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AGO 1962 No. 140 - May 24, 1962
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John J. O'Connell | 1957-1968 | Attorney General of Washington


PENSIONS ‑- FIREMEN ‑- CITIES AND TOWNS ‑- USE OF MILLAGE LEVY ‑- DEFINITION OF ACTUARY ‑- FUND CONSIDERED ACTUARIALLY SOUND.

(1) Under the provisions of § 9, chapter 255, Laws of 1961, if after an examination of and report on the condition of the firemen's pension fund by an actuary, it is determined that the condition of the fund is such as not to require all or part of the millage levy therein provided for, such millage may be omitted or levied and used for other municipal purposes.

(2) The word "actuary" as used in RCW 41.16.060 means the computing officer of an insurance company; a person skilled in calculating the value of life interests, annuities, and insurance.  Whether or not an individual qualifies as an actuary is a question of fact since there is no legal provision in this state for crediting or qualifying an actuary for the purposes of RCW 41.16.060.

(3) and (4) Examination and report of an actuary specified by RCW 41.16.060 contemplates an examination and report as to the actuarial soundness of the firemen's pension fund; not merely the anticipated cash disbursements or operating expenses of the fund for an ensuing fiscal year.

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                                                                   May 24, 1962

Honorable Mark Litchman, Jr.
State Representative, 45th District
719 Arctic Building
Third and Cherry
Seattle 4, Washington

                                                                                                              Cite as:  AGO 61-62 No. 140

Dear Sir:

            By letter, previously acknowledged, you have requested our interpretation of § 9, chapter 255, Laws of 1961 (RCW 41.16.060) on the following questions relative to the operation of the firemen's pension fund in cities and towns:

            "1. Is the levy of one mill mandatory regardless of the condition of the firemen's pension fund?

            "2. In the second paragraph of Sec. 9 of said law when it refers to 'actuary' what is meant by the word actuary?  Does the word mean that a man or  [[Orig. Op. Page 2]] corporation has to be accredited?  Who determines the qualifications of an actuary?

            "3. When is a firemen's pension fund considered actuarially sound?  In order for an actuary to approve the condition of a fund so that the one mill levy need not be issued is it necessary that one consider the current liability for retirement, disability, death benefits, budget for the year regarding operating expenses, etc.?

            "4. Is it possible that an actuary could approve of a firemen's pension fund, taking only into consideration the budget (operating expenses) for the ensuing budget year?"

            We answer your first question in the negative as explained in the analysis.  The answers to your second, third and fourth questions will be found in the analysis.

                                                                     ANALYSIS

            Section 9, chapter 255, Laws of 1961 (cf. RCW 41.16.060) provides:

            "It shall be the duty of the legislative authority of each municipality, each year as a part of its annual tax levy, to levy and place in the fund a tax of one mill on all the taxable property of such municipality: PROVIDED, That should the estimated amount to be raised by said levy of one mill, together with other estimated income be insufficient to meet the estimated requirements of the fund then there shall be levied such additional tax, not to exceed one mill, as will meet said requirements:  PROVIDED FURTHER, That this additional levy may be in addition to the city fifteen mill levy limit now provided by law.

            "Any city or town may, at any time before the annual budget for the city or town is made, cause an examination of and report on the condition of the firemen's pension fund by an actuary, and if it is established from such examination and report that the condition of the fund and the estimated demands and requirements thereon under this chapter during the ensuing budget year will not require the levy of the mandatory one mill, or if all or any part of the additional one mill levy is unnecessary to meet the estimated demands on the fund under  [[Orig. Op. Page 3]] this chapter for the ensuing budget year, the levy of the mandatory or additional one mill may be omitted, or the whole or any part of such millage may be levied and used for any other municipal purpose."

            The answer to your first question, together with an analysis and history of the statute, are found in a recent opinion of this office, AGO 61-62 No. 40, copy of which is enclosed.  We were there asked to answer the following question:

            "Under the provisions of § 9, chapter 255, Laws of 1961, if, after an examination of and report on the condition of the firemen's pension fund by an actuary, it is determined that the condition of the fund is such as not to require all or part of the millage levy therein provided for, may such millage nevertheless be levied and used for another municipal purpose?"

            We answered as follows:

            "Assuming then that a determination is in fact made that either or both the 'mandatory' mill or the 'additional' mill is unnecessary for pension fund purposes for a particular year how should the question of whether this millage may nevertheless be levied for other municipal purposes be answered?  On this point we believe that the statute here under consideration is plain, clear, and unambiguous.  In essence it provides that if either or both the 'mandatory' mill or the 'additional' mill is determined to be unnecessary for pension fund purposes for a particular year, then, '. . . the levy of the mandatory or additional one mill may be omitted, or the whole or any part of such millage may be levied and used for any other municipal purpose.'  (Emphasis supplied.)"

            In the opinion, however, we were not asked to determine what the legislature meant by the word "actuary" nor what specifically constituted the necessities of the pension fund, for an effective determination whether or not to levy the "mandatory" and "additional" mills.

            Your remaining questions present the necessity of such determination at this time.  The reason for the necessity is the legislature's use of words and phrases in the statute which, because they are not sufficiently defined, are susceptible of several meanings.  The whole  [[Orig. Op. Page 4]] object of construing the statute is to resolve the ambiguity and to ascertain the meaning and intention of the legislature.  Cory v. Nethery, 19 Wn. (2d) 326, 142 P. (2d) 488 (1943).  The language of a statute is to be construed in the light of the object which the statute was intended to accomplish.  Clark v. Housing Authority of Port Orchard, 25 Wn. (2d) 419, 171 P. (2d) 217 (1946).  Statutes should receive a sensible construction, such as will effect the legislative intention, and if possible, so as to avoid an unjust or absurd conclusion.  State v. Asotin County, 79 Wash. 634, 140 Pac. 914 (1914).  Of course, in case of doubt, a statute should not be so construed as to impair existing rights.  State v. Natsuhara, 136 Wash. 437, 240 Pac. 557 (1925).

            Your second question calls for a construction of the term "actuary," as it appears in the statute.

            Black's Law Dictionary (4th ed.), defines "actuary" as follows:

            "In English ecclesiastical law, a clerk that registers the acts and constitutions of the lower house of convocation; or a registrar in a court christian.

            "Also an officer appointed to keep savings banks accounts; the computing officer of an insurance company; a person skilled in calculating the value of life interests, annuities, and insurances.  Champagne v. Unity Industrial Life Ins. Co., La. App., 161 So. 52, 53."

            Similarly, Webster's New Twentieth Century Dictionary, Unabridged, (2nd ed.) defines "actuary" as follows:

            "1. A registrar or clerk; a term of the civil law, and used originally in courts of civil law jurisdiction.

            "2. An official statistician and computer of an insurance company; one who calculates insurance risks and premiums."

            Obviously the only definition which has any application to the meaning of the statute in question is that used by both dictionaries, defined in Black's,supra, as:

            ". . . the computing officer of an insurance company; a person skilled in calculating the value of life interests, annuities, and insurances.  [Citation omitted]."

             [[Orig. Op. Page 5]]

            On the remaining parts of the same question, we find no law in this state otherwise expressly defining the qualifications of an actuary.  The legislature in using the word however is presumed to have used it in its ordinarily understood sense.  State v. Vosgien, 82 Wash. 685, 144 Pac. 947 (1914).  In the event of doubt in a given case, the matter would be simply a judicial question to be determined with reference to the qualifications of a specific individual when the question arose.

            Your third and fourth questions both ask in effect the same question; namely, by what standard of measurement did the legislature intend to have the municipal governing body determine whether or not to levy the "mandatory" and the "additional" mill contemplated by the statute.  Is it sufficient to consider merely the estimated expenditures from the fund during the next ensuing budget year?  Or, instead, did the legislature have in mind the "demands and requirements" of the fund in a broader sense; i.e., the income necessary to maintain the fund on a sound actuarial basis during the next ensuing budget year?

            It may be said that neither result is clearly dictated by the exact language used by the legislature, and it is of no use to search for any particular word or phrase in the statute to end all doubts on the matter.  It is our opinion that the answer is not clear, but that it may be found, nevertheless, from reading the statute and all pertinent words and phrases thereof, in the light of the over-all legislative purpose.  The purpose is, of course, to be gleaned from the act as a whole.

            In the first place, it may be presumed that the legislature intended throughout the chapter (41.16 RCW) to establish a fund and maintain it on a level sufficient to serve certain purposes; i.e., to furnish certain future benefits to persons coming under its scope.

            Logically, then, the words "demands" and "requirements" of a fund would be expected to mean the income necessary to preserve the fund for its intended purposes unless the legislature very clearly evidenced a contrary intent.  We find no such contrary intention clearly expressed anywhere in the statute.

            As to the initial or "mandatory" one mill, we think it is fairly clear that the legislature meant something more than mere expected disbursements from the fund, as the criterion to determine whether to make or omit the levy for its intended purpose.  The statute speaks of both the "condition" of the fund, and the "estimateddemands and requirements thereon," (emphasis supplied) as determined by an actuary.  Obviously the condition of the fund, as well as its demands and requirements, depend upon the purpose it is intended to serve.  In addition, the legislature took pains to specify that the determination  [[Orig. Op. Page 6]] was to be made by an "actuary."  Considering the definitions in both the technical and nontechnical dictionaries,supra, we believe the conclusion is inescapable that the legislature had in mind the actuarial soundness of the fund‑-its ability to serve projected needs over a long period of time‑-and not merely what outlays might be required during a single budget year.

            This same conclusion is not so clearly drawn, but we think valid, nevertheless, as to the "additional" levy of not exceeding one mill.  It is to be noted that the legislature, in requiring the levy in the first place, made it mandatory, in the event that other income proved insufficient to "meet the estimated requirements of the fund."  RCW 41.16.060,supra.  In the next paragraph of the same statute the legislature allowed the same additional levy to be either omitted or diverted to other purposes if (from the contemplated actuarial report) such levy proved to be "unnecessary to meet the estimated demands on the fund under this chapter for the ensuing budget year."

            A great deal of argument could be made over the legislative choice of words; for instance, "demands on the fund" instead of "requirements of the fund."  However, the ultimate effect of drawing such a distinction would be so drastic we cannot conclude it was intended, in the absence ofclear legislative direction.  Logically, it would mean that the legislature intended to permit a situation where estimated outlay from the fund might exhaust it entirely in one year, wiping out all existing rights of beneficiaries beyond that year, and still permit an available levy to be utilized for "any other municipal purpose."

            Rather, we are convinced that the legislature intended merely to repeat in different form its previously stated condition for omitting or diverting the levy, while preserving the necessity for an actuarial report to show a sound condition of the fund.

            Finally, the fact that the statute refers to the needs of the fund "during the ensuing budget year" does not support an opposite view, in our opinion.  While actuarial soundness is, of course, determined over a period of many years, municipal needs are estimated, budgets are made up, and taxes levied, on an annual basis.  See, chapter 35.33 RCW.

            Thus the statute merely requires the needs of the pension fund for actuarial purposes as well as cash outlay purposes to be broken down into estimated annual installments, like the needs of any other fund.  In fact, we see no other workable method by which the legislature could have provided for current upkeep of the fund, except on an annual or similar periodic basis, under existing budget law.

             [[Orig. Op. Page 7]]

            Our conclusions are as follows:

            1. Under certain conditions both mills provided to be levied for the firemen's pension fund by RCW 41.16.060 may be omitted, or used for other municipal purposes.

            2. The word "actuary," as it appears in RCW 41.16.060, means:

            ". . . the computing officer of an insurance company; a person skilled in calculating the value of life interests, annuities, and insurances.  [Citation omitted]."

            Whether or not an individual qualifies under this definition would be a question to be decided in each case on its own merits since there is no legal provision in this state for accrediting or qualifying an actuary for the purposes of this statute.

            3 and 4. The examination and report of an actuary, specified by the statute, contemplates an examination and report as to the actuarial soundness of the firemen's pension fund; not merely the anticipated cash disbursements or operating expenses of the fund for an ensuing fiscal year.

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

Very truly yours,

JOHN J. O'CONNELL
Attorney General

ROBERT F. HAUTH
Assistant Attorney General

PHILIP H. AUSTIN
Assistant Attorney General

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