Adrian School Dist. v. Michigan Public School Employees Retirement System, Docket No. 107733

• Court: Supreme Court of Michigan
• Citation: 582 N.W.2d 767,458 Mich. 326
• Docket Number: No. 10,Docket No. 107733,10
• Parties: , 128 Ed. Law Rep. 860 SCHOOL DISTRICT FOR the CITY OF ADRIAN, et al., Plaintiffs-Appellees, v. MICHIGAN PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM and Michigan Public School Employees Retirement Board, Defendants-Appellants. Calendar
• Decision Date: 28 July 1998

Page 767

582 N.W.2d 767 458 Mich. 326, 128 Ed. Law Rep. 860 SCHOOL DISTRICT FOR the CITY OF ADRIAN, et al., Plaintiffs-Appellees,
v.
MICHIGAN PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM and
Michigan Public School Employees Retirement Board,
Defendants-Appellants. Docket No. 107733.
Calendar No. 10. Supreme Court of Michigan. Argued May 6, 1998.
Decided July 28, 1998.

[458 Mich. 327] Thrun, Maatsch & Nordberg, P.C. by Donald J. Bonato and Philip A. Erickson, Lansing, for plaintiffs-appellees.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and David L. Balas and [458 Mich. 328] Kevin Thom, Assistant Attorneys General, Lansing, for defendants-appellants.

White, Przybylowicz, Schneider & Baird, P.C. by Karen Bush Schneider, Okemos, amicus curiae, for Michigan Education Association.

Page 768

Opinion

MARILYN J. KELLY, Justice.

We granted leave in this case to review a 1993 declaratory ruling of the Michigan Public School Employees Retirement Board. The board concluded that worker's compensation payments made to an injured employee, who was unable to work between March 13, 1992, and June 12, 1996, ¹ constitute sick leave pay and thus are reportable compensation. We affirm that ruling.

I. FACTUAL AND PROCEDURAL BACKGROUND

On September 5, 1990, Ms. Bessie Traylor, age fifty-eight, fell and broke her hip while at work. At the time, she was employed by one of the plaintiff school districts and had earned 29.8 years of retirement service credit. She began receiving worker's compensation payments for her injury and, later, sought regular service retirement benefits from the Michigan Public School Employees Retirement System in lieu of disability benefits. The retirement system advised her that her worker's compensation payments were not considered "compensation" for purposes of calculating her retirement service credit.

[458 Mich. 329] As a consequence, Ms. Traylor would have received less than thirty years of service credit, greatly reducing her lifetime retirement benefits. Had she been given credit for the time she collected worker's compensation payments, she would have retired with 30.8 years' service and her full retirement package. Ms. Traylor contested the retirement system's denial of one year of retirement service credit and received an adverse ruling.

She then filed an exception with the Michigan Public School Employees Retirement Board. The board unanimously granted her request. It ordered her account credited for both the compensation and service time lost while she received worker's compensation benefits, beginning September 6, 1990, the date of her injury.

On March 13, 1992, the retirement board adopted a policy consistent with this decision and, later, notified the school districts. ² The districts sought and received a hearing from the retirement board, which issued a declaratory ruling affirming its policy on July 30, 1993. It stated that employees were to receive retirement credit for the time they received worker's compensation payments due to an injury incurred in the employment of a member school district.

[458 Mich. 330] The school districts appealed to the Ingham Circuit Court, which affirmed the declaratory ruling. They next appealed to the Court of Appeals, which reversed the circuit court's order. ³

The Court held that retirement system members were not entitled to retirement service credit for periods during which they received worker's compensation benefits. ⁴ We granted defendants' application for leave to appeal. ⁵

II. ANALYSIS

The issue before us is whether the term "compensation" includes worker's compensation payments received for an injury suffered by a public school employee between March 13, 1992, and June 12, 1996.

Page 769

A

The definition of "compensation" under consideration in this case appeared at M.C.L. § 38.1304(1); M.S.A. § 15.893(114)(1) ⁶:

"Compensation" means the remuneration earned by a member for service performed as a public school employee. If part of a member's remuneration is not paid in money, the retirement board shall fix the value of that part of the remuneration not paid in money. Compensation includes, on a current basis, investments made in a tax sheltered [458 Mich. 331] annuity for a public school employee as remuneration for service under this act. The remuneration shall be valued at the amount of money actually paid into the annuity. Compensation includes all amounts deducted from the pay of a public school employee, including amounts deducted pursuant to the member investment plan. Compensation includes longevity pay, overtime pay, vacation pay, and holiday pay while absent from work, sick leave pay while absent from work, and items of deferred compensation, exclusive of employer contributions to the retirement system. Compensation does not include terminal payments for unused sick leave, annual leave, bonus payments, hospitalization insurance and life insurance premiums, other fringe benefits paid by and from the funds of employers of public school employees, and remuneration paid for the specific purpose of increasing the final average compensation. [Emphasis added.]

The Court of Appeals determined that the phrase "sick leave pay while absent from work" did not include worker's compensation payments made to a public school employee injured while at work. To support its conclusion, it cited two statutes that specifically enumerate instances when a member may receive credit for periods worker's compensation benefits are drawn. ⁷ The Court concluded that, had the Legislature intended that all members receive service credit while drawing worker's compensation benefits, the statutory exceptions would be rendered nugatory. We disagree.

[458 Mich. 332] In scrutinizing the declaratory ruling of the retirement board, we keep in mind the limits of judicial review. The Michigan Constitution provides that review of matters, including declaratory rulings, "shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law...." Const. 1963, art. 6, § 28.

We will set aside the legal rulings of administrative agencies if they violate the constitution or a statute or contain a substantial and material error of law. M.C.L. § 24.306(1)(a), (f); M.S.A. § 3.560(206)(1)(a), (f); Amalgamated Transit Union v. SEMTA, 437 Mich. 441, 450, 473 N.W.2d 249 (1991). Declaratory rulings are subject to the same judicial review as an agency's final decision or order in a contested case. M.C.L. § 24.263; M.S.A. § 3.560(163). We give them deference, provided they are consistent with the purpose and policies of the statute in question. Empire Iron Mining Partnership v. Orhanen, 455 Mich. 410, 416, 565 N.W.2d 844 (1997).

In reviewing statutes, our primary goal is to ascertain and give effect to the intent of the Legislature. Farrington v. Total Petroleum, Inc., 442 Mich. 201, 212, 501 N.W.2d 76 (1993). If a statute's wording is certain and unambiguous, we do not interpret it. Turner v. Auto Club Ins. Ass'n, 448 Mich. 22, 27, 528 N.W.2d 681 (1995). However, if reasonable minds can differ regarding its meaning, then judicial construction is appropriate. Yaldo v. North Pointe Ins. Co., 457 Mich. 341, 578 N.W.2d 274 (1998). In this case, we find that reasonable minds can differ regarding the statutory meaning of "compensation." Therefore, judicial construction is appropriate.

Page 770

The question presented here is whether the retirement board wrongly extended the law. The board [458 Mich. 333] concluded that worker's compensation benefits are functionally the same as sick leave pay. It reasoned that the benefits are no less remuneration than is sick leave paid while the employee is absent from work. We agree. We find that the retirement board made a faithful reading of the Legislature's intent when it interpreted the statutory language.

As this Court stated in McAvoy v. H B Sherman Co., 401 Mich. 419, 437, 258 N.W.2d 414 (1977):

The objective of the social legislation [worker's disability compensation legislation] is to provide the disabled worker with benefits during the period of his disability so that the worker and his dependents may survive (literally) the catastrophe which the temporary cessation of necessary income occasions. [Emphasis deleted.]

To the extent that worker's disability compensation benefits are intended to replace wages, they are a form of remuneration.

The United States Supreme Court has articulated the public policy objective underlying the furnishing of retirement benefits. It is to provide assistance to aged individuals who, having rendered long and valuable employment service, are no longer able to labor productively. Helvering v. Davis, 301 U.S. 619, 57 S.Ct. 904, 81 L.Ed. 1307 (1937). The retirement board's interpretation of the retirement act clearly supports the policy of providing financial security to public school employees who qualify for retirement.

The Legislature's use of the term "compensation" in the retirement act suggests that a broad interpretation is appropriate in crediting remuneration received by public school employees. The Legislature could have chosen words having a nonrestrictive meaning. It [458 Mich. 334] could have selected the word "salary" as the basis for retirement credit. "Salary" has been defined as a periodic payment made to a person for official or professional services or for regular work. See People v. Lay, 193 Mich. 476, 488, 160 N.W. 467 (1916).

In this case, the plaintiff school districts argued, and the Court of Appeals agreed, that the appropriate rule of statutory construction is expressio unius est exclusio alterius. ⁸ They point out that worker's disability compensation benefits were not expressly listed as a form of "compensation" in subsection 4(1) of the retirement act. Therefore, they urge that the Legislature must have intended to exclude them from being treated as creditable compensation under the...