Oregon Advisory Opinions December 03, 1973: OAG 73-57 (December 3, 1973)

OAG 73-57.

Oregon Laws 1973, ch 695 revised the benefits, rights and privileges available to retirees and current members of the Public Employes' Retirement System (PERS). These provisions increased benefits and allowances for the membership of PERS, and were enacted to improve the retirement program for public employes of the state. Excluding those benefits payable to policemen and firemen, these revisions may be summarized as follows:

Section 1. The maximum annual percentage adjustment for monthly retirement allowances provided for in ORS 237.060, reflecting cost of living increases or decreases, was modified from 1-1/2 percent of the allowances to 2.0 percent.

Section 3. The age of compulsory retirement and years of service required to retire without actuarial reduction was modified to allow retirement at age 60 with 30 years of service or age 62 with 25 years of service.

Section 4. The formula for the pension portion of the employes' retirement benefit in ORS 237.147 was increased from .84 percent of final average salary per year of service to 1.0 percent of final average salary per year of service.

Section 6. Effective January 1, 1974, the monthly service retirement allowance or the monthly disability allowance payable to members of the system was increased depending upon the date of the members' retirement. For persons retiring before January 1, 1972, the percentage increase would range from 12 percent to 25 percent. Persons retiring after January 1, 1972, but before January 1, 1974, would receive an increased allowance based upon retirement under the new formula established by section 4 of the act.

The foregoing summary sets the stage for consideration of whether the benefits of these provisions are applicable to members of a teachers retirement fund association (TRFA), established by ORS Chapter 239. Section 11 of Chapter 695 was made a part of Chapter 239, providing:

"Provisions of sections 1, 3 and 4 of this 1973 act that affect cost of living adjustments and computation of retirement allowances under the Public Employes' Retirement System are applicable to the rights, privileges and benefits of members of the Teachers Retirement System." (emphasis provided)

This clearly makes applicable to members of TRFA those benefits created by sections 1, 3 and 4 of the 1973 Act which are payable to members of the Public Employes' Retirement System.

However, section 11 noticeably omits reference to section 6, which increased the monthly service and monthly disability allowance to members of PERS. Does this mean the Legislature intended to exclude members of TRFA from the increased benefits provided for by section 6 and limit these allowances to members of the Public Employes' Retirement System?

In our opinion the Legislature did not intend this result nor did it intend to cause disparity or unequal treatment between members of PERS and TRFA. We conclude the benefits established by section 6 of the act are equally applicable to members of TRFA as to members of PERS.

A similar situation was considered by this office following enactment of Oregon Laws 1971, ch 738. The 1971 Legislative Assembly granted to members of PERS additional retirement benefits in the form of increased monthly service retirement allowances and monthly disability allowances. ORS 237.199. Chapter 738 also repealed a discretionary dividend payment system under ORS ch 237 and substituted a mandatory increase in retirement and disability allowances. While this legislation was clearly made applicable to PERS, the question presented itself as to whether it was equally applicable to TRFA membership. This issue developed because the Legislature did not repeal or amend then ORS 239.258, which authorized TRFA to pay a dividend to its members only when PERS paid a dividend to its members. Since PERS no longer paid dividends to its members and ORS 239.258 was not modified, it was suggested TRFA members would not receive the increased benefits provided by Oregon Laws 1971, ch 738. We held to the contrary in 35 Op. Att'y Gen. 1243 (1972). The reasoning of this opinion is equally applicable to the question now under consideration.

We noted in this opinion that it has been the policy of the Legislature since at least 1959 that employe contributions for retirement benefits and disability benefits be identical for TRFA members and PERS members. This policy was expressed by the Legislative Assembly in ORS 239.201, which reads in relevant part as follows:

"(2) The provisions of ORS 239.131 to 239.137 and 239.201 to 239.263 shall be so construed and administered as to effectuate the general purpose to make uniform the contributions and benefits provided by ORS 239.131 to 239.137 and 239.301 to 239.263 with respect to members of the Teachers' Retirement System and the contributions and benefits provided by the Public Employes' Retirement Act with respect to teachers of the school district who are members of the Public Employes' Retirement System." (emphasis supplied)

Similarly ORS 239.203 reads in pertinent part:

"(1) The objective of the Teachers' Retirement Act shall be to provide each teacher who is an active member of the association on or after July 1, 1959, a total disability retirement allowance and a total service retirement allowance identical in respective amounts to the total disability retirement allowance and the total service retirement allowance he would be entitled to at the same rates of employe contributions subject to the same elections as are provided for from time to time by the Public Employes' Retirement Act . . . had he become a member of the Public Employes' Retirement System . . . "

"(2) Each teacher shall make identical contributions as required under the Public Employes' Retirement Act, as that Act may be amended from time to time . . . " (emphasis supplied)

In accordance with this declaration of policy, specific statutes in ORS Chapter 239 provide for benefits to TRFA members identical to benefits to PERS members. Although discussed extensively in our former opinion, we believe a summary of these statutes would be helpful to this discussion. ORS 239.215, relating to separation from service prior to early retirement age, provides in subsection (1) for a disability or service retirement allowance consisting of a refund annuity plus

"(b) A pension which when added to the annuity . . . shall provide him the same total retirement allowance he could receive from the Public Employes' Retirement System had he become a member of the system . . ." (emphasis supplied)

Again, ORS 239.219 provides for a pension for a TRFA member who retires before retirement age but is then re-employed which:

" . . . shall be the same as if he had been formally retired, re-entered employment . . . and subsequently, retired . . . as a member of the Public Employes' Retirement System . . ." (emphasis supplied) ORS 239.214 (1) (c).

And ORS 239.233, the disability retirement statute, also provides for:

" . . . the same total disability retirement allowance he would receive from the Public Employes' Retirement System had he become a member of that system . . ." (emphasis supplied) ORS 239.233 (2).

The statute prescribing retirement benefits for TRFA members who retire at the usual retirement age contains virtually identical provisions. ORS 239.227 provides for a service retirement allowance consisting of an actuarily determined refund annuity based upon the member's own contributions (subsection (1)) plus:

"(2) A pension (nonrefund) which, when added to the refund annuity referred to in subsection (1) of this section, shall provide him the same total service retirement allowance he would receive from the Public Employes' Retirement System had he become a member of that system . . ." (emphasis supplied)

As pointed out in our earlier opinion, the "mechanism" necessary to determine "the same total service retirement allowance" for TRFA members, ORS 238.147, is applicable to PERS members retired in like circumstances. Similarly, the "mechanism" necessary to determine "the same disability retirement allowance" for TRFA members, ORS 237.161, is applicable to

PERS members receiving disability retirement benefits. The foregoing statutory provisions have not been significantly modified by the 1973 Legislature.

ORS 237.147 was amended by Oregon Laws 1973, ch 695 §4 to increase the pension portion of retirement benefits from .84 percent to 1.0 percent of final average salary multiplied by number of years of service. Section 11 of Chapter 695 expressly makes section 4 of the act applicable to increase pension benefits to TRFA members. Similarly, ORS 237.060 was amended by section 1 to increase the maximum annual cost of living increase from 1-1/2 percent to 2 percent. Section 11 of this chapter again expressly makes section 1 applicable to TRFA members.

While section 11 of Chapter 695 did not expressly make the increases for service and disability retirement allowances in ORS 237.199 as amended by section 6, applicable to TRFA members, we nonetheless conclude this statute is also applicable to TRFA benefits. ORS 237.199 increases the monthly service and monthly disability retirement allowance as these terms are used in both ORS 237.147 and 237.171; ORS 237.199 as amended becomes a part of the computation of the "same total service or disability retirement allowance" under ORS 239.227 and 239.233 and is applicable to it to the same extent as ORS 237.147 and 237.171.

We summarize our conclusions as follows. The Legislative Assembly has expressly provided that retirement benefits for TRFA members must be identical to those of PERS members. If the retirement benefits provided under Chapter 695 were increased by the 1973 Legislature, so, too, were retirement benefits for TRFA members, since their benefits must be "the same" as for

PERS members. Section 6 of Chapter 695 provides for increases in monthly service retirement allowances and monthly disability retirement allowances on a graduated scale depending on date of retirement, effective January 1, 1974. ORS 239.233, relating to disability retirement allowances, and ORS 239.227, relating to retirement allowances at compulsory retirement age for teachers, both provide the benefits payable shall be

" . . . the same . . . allowance he would receive from the Public Employes' Retirement System . . ."

As stated at page 1258 of our former opinion:

"We conclude that the specific statutes in ORS Chapter 239 providing for the same retirement benefits for TRFA members as for PERS members when read in light of the legislative policy . . . operate to make any increases in retirement benefits provided by changes in ORS Chapter 237 automatically applicable to retirement benefits under ORS Chapter 239."

The failure to include section 6 of the 1973 Act within the series of sections applicable to members of TRFA as well as members of PERS does not, in our judgment, render nugatory other specific provisions of law granting these identical benefits to TRFA members. The omission of this section may be deemed to be an oversight, which should in no way impede or impair the clear legislative intention expressed since 1955 to create equal benefits for members of both TRFA and PERS. Warren v. Marion County, 222 Or. 307, (1960), State v. Lermery, 213 Or. 574, (1958).

Alternatively, it can be quite logically urged that section 11 of the 1973 Act adds nothing to the existing law and is unnecessary to support our conclusions. Since increases in retirement benefits provided by changes in ORS Chapter 237 are automatically applicable to retirement benefits under ORS Chapter 239, our conclusion would be the same, without statutory language similar

to section 11. In other words, the result would be the same whether section 11 listed all sections applicable to both TRFA and PERS, or was entirely omitted. The section adds nothing to the previously expressed legislative intention and declaration of policy, or to the specific statutory directions that increases in PERS benefits are to be included in computation of TRFA benefits.

We accordingly conclude that members of a teachers' retirement fund are entitled to all increases in retirement benefits made available to Oregon Laws 1973, ch 695, including those established by section 6 of the Act, to members of the Public Employes' Retirement System.