Savannah R-III School Dist. v. Public School Retirement System of Mo.
| Decision Date | 19 August 1997 |
| Docket Number | R-III,No. 79280,79280 |
| Citation | 950 S.W.2d 854 |
| Parties | 120 Ed. Law Rep. 1239 SAVANNAHSCHOOL DISTRICT, et al., Appellants, v. PUBLIC SCHOOL RETIREMENT SYSTEM OF MISSOURI, et al., Respondents. |
| Court | Missouri Supreme Court |
Craig S. Johnson, J. W. Trimmer, Victor S. Scott, Jefferson City, for Appellants.
Allen D. Allred, Lawrence C. Friedman, David A. Dick, St. Louis, J. Kent Lowry, Jefferson City, Christopher T. Hexter, Elliott M. Uchitelle, St. Louis, Diane Howard, Cape Girardeau, for Respondents.
This is an appeal from the dismissal of a class action suit brought by various public school districts against the Missouri Public School Retirement System. The school districts sued the retirement system for a refund of overpayments made to the retirement system and for a declaration that a 1996 amendment to the statute on which contributions were based, sec. 169.030.3, 1 is unconstitutional. The trial court determined that the 1996 amendment to sec. 169.030.3 is constitutional and that the amendment mooted the school districts' claim for a refund. Accordingly, the trial court dismissed the case.
The issue before this Court on appeal is whether the 1996 amendment to sec. 169.030.3 violates several provisions of our state constitution. First, the school districts argue that the amendment violates the constitutional prohibition of retrospective laws. Second, the school districts urge that the amendment unconstitutionally impairs a contract. Third, the school districts argue that the amendment contravenes the constitutional separation of powers. Finally, the school districts contend that the amendment violates the constitutional prohibition of special laws. Because this case involves the validity of a statute, this Court has jurisdiction. Mo. Const. art. V, sec. 3. Section 169.030.3, as amended in 1996, does not violate our constitution in any of the respects raised. The judgment of the trial court is affirmed.
Defendant, the Public School Retirement System of Missouri, administers a pension plan for teachers working in public school districts with a population under 400,000. Sec. 169.020. The retirement system was created and is governed by secs. 169.010 through 169.141. Plaintiffs are several public school districts representing a certified class consisting of public school district teacher members of the retirement system and employing school districts who contributed retirement funding to the retirement system pursuant to sec. 169.030 after April 3, 1983. There are approximately 573 school districts and 58,000 teachers in the class. Notwithstanding the certification of the class purporting to represent all teachers, several associations representing the interests of retired and active teachers and school administrators covered by the plan were all permitted to intervene as defendants. 2 In addition, a number of individual active and retired teachers filed a document characterized as a "petition" in which they objected to the relief sought by the school districts and requested decertification of the class.
The retirement system is funded solely through employer and employee contributions. Sec. 169.030.1. Public school teachers contribute a percentage of their "salary rate" to the retirement system. Sec. 169.030.3. Employing school districts match their teachers' contributions. Sec. 169.030.1. Contribution rates are established by the board of trustees of the retirement system within certain limits set forth in sec. 169.030.4. With the collected money and interest derived from its investment, the retirement system pays allowances to retired teachers. Sec. 169.030.1. Upon retirement, teachers may choose from various formulas to determine the amount of their monthly allowance. Sec. 169.070. Retirement benefits are based upon a percentage of the teacher's "final average salary," which is defined as "the total compensation payable to a member for any five consecutive years of creditable service, as elected by the member, divided by sixty." Secs. 169.010(8), 169.070. If a teacher and his or her designated beneficiary die before receiving a full return of the teacher's contributions plus interest, the balance is paid to the teacher's estate. Sec. 169.070.4.
In 1970, the retirement system began notifying school districts that the value of fringe benefits, including health insurance, provided to teachers should be included as part of each teacher's salary rate from which the contribution amount is calculated. Most of the school districts complied with the retirement system's direction.
However, in 1982 the retirement system discovered that some districts were not complying with this direction and were not including fringe benefits in their teachers' salary rates. The retirement system sued these school districts to enforce universal compliance. The circuit court concluded that no justiciable controversy existed because the retirement system had failed to adopt a rule officially promulgating its interpretation of the statute. Accordingly, the circuit court dismissed the suit without prejudice on November 19, 1986.
On December 29, 1987, the retirement system issued a rule, 16 CSR 10-3.010(8), which defined "salary rate" as used in sec. 169.030.3 to include the value of health insurance premiums or annuities purchased in lieu thereof. Consequently, the school districts filed this lawsuit on April 7, 1988, generally seeking declaratory and injunctive relief on the ground that the rule was contrary to sec. 169.030.3. The school districts also sought a refund of prior contributions based upon health insurance benefits. The circuit court certified the case as a class action, upheld the rule, and granted summary judgment in favor of the retirement system.
The judgment of the circuit court was reversed on appeal. Savannah R-III Sch. Dist. v. Public Sch. Retirement Sys., 912 S.W.2d 574 (Mo.App.1995) (per curiam) (Savannah I). In Savannah I, the court of appeals concluded that the term "salary rate" of sec. 169.030.3, RSMo 1994, did not include any fringe benefits such as health insurance or annuities purchased in lieu thereof. The court also found 16 CSR 10-3.010(8) to be arbitrary and contrary to the statute's plain and ordinary meaning. The court of appeals reversed the circuit court's grant of summary judgment and remanded the case for further proceedings. Id. at 577.
While the case was pending in the circuit court following remand, the legislature amended sec. 169.010, to redefine the term "salary rate" to specifically include employer paid medical benefits. 1996 Mo. Laws 386. The legislature also added the following language to sec. 169.030.3 in an apparent attempt to put to rest the pending litigation:
Contributions transmitted to the retirement system before the effective date of this act [February 20, 1996], based on salary rates which either included or excluded employer paid medical benefits for members, shall be deemed to have been in compliance with this section. The retirement system shall not refund or adjust contributions or adjust benefitdeterminations with respect to any period before [February 20, 1996], solely because of the treatment of employer paid medical benefits for members.
The retirement system filed a motion to dismiss the case on the ground that the 1996 amendment to sec. 169.030.3 mooted the controversy. The school districts filed a third amended petition, which added challenges to the constitutionality of the 1996 amendment and sought a declaration of rights and duties. The school districts then filed a motion for summary judgment as to its constitutional challenges to the 1996 amendment. Upholding the constitutionality of sec. 169.030.3, as amended in 1996, the circuit court denied the school districts' motion for summary judgment and granted the retirement system's motion to dismiss. Upon judgment for dismissal, this appeal was taken.
The school districts argue that the 1996 amendment to sec. 169.030.3 impairs an obligation of contract in violation of article I, sec. 13 of the Missouri Constitution. This argument lacks merit. There is no contractual relationship between the retirement system and the school districts. Any legal obligation between the retirement system and the school districts is purely statutory.
The school districts further argue that the amendment to sec. 169.030.3 unconstitutionally impairs a contractual relationship existing between the teacher class members and the retirement system. We need not address the merits of this argument. Plaintiffs lack standing to assert the rights of teachers because all of the representatives of the class are school districts. 3 Named plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other members of the class which they purportedly represent. Harris v. Union Elec. Co., 766 S.W.2d 80, 86 n. 10 (Mo. banc), cert. denied, 492 U.S. 919, 109 S.Ct. 3245, 106 L.Ed.2d 592 (1989).
Article I, sec. 13 of the Missouri Constitution also prohibits the enactment of any law "retrospective in its operation." The school districts contend that the 1996 amendment to sec. 169.030.3 violates this constitutional provision.
Because the retrospective law prohibition was intended to protect citizens and not the state, the legislature may constitutionally pass retrospective laws that waive the rights of the state. State ex rel. Meyer v. Cobb, 467 S.W.2d 854, 856 (Mo.1971); Graham Paper Co. v. Gehner, 332 Mo. 155, 59 S.W.2d 49, 51-52 (banc 1933). All of the representative plaintiffs are school districts. "School districts are bodies corporate, instrumentalities of the state established by statute to facilitate effectual discharge of the General Assembly's constitutional mandate to establish and maintain free public schools...." State ex rel. Independence Sch. Dist. v. Jones, 653...
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