KENTUCKY RETIREMENT SYSTEMS v. NANCY HEAVRIN
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RENDERED:
February 4, 2005; 10:00 a.m.
TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-000238-MR
KENTUCKY RETIREMENT SYSTEMS
APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE WILLIAM L. GRAHAM, JUDGE
ACTION NO. 03-CI-00350
v.
NANCY HEAVRIN
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
COMBS, CHIEF JUDGE; GUIDUGLI AND SCHRODER, JUDGES.
GUIDUGLI, JUDGE:
Kentucky Retirement Systems (hereinafter “the
Systems”) appeals from an order of the Franklin Circuit Court
that granted Nancy Heavrin’s appeal from an administrative
proceeding and overruled the Systems’s final order.
In doing
so, the circuit court determined that the Systems’s final order
denying Heavrin’s appeal and adopting the Systems’s hearing
officer’s recommended order should be reversed.
The effect of
this order is that Heavrin will be permitted to purchase five
years of non-qualified service credit at a price reflective of
her actual salary and the Systems must refund any excess payment
made by her, plus interest.
We affirm.
The facts of this case are not in serious dispute;
however, the interpretation of the applicable statute is.
The
facts disclose that at the time of her request to purchase the
non-qualified service credit, Heavrin was employed by the Oldham
County Health Department with twenty years of service in the
Systems.
While employed with the Health Department, Heavrin
worked eight hour days, three days per week.
was $25.26 per hour.
Her rate of pay
The Systems requested written verification
from the Health Department as to Heavrin’s specific rate of pay
and regular hours worked.
In reply, the Health Department
verified that as of August 30, 1999, Heavrin’s rate of pay was
$25.26 per hour and that she worked 24.5 hours per week.
Based
upon this information, the Systems calculated that Heavrin could
purchase the five years of non-qualified service credit for
$18,041.70.
The purchase amount was based upon an annual salary
of $31,813.94 per year.
It appears that the annual salary was
calculated in the following manner:
3 days per week x 52 weeks per year.
$25.26 x 8 hours per day x
Heavrin purchased the five
extra years of service on September 6, 1999.
Following an audit of her account, Heavrin was
notified by the Systems that her final compensation had been
erroneously determined and that to purchase the service time
would cost her a total of $26,202.10.
owing an additional $8,160.40.
This resulted in her
According to the Systems, the
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audit revealed that the cost to purchase the service time should
have been based on her working full-time not part-time.
As
such, her annual salary was determined to be $52,540.50 ($25.26
x 8 hours per day x 260 days) and not her actual salary of
$31,813.94.
Heavrin contested the method of determining her
annual salary but paid the additional amount allegedly owed and
subsequently retired.
Heavrin continued to contest the additional funds paid
and the matter was set for a hearing before Paul F. Fauri, a
hearing officer with the Systems.
Following discovery and
briefing of the issues, the parties agreed to forego an
evidentiary hearing and submitted the matter to Fauri.
On
September 5, 2000, Fauri filed his report and recommended order.
Fauri determined that the Systems had followed all applicable
statutes and regulations and upheld the Systems’s calculation of
Heavrin’s annual salary and total cost to purchase the
additional service.
Heavrin filed exceptions to the finding and
order, which were dismissed in a letter from the Deputy
Commissioner of Benefit Services, William P. Hanes, on October
13, 2000.
Heavrin next filed a petition for judicial review in
the Franklin Circuit Court.
On May 16, 2001, Judge Roger L.
Crittenden entered an opinion and order which granted Heavrin’s
petition and ordered “the Systems to calculate the appropriate
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purchase price based upon a 52 week conversion rate.”
In his
order the Franklin Circuit Judge reviewed KRS 61.510(15) and
determined that Heavrin’s annual salary was actually $32,181.24,
not the $52,540.80 the Systems had determined.
The court
stated:
K.R.S. 61.510([15]) provides:
[t]he following equivalents shall
be used to convert the rate to an
annual rate: two thousand eighty
(2,080) hours for eight (8) hour
workdays, nineteen hundred fifty
(1,950) hours for seven and onehalf (7 ½) hour workdays, two
hundred sixty (260) days, fiftytwo (52) weeks, twelve (12)
months, one (1) year.
The Respondent’s application of the
statute authorized and mandated the
annualizing of the Petitioner’s hourly rate
resulting in a calculation derived from a
yearly salary of $52,540.80, a significantly
larger amount than Heavrin’s actual yearly
salary of $32,181.24. This calculation is
illogical because its basis does not
contemplate the Petitioner’s actual
earnings. In the interest of fairness, the
Systems must base its calculations on the
actual earnings of Heavrin by using a 52
week conversion rate. K.R.S. 61.510([15])
explicitly provides the Systems several
alternative conversion rates permitting them
the ability to maximize the purchase price
for non-qualified service credit based upon
a client’s actual income rather than
speculative unearned income. The integrity
of K.R.S. 61.510([15]) will not be
jeopardized under the present circumstances,
given the fact Heavrin has retired and does
not seek employment at a forty hour a week
position. In this particular instance it
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was appropriate to use the 52 week standard
as provided in K.R.S. 61.510([15]) to
formulate the purchase price.
The Systems appealed from that order.
On appeal, this
Court granted a motion to remand based upon the recently
rendered case of Baker v. Commonwealth of Kentucky, Kentucky
Retirement Systems, 50 S.W.3d 770 (Ky.App. 2001).
The Baker
case held that the Board of Trustees of the Systems had no
authority to delegate its authority to enter a final order to a
subcommittee of the Board, at least not where the subcommittee
constituted less than a quorum of the entire Board.
This Court
then held that an order signed by the subcommittee was not a
“final order from which an appeal could be taken.”
13B.030(1); KRS 61.665(4).
See KRS
This Court vacated the judgment of
the Franklin Circuit Court and the order entered by the
Administrative Appeals Committee of the Board of Trustees of the
Systems and remanded the matter back to the Board of Trustees
for entry of a final decision.
On remand, the Board determined that an additional
hearing was necessary and referred the matter again to hearing
officer Fauri.
Following additional briefing and an evidentiary
hearing, Fauri rendered his report and recommended order on June
14, 2002.
Fauri again held that the Systems had followed the
law and properly determined that Heavrin’s annual salary should
be based upon her hourly rate of pay ($25.26), times the hours
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worked per day (8), then multiplied by the 260 days reflective
of a full-time employee (40 hours per week).1
In his recommended
order, Fauri made the following findings in making his
determination:
The position of the Claimant in this
matter is that her actual salary was not
used in the calculation because the Systems
calculated her salary at a rate of 40 hours
per week at her hourly rate of $25.26, when
in fact she was working only 24.5 hours a
week and that this was the information
provided by the Oldham County Health
Department. The calculations result in
approximately a $20,000 difference. That
is, Ms. Heavrin was basically earning
$32,000 a year for her approximately 106
hours of work a month, but based on the
calculation on a 40-hour a week basis, she
would be making about $52,000 a year.
Obviously, in actuality, she did not receive
the $52,000 salary, but the Systems takes
the position that this was her current rate
of pay and, as Mr. Gagel [an actuary]
testified and has set forth in his letter
(Exhibit 12), the Systems was obligated to
utilized (sic) the higher of the member’s
current rate of pay, final rate of pay, or
final compensation in order to protect the
Retirement Systems from possible
manipulation by the member.
In addition, this case does not appear
to have been a manipulation in any way by
Ms. Heavrin due to the fact that, after she
received her additional five years of
service, she retired as of December of 1999.
There is also the fact that the purchase of
this additional time resulted in her being
1
It should be noted that the Systems audited Heavrin’s account prior to this
hearing and determined it had made another calculation error (it used the
wrong rate factor) which resulted in Heavrin owing an additional $3,593.80.
Heavrin does not contest that the wrong rate factor was used and this is not
an issue on appeal.
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able to retire and not having to wait until
age 55. Mr. Gagel, in both his testimony
and letter, indicated that Ms. Heavrin would
also be receiving additional benefit by the
ability to retire prior to age 55. In his
calculations, he determined that this value
would be approximately $90,000. The
assumption was made that, if she had
terminated as of December 1999, she would
have to wait until she was age 55 to retire
and the present value as of December 1999
without the purchase would be $22,900 and
after the purchase was $113,800. Mr. Gagel
made it clear that the methodology must
reflect the potential liability to the
Retirement Systems. Therefore, that is why
the Systems has utilized the purchase of
service set forth for military purchase by
Samuel Rosenbloom in the March 12, 1974
letter to the Kentucky Employees Retirement
Systems General Manager, George R. Arvin.
(Exhibit 10, p. 29).
In addition to the testimony of Mr.
Gagel, Ms. Rebecca Stephens testified and
indicated in her testimony that the Systems
was obligated to use the calculation of
$25.26 an hour times eight hours times 260
days as set forth on Exhibit 5. Basically,
the information as to Ms. Heavrin’s rate of
pay was hourly and it was not provided as 5
hours per day per week, but simply as a
total number of hours per week. As noted
above, Ms. Heavrin takes the position that
the Systems should have used her hourly rate
of $25.26 times 8 hours a day 3 days a week
to arrive at her weekly income, and multiply
this figure by 52 weeks to arrive at her
current rate of pay. As previously noted,
the Systems has taken the position that her
hourly rate of pay should be times 8 hours
and then 260 days a year. This is the
result of the $20,000 difference indicated
above.
The Claimant further argues that the
action herein by the Agency is in violation
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of Section 2 of the Kentucky Constitution,
that it fails to follow statutory
construction, and that the determination is
arbitrary, capricious, as well as a denial
of equal protection and, therefore, the
method applied to establish the cost of the
service is unconstitutional. Of course, the
Systems takes just the opposite position and
further states that it has to be actuarially
sound and must follow the statutory mandate.
In reviewing this matter, first and
foremost, the statute which permits Ms.
Heavrin to purchase this non-qualified
service is KRS 61.552(26). The statute
specifically provides, after setting forth
that the employee must have 240 months of
service credit and that the service is not
otherwise purchasable under any provisions
of Chapters 16, 61 or 78 as follows:
... The purchase price of the
retirement service credit shall be
calculated and paid for based on
the full actuarial cost as
determined by the Systems.
[Emphasis in original].
The Systems has determined that the
calculation should be based on the current
rate of pay, final rate of pay, or final
compensation at the time of the date of
purchase, whichever is greatest. [Emphasis
in original]. Accordingly, the Systems has
performed the calculations in this matter
and determined that the Claimant’s final
compensation would be less than the current
rate of pay, that her final rate of pay
would be less than her current rate of pay,
and that her current rate of pay, as set
forth in KRS 61.510(25), would be the
member’s actual hourly, daily, weekly, biweekly, monthly or yearly rate of pay
converted to an annual rate as defined in
the final rate of pay.
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Obviously, the current rate of pay
would be higher than Ms. Heavrin’s final
compensation and her final rate of pay due
to the fact that her current rate of pay is
to be converted to an annual rate based on
the factors that have been set forth under
final rate of pay, KRS 61.510. Due to the
fact that Ms. Heavrin did not work a full
work week, the Systems was obligated to
calculate her salary on a yearly basis, not
on her actual earnings. Accordingly, while
she argues that the 24.5 hours at $25.26 is
weekly, the Systems was obligated to convert
her income into an annual current rate of
pay. Certainly, this seems harsh. If in
fact the Oldham County Health Department had
reported her income as working three days a
week for a total of eight hours a day, and
that she had a weekly income of $25.26 times
3 times 8, and that she did not work any
more, or could not work any more, then that
would be both her final rate of pay and her
current rate of pay. However, it is clear
that her income was not reported this way,
and further, as set forth on Exhibit 13, it
was indicated that Exhibit 4 would not be
changed to reflect a weekly income and that
Ms. Heavrin could work more than the 100
hours a month. Therefore, her income was
reported as an hourly income, as Ms.
Stephens testified, and even though
calculations could be made to attempt to
show a weekly income, it was not so
reported, and accordingly, the calculations
for current rate of pay was based on an
hourly rate annualized on a 40-hour-a-week
basis.
As the undersigned Hearing Officer has
indicated in the previous Report and
Recommended order, Ms. Heavrin’s benefits
would not change if the $32,000 figure or
the $52,000 figure was used. The only issue
is if she would be refunded about $8,000.
The Systems has made it perfectly clear that
they must comply with the law and, further,
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they must ensure the integrity of the fund
and no refund is due.
Certainly, the arguments of Ms. Heavrin
as to her situation being separate and
distinct from other hourly employees are
understandable. However, the Systems must
take the information as provided and apply
the proper actuarial bases for determining
purchase of non-qualified service credit.
Clearly, KRS 61.552(26) mandates that the
Systems determine the purchase price based
on the full actuarial cost. The testimony
of Stephen Gagel clearly indicates that the
Systems has made a proper determination to
obtain the full actuarial cost.
Any other
calculation would be contrary to this
statute.
Heavrin filed exceptions to the recommended order, but
the Board of Trustees of the Systems again adopted the hearing
officer’s recommended order as its final order.
Heavrin
thereafter, again, petitioned the Franklin Circuit Court for
judicial review.
This time the case was assigned to Circuit
Judge William L. Graham.
After reviewing the petition, the
Systems’s response, the administrative record and the parties’
briefs, Judge Graham entered his opinion and order on January
26, 2004.
In its order, the Franklin Circuit Court granted
Heavrin’s appeal and reversed the Systems’s final order.
The
court further ordered the Systems to “1) calculate [Heavrin’s]
purchase price to reflect her actual income, and 2) refund
[Heavrin’s] excess payment plus interest.”
Systems followed.
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This appeal by the
In his opinion, Judge Graham discussed Heavrin’s cost
to purchase her non-qualified service credit in the following
terms:
B.
Cost Calculation
The Court overrules the Respondent’s
final order because [the Systems] misapplied
the statutory formula for calculating the
cost of [Heavrin’s] non-qualified service
credit. See KRS 13B.150.
KRS 61.552(26) states that “[t]he
purchase price for the retirement service
credit shall be calculated and paid for
based on the full actuarial cost as
determined by the system.” To derive the
purchase price, [the Systems] uses the
greatest of the employee’s “current rate of
pay,” “final rate of pay,” or “final
compensation,” as the terms are defined in
KRS 61.510. See KRS 61.5525 (codified in
2001 but followed by [the Systems] since
1974). [The Systems] then multiplies the
number by a rate factor determined by
actuaries. In this instance [the Systems]
used the “current rate of pay,” which “means
the member’s actual hourly, daily, weekly,
biweekly, monthly, or yearly rate of pay
converted to an annual rate as defined in
final rate of pay.” KRS 61.510(25). The
definition of “Final rate of pay” states:
the following equivalents shall be
used to convert the rate to an
annual rate: two thousand eighty
(2,080) hours for eight (8) hour
workdays, nineteen hundred fifty
(1,950) hours for seven and onehalf (7-1/2) hour workdays, two
hundred sixty (260) days, fiftytwo (52) weeks, twelve (12)
months, one (1) year.
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KRS 61.510(15). The “current rate of
pay” definition also requires the employer
to certify the employee’s rate, and
[Heavrin’s] employer certified her rate as
$25.26 an hour for 24.5 hours per week. See
KRS 61.510(25). The facts also suggest that
[Heavrin] worked three days a week for eight
hours each day.
[The Systems] erroneously calculated
[Heavrin’s] “current rate of pay.” [The
Systems] multiplied [Heavrin’s] hourly wage,
$25.26, by 2080 to yield about $52,000.
This number is supposed to represent
[Heavrin’s] annual salary, but [Heavrin] in
reality only made about $32,000 a year. The
calculation is illogical and unfair to
[Heavrin] because it does not contemplate
her actual earnings. The 2080 number, used
to annualize [Heavrin’s] salary from an
hourly wage, is equivalent to 260 days times
8 hours a day. The problem is that
[Heavrin] did not work 260 days each year,
which is the equivalent of five days a week.
Since she worked 3 days a week, she only
worked 156 days a year.
KRS 61.510(15) and KRS 61.510(25) give
[the Systems] several options for
calculating the base for the “current rate
of pay,” such as hourly or weekly rate, and
for annualizing the base. [The Systems]
originally derived the base by multiplying
$25.26 per hour times 8 hours per day times
3 days per week. The agency then annualized
that base by multiplying it by 52 weeks per
year. This equation yielded approximately
$32,000, about [Heavrin’s] actual salary,
and seems more appropriate to formulate the
purchase price.
[The Systems] contends that the
actuarial soundness of the purchase credit
system will be jeopardized if [Heavrin] does
not pay the higher amount. [The Systems] is
concerned that employees will take advantage
of the system by purchasing credit when
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their salary is low and subsequently take a
higher salary. That worry is unfounded here
because [Heavrin] retired after she made the
purchase and did not subsequently seek a
higher salary.
We agree with the circuit court that the Systems misapplied the
statutory formula for calculating the cost of Heavrin’s nonqualified service credit.
The circuit court correctly noted the standard of
review applicable to an appeal from an administrative agency.
In citing Kentucky Unemployment Insurance Commission v. King,
657 S.W.2d 250 (Ky.App. 1983), the circuit court stated that the
function of the court in an appeal from an administrative agency
is to ensure that the agency did not act arbitrarily and that
its decision is based on substantial evidence in the record and
that the agency did not apply the wrong rule of law.2
Substantial evidence is defined as evidence that “when taken
alone or in the light of all the evidence it has sufficient
probative value to induce conviction in the minds of reasonable
men.”3
As to the issue of whether an agency acts in an arbitrary
manner, the court, citing Bourbon County Bd. of Adj. v. Currans,
873 S.W.2d 836, 838 (Ky.App. 1994), held that an agency acts
arbitrarily when it denies relief to a party and “the record
2
See also, American Beauty Homes Corp. v. Louisville & Jefferson Cty.
Planning and Zoning Commission, 379 S.W.2d 450 (Ky. 1964).
3
Kentucky State Racing Commission v. Fuller, 481 S.W.2d 298, 308 (Ky. 1972).
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compels a contrary decision in light of substantial evidence
therein.”
In Johnson v. Galen Health Care, Inc., 39 S.W.3d 828
(Ky.App. 2001), this Court, again, addressed the standard of
review from both the circuit court and appellate court
standpoint.
In Johnson, 39 S.W.3d at 833, this Court stated:
Our standard of review of a circuit
court’s review of an administrative action
was set forth in Jones. V. Cabinet for Human
Resources, [Ky.App., 710 S.W.2d 862, 866
(1986)], as follows:
In an appeal of an administrative
action by an agency, the circuit
courts are to provide review, not
reinterpretation. Kentucky
Unemployment Insurance
Commissioner v. King, Ky.App., 657
S.W.2d 250 (1983). Thus, when
substantial evidence exists in the
record to support an
administrative agency’s action,
the circuit court has no authority
to overturn it. Kentucky State
Racing Commission v. Fuller, Ky.,
481 S.W.2d 298 (1972). Our task
is to determine whether or not the
circuit court’s findings upholding
the Cabinet are clearly erroneous.
CR 52.01. [See also Kirk v.
Jefferson County Medical Society,
Ky.App., 577 S.W.2d 419 (1978)].
Thus, at this level of appellate
review, Dr. Johnson has the very high burden
as to the factual issues of showing that the
circuit court was clearly erroneous in
finding that the Executive Committee’s
decision was supported by substantial
evidence.
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In this case, the high burden of showing that the
Systems’s decision was not supported by substantial evidence was
placed upon Heavrin.
We believe Heavrin has successfully
carried that heavy burden by showing that the Systems’s decision
was not supported by substantial evidence nor legally sound.
See KRS 13B.150.
Heavrin contended and the circuit court agreed
that the Systems had misapplied the statutory formula for
calculating the cost of her non-qualified service credit.
We
agree.
The parties agree that Heavrin’s cost to purchase the
service credit is to be based upon the “final rate of pay.”
Final rate of pay is defined in KRS 61.510(15) as:
“Final rate of pay” means the actual rate
upon which earnings of an employee were
calculated during the twelve (12) month
period immediately preceding the member’s
effective retirement date, including
employee contributions picked up after
August 1, 1982, pursuant to KRS 61.560(4).
In the case of members of the General
Assembly, the “final rate of pay” shall be
the creditable compensation. The rate shall
be certified to the system by the employer
and the following equivalents shall be used
to convert the rate to an annual rate: two
thousand eighty (2,080) hours for eight (8)
hour workdays, nineteen hundred fifty
(1,950) hours for seven and one-half (7-1/2)
hour workdays, two hundred sixty (260) days,
fifty-two (52) weeks, twelve (12) months,
one (1) year.
The Systems contends that since Heavrin worked 8 hour
days, it must calculate her final rate of pay at 8 hours times
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2,080 hours or 260 days.
This, however, does not reflect her
actual hours or days worked.
Her employer, the Oldham County
Health Department, certified that she worked an 8 hour day but
only 24.5 hours per week.
The Systems verified this information
and knew that Heavrin was a permanent part-time employee working
only 100 hours per month and her yearly salary was approximately
$32,000 per year.
The Systems’s first calculation was based
upon this information.
It was only upon review that the Systems
recalculated Heavrin’s cost to be based upon the mythical
$52,000 annual salary.
The Systems claims this figure must be
used because the cost to purchase the service time must be based
on the full actuarial cost as determined by the Systems.
While
this is certainly a correct statement of the law, the testimony
before the hearing officer does not support the Systems’s method
of calculating the costs in this particular case.
The hearing officer made the following findings on
this issue:
Obviously, the current rate of pay
would be higher than Ms. Heavrin’s final
compensation and her final rate of pay due
to the fact that her current rate of pay is
to be converted to an annual rate based on
the factors that have been set forth under
final rate of pay, KRS 61.510. Due to the
fact that Ms. Heavrin did not work a full
work week, the Systems was obligated to
calculate her salary on a yearly basis, not
on her actual earnings. Accordingly, while
she argues that the 24.5 hours at $25.26 is
weekly, the Systems was obligated to convert
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her income into an annual current rate of
pay. Certainly, this seems harsh. If in
fact the Oldham County Health Department had
reported her income as working three days a
week for a total of eight hours a day, and
that she had a weekly income of $25.26 times
3 times 8, and that she did not work any
more, or could not work any more, then that
would be both her final rate of pay and her
current rate of pay. However, it is clear
that her income was not reported this way,
and further, as set forth on Exhibit 13,[4]
it was indicated that Exhibit 4 would not be
changed to reflect a weekly income and that
Ms. Heavrin could work more than the 100
hours a month. Therefore, her income was
reported as an hourly income, as Ms.
Stephens testified, and even though
calculations could be made to attempt to
show a weekly income, it was not so
reported, and accordingly, the calculations
for current rate of pay was based on an
hourly rate annualized on a 40-hour-a-week
basis.
As the undersigned Hearing Officer has
indicated in the previous Report and
Recommended Order, Ms. Heavrin’s benefits
would not change if the $32,000 figure or
the $52,000 figure was used. The only issue
is if she would be refunded about $8,000.
The Systems had made it perfectly clear that
they must comply with the law and, further,
they must ensure the integrity of the fund
and no refund is due.
Certainly, the arguments of Ms. Heavrin
as to her situation being separate and
distinct from other hourly employees are
understandable. However, the Systems must
take the information as provided and apply
the proper actuarial bases for determining
purchase of non-qualified service credit.
Clearly, KRS 61.552(26) mandates that the
4
Exhibit 13 is the Kentucky Retirement Systems’s folder comments for Heavrin.
We do not believe this exhibit supports the hearing officer’s finding that
the Systems was obligated to use the $50,000 annual salary.
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Systems determine the purchase price based
on the full actuarial cost. The testimony
of Stephen Gagel clearly indicates that the
Systems has made a proper determination to
obtain the full actuarial cost. Any other
calculation would be contrary to this
statute.
Accordingly, it is again the
recommendation that the administrative
determination be affirmed.[5]
In reviewing the hearing officer’s report, we first
note that the Systems and the hearing officer were given
information of Heavrin’s actual hours worked.
There is no doubt
that both knew that Heavrin was a permanent part-time employee
working only 100 hours per month and had done so for a
significant period of time.
However, each ignored this
information in reaching its decision as to Heavrin’s actual
hours worked.
Both knew that Heavrin’s actual salary was
approximately $32,000, not the $52,000 used to calculate her
cost to purchase the service time.
Both admitted that her
retirement benefits would be based upon the $32,000 actual
salary and not the $52,000 fictional figure.
Both admitted that
the actual actuarial cost of any other person working 24.5 hours
per week or 100 hours per month and earning the same hourly wage
as Heavrin would be based upon $32,000.
It did not matter if
that individual worked 5 hours, 5 days per week or 4 hours, 6
days per week or any other hours/days combination that totaled
5
Hearing Officer’s Report and Recommended Order of June 14, 2002, pp. 6-8.
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24.5 per week or 100 hours per month.
The argument that if one
worked an 8 hour day, then the cost must be based on full-time
annual salary is ridiculous.
If the system is actuarially sound
under similar fact patterns (any combination equaling 24.5 hours
per week or 100 hours per month), then it is certainly
actuarially sound in this case and reliance upon the $52,000
full-time annual salary is unfounded.
Having thoroughly reviewed this case, the Franklin
Circuit Court’s opinion and order granting Heavrin’s appeal is
affirmed.
The Systems’s determination that purchase of non-
qualified service time must be based on the full actuarial cost
as determined by the system is correct.
However, in this case
it erred both factually and legally in basing the purchase cost
upon a full-time annual salary when Heavrin was employed as a
permanent part-time employee.
ALL CONCUR.
BRIEF AND ORAL ARGUMENT FOR
APPELLANT:
Brown J. Sharp, II
Louisville, KY
BRIEF FOR APPELLEE:
Christina Heavrin
Louisville, KY
James K. Murphy
Louisville, KY
ORAL ARGUMENT FOR APPELLEE:
Christina Heavrin
Louisville, KY
-19-
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