State ex rel. Dreer v. Public School Retirement System of City of St. Louis, 58380

Citation519 S.W.2d 290
Decision Date10 February 1975
Docket NumberNo. 58380,No. 1,58380,1
PartiesSTATE of Missouri ex rel. Dr. Herman DREER et al., and John C. Danforth, Attorney General of the State of Missouri, Relators-Respondents, v. PUBLIC SCHOOL RETIREMENT SYSTEM OF the CITY OF ST. LOUIS, Missouri, a corporation, Respondent-Appellant
CourtUnited States State Supreme Court of Missouri

Kappel, Neill, Staed & Wolff, Robert E. Staed, C. William Portell, Jr., St. Louis, for relators-respondents.

John C. Danforth, Atty. Gen., B. J. Jones, Asst. Atty. Gen., Jefferson City, for relator-respondent, Attorney General.

Lashly, Caruthers, Thies, Rava & Hamel, John H. Lashly, Darold E. Crotzer, Jr., St. Louis, for appellant.

Edward T. Matheny, Jr., David L. West, Edward H. Sheppard, Blackwell, Sanders, Matheny, Weary, & Lombardi, Kansas City, for Amici Curiae.

HIGGINS, Commissioner.

Appeal in which the questions are whether Section 169.585, RSMo 1969, H.B.No.613, effective August 13, 1972, V.A.M.S., is an impairment of contract rights prohibited by Article I, Section 13, Missouri Constitution, V.A.M.S.; whether the statute is an unlawful grant of public money to private persons in violation of Article III, Sections 38(a) and 39(3), and Article VI, Section 25, Missouri Constitution; and whether the statute is discriminatory and a violation of the due process clause of the Fifth and Fourteenth Amendments of the Constitution of the United States.

The statute in question:

'169.585. Certain retired teachers to be employed by retirement system as special school advisors and supervisors, when--actuarially unsound, effect of

'1. Any retired teacher now receiving retirement benefits, who served five years or more as a teacher in the public schools of this state and who retired after June 30, 1957, and prior to January 1, 1971, under the provisions of this chapter, shall, upon application to the retirement system from which he is receiving retirement benefits be employed by that retirement system as a special school advisor and supervisor. Any person so employed shall perform such duties as the board of trustees of the retirement system of which he becomes an employee directs, and shall receive a salary of five dollars per month for each year of teaching service not to exceed seventy-five dollars per month, payable by the retirement system as part of its administrative costs, but the payment to the retired person for such services, together with the retirement benefits he receives under this chapter, shall not exceed one hundred fifty dollars per month. The employment provided for by this section shall in no way affect any person's eligibility for retirement benefits under this chapter.

'2. Annually, immediately after the close of the fiscal year of each teacher retirement system, the actuary for the system shall determine if the payments made pursuant to the provisions of this section have impaired the actuarial soundness of the plan, and upon his certification that the soundness has been so impaired, the system shall bill each of the school districts which last employed each of these retired persons on a full-time basis for reimbursement of the amount paid to that person during the preceding fiscal year. The school districts shall forthwith accordingly reimburse the appropriate retirement system.'

Relators filed petition for writ of mandamus and, among other things, alleged: they were retired employees of the St. Louis Board of Education who were currently receiving benefits from the public school retirement system; House Bill No. 613, now Section 169.585, RSMo 1969, effective August 13, 1972, V.A.M.S., provided for employment of a class of persons of which relators are members; relators applied for such employment but were refused; the refusal was 'illegal, arbitrary and a deprivation of the rights and privileges of Relators granted by and under the laws of this state.'

No alternative writ was issued because, by agreement, the respondent, Public School Retirement System of the City of St. Louis, filed a return to the petition for writ of mandamus. The Retirement System admitted allegations of the petition pertaining to relators' status and the existence of the Retirement System as a body corporate with power to sue and be sued; and that relators had applied for benefits pursuant to House Bill 613 and had been denied employment. The System denied that its actions were illegal and stated that the provisions of House Bill 613 were unconstitutional. It alleged that the bill discriminated against other retired persons in the system and also against members who have not yet retired and that it deprived certain members of the System of valuable rights without due process and impaired existing contractual rights. The System also took the position that House Bill 613 was a grant of extra compensation, fee or allowance to employees of the Board of Education of the City of St. Louis after services have been rendered and that it requires the Board of Education of the City of St. Louis to make an expenditure for persons who are ostensibly employed by another.

John A. Brennan, Executive Secretary of the St. Louis Public School Retirement System, testified from his records that each of the relators was a retired teacher receiving benefits from the Retirement System; that Dr. Dreer's benefits from the Retirement System have been $98.58 per month, Mr. Ruffin's benefits have been $96.94 per month, and Mrs. Staed's benefits have been $102.40 per month.

The annual report of the board of trustees for 1971, compiled by Mr. Brennan, included information taken from the auditor's report prepared by Ernst & Ernst and the actuary's report prepared by Nelson and Warren. Mr. Brennan identified the various sections of his report and stated that as of December 31, 1971, the total assets of the Retirement System fund were $64,946,451. Mr. Brennan also stated that the System was created on January 1, 1944. As of January 1, 1972, there were 7,316 nonretired members of the System with an average of 125 members retiring annually. All but seven of the employees of the St. Louis Board of Education are members of the Retirement System. Teachers, custodians, matrons, mechanics, and food service personnel of the Board are included. This is a difference from the State school retirement system which covers only teachers. The annual expenses of the System in 1971 were $87,704. Included in these expenses were the salaries of four employees, Mr. Brennan, a bookkeeper-machine operator, and two secretaries. The System also has legal and actuarial counsel. The Retirement System is operated by salary deductions from employees, contributions from the St. Louis Board of Education based upon an actuarial formula, and income from investment of funds. To Mr. Brennan's knowledge the Retirement System had never employed anyone as an advisor or supervisor; the staff employment specifications did not contain any such position; the Retirement System does not have the position of 'special school advisor and supervisor,' nor does it have anything to do with the operation of schools.

At the time of trial Mr. Brennan had received relators' applications for benefits under House Bill 613, and 212 teachers in all were eligible if the bill was found to be constitutional. That number included teachers who retired between 1961 and 1971 and currently receive less than $150 per month in benefits. If all of the 212 retired teachers were paid pursuant to the bill, it would cost the Retirement Fund $12,013.39 per month.

Mr. Brennan also testified that in 1961 there was a law enacted to increase the ceiling on which benefits could be computed and thus benefits were increased for those who retired after 1961. Furthermore, benefits were increased for those who retired prior to July 1, 1957, by House Bill 337. The effect of that bill was to give people employment as supervisors and consultants in the State Department of Education. The bill was amended to include teachers of the Retirement System of the State of Missouri, the Kansas City Retirement System, and the St. Louis Public School Retirement System. Under this bill, school teacher retirees in St. Louis who retired prior to June 30, 1957, received increased benefits, up to $150 per month. House Bill 337 was similar in nature to House Bill 513 in that any retired teacher that retired prior to 1957 could apply for a position as consultant and, if the application were accepted, then that retired teacher could qualify for an extra benefit over and above the retired benefit, up to a ceiling of $150 per month. Under House Bill 337, the Public School Retirement System of the City of St. Louis made no financial contribution to these extra benefits. The funds that are used to provide consultant funds under House Bill 337 come from general revenue of the State of Missouri. Under House Bill 613, the funds to pay those that are employed under the terms of this bill, as advisors and supervisors, will be required to be paid, under the provisions of that Act, out of the funds of the St. Louis Public School Retirement System.

Dr. Sam Lawson, treasurer of the St. Louis Public Schools and treasurer of the Public School Retirement System, said that each year the St. Louis Board of Education makes a payment to the Retirement System. The amount of that payment is determined by the actuary. Dr. Lawson also stated that, for the first time, in 1973 the St. Louis Board of Education would be expending more money that it was receiving. He stated further that of the approximately 7,300 members of the Retirement System about 1,900 were noncertified (nonteaching) personnel and that House Bill 613 made no provision for those employees. He also stated that if the operating budget of the Retirement System were increased, the only sources from which the funds could come were contributions from members, contributions from the St. Louis Board of Education, and income from investments of those funds.

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