KENTUCKY EMPLOYEES RETIREMENT SYSTEM v. KATHRYN M. HARGRAVES
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RENDERED:
AUGUST 20, 2004; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO.
2003-CA-001108-MR
KENTUCKY EMPLOYEES RETIREMENT SYSTEM
APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE ROGER L. CRITTENDEN, JUDGE
ACTION NO. 01-CI-00410
v.
KATHRYN M. HARGRAVES
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE:
JUDGE.1
COMBS, CHIEF JUDGE; VANMETER, JUDGE; AND MILLER, SENIOR
VANMETER, JUDGE:
Kentucky Employees Retirement System (“KERS”)
appeals an Opinion and Order of the Franklin Circuit Court
reversing a decision of KERS that appellee, Kathryn M.
Hargraves, was not eligible under KRS 61.552(17) to purchase one
year of out-of-state employment credit.
We reverse and remand
the decision of the Franklin Circuit Court.
1
Senior Status Judge John D. Miller sitting as Special Judge by
assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky
Constitution.
From September 22, 1980, to September 24, 1981,
Hargraves was employed by Vanderburgh County, Indiana as a legal
aid lawyer.
Although she was eligible, Hargraves did not
participate or make any contributions to the Indiana Public
Employees Retirement Fund (“PERF”).
Madelyn Grayson, with the
Vanderburgh County Auditor’s Office, provided the following
Certification of Full Time Service:
I can vertify that you were employed full
time as a Staff Attorney for the Legal Aid
Society of Vanderburgh County from 9/22/1980
through 9/24/1981. As a full time employee,
you were eligible for PERF benefits. At the
time you became a Vanderburgh County
employee, PERF was permitting members to
waive their PERF contributions for one year.
A PERF membership record should have been
completed and signed by you stating that you
become eligible for PERF benefits in
September of 1980, but that you chose to
waive your contributions until September of
1981. Neither Vanderburgh County nor PERF
have any record of this Membership Record
ever being completed and sent in. Even
though there is no Membership Record on file
for you, PERF told me that if you became
employed in another PERF-COVERED position,
after six months of employment in that
position you would then be entitled to
recognition of the creditable service earned
while working for Vanderburgh County.
Therefore, I can state that you have one
year of creditable service earned with
Vanderburgh County.
In 1981, Hargraves became employed by the Kentucky
Natural Resources and Environmental Protection Cabinet.
In
2000, Hargraves decided to purchase out-of-state service credit
2
toward her retirement.
However, because Hargraves had never
belonged or contributed to PERF, KERS refused to allow her to
purchase any Indiana service credit.
Upon review, the Franklin
Circuit Court reversed the decision of KERS, holding that KERS
must recognize Hargraves’ right to purchase one year of
“creditable service” under PERF.
This appeal follows.
On appeal from a ruling by an administrative agency
courts apply
the substantial evidence standard of review
applicable to decisions of administrative
agencies. “If the findings of fact are
supported by substantial evidence of
probative value, than they must be accepted
as binding and it must then be determined
whether or not the administrative agency has
applied the correct rule of law to the facts
so found.”
Kentucky Unemployment Insurance Commission v. Landmark Community
Newspapers of Kentucky, Inc., Ky., 91 S.W.3d 575, 578
(2002)(quoting Southern Bell Tel. & Tel. Co. v. Kentucky
Unemployment Insurance Commission, Ky., 437 S.W.2d 775, 778
(1969)).
Here, the parties agree that no question exists as to
the facts.
The only issue concerns the interpretation of KRS
61.552(17) and its application to those facts.
As correctly
noted by the circuit court, questions of law arising out of
administrative proceedings are fully reviewable de novo by the
courts.
See Camera Center, Inc. v. Revenue Cabinet, Ky., 34
S.W.3d 39, 41 (2000) (court holding that “an erroneous
3
interpretation or application of the law is reviewable by the
court which is not bound by an erroneous administrative
interpretation no matter how long standing such an
interpretation.”); Revenue Cabinet v. Joy Technologies, Inc.,
Ky. App., 838 S.W.2d 406, 408 (1992) (court holding that “[i]f a
board has misconstrued the legal effect of the facts, courts are
not bound to accept legal conclusions of that administrative
body”).
At the time Hargraves requested to purchase the
out-of-state credit, KRS 61.552(17)2 provided as follows:
After August 1, 1998, any employee
participating in one (1) of the
state-administered retirement systems . . .
may purchase credit in the system in which
the employee has the service credit for up
to ten (10) years service in a regular
full-time position that was credited to a
state or local government-administered
public defined benefit plan in another state
other than a defined benefit plan for
teachers. The employee shall pay the full
cost of the service as determined by the
system. Payment may be by lump sum, or the
employee may pay by increments. The
employee may transfer funds directly from
the other state’s plan if eligible to the
extent permitted under subsection (16)(h) of
this section and to the extent permitted by
the other state’s laws and shall provide
proof that he is not eligible for a
retirement benefit for the period of service
from the other state’s plan.
(Emphasis added).
2
In 2003, KRS 61.552 was amended such that section 17 became section 18.
4
Under the facts as provided by Madelyn Grayson of the
Vanderburgh County Auditor’s Office, Hargraves was eligible but
did not participate in PERF.
Thus, she had nothing more than
one year of creditable service, which would be credited to her
only if she returned and worked an additional six months in a
PERF-covered position.
Although KERS determined that the
language of the statute required Hargraves to actually have her
Indiana time credited to PERF, the Franklin Circuit Court
disagreed, holding that “KRS 61.552(17) clearly allows an
employee to purchase out of state credit that has been credited
to a benefit plan.
The State of Indiana recognizes Ms.
Hargraves’ year of employment as earned creditable service,
which is all that is required in KRS 61.552.”
We disagree with
the conclusion of the circuit court.
The plain language of KRS 61.552(17) permits the
purchase of out-of-state service that “was credited to a state
or local government-administered public defined benefit plan.”
Unfortunately, the only evidence in the record is that
Hargraves’ service was not credited.
Instead, her service is
only “creditable,” and it will be recognized or “credited” by
the out-of-state plan only if she returns and works six months
in a PERF-covered position.
To hold otherwise would be
tantamount to permitting an unauthorized purchase of out-ofstate governmental service credit which either was not covered
5
by a defined benefit plan, or was not applicable because the
employee chose not to participate in coverage.3
In this
instance, the legislature has made a policy determination to
permit employees to purchase out-of-state credit to a Kentucky
administered plan only for service credit earned while the outof-state position was covered by a defined benefit plan and the
employee elected to participate.
Courts may not add to or
substract from legislative enactments.
Commonwealth v. Garrett,
Ky. App., 8 S.W.3d 573, 575-76 (1999).
The Opinion and Order of the Franklin Circuit Court is
reversed and remanded to the circuit court for reinstatement of
the order of the KERS.
COMBS, CHIEF JUDGE, CONCURS.
MILLER, SENIOR JUDGE, DISSENTS.
MILLER, SENIOR JUDGE, DISSENTING:
Because I believe
the provisions of Kentucky Revised Statutes (KRS) 61.552(17)4
providing for the purchase of out-of-state governmental
employment service credit is entitled to a broader
interpretation than that accorded by the majority, I
respectively dissent.
3
Beyond the plain language of KRS 61.552(17), this interpretation is
supported by other subsections of KRS 61.552 in which the General Assembly
has permitted the purchase of service credit time not covered by a defined
benefit plan. E.g., KRS 61.552(15) (purchase of credit for any period of
approved maternity leave or sick leave without pay); KRS 61.552(19) (purchase
of credit service for time served in the Kentucky Peace Corps).
4
In 2003, KRS 61.552 was amended such that section 17 was recodified as
section 18.
6
KRS 61.552(17) provides that a Kentucky governmental
employee participating in one of the state-administered
retirement systems is entitled to purchase additional retirement
credit for prior out-of-state “service in a regular full-time
position that was credited to a state or local governmentadministered public defined benefit plan in another state.”
It is uncontested that Hargraves currently
participates in one of the state-administered retirement
systems, that she previously accumulated one year of service in
a regular full-time governmental position in Indiana, and that
in her Indiana position she was entitled to full participation
in the Indiana state government defined benefit plan.
I believe, broadly interpreted, Hargraves’ one year of
service in the Indiana position was “credited” to the Indiana
plan so as to entitle her to purchase that year of credit
pursuant to KRS 61.552(17).
When analyzing a statute, we must interpret statutory
language with regard to its common and approved usage.
446.080.
KRS
In so doing, we must refer to the language of the
statute rather than speculating as to what may have been
intended but was not expressed.
S.W.2d 278, 280 (1998).
Commonwealth v. Allen, Ky., 980
In other words, a court "may not
interpret a statute at variance with its stated language."
(citation omitted).
Id.
See also Gurnee v. Lexington-Fayette Urban
7
County Government, Ky. App., 6 S.W.3d 852, 856 (1999).
Therefore, any statutory analysis must begin with the plain
language of the statute.
In so doing, however, our ultimate
goal is to implement the intent of the legislature.
See Wesley
v. Board of Education of Nicholas County, Ky., 403 S.W.2d 28, 29
(1966); AK Steel Corp. v. Commonwealth, Ky. App., 87 S.W.3d 15,
17 (2002).
"Where there is no ambiguity in a statute, there is no
need to resort to the rules of statutory construction in
interpreting it.
The words of the statute are simply accorded
their commonly understood meaning."
Stewart v. Estate of
Cooper, Ky., 102 S.W.3d 913, 915 - 916 (2003).
The words of a
statute are to be given their plain meaning unless to do so
would constitute an absurd result.
Executive Branch Ethics
Com'n v. Stephens, Ky., 92 S.W.3d 69, 73 (2002).
If there is
any doubt from the language used by the legislature as to the
intent and purpose of the law, then courts in interpreting the
statute should avoid a construction which would be unreasonable
and absurd in preference to one which is reasonable, rational,
sensible and intelligent.
Id.
I believe that the legislature’s use of the term
“credited” in KRS 61.552(17) is ambiguous and that, under the
principles stated above, it is necessary to refer to legislative
8
intent and, further, to apply the rule that the statute be given
a rational construction.
It seems to me that the purpose of KRS 61.552(17) is
to enhance the mobility of government (state and local)
employees thus ensuring the availability of a trained and
efficient workforce.
To accomplish these ends the statute
attempts to protect the retirement of incoming employees by
placing them upon the same footing they would have enjoyed in
the departing state.
Too many times employees are penalized in changing
jobs (often by necessity) by having to “cash-in” their
retirement or leaving same at the hands of remote and reckless
administrators.
By its passage of KRS 61.552(17) our
legislature has attempted to, in part, remedy this peril at
least as to state and local employees.
Moreover, the legislature has adopted the policy of
permitting the purchase of retirement time for the broad purpose
of reducing governmental employment levels through early
retirement.
I believe the legislative intent of KRS 61.552(17)
was, in part, to also advance this policy.
Based upon what I view as the legislative intent
behind KRS 61.552(17) as described above, I believe the statute,
and the term “was credited,” are entitled to broad
interpretation.
Applying a broad interpretation to the statute,
9
I believe Hargraves’ one year of service in her full-time state
employment position in Indiana is covered under the statute and
that she should be entitled to purchase the service for credit
to her Kentucky retirement plan.
As I view the situation at hand the state of Indiana
waived employee contribution for the first year of employment as
an incentive benefit for incoming employees.5
If the employee
thereafter continued in his Indiana governmental service for six
additional months his retirement time would then be computed ab
initio.
Hargraves in fact continued her governmental service
career, albeit in Kentucky, and I believe that in light of this
Hargraves should be accorded the same status as if she had
remained an additional six months in a covered position in
Indiana.
Thus having been employed an additional six months in
this Commonwealth, it is my view she was and is entitled to
recognition as having received credit for her initial year of
government service in Indiana.
In my view the central issue in this case is not
whether Hargraves actually contributed to a retirement plan in
Indiana.
Hargraves is recognized by the Indiana retirement
system as having served one year in an Indiana public Employees
Retirement Fund position.
In this respect she was “credited”
5
Further, as most government jobs are subject to a probationary period, it
seems reasonable that no employee contribution to an applicable retirement
fund would be required until the probationary period has been successfully
completed.
10
with participation in a defined benefit plan in another state.
Indeed the Vanderburgh County Auditor’s Office provided a letter
averring that Mrs. Hargraves had “one year of creditable service
earned with Vanderburgh County.”
The majority applies a
hyper-technical distinction between “credited” and “creditable”
to reach its conclusion that Hargraves’ Indiana service is not
covered under KRS 61.552(17).
I believe this distinction
neither recognizes the legislative intent of the statute nor
applies a rational interpretation to the provision.
Lastly, Hargraves is purchasing her way into the
Kentucky plan by a cash outlay.
It is a cash contribution
incidentally fixed by the Administrators of our plan over which
she has no control.
She is not getting something for nothing.
The issue is simply one of calculating retirement time.
Under
these circumstances, there is no rational reason to reach the
hyper-technical interpretation of the statute accorded by the
majority.
For the reasons set forth herein, I would affirm the
decision of the circuit court.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Brown Sharp II
Frankfort, Kentucky
Phillip J. Shepherd
Frankfort, Kentucky
11
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