Shinkman v. State Employees' Retirement Bd.

• Decision Date: 16 October 2008
• Docket Number: No. 1992 C.D. 2007.,1992 C.D. 2007.
• Citation: 958 A.2d 613
• Parties: Susan SHINKMAN, Petitioner v. STATE EMPLOYEES' RETIREMENT BOARD, Respondent.
• Court: Pennsylvania Commonwealth Court

958 A.2d 613

Susan SHINKMAN, Petitioner v. STATE EMPLOYEES' RETIREMENT BOARD, Respondent.

No. 1992 C.D. 2007.

Commonwealth Court of Pennsylvania.

Argued September 11, 2008.

Decided October 16, 2008.

Alaine S. Williams, Philadelphia, for petitioner.

Nicholas Joseph Marcucci, Deputy Chief Counsel, Harrisburg, for respondent.

BEFORE: PELLEGRINI, Judge, and FRIEDMAN, Judge and LEAVITT, Judge.

OPINION BY Judge PELLEGRINI.

Susan Shinkman (Claimant) appeals a decision of the State Employees' Retirement Board (Board) denying with prejudice her request to purchase her prior state service credit in an amount less than her total prior state service. Because the Board's interpretation of the State Employees' Retirement Code (Code)¹ requiring members who want to purchase any of their previous state service credit to purchase all of their previous state service is not plainly erroneous, we affirm the Board's decision.

The facts of this case are not in dispute. Claimant first became a member of the State Employees' Retirement System (SERS) when she was employed by the Department of Labor and Industry from April 1, 1976, through October 9, 1979. During that time, she earned 3.8181 years of Class A state credited service. When she left her employment with the Commonwealth, she withdrew the contributions and interest from her retirement account. It is not clear from the record what she did between 1979 and 1984, but from 1984 through 1991, Claimant was employed by the City of Philadelphia. She completed an "Application for Service Credit Under Municipal Retirement System for Governmental Service Prior to City Employment" and sought to purchase service credit for her Commonwealth employment from April 1, 1976, through October 9, 1979, in order to have the required 10 years of service necessary to vest in the City of Philadelphia's pension plan. As a result of her purchase of her Commonwealth service, she became eligible for a pension from the City of Philadelphia.

Claimant left the City of Philadelphia's employment and rejoined SERS in 1992 when she became re-employed by the Department of Labor and Industry as Chief Counsel from January 6, 1992, through January 20, 1995. During that period of employment with the Commonwealth, she earned 3.1136 years of Class A state credited service. When that second period of employment with the Commonwealth ended, she again withdrew her contributions and interest from her retirement account. Claimant reactivated her SERS membership a third time on May 5, 2003, when she was re-employed by the Commonwealth. She remains employed by the Commonwealth to this day as Chief Counsel to the Department of Environmental Protection and is an active Class AA member of SERS.

In June 2003, Claimant sent a letter to SERS requesting a "cost statement" for her first two periods of Commonwealth employment—January 1992 to January 1995; and April 1976 to October 1979. She indicated that she had purchased some of her prior service time to qualify for a City of Philadelphia pension and inquired if that time could be used again to purchase service credit with SERS. SERS initially responded by advising Claimant that it had confirmed her purchase of prior Commonwealth service with the City of Philadelphia Board of Pensions and Retirement, and that there was no impediment under the Code to purchasing the prior state service that she used to vest in the City of Philadelphia, and it enclosed an invoice of the amount due. The letter, however, noted that purchase of this time might impact on her City of Philadelphia pension, and that SERS intended to notify the City of Philadelphia of her inquiry.² Claimant began receiving a monthly benefit of $1,428 from the City of Philadelphia Board of Pensions and Retirement effective February 25, 2004.

In April 2005, the City of Philadelphia Board of Pensions and Retirement notified Claimant that Section 22-802 of the City Pension Code had an anti-double-dipping provision that prohibited an employee from purchasing pension credit for other governmental employment if the time would be used to qualify for another pension. Claimant then notified SERS that she did not intend to purchase prior service for the period of April 1, 1976, through April 18, 1979, which was the period she purchased to qualify for the City of Philadelphia pension. She also notified the City of Philadelphia Board of Pensions and Retirement of the same. However, a few weeks later, SERS notified Claimant that it had denied her request to purchase only a portion of her previous state service relying on Section 5504(a) of the Retirement Code, 71 Pa.C.S. § 5504(a). Specifically, the letter stated that she was "only eligible to purchase all of your prior state service or none of it."

Claimant filed an appeal, and a hearing was held before a hearing examiner. The hearing examiner recommended that the Board deny her request to purchase prior state service credit in an amount less that her total previous state service, which recommendation the Board adopted. This appeal by Claimant followed.³

The only issue involved is a question of statutory interpretation.⁴ Section 5504(a) of the Retirement Code provides the following:

(a) Amount of contributions for service in other than Class G through N.—The contributions to be paid by an active member or eligible school employee for credit for total previous State service other than service in Class G, Class H, Class I, Class J, Class K, Class L, Class M and Class N or to become a full coverage member shall be sufficient to provide an amount equal to the regular and additional accumulated deductions which would have been standing to the credit of the member for such service had regular and additional member contributions been made with full coverage in the class of service and at the rate of contribution applicable during such period of previous service and had his regular and additional accumulated deductions been credited with statutory interest during all periods of subsequent State and school service up to the date of purchase. (Emphasis added.)

Claimant contends that the Board's interpretation of Section 5504(a) is incorrect because the statute does not require an "all or nothing" purchase of state service. Rather, Claimant interprets the Code to require the Board to provide active members of the system with their service credits even if partial credits only are desired to be purchased. She points out that nowhere in the Code does it explicitly state that a member must purchase all of their service credit or they are entitled to none of their credits, and several sections of the Code state that members shall receive credit or points, e.g., § 5302(a) of the Code, 71 Pa.C.S. § 5302(a); § 5303(b) of the Code, 71 Pa.C.S. § 5303(b); and § 5307 of the Code, 71 Pa.C.S. § 5307, thus indicating that the General Assembly intended for members of the system to receive all of their credits for state service when requested for purchase.

Although Claimant is essentially arguing that the word "total" does not include the member's entire previous service, aside from the obvious dictionary interpretation which does not support her argument,⁵ an understanding of how SERS calculates a member's contribution and purchase of credits aids in interpreting the statute.⁶ Section 5504(a) requires the contributions to be paid by an active member for credit for "total previous state service" which shall be sufficient to provide an amount equal to the regular and additional accumulated deductions which would have been standing to the credit of the member for "such" service. First, the Board explains that Section 5504(a) requires that the contribution amount include interest which is credited during "all periods of subsequent state service" up to the date of purchase.⁷ Further, the Board points out that SERS could not accurately calculate the interest due if "all" state service was not purchased and credited. If total compensation and interest were not calculated for all state service that was purchased and credited, members could manipulate the purchase price formulas. Additionally, the Board explains that the amount of contribution the member must make is equal to the regular and additional accumulated deductions which would have been standing to the member's credit for her total previous state service. Because the purchase formula requires contributions for the member's total previous state service, it is a reasonable conclusion that the purchase of previous state service is intended to be for the "total" and not a portion of the previous state service.

Additionally, Section 5905, 71 Pa.C.S. § 5905(a), dealing with the duties of the Board regarding applications and elections of members, provides that as soon as a new member becomes active in the system, the Board shall issue a statement to the member stating her contribution rate and the "aggregate length of total previous state service and creditable non-state service for which she may receive credit." Similarly, Section 5907(d), 71 Pa.C.S. § 5907(d), requires an active member who desires to receive credit for her "total previous state service" to notify the Board so that upon written agreement, the member shall receive credit for such service.⁸ It appears that in repeatedly using the term "total," the General Assembly deliberately chose to use the word "total" when referring to periods of service rather than "a portion of" or some other term denoting less than the entire amount of state service. Despite Claimant's contention, nowhere in the Code is there any language that suggests a member can purchase only a portion of her state service.

Claimant also argues that the Board's interpretation unjustifiably punishes her because it will require her to forfeit her prior state service. She claims that she was not provided with any forewarning that she would forfeit her right to purchase her state service if she purchased into the City of...