Glenn E. KENNEDY, Charles Wolfe, Terry Knighton, and Jerry Landford, Individually and on Behalf of a Class of Persons Similarly Situated, Appellants, v. The SOUTH CAROLINA RETIREMENT SYSTEM and the South Carolina Budget and Control Board, Respondents.
No. 25133
Supreme Court of South Carolina
Refiled May 22, 2001
Rehearing Denied July 30, 2001
549 S.E.2d 243
Reheard Dec. 5, 2000.
AFFIRMED.
TOAL, C.J., and MOORE, WALLER and PLEICONES, JJ., concur.
Stephen Van Camp, of South Carolina Retirement System, of Columbia; and R. Kent Porth and Elizabeth H. Campbell, both of Nexsen Pruet, Jacobs & Pollard, of Columbia, for Respondent South Carolina Retirement System. Joseph D. Shine and Edwin E. Evans, both of State Budget and Control Board, of Columbia, for Respondent State Budget and Control Board. Richard Mark Gergel and W. Allen Nickles, both of Gergel, Nickles & Solomon, of Columbia, for Respondents. Lesley A. Bowers, of Columbia, for Amicus Curiae, Protection and Advocacy for People With Disabilities, Inc. Mary J. Bradwater, of Columbia, for Amicus Curiae, The South Carolina School Boards Association. Edwin Johnson, II, of McNair Law Firm, of Columbia, for Amicus Curiae, The South Carolina Chamber of Commerce. Deena Smith McRackan, of Charleston, for Amici Curiae, The South Carolina Education Association and The South Carolina Education Association--Retired. Vance J. Bettis, of Gignilliat, Savitz & Bettis, of Columbia, for Amicus Curiae, The South Carolina State Employees Association, for respondents. Richard J. Breibart, of Lexington, for Amicus Curiae, The Fraternal Order of Police. Ray E. Chandler, of Coffey Chandler & Johnson, of Manning, for Amicus Curiae the South Carolina State Fireman‘s Association. Scott T. Price, of Columbia, for Amicus Curiae the South Carolina School Boards Association.
TOAL, Chief Justice:
Four retired state employees (“the Employees“) brought suit against the South Carolina Retirement System and the South Carolina Budget and Control Board (collectively “the Retirement System“) claiming their retirement benefits have been miscalculated. The trial court ruled in favor of the Retirement System and the Employees have appealed.
In 1986, the General Assembly amended
Before 1978, the Retirement System gave a retiring employee credit for all accrued unused annual leave when calculating the average final compensation for retirement benefits. The statutory section read:
(17) “Average final compensation” with respect to those members retiring on or after July 1, 1970, shall mean the average annual earnable compensation of a member during the three consecutive fiscal years of his creditable service producing the highest average.
Under this statute and its predecessors going back to the creation of the system in 1945, the Retirement System, as a matter of policy, gave credit for unused annual leave even though there was no specific requirement in the statutory section that it do so. Furthermore, there was no limit on the amount of accrued annual leave for which an employee could receive credit.
(17) “Average final compensation” with respect to those members retiring on or after July 1, 1970, shall mean the average annual earnable compensation of a member during the three consecutive fiscal years of his creditable service producing the highest such average; an amount up to and including forty-five days termination pay for unused annual leave may be added to the pay period immediately prior to retirement and included in the average as applicable.3
The 1978 amendment had two major effects on the use of unused annual leave in the average final compensation calculation. First, the amendment placed a forty-five day cap on the amount of unused annual leave for which an employee could receive credit. Second, the unused annual leave could only be calculated in the average final compensation equation if the pay period immediately prior to the employee‘s retirement was one of the three highest in the employee‘s career. As a consequence of this second restriction, employees would regularly have to retire on the last day of their last fiscal year to ensure that any unused annual leave would be included in the calculation. Servicing a large volume of retirement claims at one time created an administrative problem for the Retirement System.
In 1986, the General Assembly amended
(17) “Average final compensation” with respect to those members retiring on or after July 1, 1986, means the average annual earnable compensation of a member during the twelve consecutive quarters of his creditable service on which regular contributions as a member were made to the System producing the highest such average; a quarter means a period January through March, April through June, July through September, or October through December. An amount up to and including forty-five days’
termination pay for unused annual leave at retirement may be added to the average final compensation....4
Both sides in this matter agree that the General Assembly intended to alter the calculation of average final compensation. The dispute in this case is over the nature of the change in unused annual leave benefits.
The parties disagree about whether the amendment changed the method of adding any unused annual leave to the average final compensation equation. Before the 1986 amendment, it is undisputed that the value of the unused annual leave was added into the average final compensation equation before the total was averaged. After the amendment, the Employees claim the value of the unused annual leave should be added to the average final compensation equation after the average has been taken. The Retirement System‘s position is that the unused annual leave should still be added into the average final compensation equation before the average is taken.
The Employees filed suit against the Retirement System in November 1995, seeking a declaratory judgment as to the meaning of
The trial court then looked to the rules of statutory construction to determine the intent of the General Assembly in regards to the calculation of average final compensation. First, the trial court analyzed what it determined to be the legislative history of the 1986 amendment. The trial court also looked at the Retirement System‘s statutory scheme as a whole. The trial court gave deference to the interpretation of the statute by the Retirement System. Furthermore, the trial court determined that the use of the word “may” in reference to the addition of unused time to the average final compensation resulted in total discretion on the part of the Retirement System as to whether any unused annual leave would be added into the equation. Finally, the trial court found that even if the Employees were correct in their interpretation,
LAW/ANALYSIS
I. Section 9-1-10(17) is Ambiguous
The first question of statutory interpretation is whether the statute‘s meaning is clear on its face. “If a statute‘s language is plain and unambiguous, and conveys a clear and definite meaning, there is no occasion for employing rules of statutory interpretation and the court has no right to look for or impose another meaning.” Paschal v. State Election Comm‘n, 317 S.C. 434, 436, 454 S.E.2d 890, 892 (1995). We find the language of
The section can be read, as the Employees argue, that up to 45 days are added to the equation after the average is taken. The section can also be read as the Retirement System argues, adding up to 45 days of unused annual leave to the average final compensation equation before taking the average of the 12 highest quarters. The use of the phrase “average final compensation” in the section that defines “aver-
The most powerful indication of legislative intent is the lack of legislative history and debate which accompanied the adoption of
If the General Assembly intended to add the leave after the average was taken, it is reasonable to assume the history and circumstances surrounding the amendment would indicate the General Assembly intended to increase benefits, thereby adding $1.177 billion in liability to the State Retirement System. The history in no way indicates the legislature intended to make such a dramatic increase in benefits. First, the title of the 1986 Appropriations Act, which included the amendment to
To amend
sections 9-1-10 and9-11-10 of the 1976 Code, relating to the South Carolina Retirement System and the
South Carolina Police Officers Retirement System, so as to change the definition of average final compensation from average annual earnable compensation of a member during three consecutive fiscal years to twelve consecutive quarters.
The plain language of the title gives no indication or notice that the amendment would triple the dollar value for unused annual leave.
Secondly, had the General Assembly intended to increase benefits and spend $1.177 billion, it is reasonable to assume they would have engaged in floor debate. They did not.12 Furthermore, no fiscal impact analysis was undertaken. See
Policy considerations also weigh in favor of the Retirement System‘s interpretation. It must be assumed the legislature intends to maintain the soundness of the State Retirement System. If the Court accepts the Employees’ interpretation, the dramatic increase in liability might render the System unsound. Donald Overholser (“Overholser“), the Retirement System‘s actuary, testified the interpretation sought by the Employees would make the entire State Retirement System actuarially unsound. Thomas Cavanaugh (“Cavanaugh“) of Gabriel, Roeder, Smith & Company also testified the $1.177 billion unfunded liability would leave the System actuarially unsound.14 Cavanaugh and Overholser were qualified by the court without objection as experts in the field of actuarial valuation. The Employees presented no expert testimony or any testimony to contradict Cavanaugh and Overholser‘s conclusion. Instead, the Employees claim the Court and the actuaries should only consider the amount of money it would take to pay off their plaintiff class, not the effect of the interpretation on the system as a whole. This position ignores the rule of statutory construction that, absent a change by the legislature, the statute will apply to all state employees who will retire in the future.
Furthermore, we find the Employees’ interpretation of the statute, which would have the unused annual leave added after the total is averaged, leads to an absurd result that the Legislature could not have intended. See Gentry v. Yonce, 337 S.C. 1, 143, 522 S.E.2d 137, 143 (1999) (“Statutes should not be construed so as to lead to an absurd result.“); Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 440 S.E.2d 364 (1994) (the court should reject a meaning when to accept it would lead to a result so plainly absurd that it could not have been intended by the legislature). We hold the Employees’ interpretation of the statute leads to the absurd result of rendering the State Retirement System actuarially unsound.
Construing the statute so as to cause such a devastating impact on the fiscal integrity of the State Retirement System, especially in the absence of any fiscal impact report or meaningful debate from the Legislature, would lead to an absurd result that could not have been intended by the legislature.
II. The Use of the Term “May” Does Not Grant the Retirement System Unlimited Discretion
The Retirement System argues that the use of the phrase “may” in
The term “may” is used in
The construction given to the word “may” by the trial court would result in unfettered discretion by the Retirement System in determining whether to grant or deny credit for unused annual leave. It would allow the Retirement System to treat employees with the same number of unused annual leave days differently. This discretion would be entirely inappropriate in a statute defining retirement benefits computation. Absolute equality of treatment to similarly situated beneficiaries is the hallmark of a qualified defined benefits pension plan. The only reasonable construction of the word “may” is that it allows the Retirement System to include up to 45 days, and no more, in the calculation, if the employee has such unused leave when he retires.
III. The Testimony of Purvis Collins about Legislative Intent Was Inadmissible
The Employees argue that the trial court erred in admitting the testimony of Purvis Collins and relying on his testimony in construing
Purvis Collins, who at the time of this case was retired and is now deceased, was the director of the Retirement System for 24 years. Mr. Collins has been recognized nationally as one of the country‘s leading governmental retirement system administrators. This Court has the highest respect for Mr. Collins’ knowledge, ability, and integrity. Nevertheless, as a matter of law, the testimony of Mr. Collins, an executive branch officer, as the “author” of a legislative amendment, is not admissible as evidence of legislative intent. Not even members of the General Assembly are permitted to so testify. “It is a settled principle in the interpretation of statutes that even where there is some ambiguity or some uncertainty in the language used, resort cannot be had to the
Collins’ testimony goes well beyond any limited role claimed for it by the Retirement System. Collins testified extensively about how he drafted the amendment and what he intended the amendment to accomplish. Such testimony of what he intended as “author” of the amendment, as well as what problems he intended the amendment to address, are not proper legislative history for a court to take into account. See Tallevast v. Kaminski, 146 S.C. 225, 143 S.E. 796 (1928).
Collins’ testimony is not completely inadmissible. In his role as the head of the South Carolina Retirement System, Collins’ testimony is relevant, although not controlling, to the extent that it discusses how the executive branch interpreted the amendment after its enactment. See Nucor Steel v. South Carolina Public Serv. Comm‘n, 310 S.C. 539, 426 S.E.2d 319 (1992). For the reasons discussed, we find the executive agency‘s interpretation does reflect the legislative intent of the section.
In light of our holding, we do not need to address the Employees’ claims concerning the class certification and statute of limitations.
CONCLUSION
Based on the foregoing, we AFFIRM in result the decision of the trial court.
MOORE, WALLER and PLEICONES, JJ., concur.
BURNETT, J., concurring in part and dissenting in part in a separate opinion.
I concur with Parts II and III of the majority opinion.18 However, I respectfully dissent from Part I of the opinion.
The dispute in this case concerns the General Assembly‘s 1986 amendment to the definition of “average final compensation” for State employee retirement purposes found in
Prior to 1978,
(17) “Average final compensation” with respect to those members retiring on or after July 1, 1970, shall mean the average annual earnable compensation of a member during the three consecutive fiscal years of his creditable service producing the highest average.
Even though the statute did not refer to accrued unused annual leave, the South Carolina Retirement System credited retiring employees with all accrued unused annual leave when calculating the average final compensation for retirement benefits. There was no limit on the amount of accrued annual leave for which an employee could receive credit.21
(17) “Average final compensation” with respect to those members retiring on or after July 1, 1970, shall mean the average annual earnable compensation of a member during the three consecutive fiscal years of his creditable service producing the highest such average; an amount up to and including forty-five days termination pay for unused annual leave may be added to the pay period immediately prior to retirement and included in the average as applicable....22
See Act No. 408, 1978 Acts 1295.
The 1978 amendment altered the definition of “average final compensation” by limiting the creditable accrued unused annual leave to forty-five days. In addition, it included the annual leave credit in a retiree‘s average final compensation only if the pay period immediately prior to retirement was within the employee‘s three highest consecutive fiscal years. As a result of the 1978 amendment, employees generally retired on the last day of their last fiscal year to ensure receipt of credit for any accrued unused annual leave in their average final compensation. The number of employees who retired at the end of the fiscal year produced administrative difficulties for the Retirement System.
In 1986, the General Assembly again amended the definition of “average final compensation.” The 1986 amendment provides:
(17) “Average final compensation” with respect to those members retiring on or after July 1, 1986, means the average annual earnable compensation of a member during the twelve consecutive quarters of his creditable service on which regular contributions as a member were made to the System producing the highest such average; a quarter means a period January through March, April through June, July through September, or October through December. An amount up to and including forty-five days’ termination pay for unused annual leave at retirement may be added to the average final compensation....23
The parties disagree, however, as to whether the 1986 amendment also changed the method of including accrued unused annual leave in the average final compensation. The Retirement System asserts the amendment did not change the method. According to the Retirement System, pursuant to the 1986 amendment, the value of any unused annual leave is added to the highest consecutive twelve quarters before averaging to determine the average final compensation. Employees, on the other hand, claim the 1986 amendment provides that the value of any unused annual leave is added to the average final compensation after the average is taken. I agree with Employees.
“[W]here a statute is complete, plain, and unambiguous, legislative intent must be determined from the language of the statute itself.” Charleston County Parents for Public Schools, Inc. v. Moseley, 343 S.C. 509, 515, 541 S.E.2d 533, 536 (2001). “If a statute‘s language is plain and unambiguous, and conveys a clear and definite meaning, there is no occasion for employing rules of statutory interpretation and the court has no right to look for or impose another meaning.” Paschal v. State Election Comm‘n, 317 S.C. 434, 436, 454 S.E.2d 890, 892 (1995).
In my opinion,
In any event, even if the language of the 1986 amendment is considered ambiguous, by construing the statute as providing that the value of unused annual leave is included in the average final compensation, it is my opinion the majority misapprehends the legislature‘s intent. I hold this view for several reasons.
First, a comparison of the language in
Second, contrary to the majority‘s assertion, this Court has never considered the extent of legislative history and debate on a proposed statutory amendment as a factor in interpreting
Third, this Court has never held that the title of a bill is a factor used in determining legislative intent behind a statutory enactment.25 Accordingly, the fact that the title to the 1986 Appropriations Act does not mention an increase in retirement benefits does not assist the Court in construing the 1986 amendment.
Instead, South Carolina Constitution Article III, § 17 requires that the title of a legislative act serve as notice of its general subject.26 The purpose of this constitutional provision is to prevent the General Assembly from being misled into the passage of bills containing provisions not indicated in their titles and to apprize the citizens of the subject of proposed legislation, thereby giving them an opportunity to be heard. Hercules, Inc. v. South Carolina Tax Comm‘n, 274 S.C. 137, 262 S.E.2d 45 (1980); Colonial Life & Accident Ins. Co. v. South Carolina Tax Comm‘n, 233 S.C. 129, 103 S.E.2d 908 (1958), superseded on other grounds I‘On, L.L.C. v. Town of Mt. Pleasant, 338 S.C. 406, 526 S.E.2d 716 (2000). The Court has repeatedly held that “[t]he title of an act need not be a complete index of its contents. The constitutional mandate is satisfied where the title states the general subject, and the provisions in the body of the act are germane thereto and
Here, the title of the 1986 Appropriations Act provides:
TO AMEND SECTIONS 9-1-10 AND 9-11-10 OF THE 1976 CODE, RELATING TO THE SOUTH CAROLINA RETIREMENT SYSTEM AND THE SOUTH CAROLINA POLICE OFFICERS’ RETIREMENT SYSTEM, SO AS TO CHANGE THE DEFINITION OF AVERAGE FINAL COMPENSATION FROM AVERAGE ANNUAL EARNABLE COMPENSATION OF A MEMBER DURING THREE CONSECUTIVE FISCAL YEARS TO TWELVE CONSECUTIVE QUARTERS.
The title of the 1986 Appropriations Act refers to amending
Fourth, the Court has never used the lack of a fiscal impact statement as a factor in statutory interpretation. Moreover,
Finally, like the majority, I am also concerned about the fiscal impact of the 1986 amendment on the financial stability of the Retirement System and the State‘s creditworthiness. However, I question whether adoption of the Employees’
As I read the trial record, the Retirement System‘s actuary testified the Employees’ interpretation of
I would hold the language of the 1986 amendment plainly requires that unused annual leave of up to forty-five days may be added to the average produced by the retiree‘s twelve highest consecutive quarters. Accordingly, I respectfully dissent from Part I of the majority opinion.
Notes
.0182 x “Average Final Compensation” x Years of Service = Annual Retirement Allowance
$96,190 (the total of his 12 highest quarters) + $5,875 = $34,022 / 3
As a retired police officer, Wolfe‘s average final compensation would then be put into
.0214 x $34,022 x 30 = $21,842.13 (Annual Retirement Allowance)
$21,842.13 / 12 = $1,820.18 (monthly benefits payment to Wolfe)
Under the Employees approach, Wolfe‘s average final compensation would be calculated as:
$96,190 (the total of his 12 highest quarters) / 3 = $32,064 + $5,875 = $37,939
Put into
.0214 x $37,939 x 30 = $24,356.84 (Annual Retirement Allowance)
$24,356.84 / 12 = $2,029.74 (monthly benefits payment to Wolfe)
$2,029.74 - Monthly Payment Under Employee‘s approach
$1,820.18 - Monthly Payment Under Retirement System‘s approach
$ 209.56 Difference Between Methods