Alvarez v. State Bd. of Admin.
| Decision Date | 06 August 2021 |
| Docket Number | Case No. 5D19-2679 |
| Citation | 326 So.3d 730 |
| Parties | Sergio ALVAREZ, Appellant, v. STATE BOARD OF ADMINISTRATION, Appellee. |
| Court | Florida District Court of Appeals |
Sergio Alvarez, Orlando, pro se.
Ruth E. Vafek and Deborah S. Minnis, of Ausley McMullen, Tallahassee, for Appellee.
Pro se Appellant Sergio Alvarez ("Alvarez"), appeals from a final order of the State Board of Administration ("SBA"), denying his request to transfer his fully vested retirement assets from his current Florida Retirement System ("FRS") Investment Plan into the State University System Optional Retirement Program ("SUSORP"). Alvarez argues that SBA misinterpreted the plain meaning of the provisions of chapter 121, Florida Statutes, pertaining to his participation in the SUSORP and regarding what will become of his already vested FRS Investment Plan assets. We agree and reverse SBA's final order. We hold that Alvarez is entitled to enroll in the SUSORP, retroactive to his first date of current employment with the University of Central Florida ("UCF"), without any requirement to convert his Investment Plan account to a Pension Plan account nor any requirement that he forfeit his Investment Plan retirement assets. We remand this matter to SBA and the Department of Management Services ("DMS") for further proceedings consistent with this opinion.
Prior to 2000, FRS offered only a Pension Plan, or "defined benefit," option to eligible employees. The Pension Plan is established under Part I of chapter 121, Florida Statutes, and is administered by DMS pursuant to section 121.025, Florida Statutes (2018). In 2000, the legislature created the FRS Investment Plan or "defined contribution" option, established under Part II of chapter 121, see ch. 2000-169, § 3, Laws of Fla., and authorized SBA1 to administer it. § 121.4501, Fla. Stat. (2018). Nowadays, FRS contains two general plans—the Pension Plan and the Investment Plan. § 121.021(3), Fla. Stat. (2018) ; § 121.70(1), Fla. Stat. (2018) (). These two plans are administered by different entities, as DMS administers the Pension Plan and SBA administers the Investment Plan.
The Florida Legislature also created certain optional retirement programs offered in lieu of participation in FRS. See, e.g. , § 121.35, Fla. Stat. (2018) (). The optional retirement program applicable to this proceeding is the SUSORP, which was created in 1984 and is only available to certain classes of state university employees. § 121.35(2)(a)(1) – (3), Fla. Stat. (). DMS is also the administrator of SUSORP. § 121.35(6), Fla. Stat. SUSORP is a desirable plan because the employer contributes more to an eligible employee's SUSORP account than the State contributes to an employee's FRS Investment Plan.2
Alvarez commenced his employment as a Chief Economist with the Florida Department of Agriculture and Consumer Services on June 3, 2013, an FRS-participating employer. He had until November 27, 2013, to make an initial election between the FRS defined contribution Investment Plan and the FRS defined benefit Pension Plan. He made a timely election to enroll in the Investment Plan pursuant to section 121.4501(4)(a), Florida Statutes. This election became final and irrevocable on September 30, 2013. See Fla. Admin. Code R. 19-11.006(3) (2013). Alvarez was employed with the Department of Agriculture and Consumer Services from June 3, 2013, through August 3, 2018. Alvarez is fully vested in his current FRS Investment Plan account (including employer contributions made thereto). See § 121.4501(6)(a)–(b), Fla. Stat.
On August 8, 2018, Appellant became employed with UCF as a research and instructional faculty, a SUSORP eligible position. He completed and submitted the paperwork necessary to enroll in SUSORP.
When Alvarez attempted to enroll in SUSORP, the Division of Retirement ("the Division") within DMS determined that he could not do so, because he was already a participant in the FRS Investment Plan. The Division stated that there was no statutory provision allowing a direct transfer of funds from the FRS Investment Plan to SUSORP; only FRS Pension Plan members could transfer the current value of their pension account directly into the SUSORP. The Division advised that if Alvarez wished to join the SUSORP, he must first exercise his second election under section 121.4501(4)(f) to transfer from the FRS Investment Plan to the Pension Plan, at an estimated cost to him of approximately $41,000. Upon transfer into the SUSORP, he would effectively forfeit the $41,000 because he did not meet the vesting requirements of the Pension Plan, and because he would be a SUSORP participant, he would not accumulate any additional vesting credits for the Pension Plan.
Not surprisingly, Alvarez did not accept the Division's interpretation and pointed out that in his new position at UCF he was eligible for and had made a written demand, that was sent to DMS, requesting to be enrolled in SUSORP. DMS consulted with SBA, and SBA advised Alvarez that the decision was final: either stay in the Investment Plan or convert his Investment Plan account into a Pension Plan account with a forfeiture of $41,000 as a means to access SUSORP. DMS by its action or inaction adopted SBA's position on that.
Alvarez timely exercised his right to an informal administrative hearing in order to formally contest DMS's and SBA's refusal to allow him to directly enroll in and transfer his vested assets to SUSORP. He made it clear that he wished to participate in that program and suggested two options. First, he offered to buy into the Pension Plan if his remaining balance would then be transferred to his SUSORP account. Alternatively, he offered to leave the current balance in his Investment Plan account untouched until retirement and begin a new account in SUSORP with a zero starting balance. He saw no justification for having to forfeit over $41,000 when there was no obvious statutory requirement for the Division's position. Nor did he see any justification requiring him to forgo the estimated additional $250,000 he projects that he will receive as a participant in SUSORP compared to the FRS Investment Plan if he stays in his current position until normal retirement age.
An informal hearing was held in December 2018. SBA confirmed that Alvarez was eligible to participate in SUSORP but stated there were two questions to be answered by the hearing officer. First, whether Alvarez could directly transfer the assets from his Investment Plan to SUSORP or must he do something else, such as first exercise his option to transfer into the Pension Plan? Second, if he had to buy into the Pension Plan, what would become of Alvarez's $41,000 estimated payment if he bought into the Pension Plan? SBA maintained the position held by it, the Division, and DMS: that if he wanted to join SUSORP, the governing law would require Alvarez to first transfer into the Pension Plan by paying $41,000, and that transfer payment would not be added as a starting balance to his SUSORP account.
The hearing officer stated that she was "as baffled as Mr. Alvarez" that he would have to forfeit his vested Investment Plan benefit in order to partake in SUSORP "where the statute says you're just in the program automatically." Ultimately, the hearing officer issued a recommended order that SBA should issue its final order granting the relief requested by Alvarez. The hearing officer could not conclude that as a matter of law Alvarez was not permitted to either transfer the value of his Investment Plan as his opening SUSORP account balance or to simply maintain his current Investment Plan account with no further contributions and commence participation in SUSORP with a zero balance beginning the date his employment began at UCF. Neither party filed exceptions to the recommended order.
SBA then issued its final order, adopting all of the hearing officer's findings of fact, but rejecting all but one of the conclusions of law set forth in the recommended order. In its final order, SBA engaged in a convoluted analysis of the governing statute. It concluded that because section 121.35(3)(h) provides that a participant in SUSORP cannot participate in more than one state-administered plan, Alvarez could not simply keep his Investment Plan with no further additions while joining SUSORP. SBA noted that a participant in the Pension Plan was authorized to directly transfer into SUSORP, meaning that if Alvarez wished to join SUSORP, it would cost him $41,000, which SBA acknowledged, in a gross understatement, could be deemed an "unfair result." Alvarez timely appealed.
At the outset, we reject SBA's argument that Alvarez failed to exhaust his administrative remedies through the Division and DMS. Alvarez first corresponded with DMS which in turn was advised by SBA on how to respond. Indeed, it was SBA, apparently acting on behalf of the Division and DMS, that rendered the state's official position outlined above, described the decision as final, and notified Alvarez that he had a right to a hearing. By its action or inaction, DMS adopted the position of SBA. Alvarez thus had what SBA, the Division, and DMS declared to be a final decision, which Alvarez then contested in a hearing in which SBA participated. Given that SBA undertook to advise the Division and DMS informally, corresponded directly with Alvarez...
To continue reading
Request your trial