City of West Jordan v. Utah State Retirement Bd.

Citation767 P.2d 530
Decision Date30 December 1988
Docket NumberNo. 20078,20078
PartiesCITY OF WEST JORDAN, et al., Plaintiffs and Appellants, v. UTAH STATE RETIREMENT BOARD, et al., Defendants and Appellees.
CourtUtah Supreme Court

Stephen G. Homer, West Jordan, for plaintiffs and appellants.

Mark A. Madsen, Arthur H. Nielsen, and Clark R. Nielsen, Salt Lake City, for defendants and appellees.

ZIMMERMAN, Justice:

Plaintiffs city of West Jordan, the elected mayor and members of the city council, five city employees, and two taxpaying city residents (hereinafter "West Jordan") appeal from an order granting summary judgment for defendant Utah State Retirement Board ("the Board"). The district court rejected a variety of constitutional challenges mounted by West Jordan to portions of Senate Bill 327, which was passed by the 1983 legislature, and to certain portions of the underlying statutes governing the state retirement system. These challenges largely center around amendments that S.B. 327 made to the various state retirement programs participated in by West Jordan, amendments that expressly deny municipalities participating in these programs as of January 1, 1982, the right to withdraw from membership in the system. We affirm.

In 1961, the Utah State Legislature created a retirement system for all employees of the state and its subdivisions. See 1961 Utah Laws chs. 100-02. Political subdivisions of the state were presumed to be members of the system but were free to opt out of the plan. Id. at §§ 5-6. Shortly thereafter, West Jordan's city council passed a resolution that took advantage of this option. However, in 1968 the city reversed itself and joined the general state retirement system. In 1979, the city also joined Utah's public safety retirement system and, at the same time, enlarged its participation in and coverage under the general state retirement system. The city relied entirely on the state system to provide retirement benefits for its employees until December of 1981, when the city obtained supplemental retirement benefits for some of its employees from Beneficial Life Insurance Company ("Beneficial Life"). In June of 1982, the city council voted to rescind the resolutions of 1968 and 1979 requesting membership in the state retirement system. West Jordan claimed that the effect of this action was to withdraw the city entirely from participation in the state retirement system.

Senate Bill 327 was passed by the legislature in 1983, apparently in response to attempts by West Jordan and other political subdivisions to withdraw from the system. It continued the presumption that each political subdivision of the state is a member of the system, but explicitly provided that any entity which was a member as of January 1, 1982, cannot opt out of the system and must continue to meet its requirements. 1983 Utah Laws ch. 224, § 11; Utah Code Ann. § 49-10-11(1), (2) (Supp.1983) (now codified at Utah Code Ann. §§ 49-2-204, 49-3-204 (Supp.1987)). Any political subdivision that was not a member as of January 1982 can elect to be excluded from the system only if it does not choose to provide any retirement benefits to its employees. If it chooses to provide benefits, it must do so through the state retirement system. 1 1983 Utah Laws ch. 224, § 11; Utah Code Ann. § 49-10-11(2) (Supp.1983) (now codified at Utah Code Ann. §§ 49-2-204, 49-3-204 (Supp.1987)).

In response to the passage of S.B. 327, West Jordan filed the present action, seeking a declaratory judgment that the provisions of the bill and some of the provisions of the underlying retirement system statutes violate both the state and federal constitutions. The trial court rejected these arguments in a memorandum decision denying West Jordan's motion for summary judgment. The trial court then granted the Board's motion for summary judgment, upholding the challenged provisions of S.B. 327 and of the underlying retirement system statutes. On appeal, West Jordan reasserts a number of the claims raised below.

Before reviewing these claims, we note that the appeal before us presents questions of law only. Therefore, we review the legal conclusions supporting the summary judgment for correctness. E.g., Mountain Fuel Supply Co. v. Salt Lake City Corp., 752 P.2d 884, 887 (1988); Atlas Corp. v. Clovis Nat'l Bank, 737 P.2d 225, 229 (Utah 1987); Scharf v. BMG Corp., 700 P.2d 1068, 1070 (Utah 1985).

Underlying many of West Jordan's challenges to the constitutionality of S.B. 327 is the claim that by denying members the right to withdraw unilaterally from participation in the retirement system, S.B. 327 alters system members' rights and obligations. West Jordan's premise is that it had the right to withdraw at will from participation in the system before the passage of S.B. 327. To the extent that this premise is unsound, we need not address arguments based on it.

When the city petitioned to join the state retirement system in 1968, the statutes creating that system were silent on the right of members to withdraw. The question, then, is whether that silence indicates legislative intent either to grant or to deny members the right to withdraw. From the system's inception, its design has been such that certainty and stability of membership is necessary to achieve the actuarial soundness sought by the legislature. This objective could easily be imperiled if political subdivisions that had joined the system were free to withdraw at any time. This suggests that under the terms of the original statute, no such right was intended to be given to those opting to join the system. Confirmatory evidence of this intention is the application form the city filed in 1979 to expand its participation in the retirement system and to join the public safety retirement system. That application plainly states that enrollment in the system is permanent and members may not withdraw. Finally, S.B. 327 states in its preamble that it is a clarification of the laws as they exist. See 1983 Utah Laws ch. 224 preamble. Under these circumstances, we conclude that legislative silence at the time the system was created does not indicate that members would be free to withdraw at any time. Rather, we conclude that this silence should be interpreted as indicating that once a local unit of government had joined the system, withdrawal was not permitted. Therefore, the city never had the right to withdraw unilaterally from participation in the system, and we find no merit in West Jordan's claims to the extent that they are based on the presumption that members could freely withdraw from the system prior to S.B. 327's enactment.

Moving on to West Jordan's remaining challenges, we begin with the presumption of validity that must be accorded legislative enactments when attacked on constitutional grounds. The burden is on those who would have us strike down an act. See, e.g., Lehi City v. Meiling, 87 Utah 237, 246-47, 48 P.2d 530, 535 (1935). In that light, we first consider West Jordan's claim that S.B. 327 and the underlying retirement statutes 2 violate article VI, section 28 of the Utah Constitution, which denies the legislature authority to "delegate to any special commission, private corporation or association, any power ... to perform any municipal functions." Utah Const. art. VI, § 28. This argument takes several forms. First, West Jordan focuses on the fact that as a result of the changes made by S.B. 327, if any municipality chooses to provide retirement benefits to its employees, it must become a member of the state retirement system and offer at least the benefits required of system members. West Jordan seems to contend that somehow the fact that membership in the state system is now mandatory rather than voluntary amounts to a violation of article VI, section 28. This claim is meritless.

Article VI, section 28 prohibits only the legislature's delegating certain powers relative to municipal matters to a special commission. By requiring that municipalities offering retirement benefits do so in part through the state retirement system, the legislature has not delegated any powers to anyone; it has simply regulated how municipalities must perform a function, if they choose to do it at all. Article VI, section 28 is not implicated by this fact alone. Therefore, the validity of the Board's place in the retirement system is unaffected by the mandatory membership provision of S.B. 327.

West Jordan's second argument under article VI, section 28 is directed against delegating to the Board responsibility to operate a retirement program that covers municipal employees. West Jordan contends that the Board is a "special commission" and that the provision of retirement benefits to municipal employees is a "municipal function." For the purposes of argument, we will assume that the Board constitutes a "special commission," although the Utah cases do not give this term any clear meaning. See, e.g., Tygesen v. Magna Water Co., 119 Utah 274, 279-81, 226 P.2d 127, 129-31 (1950); Lehi City v. Meiling, 87 Utah at 272-79, 48 P.2d at 546-49; Logan City v. Public Util. Comm'n, 72 Utah 536, 566-69, 271 P. 961, 972-73 (1928); id. at 574, 271 P. at 975 (Gideon, J., concurring); id. at 577, 271 P. at 976 (Woolley, District Judge, concurring).

The central question, then, is whether the Board is performing a "municipal function" within the meaning of article VI, section 28. A brief background on that section will be helpful. Article VI, section 28 is termed a "ripper clause." See generally Porter, The Ripper Clause in State Constitutional Law: An Early Urban Experiment--Parts I and II, 1969 Utah L.Rev. 287, 450 [hereinafter "Porter"]. Its prototype first appeared in Pennsylvania in the late 19th century, and it was subsequently adopted by a total of eight states over the next few years. Id. at 306-11 & nn. 147-50. The motivation for the Pennsylvania clause was to protect local government councils from having their particularly local functions...

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