OASI FOR MEMBERS OF THE STATE TEACHERS' RETIREMENT SYSTEM
Employer's and Employee's contributions for members of the Teachers' Retirement System for retroactive coverage from January 1, 1956 to June 30, 1957, inclusive, must be paid from the Teachers' Retirement Pension Reserve Fund and the Teachers' Retirement Fund, respectively. The above funds are special funds; thus further legislative appropriation is unnecessary to effect the transfer.
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November 14, 1957
Mr. L. D. Burrus
Washington State Teachers'
P.O. Box 778
Olympia, Washington Cite as: AGO 57-58 No. 131
Dear Mr. Burrus:
You have requested our official opinion on the following specific questions:
(1) Does chapter 183, Laws of 1957, require that the employers' OASI contributions for members of the teachers' retirement system, for retroactive coverage from January 1, 1956, to June 30, 1957, inclusive, be paid from the teachers' retirement pension reserve fund?
(2) Does chapter 183, Laws of 1957, require that the employees' OASI contributions for members of the teachers' retirement system, for retroactive coverage from January 1, 1956, to June 30, 1957, inclusive, be paid from the teachers' retirement fund?
(3) If the answers to questions (1) and (2) are in the affirmative, is a legislative appropriation necessary to transfer subject funds?
[[Orig. Op. Page 2]]
Your first and second questions are answered in the affirmative and your third question is answered in the negative.
Questions (1) and (2)
Legislative approval of the plan for OASI coverage of members of the state teachers' retirement system was accomplished by specifically approving and incorporating the plan in chapter 183, Laws of 1957. The plan contains provisions for retroactive coverage to January 1, 1956, and stipulates the funds from which such retroactive payments are to be made. The agreement between the State of Washington and the Secretary of Health, Education, and Welfare was executed on June 27, 1957, which was just three days before the end of the second quarter on June 30, 1957. Therefore all coverage after January 1, 1956, and prior to June 30, 1957, became retroactive coverage, and the pertinent provisions of subsection (13) of § 2, chapter 183, Laws of 1957, apply. Those provisions are quoted below:
"Theemployer's contribution for any retroactive coverage shall be transferred by the board of trustees from the teachers' retirement pension reserve fund to the official designated by the governor to administer the plan at the state level.
"Eachemployee's contribution for any retroactive coverage shall be transferred by the board of trustees from his accumulated contributions in the teachers' retirement fund, to the official designated above. Each employee, if he so desires, may, within one year from the date of transfer, reimburse his accumulated contributions for the amount sotransferred." (Emphasis ours.)
You will note that the above‑quoted portion of the law is mandatory in nature; therefore, it is our conclusion that all employer and employee contributions for service performed from January 1, 1956, through June 30, 1957, inclusive, are retroactive payments and that they must be paid from the funds designated above.
It is our understanding that a legislative appropriation was made in 1957 to provide for the retroactive payments, but that the amount appropriated was inadequate. Your third question concerns the necessity of another legislative appropriation to transfer the funds required to make the remaining retroactive payments.
[[Orig. Op. Page 3]]
The law which established the state teachers' retirement system designates the treasurer of the state as the custodian of all moneys received by him for the teachers' retirement system. RCW 41.32.220.
Article VIII, § 4, of the Washington state constitution, as amended, (11th Amendment) reads in pertinent part as follows:
"No moneys shall ever be paid out of the treasury of this state, or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; . . ."
While the constitutional provision appears to be all-inclusive, our supreme court has previously held that an appropriation is not necessary when the legislature has created a special fund of a proprietary nature. (See discussion below.)
It appears therefore that to resolve the question of whether a further appropriation is necessary to transfer the funds as required by law, we must decide whether the legislature in this instance provided for special funds of a proprietary nature which may be expended without the necessity of a specific appropriation, or for a state fund within the prohibition of the constitutional provision.
We have previously considered this question in attorney general's opinion 53-55 No. 308, dated September 1, 1954 [[to P. R. Giovine, Department of Security]], dealing with the OASI contributions fund. In that opinion, speaking of the findings of our supreme court, we said: that opinion, speaking of the findings of our supreme court, we said:
[The Supreme Court found] ". . . in State ex rel. Washington Toll Bridge Authority v. Yelle, 195 Wash. 636, that tolls exacted for the use of a bridge, which were paid to the state treasurer as a suitable custodian, were not state funds and were segregated from all state funds; hence, they were not within the contemplation of the Constitution, Article VIII, § 4. In the later case ofState ex rel. State Retirement Board v. Yelle, 31 Wn. (2d) 87, the Supreme Court found that the legislature intended the funds established by the State Employees Retirement Act should not constitute a state or public fund but, rather, a special fund of a proprietary nature which should be available for disbursement at all times without the necessity of a biennial appropriation. The court stated at page 106:
"'The mere fact that the state treasurer may be made the custodian of a particular fund and may be required to render certain services with respect to such fund, does not of itself [[Orig. Op. Page 4]] make the moneys so received and held by himstate funds in the state treasury. * * *'
"and further, at page 111:
"'Since, as hereinbefore determined, the legislature had the power to provide for the creation, collection, and administration of special funds for special purposes, without making them state or public funds, the situation resolves itself into the question whether the legislature, in passing the retirement system act, intended to create a state fund subject to the constitutional restriction, or whether, on the contrary, it intended simply to set up aspecial, proprietary fund to be expended as directed by the legislature, without a specific appropriation.
"'The legislative intent is of course to be determined from reading the act itself, construing the terms and provisions therein according to their ordinary meaning, and giving consideration to the purposes and objects sought to be accomplished by the legislative enactment.'
"Thus, the constitutional prohibition in question does not apply if the legislative intent was to provide for a separate, special fund for certain specified purposes."
The court, in concluding that the retirement funds in question were not subject to appropriation, stated further (State ex rel. State Retirement Board v. Yelle, 31 Wn. (2d) 87, 111):
"When the act is read as a whole and due consideration is given to each and every section thereof in their relation to each other, we think it becomes clear that it was the legislative intent that the funds here in question should not constitute a state or public fund, but rather a special fund, of a proprietary nature, to be at all times readily available for disbursement as provided by the act, without the necessity of a biennial appropriation therefor."
Among the factors which induced this conclusion were that the act contemplated the establishment of a retirement fund with as little governmental restriction as possible; that the treasurer was merely named as custodian; that members of the [[Orig. Op. Page 5]] retirement board were vested with the authority and responsibility of making the act effective; that the members of the board were made trustees who have the power to authorize the investment of the funds; and that the board of trustees is authorized to make rules and regulations for the administration of the funds. The court included several other factors in reaching its decision, most of which are also common to the officers and trustees of the state teachers' retirement system.
Therefore, it is our opinion that the legislature evidenced its intention that the two funds here in question are special and separate funds. Thus, if we follow the reasoning of the supreme court and our previous opinion, no legislative appropriation is required to authorize a transfer of the funds in question.
We do not believe that the fact that a previous appropriation was made is controlling. In this connection, we wish to quote from the opinion cited above:
"In answer to the second question, we believe it follows that if the appropriation was an unnecessary act on the part of the legislature in 1953, the fact that there was an appropriation made does not alter the nature of the fund so as to prohibit the issuing and redeeming of warrants drawn on this particular fund for the remainder of this biennium. It appears that when the appropriation is exhausted, we are left in the same position as though no appropriation had been made at the beginning of this biennium; and disbursements can be made accordingly."
We conclude, therefore, that moneys may be transferred from the teachers' retirement reserve fund and from the teachers' retirement fund for the purpose of retroactive OASI coverage without the necessity of a legislative appropriation.
Very truly yours,
JOHN J. O'CONNELL
PAUL J. MURPHY
Assistant Attorney General