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May 8, 1970
Honorable Robert S. O'Brien
Chairman, Washington State
Employees' Retirement Board
Olympia, Washington 98501
Cite as: AGLO 1970 No. 77
This is written in response to your recent letter requesting our opinion on a question pertaining to the investment of funds of the Washington public employees' retirement system. Your question reads as follows:
"'Can the Washington Public Employee's Retirement System funds be invested pursuant to the authority contained in chapter 93, Extraordinary Session, 1970 (H.B. 326)?'"
We answer this question in the affirmative for the reasons set forth below.
Section 1 of the 1970 act to which your question refers provides as follows:
"Notwithstanding the provisions of any other statute of the state of Washington to the contrary, it shall be lawful for the state of Washington and any of its departments, institutions and agencies, municipalities, districts, and any other political subdivision, or any political or public corporation of the state, or for any executor, administrator, guardian, or conservator, trustee or other fiduciary, to invest its funds or the moneys in its custody or possession, eligible for investment, in notes, bonds, or debentures of savings and loan associations, banks, mutual savings banks, savings and loan service corporations operating with approval of the Federal Home Loan Bank, and corporate mortgage companies: PROVIDED, That the notes, bonds or debentures are rated not less than "A" by nationally recognized rating agency, or are insured or guaranteed by an agency of the federal government or by private insurer authorized to do [[Orig. Op. Page 2]] business in the state: PROVIDED FURTHER, That the notes, bonds and debentures insured or guaranteed by a private insurer shall also be backed by a pool of mortgages equal to the amount of the notes, bonds or debentures." (Emphasis supplied.)
As you are aware, the question of whether certain public funds which are within the apparent purview of this 1970 act can constitutionally be invested in securities of the general types provided for therein is currently being litigated in the case ofState ex rel. Graham v. City of Olympia, Thurston County Cause No.42641. This case pertains to the scope of §§ 5 and 7 of Article VIII of our state Constitution, which govern the lending of public funds and credit; and it calls upon the court to review its earlier decision on this matter in the case ofAberdeen v. National Surety Co. 151 Wash. 55, 275 Pac. 62 (1929). Thus, consistent with our long-standing policy of not issuing opinions upon questions which are in litigation during the pendency thereof, no opinion can presently be written by this office on the utility of the act in question with respect to the investment of those state or local public funds which are still governed by the constitutional provisions involved in the Graham case. However, in view of the 49th Amendment to our state Constitution, it is clear that these provisions no longer apply to public pension funds such as those which are the subject of your immediate question.1/ Therefore, we may proceed to consider this question on its merits.
There can be no doubt but that, on its face, § 1, chapter 93, Laws of 1970,supra, is written in broad enough terms to include the funds of the Washington public employees' retirement system among those to which it applies. Thus, the question becomes one of the relationship between this 1970 act and the preexisting statute ‑ RCW 41.40.071 ‑ which generally governs the investment of retirement system funds. This statute, which codifies § 8, chapter 155, Laws of 1955, as last amended by § 3, chapter 128, Laws of 1969, designates [[Orig. Op. Page 3]] the members of the retirement board as the trustees of the several funds created by chapter 41.40 RCW, and then provides that:
". . . the retirement board shall have full power to invest or reinvest, or to authorize the state finance committee to invest or reinvest, such funds in the following classes of investments, and not otherwise:
". . ." (Emphasis supplied.)
The problem posed by this statute is that while the list of authorized investments which follows the above quoted preamble includes certain bank, mutual savings bank, savings and loan association, and other corporate bonds2/ which are also within the scope of § 1, chapter 93, Laws of 1970,supra, it does not include all of them. For example, it does not include those obligations of savings and loan service corporations or corporate mortgage companies which are not eligible for an "A" rating or better from two nationally recognized rating agencies3/ - but are nevertheless insured by an agency of the federal government; or by a private insurer authorized to do business in the state of Washington and backed by a pool of mortgages equal to their amount, as required by the 1970 act.
It is apparent that to the extent of those securities which are included under the 1970 act but not under the preexisting provisions of RCW 41.40.071, the two acts ‑ in so far as the employees' retirement board is concerned ‑ are in conflict. RCW 41.40.071 says that the board may invest in the securities enumerated thereinand not otherwise, while the 1970 act provides that the board (as a state agency included in its terms) may invest in any of the securities described therein "Notwithstanding the provisions of any other statute of the state of Washington to the contrary, . . ." The only way by which this conflict could be avoided would be through an interpretive exclusion of the retirement board and its funds from the provisions of the 1970 act, but as we have already seen from the breadth of this act, its inclusion of this board and its funds seems clear.
[[Orig. Op. Page 4]]
Accordingly, since the conflict between the two acts cannot, thusly, be avoided, it must, instead, be resolved on the basis of the following rule of statutory construction, as stated by the Washington court in Abel v. Diking & Drainage Imp. Dist., 19 Wn.2d 356, 363, 142 P.2d 1017 (1943):
"Repeals by implication are ordinarily not favored in law, and a later act will not operate to repeal an earlier act except in such instances where the later act covers the entire subject matter of the earlier legislation, is complete in itself, and is evidently intended to supersede the prior legislation on the subject, or unless the two acts are so clearly inconsistent with, and repugnant to, each other that they cannot, by a fair and reasonable construction, be reconciled and both given effect. . . ."4/
It is true that where, as here, the conflict is between a general law (such as § 1, chapter 93, Laws of 1970) and a special act (RCW 41.40.071, dealing, specially, with the investment of one particular state fund alone) the conflict is ordinarily resolved in favor of the special act ‑ irrespective of which is later in time. Accord,Bank of Fairfield v. Spokane County, 173 Wash. 145, 22 P.2d 646 (1933); 2 Sutherland, Statutory Construction, § 5204 (p. 541). However, as was stated in 50 Am.Jur., Statutes, § 564 (p. 565):
"There is no rule which prohibits the repeal by implication of a special or specific act by a general or broad one. The question is always one of legislative intention, and the special or specific act must yield to the later general or broad act, where there is a manifest legislative intent that the general act shall be of universal application notwithstanding the prior special or specific act. . . ."
[[Orig. Op. Page 5]]
Here, in our judgment, we have a case which squarely comes within this latter statement of analytical approach ‑ for here the legislature has expressly said that the provisions of § 1, chapter 93, Laws of 1970, shall apply to, and sanction, the investment of all of the types of funds included therein "Notwithstanding the provisions of any other statute of the state of Washington to the contrary." Therefore, supported by the foregoing principles of statutory construction, we arrive at the conclusion that to the extent of conflict between these two acts, the provisions of the later general act, § 1, chapter 93, Laws of 1970, must prevail over the provisions of the earlier special act ‑ RCW 41.40.071.
From this it follows, in direct answer to your question, that the Washington public employees' retirement system funds may be invested pursuant to the authority contained in chapter 93, Laws of 1970; i.e., that your question is answerable in the affirmative.
We trust that the foregoing will be of assistance to you at this time.
Very truly yours,
FOR THE ATTORNEY GENERAL
Philip H. Austin
Assistant Attorney General
*** FOOTNOTES ***
1/This constitutional amendment, which was approved by the voters at the 1968 state general election, provides as follows:
"Notwithstanding the provisions of sections 5, and 7 of Article VIII and section 9 of Article XII or any other section or article of the Constitution of the state of Washington, the moneys of any public pension or retirement fund may be invested as authorized by law."
2/See, RCW 41.40.071 (11), (12), (14) and (15).
3/See, RCW 41.40.071 (11).
4/See, also, State Etc. v. Spanaway Water Dist., 38 Wn.2d 393, 229 P.2d 532 (1951); State v. Becker, 39 Wn.2d 94, 234 P.2d 897 (1951);Taylor v. Greenler, 54 Wn.2d 682, 344 P.2d 515 (1959); andTacoma v. Cavanaugh, 45 Wn.2d 500, 275 P.2d 933 (1954).