' retirement system and except as provided in subsection (2) of this section, shall leave his accumulated contributions in the teachers' retirement fund.  Upon his attaining eligibility for retirement under the Washington state teachers' retirement system, such faculty member or other employee shall receive from the Washington state teachers' retirement system a retirement allowance consisting of an annuity which shall be the actuarial equivalent of his accumulated contributions at his age when becoming eligible  [[Orig. Op. Page 4]] for such retirement and a pension for each year of creditable service established and retained at the time of said designation as provided in RCW 41.32.497 as now or hereafter amended.  Anyone who on July 1, 1967, was receiving pension payments from the teachers' retirement system based on thirty-five years of creditable service shall thereafter receive a pension based on the total years of creditable service established with the retirement system:  Provided,however, That any such faculty member or other employee who, upon attainment of eligibility for retirement under the Washington state teachers' retirement system, is still engaged in public educational employment, shall not be eligible to receive benefits under the Washington state teachers' retirement system until he ceases such public educational employment.  Any retired faculty member or other employee who enters service in any public educational institution shall cease to receive pension payments while engaged in such service:  Providedfurther, That such service may be rendered up to seventy-five days in a school year without reduction of pension.

            "(2) A faculty member or other employee designated by the board of trustees of his respective state college as being subject to the annuity and retirement income plan and who, at the time of such designation, is a member of the Washington state teachers' retirement system may, at his election and at any time, on and after midnight June 10, 1959, terminate his membership in the Washington state teachers' retirement system and withdraw his accumulated contributions and interest in the teachers' retirement fund upon written application to the board of trustees of the Washington state teachers' retirement system.  Faculty members or other employees who withdraw their accumulated contributions, on and after the date of withdrawal of contributions, shall no longer be members of the Washington state teachers' retirement system and shall forfeit all rights of membership, including pension benefits, theretofore acquired under the Washington state teachers' retirement system."

             [[Orig. Op. Page 5]]

            This statute thus provides two alternatives to such persons.  The first is to leave their accumulated contributions in the teachers' retirement fund, thereby maintaining eligibility for retirement under that system; and the second is for such persons to terminate membership in TRS, withdrawing their accumulated contributions and interest in the teachers' retirement fund, and thereby automatically forfeiting all rights of membership, including pension benefits, theretofore acquired under that retirement system.

            Bearing these several statutes in mind it is possible to identify several different classes of retired persons to whom RCW 28B.10.400(3) and 28B.10.415 may be applied within a given institution, as follows:

            (A) Those retired persons who had past full time service in another state institution of higher education and who also participated in TIAA/CREF while employed at that institution.

            (B) Those retired persons who had past full time service at the same or another state institution of higher education which, instead, was covered by the Washington state teachers' retirement system, who participated in that system long enough for their interest in the retirement benefits payable thereunder to be vested and who elected under RCW 28B.10.417 to retain credit for such prior service upon becoming covered by TIAA/CREF.

            (C) Those retired persons who had past full time service in another state institution of higher education which was covered by TRS but did not participate in that system long enough for their interest in its retirement benefits to vest.

            (D) Those retired persons otherwise falling in either class (B) or (C) who withdrew their contributions to TRS under RCW 28B.10.417(2) upon becoming covered by TIAA/CREF.

            (E) Those retired persons who had past service at a state institution of higher education which, at the time of their service, had no retirement system and, therefore, afforded no pension credit for the service thus rendered.

            (F) Those retired persons who had past periods of service in a state institution of higher education during which they were eligible to participate in a retirement program but chose not to do so.

             [[Orig. Op. Page 6]]

            Your first three questions, however, deal only with persons in classes (B) through (D) and your principal concern, as we understand it, is only with those in class (B); i.e., those who, upon retirement, will be entitled to receive both a TRS retirement allowance under chapter 41.32 RCW and some form of annuity and supplementary payment under RCW 28B.10.400(1) and (3).

            Question (1):

            Your first question, repeated for ease of reference, is as follows:

            "If an institution of higher education provides a supplementary payment, as it is authorized to do under RCW 28B.10.400(3) and RCW 28B.10.415, may the guaranteed amount upon which such supplementary payment is computed be based in part on years of higher education service under coverage of the Washington teachers' retirement system (TRS) as well as on years under TIAA/CREF?"

            In answering this question our first resort must be to the language of the statutes involved.  Champion v. Shoreline Sch. Dist., 81 Wn.2d 672, 504 P.2d 304 (1972).  Where that language is plain and unambiguous, there is no room for construction.  Krystad v. Lau, 65 Wn.2d 827, 400 P.2d 72 (1965), and cases cited therein.

            Here, based on the plain and unqualified language of RCW 28B.10.400 and 28B.10.415, it is our opinion that an institution of higher education, in providing a supplementary payment to a retired person, may, in calculating the amount of that payment, take into consideration years of higher education service at the same or another institution under coverage of the Washington state teachers' retirement system ‑ although it is not required to do so because RCW 28B.10.400(3) is permissive and not mandatory.  Moreover, if it does thus allow credit for such service this action may well have an impact upon the retiree's pension under the TRS statutes in chapter 41.32 RCW for the reason discussed below in answer to your second question.

            Specifically, RCW 28B.10.415 expressly provides that an institution cannot pay any amount to be added to the annuity or retirement income plan of a retired person ". . . who has served less than ten years in one or more of the state institutions of higher education."1/   In addition, RCW  [[Orig. Op. Page 7]] 28B.10.400(3), in authorizing institutions to make such supplemental payments, reads:

            ". . . paid to such retired person for his highest two consecutive years of full time service at an institution of higher education . . ."

            Thus, any years of service at a state institution of higher education, whether covered by a different retirement system or by the same annuity or retirement income plan offered by the educational institution making such payment,may be considered in determining whether the initial ten year period has been satisfied as well as for the purpose of calculating the supplement itself.  Contrast, in this regard, RCW 28B.10.415, supra, with the following provision of RCW 28B.10.405 with respect to employees' contributions to an annuity or retirement income plan offered by an institution under RCW 28B.10.400(1):

            "Members of the faculties and such other employees as are designated by the boards of regents of the state universities, the boards of trustees of the state colleges, or the state board for community college education shall be required to contribute not less than five percent of their salaries during each year of full time service after the first two years of such service toward the purchase of such annuity or retirement income plan; such contributions may be in addition to federal social security tax contributions, if any."

            Thus, RCW 28B.10.405 clearly indicates that the legislature was aware that there could be years of service while not contributing to the TIAA/CREF plan; yet in RCW 28B.10.415, the eligibility for the supplemental payments is couched not in terms of years of membership in the TIAA plan, but simply in terms of years of service period.

            The only limitation upon the consideration of such prior service in the computation of supplementary payments under the subject statutes would be that benefits paid to a retired person under the institution's annuity or retirement income plan could not be basedsolely upon those years of prior service rendered under the coverage of a different pension plan.  Rather, the retired person must have performed some services after the effective date of the institution's annuity or retirement income plan under which such supplement is to be paid.  See,Aldrich v. State Employees' Etc., 49 Wn.2d 831, 307 P.2d 270 (1957).

             [[Orig. Op. Page 8]]

            Bearing this point in mind it is thus our opinion, in answer to your first question, that if an institution of higher education provides a supplementary payment under RCW 28B.10.400(3) and RCW 28B.10.415 it may base the amount of that payment partially on prior years of full time service to either the same or another such institution under coverage of the Washington teachers' retirement system (TRS) as well as on years of service to the granting institution under its own annuity or retirement income plan.

            Question (2):

            Next you have asked:

            "If the answer to question (1) above is in the affirmative, does RCW 41.32.340 or any other provision of law prohibit pension payments by the teachers' retirement system based on service which also entitles a retiree to increased supplementary payments under RCW 28B.10.400(3) and RCW 28B.10.415?"

            As previously mentioned, RCW 28B.10.417 sets forth the rights and duties of faculty or other employees designated by an institution of higher education as being subject to its annuity or retirement income plan who, at the time, are members of the Washington state teachers' retirement system.  Basically, that statute provides that unless they elect to withdraw their employees' contributions such persons shall retain credit for their service as members of that system and, upon attaining eligibility for retirement under that system, shall receive appropriate payment.  Nothing in the statute speaks to any requirements or limitations concerning the granting of credit for either prior or subsequent service under a different retirement system.

            On the other hand, in chapter 41.32 RCW, the teachers' retirement act, RCW 41.32.340 defines "creditable service" for the purposes of TRS in the following manner:

            "Creditable service of a member at retirement shall consist of the membership service rendered by him for which credit has been allowed, and also, if he has a prior service certificate that is in full force and effect, the amount of the service certified on his prior service certificate.  No pension payments shall be made for service credits established or reestablished after July 1, 1955 if such credits entitle the member to retirement benefits from any other public state or local retirement system or fund.  No pension payments shall be made for service credits  [[Orig. Op. Page 9]] established or reestablished after July 1, 1961, if such credits entitle the member to retirement benefits from a public federal retirement system or fund for services rendered under a civilian program:  Provided, That no pension payments shall be made for service credits established or reestablished after July 1, 1969, if credit for the same service is retained for benefits under any other retirement sytem of fund."

            Thus, we conclude that RCW 41.32.340 does prohibit pension payments by the teachers' retirement system based on any post-July 1, 1955, service for which credit is also allowed in computing a supplementary retirement allowance offered by a state institution of higher education under RCW 28B.10.400(3) and RCW 28B.10.415,supra.  Therefore, if such an institution does in fact include a retiring employee's previous service under TRS when computing the amount of his supplementary payments under these latter statutes, and that service occurred after July 1, 1955, the retiree's pension under chapter 41.32 RCW will correspondingly have to be reduced to the extent required by the resulting elimination of TRS service credits under RCW 41.32.340.

            Question (3):

            Your next question asks:

            "If a retiree from an institution of higher education has both TRS service and service under TIAA/CREF, do the relevant statutes require that the TRS benefit be offset for purposes of calculating the amount of any supplemental payment to be paid to such retiree under RCW 28B.10.400(3)?"

            In order to focus in on the issue raised by this question let us again quote the pertinent language of RCW 28B.10.400:

            "The boards of regents of the state universities, the boards of trustees of the state colleges, and the state board for community college education are authorized and empowered:

            "(1) To assist the faculties and such other employees as any such board may designate in  [[Orig. Op. Page 10]] the purchase of old age annuities or retirement income plans under such rules and regulations as any such board may prescribe. . . .

            ". . .

            "(3) To pay to any such retired person or his surviving spouse, each year after his retirement, an amount which, when added to the amount of such annuity or retirement income plan received by him or his surviving spouse in such year, will not exceed fifty percent of the average annual salary paid to such retired person for his highest two consecutive years of full time service at an institution of higher education:  Provided,however, That if such retired person prior to his retirement elected a supplemental payment survivors option, any such supplemental payments to such retired person or his surviving spouse shall be at actuarially reduced rates: . . ."  (Emphasis supplied.)

            We have underscored the critical language of this statute.  The question to be resolved is whether the subject retiree's TRS benefit comes within the purview of the phrase ". . . such annuity or retirement income. . ." in subsection (3).

            This is not an easy question to answer.  At the outset we readily acknowledge the consequence of a negative response would be that, notwithstanding the fifty percent limitation on supplementation contained in RCW 28B.10.400(3), an institution of higher education could provide for the retirement of one of its faculty members with TIAA/CREF plus supplemental payments bringing him to the fifty percent goal and,in addition, such retiree would be entitled to receive any TRS benefit previously earned.  Thus, such a person could retire with a total retirement income of more than fifty percent of the average annual salary paid to him for his highest two consecutive years of full time service.  In other words, while the first class of retirees listed at the outset of this opinion (namely, those in TIAA throughout their years of service) could only retire at the fifty percent maximum the second class of faculty members (the TRS transfer group) could have retirement incomes with supplementation which would cause the total of their retirement income benefits from all of their years of service at higher education institutions to exceed that maximum.

             [[Orig. Op. Page 11]]

            Nevertheless, we believe that this is the answer which we must reach.  In order to avoid it we would have to be able to characterize the teachers' retirement system pension program provided for by the independent provisions of chapter 41.32 RCW as being, instead, within the scope of so much of RCW 28B.10.400(1) as authorizes the respective boards of regents and trustees to

            ". . . assist the faculties and such other employees as any such board may designate in the purchase of old age annuities or retirement income plans under such rules and regulations as any such board may prescribe. . . ."

            Only in this manner could the retirement allowance earned by a retiree under TRS be included in the term "such annuity" in RCW 28B.10.400(3).  The insurmountable obstacle to this approach, however, is that under the applicable statutes a board of regents or trustees has nothing whatsoever to do or say about the participation of an employee in the teachers' retirement system.  If an individual is a "teacher" as defined in RCW 41.32.010(30)2/ and is employed full time by a "public school" as defined in RCW 41.32.010(23),3/  [[Orig. Op. Page 12]] that individual is required to be a member of TRS by RCW 41.32.240 unless (a) he is employed by a higher educational institution and has been covered by an annuity or retirement program such as TIAA/CREF instead; or (b) he has previously exempted himself from TRS under certain prior statutes allowing such exemptions on an individual basis under certain circumstances.  Furthermore, a college or university employing a member of TRS does not even make an employer's contributions to help fund the retirement benefits that the members of that system receive ‑ unlike the situation which exists with respect to TIAA/CREF under RCW 28B.10.4104/ - because that function is performed in the case of TRS by means of periodic legislative appropriations instead.  See, RCW 41.32.401.

            Accordingly, in direct answer to your third question it is our opinion that where a retiree from an institution of higher education has both TRS service and service under TIAA/CREF, the relevant statutes do not require that the TRS benefit be offset for purposes of calculating the amount of any supplemental payment to be paid to such retiree under RCW 28B.10.400(3).

            Having so concluded, however, we should note and emphasize that, as with the question of credit for prior service covered by the teachers' retirement system (i.e., question (1), above), the decision as to whether to make any particular level of supplementary payments under RCW 28B.10.400(3), supra, is discretionary with each institution.  The statutedoes not require such payments to be made but rather,it merely authorizes them ‑ subject to the qualifications and limitations set forth therein and in RCW 28B.10.415.  All that we are here saying in response to your third question is that the first of these two statutes does not require an offsetting  [[Orig. Op. Page 13]] of a retiree's TRS benefit under the circumstances contemplated by your third question.

            Nor, we should add, is such an offsetting required by either of two other statutes to which our attention has been directed in the preparation of this opinion.  First, although RCW 28B.10.423 fixes a sixty percent limitation upon certain retirement income, the retirement income which is thus limited does not, under the terms of the statute, include anything payable under the laws governing the teachers' retirement system (chapter 41.32 RCW) or by virtue of RCW 28B.10.417,supra, allowing the preservation of credit upon transfer from TRS to TIAA/CREF.5/

             Secondly, while another statute, RCW 41.04.100, states that where a person is receiving pensions under two or more public retirement systems the total of those pensions ". . . shall not exceed the maximum payment for full service in the system last participated in," a reading of that statute in context with the remainder of chapter 98, Laws of 1951, by which it was enacted (now RCW 41.04.080-41.04.110) readily reveals its inapplicability in the present case.  Instead, as we read  [[Orig. Op. Page 14]] it, RCW 41.04.100 only applies to cases involving preservations of credit upon transfers of employment pursuant to agreements between agencies administering pension systems as provided for in RCW 41.04.080.

            Question (4):

            Finally you have asked:

            "Is federal social security an 'annuity or retirement income plan,' within the meaning of that phrase as used in RCW 28B.10.400(3) so that social security benefits are to be offset against the guaranteed amount, however computed, in determining the supplementary benefit payable to a retiree?"

            In answering this question it is first helpful to look at chapter 41.48 RCW which codifies the state act whereby federal social security was extended to employees of the state.  As set forth in RCW 41.48.010, the purpose of that act was as follows:

            ". . . it is hereby declared to be the policy of the legislature, subject to the limitations of this chapter, that such steps be taken as to provide such protection to employees of the state and its political subdivisions on as broad a basis as is permitted under the social security act."

            RCW 41.48.030 further authorized the governor of Washington to enter on behalf of the state into an agreement with the federal government for the purpose of extending the benefits of the federal old age and survivors' insurance system (OASI) to employees of the state and ". . . to members of a retirement system established by the state . . . or by an institution of higher learning with respect to services specified in such agreement which constitute 'employment' as defined in RCW 41.48.020. . . ."

            Thus, OASI is not an annuity or retirement plan authorized by any individual state institution of higher education.  Rather, it is a federal program, coverage of which was extended to state employees by the above‑referenced action of the state legislature.

            This conclusion and resulting negative answer to your  [[Orig. Op. Page 15]] fourth question6/ if further supported by the language of two other previously noted statutes, RCW 28B.10.405 and RCW 28B.10.410.  Respectively, these statutes set forth the requirements and limitations regarding the level of contribution by both faculty and the institution itself towards the purchase of a particular annuity or retirement income plan.  In addition, both of these statutes expressly provide that such a contribution "may be in addition to federal social security tax contributions, if any."

            We trust that the foregoing will be of some assistance to you.

Very truly yours,

SLADE GORTON
Attorney General

JERRY L. COE
Assistant Attorney General

                                                         ***   FOOTNOTES   ***

1/Conversely, therefore, it may pay such a supplemental benefit to a retired person who has served ten or more years in any such institution or institutions.

2/"(30) 'Teacher' means any person qualified to teach who is engaged by a public school in an instructional, administrative, or supervisory capacity, including state, intermediate school district, city superintendents and their assistants and certificated employees; and in addition thereto any qualified school librarian, any registered nurse or any full time school doctor who is employed by a public school and renders service of an instructional or educational nature."

3/"(23) 'Public school' means any institution or activity operated by the state of Washington or any instrumentality or political subdivision thereof employing teachers, except the University of Washington and Washington State University."

4/"The boards of regents of the state universities, the boards of trustees of the state colleges, or the state board for community college education shall pay not more than one‑half of the annual premium of any annuity or retirement income plan established under the provisions of RCW 28B.10.400 as amended in section 1, chapter 149, Laws of 1973 1st ex. sess.   Such contribution shall not exceed ten percent of the salary of the faculty member or other employee on whose behalf the contribution is made.  This contribution may be in addition to federal social security tax contributions made by the boards, if any."

5/RCW 28B.10.423, which codifies § 8, chapter 149, Laws of 1973, 1st Ex. Sess., reads as follows:

            "It is the intent of RCW 28B.10.400, 28B.10.405, 28B.10.410, 28B.10.415, 28B.10.420, 28B.10.423 and 83.20.030 that the retirement income resulting from the contributions described herein from the state of Washington and the employee shall be projected actuarially so that it shall not exceed sixty percent of the average of the highest two consecutive years salary.  Periodic review of the retirement systems established pursuant to RCW 28B.10.400, 28B.10.405, 28B.10.410, 28B.10.415, 28B.10.420, 28B.10.423 and 83.20.030 will be undertaken at such time and in such manner as determined by the committees on ways and means of the senate and of the house of representatives and the public pension commission, and joint contribution rates will be adjusted if necessary to accomplish this intent."

6/In answering this question it should be noted that our conclusion should not be construed as prohibiting an institution from offsetting or otherwise considering social security benefits in computing the supplementary benefit payable to a person retired, under the reasoning set forth in our answer to question (3), above.

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