Bartlett v. Cameron

• Decision Date: 19 December 2013
• Docket Number: No. 34,210.,34,210.
• Citation: 316 P.3d 889
• Parties: Joanna BARTLETT, Lenore Pardee, David Hamilton, and Beth Lehman, Petitioners, v. Mary Lou CAMERON, Russell Goff, Delman Shirley, Bradley Day, Hana Skandera, James B. Lewis, and J. Thomas McGuckin, in their official capacities as Board of Trustees of the New Mexico Education Retirement Board, and Jan Goodwin, in her official capacity as Executive Director of the New Mexico Education Retirement Board, Respondents.
• Court: New Mexico Supreme Court

316 P.3d 889

Joanna BARTLETT, Lenore Pardee, David Hamilton, and Beth Lehman, Petitioners,

v.Mary Lou CAMERON, Russell Goff, Delman Shirley, Bradley Day, Hana Skandera, James B. Lewis, and J. Thomas McGuckin, in their official capacities as Board of Trustees of the New Mexico Education Retirement Board, and Jan Goodwin, in her official capacity as Executive Director of the New Mexico Education Retirement Board, Respondents.

No. 34,210.

Supreme Court of New Mexico.

Dec. 19, 2013.

Sara Berger, Attorney at Law, L.L.C. Sara K. Berger, Garcia Ives Nowara, L.L.C., Mary Emily Schmidt–Nowara, Albuquerque, NM, for Petitioners.

Gary K. King, Attorney General, Scott Fuqua, Assistant Attorney General, Christopher Graham Schatzman, Anita Xochitl Tellez, Santa Fe, NM, for Respondents.

Youtz & Valdez, P.C., Shane Youtz, Stephen Curtice, James A. Montalbano, Albuquerque, NM, for Amicus Curiae American Federation of State, County and Municipal Employees.

OPINION

BOSSON, Justice.

{1} Petitioners are retired teachers, professors and other public education employees (collectively, Retirees) who seek a writ of mandamus against the New Mexico Education Retirement Board (ERB), which administers their retirement plan under the Educational Retirement Act (ERA). SeeNMSA 1978, § 22–11–6 (2011) (describing the powers and duties of the ERB); see alsoNMSA 1978, §§ 22–11–11 to –15 (2011) (describing the educational retirement fund). Retirees seek to compel the ERB to pay them an annual cost-of-living adjustment (COLA) to their retirement benefits, calculated according to the statutes “in effect at the time of Petitioners' date of maturity of their rights,” instead of the current statutes as recently modified by our Legislature.

{2} In requesting this writ, Retirees challenge the constitutionality of a recent legislative amendment that reduces the future amounts all educational retirees might receive as a COLA. SeeNMSA 1978, § 22–11–31 (2013). Essentially, the narrow question before this Court is whether the New Mexico Constitution grants Retirees a right to an annual cost-of-living adjustment to their retirement benefit, based on the COLA formula in effect on the date of their retirement, for the entirety of their retirement. For the reasons discussed below, we conclude that the New Mexico Constitution affords Retirees no such right, and accordingly we deny the writ of mandamus.

BACKGROUND

{3} Facing a perceived threat to the fiscal stability of the ERB retirement plan, the 2013 New Mexico Legislature passed, and the Governor signed, Senate Bill 115 (SB 115). 2013 N.M. Laws, ch. 61. Between 2001 and 2012, the funded ratio for the ERB retirement plan fell from 86.8% to 60.7% as of June 30, 2012, partially the result of two significant economic downturns during that period, thereby placing the viability of the plan in jeopardy.¹See New Mexico Legislative Finance Committee Fiscal Impact Report, Educational Retirement Changes, SB115/aSFC/aHAFC, at 3 (March 14, 2013), available at http:// www. nmlegis. gov/ Sessions/ 13 Regular/ firs/ SB 0115. PDF. As one of the legislative measures designed to meet this challenge, SB 115 amended Section 22–11–31 (2010), thereby reducing COLA amounts payable to all retirees after July 1, 2013. Compare§ 22–11–31 (2010), with§ 22–11–31 (2013). Thus, under the amended COLA provision, Retirees received a smaller COLA increase on July 1, 2013, and will continue to do so in future years—up to twenty percent less—as compared with what they would have received under the COLA provisions in effect at the time of their respective retirements. See§ 22–11–31(C)(3)(b) and (d) (2013). To be clear, the 2013 amendment reduces only the COLA; the underlying retirement benefits or annuities payable to Retirees remain unaffected.

{4} Since 1979, state law has provided a cost-of-living adjustment to the underlying retirement benefit “annually and cumulatively,” on July 1 of each year. See§ 22–11–31(B). The “adjustment factor” of the COLA was based upon the difference, if any, between the consumer price index (CPI) of the two years preceding the date of adjustment. Id. Starting in 1984, the adjustment factor was equal to one-half of the percentage change in the CPI, but could not exceed four percent per year. See§ 22–11–31 (1984). In 1987, the adjustment factor calculation was amended to allow that if the CPI percentage change was less than two percent, the adjustment factor was equal to the percentage change. See§ 22–11–31(B) (1987). Under the 2013 amendment, the adjustment factor may be reduced by a set percentage determined by the funded ratio for that year, the employee's years of service credit, and the value of their annuity compared to the “median annual annuity.” See§ 22–11–31(C) (2013).

{5} In broad terms, therefore, the annual cost-of-living adjustment, if any, has been tied to changes in the CPI, by definition an index that varies with the cost of living from year to year. Accordingly, the amount of any such adjustment, would also change with each new annual CPI. And the COLA compounded each subsequent year, meaning that, once paid, it became part of the underlying retirement benefit to which the next year's CPI-related adjustment factor was applied.

{6} Even though the COLA factor remained substantially the same from 1984 to 2013, from time to time the Legislature provided additional statutory adjustments. In 1991 and again in 1999, one-time, special adjustments for retirees receiving “an annuity” (i.e., monthly benefits) were added to the annual COLAs for those years. See§ 22–11–31(F) (1991, 1999). In addition, a 2010 amendment eliminated the possibility of a negative adjustment factor, which had previously been part of the statute, a provision that allowed the COLA to be reduced as long as the retiree's underlying benefit was not reduced “below that which [the retiree] received on the date of ... retirement.” CompareNMSA 1978, § 22–11–31(B) (1999), withNMSA 1978, § 22–11–31(B) (2010). Accordingly, the history of the COLA affecting retirees over the past twenty-five years or so suggests that it has not been static, but has changed from time to time at the discretion of our Legislature.

{7} Despite a history of periodic legislative increases, Retirees take the position that the Legislature may not reduce their COLA for 2013 and subsequent years. They claim a vested property right in the COLA calculation method that was effective on the date of their eligibility for retirement. Retirees base their claim on Article XX, Section 22 of the New Mexico Constitution, which provides that under certain conditions a public employee “shall acquire a vested property right with due process protections” in a retirement plan. N.M. Const. art. XX, § 22(D). The Constitution makes no mention of a cost-of-living adjustment to a retirement plan, which calls into question the breadth of the “vested property right” guaranteed in Article XX, Section 22 of the New Mexico Constitution.

{8} Retirees' request for a writ of mandamus necessarily requires us to determine that SB 115 is unconstitutional as applied to them. When a petitioner would not otherwise have a “plain, speedy, and adequate remedy at law,” a writ of mandamus may be used to question the constitutionality of a state statute. See Montoya v. Blackhurst, 1972–NMSC–058, ¶¶ 4, 6, 84 N.M. 91, 500 P.2d 176. Here, SB 115's constitutionality as applied to the Retirees is dispositive of whether the ERB has a constitutional duty to pay Retirees any COLA, including the amount under the statutes in effect at the time they were eligible to retire.

{9} Retirees raise a significant legal issue that potentially affects a substantial number of New Mexico's retiree population. That question also has an impact upon the fiscal health of the public trust funds created by law to provide retirement benefits into the foreseeable future. Implicated as well is the authority of our Legislature as a separate and coequal branch of state government to take legislative action designed to ameliorate a perceived exigency. And that question, in turn, may have an impact on the health of the public treasury and future obligations of the taxpayer. Thus, the petition before us casts a long shadow; its constitutional question merits an answer from this Court. Because our decision will dispose of the matter effectively and efficiently, we turn to whether SB 115's 2013 amendment of Section 22–11–31 (2010), violates the New Mexico Constitution. Additional facts are included in our discussion below.

DISCUSSION

{10} The New Mexico Constitution provides:

Upon meeting the minimum service requirements of an applicable retirement plan created by law for employees of the state or any of its political subdivisions or institutions, a member of a plan shall acquire a vested property right with due process protections under the applicable provisions of the New Mexico and United States constitutions.

N.M. Const. art. XX, § 22(D); see also N.M. Const. art. II, § 18 (guaranteeing any person protection against deprivation of “life, liberty or property without due process of law”); U.S. Const. amend. V (same); U.S. Const. amend. XIV, incorporating amend. V. The New Mexico Constitution does not define an employee's vested property right in his or her “retirement plan.” However, we take notice that this provision was added to the Constitution only two years after this Court issued Pierce v. State, 1996–NMSC–001, 121 N.M. 212, 910 P.2d 288, which discussed an employee's vested property right in a retirement benefit. We require that the Constitution be read harmoniously with what we said contemporaneously in Pierce.

{11} In Pierce, 1996–NMSC–001, ¶ 43, 121 N.M. 212, 910 P.2d 288, this Court held that “the express language of the [ERA] ... creates an expectancy, or property interest, in receiving benefits” that vests in employees upon meeting the minimum requirements to qualify them to be eligible to receive retirement benefits....