PENSIONS ‑- RETIREMENT ‑- RCW 43.135.060(1) ‑- IMPACT ON PROPOSED PENSION LEGISLATION
If the Legislature amends the statutes governing the Law Enforcement Officers' and Fire Fighters' Retirement System, Plan II (LEOFF II), by reducing the retirement age from 58 years to 50 years, reducing the number of months of service from 60 months to 24 months in determining the final average salary, and requiring any increased costs to be borne by local taxing districts/employers, the State would not be required by RCW 43.135.060(1) to reimburse those local taxing districts.
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January 29, 1987
Honorable Stanley C. Johnson
State Senator, 28th District
110 Institutions Building
Olympia, WA 98504
Cite as: AGO 1987 No. 4
Dear Senator Johnson:
By letter previously acknowledged, you requested our opinion on a question that we paraphrase as follows:
If the Legislature amends the statutes governing the Law Enforcement Officers' and Fire Fighters' Retirement System, Plan II (LEOFF II), by reducing the retirement age from 58 years to 50 years, reducing the number of months of service from 60 months to 24 months in determining the final average salary, and requiring any increased costs to be borne by the local taxing districts/employers, will the State be required by RCW 43.135.060(1) to reimburse those local taxing districts?
We answer the question in the negative for the reasons set forth in our analysis.
The proposed legislation would amend the statutes governing Plan II of the Law Enforcement Officers' and Fire Fighters' Retirement System, (LEOFF II), which is found at RCW 41.26.010-41.26.070, 41.26.085, 41.26.180, 41.26.210-41.26.230, and 41.26.300-41.26.921. LEOFF Plan II consists of the statutory provisions governing persons who [[Orig. Op. Page 2]] established membership in the retirement system on or after October 1, 1977. The effects of lowering the retirement age and reducing the number of months used to determine the final average salary are to increase the amount of retirement benefits and the length of time over which benefits are paid. LEOFF II members will benefit from these changes at no additional expense because the proposed legislation would impose the costs on the members' employers.
The question is whether the State would be required to reimburse the local taxing districts/employers pursuant to RCW 43.135.060(1). This statute is the codification of Initiative 62, which was approved by the voters in 1979. RCW 43.135.060(1) provides:
The legislature shall not impose responsibility for new programs or increased levels of service under existing programs on any taxing district unless the districts are reimbursed for the costs thereof by the state.
Before beginning our analysis, it is necessary to review the purposes and objectives of Initiative 62. As stated in AGO 1980 No. 24 (copy enclosed), Initiative 62 was essentially a tax limitation measure. It limits the growth rate of state tax revenues. RCW 43.135.030;State v. Howard, 106 Wn.2d 39, 722 P.2d 783 (1985). RCW 43.135.060(1) was designed to prevent the Legislature from avoiding the effects of the state tax revenue limit by shifting the responsibility for funding of state programs to local governments. State v. Howard, 106 Wn.2d at 43.
The Legislature is prohibited from requiring local governments to offer new or expanded services unless the costs are paid by the State. RCW 43.135.060(1). In AGO 1980 No. 24, we stated:
[O]ne of the central purposes of this prohibition is to prevent the legislature from doing an "end run" around the fiscal constraints imposed by the initiative through the device of requiring local governments to pay for services mandated by the legislature.
With these introductory comments in mind, we now turn to your question. For purposes of this opinion, we made certain assumptions because a draft of the proposed legislation was not included with the opinion request. We assume that any such bill would amend the following provisions of chapter 41.26 RCW: (1) RCW 41.26.430(1)‑-amended to change the age of retirement from 58 years to 50 years; (2) RCW 41.26.430(2)‑-repealed; (3) RCW [[Orig. Op. Page 3]] 41.26.030(12)(b)‑-amended to change the number of months used to determine the final average salary from 60 months to 24 months; and (4) RCW 41.26.450‑-amended to change the employers' share of contributions to the retirement system.
The issue is whether these amendments constitute a "new program" or "increased level of service" within the meaning of RCW 43.135.060(1) such that the State would be required to reimburse the employers for any additional costs. In State v. Howard, the court stated that program and service are synonymous. 106 Wn.2d at 43. The term "program" is a shorthand reference for a group of services designed to accomplish specific public goals and result in specific public benefits. Howard, 106 Wn.2d at 43; AGO 1980 No. 24, at 5.
In AGO 1980 No. 24, we concluded that RCW 43.135.060(1)
was not intended to require the state to reimburse local governments forany and all costs which might be incurred as a result of legislative action. . .
Rather, [RCW 43.135.060(1)] only requires reimbursement for those costs incurred because of a legislatively-imposed responsibility ". . . for new programs or increased levels of service under existing programs. . ."
We therefore construed RCW 43.135.060(1) to
require reimbursement only where, and to the extent that, mandatory state legislation results in either new services to the general public or in an actual increase in local governmental services offered to the public in some measurable, quantifiable sense.
AGO 1980 No. 24 was concerned with increasing post-retirement benefits for members of the Public Employees' Retirement System (PERS) in a manner that required increased employer contributions. We concluded that RCW 43.135.060(1) did not require state reimbursement because the increased retirement benefits would not result in a new program or an increased level of service. Public employee pension benefits are merely another form of compensation. Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956). An increase in compensation, as distinguished from a mandatory [[Orig. Op. Page 4]] increase in the number of personnel,1/ does not result in increased services being rendered to the general public.
Applying the same analysis to your question regarding increased LEOFF II pension benefits, the conclusion is the same. The proposed legislation does not require the local taxing districts to add police officers or fire fighters, which would result in increased services to the public. See Seattle v. State, 100 Wn.2d 16, 25, 666 P.2d 359 (1983). The proposed legislation instead seeks to increase retirement benefits, a form of deferred compensation. Increased compensation to one no longer providing service cannot result in any increased services to the public. Greater retirement benefits do not directly result in measurably greater law enforcement or fire fighting capabilities. See State v. Howard, 106 Wn.2d at 43. Without an increase in services to the public, there is no measurable or quantifiable public benefit. Thus, RCW 43.135.060(1) does not operate to require state reimbursement.
InHoward,supra, the court held that the State was responsible for paying the defendant's attorney and expert witness fees when the Attorney General, pursuant to RCW 43.10.232, initiated a prosecution of an indigent defendant. The State was responsible for these costs because the legislation that authorized the Attorney General to file criminal charges provided an increased level of prosecutorial services to the public. See RCW 43.10.230. The increase in LEOFF II benefits is distinguishable because the Legislature is not requiring new or additional services to be offered to the public.
Therefore, it is our opinion that increased LEOFF II benefits do not constitute a "new program" or "increased level of service" within the meaning or RCW 43.135.060(1), and the State is not [[Orig. Op. Page 5]] required to reimburse the local taxing districts/employers for any additional costs.2/ We trust that the foregoing will be of assistance to you.
Very truly yours,
KENNETH O. EIKENBERRY
Assistant Attorney General
*** FOOTNOTES ***
1/ AGO 1980 No. 3 (copy enclosed), addressed legislation increasing the number of superior court judges in certain counties. We concluded that the State would be required to reimburse the counties pursuant to RCW 43.135.060(1) because the level of judicial service to the public would be increased.
2/We note that the proposed legislation would raise another significant issue, not asked and therefore not addressed in this opinion. By requiring the increased pension costs to be borne by employers, the legislation could in effect shift a portion of the total LEOFF II costs from the State to employers. This would deviate from the current method of proportional sharing of future costs in RCW 41.26.450. The issue is whether the proposed legislation would require a transfer of costs within the meaning of RCW 43.135.060(3). See, AGO 1980 No. 24, at 8.