BEFORE THE PUBLIC EMPLOYEES' RETIREMENT BOARD

OF THE STATE OF MONTANA

 

In the matter of Bradley Lins' Petition for Declaratory Ruling that he is statutorily entitled to reinstate PERS membership service

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Docket No. DO 2015-1     DECLARATORY RULING

 

INTRODUCTION

 

          1. On August 21, 2015, Bradley Lins (Lins) filed a Petition for Declaratory Ruling (Petition) with the Montana Public Employees' Retirement Board (Board) requesting a ruling confirming that he is entitled, pursuant to § 19-2-603, MCA, to reinstate prior membership service in the Public Employees' Retirement System (PERS). The Petition and the Montana Public Employee Retirement Administration (MPERA) Response (Response) constitute the record in this declaratory ruling proceeding.

 

BACKGROUND

 

          2. On September 4, 2015, counsel for the Board notified Lins' counsel and counsel for MPERA that the Board would address the Petition at their October 8, 2015 meeting and that unless good cause was shown, there would not be a hearing on the matter. Lins' counsel responded, but did not request a hearing.

 

          3. MPERA filed a Response to Petitioner's Petition for Declaratory Ruling (Response) on September 23, 2015 and did not request a hearing.

 

          4. On October 2, 2015 the Board issued a public meeting notice with an agenda for their October 8, 2015 meeting, including Lins' requested ruling with copies of Lins' Petition and MPERA's Response. The Board did not schedule a formal hearing for the matter because there was no good cause shown to hold a hearing, or even a request for a hearing.

 

          5. On October 8, 2015, the Board reviewed the Petition and Response and requested public comment on the matter. There was no public comment. Lins' counsel then requested a hearing but the Board determined the request was not timely, good cause was not established, and the delay that would result from postponing a determination of the matter would not result in a prompt disposition of the Petition. 

 

FACTS

 

          6. Lins was an employee of Cascade County working in a PERS covered position from January 1991 to April 1999, during which time he accumulated 7 years and 6.95 months of membership service. When he terminated this employment, he requested and received a refund of his PERS accumulated contributions.

 

          7. Lins was subsequently hired by Cascade County on November 16, 2009 but voluntarily declined optional PERS membership as allowed under § 19-3-412, MCA for employees in a PERS covered position who work less than 960 hours in a fiscal year.

 

          8. In February 2010, Lins became a PERS member under the terms of §§ 19-3-401 and 19-3-412, MCA, when he had worked over 960 hours in the fiscal year in his PERS covered position with Cascade County.  Lins incurred work related shoulder injuries in March 2014 and subsequently received workers' compensation disability benefits from April 2014 through November 2014. Upon being released to return to work, Lins was informed that Cascade County could not accommodate his shoulder limitations and was terminated on November 17, 2014.

 

          9. Lins received membership service for all months of service he accrued from February 2010 through April 2014. Pursuant to § 19-3-504, MCA, he was also credited six months of membership service for the months when he did not work because of his injury and during which he was receiving workers' compensation disability benefits.  Consequently, upon termination in November 2014, Lins had accumulated 4 years and 10 months of membership service.

 

          10. On July 31, 2015, Lins' counsel sent MPERA a request to confirm Lins' eligibility to reinstate refunded membership service pursuant to § 19-2-603, MCA, for March and April of 1999 and the cost to do the same. MPERA sent a response letter on August 7, 2015 stating that Lins was not eligible to reinstate service credit because he did not meet the "active or vested inactive" status requirement of a member to purchase service under § 19-2-704(2), MCA. 

 

          11. Lins' Petition asserts that a reinstatement of refunded service pursuant to § 19-2-603, MCA is distinct from a service purchase or transfer as provided in § 19-2-704(2), MCA and that a member wishing to reinstate service is not subject to the "active or vested and inactive" eligibility requirement of a member electing to purchase or transfer service. 

 

ANALYSIS

 

          12. The Board "shall provide by rule for the filing and prompt disposition of petitions for declaratory rulings as to the applicability of any statutory provision…" Section 2-4-501, MCA. The ruling shall be published pursuant to § 2-4-501, MCA, and is subject to judicial review in the same manner as decisions or orders in contested cases. Id.

 

          13. The Board has adopted the Attorney General's Model Procedural Rules governing declaratory rulings as provided in ARM 1.3.226 through 1.3.229. ARM 2.43.1401. "A party may seek a declaratory ruling from the agency when doubt exists as to how a statute or rule administered by an agency affects the party's legal rights." ARM 1.3.226.

 

          14. A pension trust fund is established and maintained for PERS. Section 19-2-501, MCA. The Board must administer that trust fund as provided in Article VIII, section 15 of the Montana Constitution and subject to the provisions of Title 19, chapters 2 and 3 of the Montana Code Annotated. Sections 19-2-302, 19-2-502, MCA. PERS members are subject to the provisions of these chapters and the rules that the Board is authorized to establish for the administration, operation, and enforcement of PERS. Section 19-2-403, MCA. 

 

          15. "Where several statutes may apply to a given situation, such a construction, if possible is to be adopted as will give effect to all." City of Bozeman v. Raccicot (1992), 253 Mont. 204, 208-209, 832 P.2d 767, 770. 

 

          16. When a member's accumulated contributions in PERS are refunded, "the person ceases to be a member of that system, all the person's service is canceled, and the person relinquishes claim to any benefits payable to members of the retirement system." Section 19-2-601, MCA.

 

          17. Following a refund of a member's contributions upon termination of service, if the person again becomes a member of PERS, the person may "reinstate that membership service or service credit by redepositing the sum of the accumulated contributions that were refunded to the person at the last termination of the person's membership plus the interest that would have been credited to the person's accumulated contributions had the refund not taken place." Section 19-2-603, MCA. 

 

          18. Membership service means the periods of service that are used to determine eligibility for retirement benefits. Section 19-2-303(33), MCA. Service credit means the periods of time for which the required contributions have been made to a retirement plan and that are used to calculate benefits. Section 19-2-303(47), MCA. 

 

          19. Reinstating refunded membership service or service credit by redepositing the refunded amount and interest as required under § 19-2-603, MCA constitutes a service purchase under several statutes and rules that apply to the situation. "Subject to [1] the rules promulgated by the board, an eligible member may elect to make additional contributions to purchase service credits as provided by [2] the statutes governing the retirement system." Section 19-2-704(1) (emphasis added). 

 

          20. The rules promulgated by the Board reflect that the redeposit or payment of accumulated contributions and interest in exchange for reinstating refunded service constitutes a type of service purchase.  ARM 2.43.2303(2)(b) lists the documentation required to prove the amount of service eligible to be purchased including the date and amount of a refund.  ARM 2.43.2308 provides that when purchasing a portion of a member's refunded service, the member must first purchase the most recent refund first.  ARM 2.43.2309 provides the "purchase request date for all service purchases other than refunded service."  ARM 2.43.2317, titled "Purchase of Refunded Service or Service From Another MPERA-Administered Retirement" provides that a "member who is statutorily eligible to do so may elect to purchase into their current retirement system all or any portion of their previously refunded service in that system" (emphasis added) after filing a request and then receiving a notice from MPERA of the amount of service the member is eligible to purchase and the cost of that service.

 

          21. The statute authorizing service purchases, titled "Purchasing service credits allowed – payroll deduction," reflects that reinstating refunded service constitutes a type of service purchase by including the "redeposit of amounts withdrawn under 19-2-602" in the statute and allowing the same payment methods and process for redeposits as other types of service purchases. Section 19-2-704(3)-(7), MCA. This statute also provides: "Subject to any statutory provision establishing stricter limitations, only active or vested inactive members are eligible to purchase or transfer service credit, membership service, or contributions." Section 19-2-704(2), MCA.

 

          22. The PERS membership statute further establishes limits on the rights of members – distinguishing between active members and both inactive vested members and inactive nonvested members, providing in relevant part: "An inactive member of the defined benefit plan with less than 5 years of membership service is an inactive nonvested member and is not eligible for any benefits from the retirement plan. An inactive nonvested member of the defined benefit plan is eligible only for a refund of the member's accumulated contributions." Section 19-3-401(3), MCA.

 

          23. An "active member" is "a paid employee of an employer, is making the required contributions, and is properly reported to the board for the most current reporting period." Section 19-2-303(2), MCA. An "inactive member" is "a member who terminates service and does not retire or take a refund of the member's accumulated contributions." Section 19-2-303(30), MCA

 

RULING

 

          24. The Board declines to issue the declaratory ruling sought by Lins that he is entitled to reinstate previously refunded service because he is not an active or vested inactive member and is therefore not eligible to purchase previously refunded service. Section 19-2-704, MCA. As long as he remains an inactive, nonvested member of PERS he is eligible only for a refund of his accumulated contributions. Section 19-3-401(3), MCA. 

 

DATED this 19th day of October, 2015.

 

MONTANA PUBLIC EMPLOYEES'

RETIREMENT BOARD

 

 

 

/s/ Sheena Wilson                                

SHEENA WILSON, PRESIDENT 

 

/s/ Mike McGinley                                

MIKE MCGINLEY, VICE PRESIDENT

 

/s/ Timm Twardoski                              

TIMM TWARDOSKI

 

/s/ Maggie Peterson                             

MAGGIE PETERSON

 

/s/ Marty Tuttle                                    

MARTY TUTTLE

 

/s/ Julie McKenna                                 

JULIE MCKENNA

 

/s/ Pepper Valdez                                

PEPPER VALDEZ

 

 

NOTICE: Petitioner has the right to appeal this ruling by filing a petition for judicial review in district court within 30 days after service of this decision. Judicial review is conducted pursuant to § 2-4-702, MCA.

   

CERTIFICATE OF MAILING

 

The undersigned hereby certifies that on the 19th day of October 2015, a true and correct copy of the foregoing was served by placing same in the U.S. mail, postage prepaid, addressed as follows:

 

Ben A. Snipes

LEWIS, SLOVAK, KOVACICH & SNIPES, P.C.

P.O. Box 2325

Great Falls, MT 59403

 

 

                                                  /s/ Kris Vladic

                                                  KRIS VLADIC

                                                  Program Specialist