Worrell v. North Carolina Dept. of State Treasurer, Retirement Systems Div.

• Citation: 333 N.C. 528,427 S.E.2d 871
• Decision Date: 08 April 1993
• Docket Number: No. 314A92,314A92
• Court: United States State Supreme Court of North Carolina
• Parties: , 81 Ed. Law Rep. 622 Maurice J. WORRELL v. N.C. DEPARTMENT OF STATE TREASURER, RETIREMENT SYSTEMS DIVISION

Page 871

427 S.E.2d 871

333 N.C. 528, 81 Ed. Law Rep. 622

Maurice J. WORRELL v. N.C. DEPARTMENT OF STATE TREASURER, RETIREMENT SYSTEMS DIVISION

No. 314A92.

Supreme Court of North Carolina.

April 8, 1993.

On appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 106 N.C.App. 640, 418 S.E.2d 241 (1992), reversing an order entered by Lewis (Robert D.), J., in the Superior Court, Buncombe County, on 8 February 1991. Heard in the Supreme Court 12 January 1993.

This appeal brings to the Court a question as to the cost to the appellant to purchase credit under the Teachers' and State Employees' Retirement System (State System) for time spent in the armed forces of the United States. The facts are not in dispute. On 1 October 1973, the appellant became an employee of the Pender County Sheriff's Department and a member of the North Carolina Local Governmental Employees' Retirement System (Local System). On 1 November 1977, he assumed a position with the North Carolina Employment Security Commission and became a member of the State System. On 19 March 1980, the appellant's accumulated contribution and membership service credits in the Local System were transferred to the State System.

On 14 November 1988, the appellant attempted to purchase retirement credits for his time spent in the military service at the reduced rate provided by law. He was advised by the respondent that he would have to pay the full actuarial value for the benefits because more than three years had elapsed from the time he became eligible to purchase the benefits.

The appellant filed a petition for a contested case hearing with the Office of Administrative Hearings. An administrative law judge recommended that the appellant be allowed to purchase his military service credit at the reduced rate. The Board of Trustees of the Teachers' and State Employees' Retirement System issued a final agency decision in which it determined that the recommended decision was erroneous and refused to adopt it. The superior court reversed the final agency decision and entered a judgment for the petitioner. The Court of Appeals reversed the superior court.

Talmage Penland, Asheville, for petitioner appellant.

Michael F. Easley, Atty. Gen., by Alexander McC. Peters, Asst. Atty. Gen., Raleigh, for respondent appellee.

WEBB, Justice.

The resolution of the issue in this case depends on the application of certain sections of Chapter 135 of the General Statutes which deal with the retirement system for teachers and state employees. The petitioner was given the right to purchase a service credit in the State System by N.C.G.S. § 135-4(f)(6), which has been repealed, with his right to purchase the credit preserved. This section provided in part:

Notwithstanding any other provision of this Chapter, teachers and other State employees not otherwise allowed service credit for service in the armed forces of the United States may, upon completion of 10 years of membership service, purchase such service credit by paying in a total lump sum an amount, based on the compensation the member earned when he first entered membership and the employee contribution rate at that time, with sufficient interest added thereto so as to equal one half the cost of allowing such service, plus a fee to cover expense of handling payment....

N.C.G.S. § 135-4(m) provides that if a member purchases credit for his or her military time at the reduced rate, it must be done within three years of the time at which the member becomes eligible. See Osborne v. Consolidated Judicial Retirement System, 333 N.C. 246, 424 S.E.2d 115 (1993).

The question posed by this appeal involves the determination of the date the petitioner became eligible to purchase a credit for military service. In order to purchase the credit at a reduced rate, the petitioner had to do so within three years of the date he became eligible. N.C.G.S. § 135-4(f)(6) says the purchase may be made "upon completion of 10 years of membership service." N.C.G.S. § 135-1(14) defines membership service as "service as a teacher or State employee rendered while a member of the Retirement System." N.C.G.S. § 135-1(22) defines Retirement System as "the Teachers' and State Employees' Retirement System of North Carolina."

The petitioner says the plain language of the pertinent sections of Chapter 135 requires that we hold that he was not eligible to purchase credit for his military service until 31 October 1987. He says that these sections require that he has to complete ten years of membership service, which service is rendered as a state employee and a member of the State System. He argues that he became a state employee and a member of the State System on 1 November 1977. He completed ten years of service on 31 October 1987 and the plain words of the statute provide that he became eligible to purchase the credit on that date.

The respondent says that in determining the eligibility date for the purchase of the service credit, we must look at N.C.G.S. § 135-18.1. That is the section which provides for the transfer of retirement credits from the Local System to the State System. The...