Source: https://www.sccourts.org/opinions/displayOpinion.cfm?caseNo=25133
Timestamp: 2020-08-12 09:10:05
Document Index: 728477674

Matched Legal Cases: ['§ 9', '§ 25', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 17', '§ 9', '§ 9', '§ 17', '§ 2', '§ 9', '§ 9', '§ 9']

Under this statute and its predecessors going back to the creation of the system in 1945, the Retirement System, as a matter of policy, gave credit for unused annual leave even though there was no specific requirement in the statutory section that it do so. Furthermore, there was no limit on the amount of accrued annual leave for which an employee could receive credit.
In 1978, the General Assembly amended the section and addressed unused annual leave for the first time. After the 1978 amendment, the section read:
Policy considerations also weigh in favor of the Retirement System's interpretation. It must be assumed the legislature intends to maintain the soundness of the State Retirement System. If the Court accepts the Employees' interpretation, the dramatic increase in liability might render the System unsound. Donald Overholser ("Overholser"), the Retirement System's actuary, testified the interpretation sought by the Employees would make the entire State Retirement System actuarially unsound. Thomas Cavanaugh ("Cavanaugh") of Gabriel, Roeder, Smith & Company also testified the $1.177 billion unfunded liability would leave the System actuarially unsound. (14) Cavanaugh and Overhoser were qualified by the court without objection as experts in the field of actuarial valuation. The Employees presented no expert testimony or any testimony to contradict Cavanaugh and Overholser's conclusion. Instead, the Employees claim the Court and the actuaries should only consider the amount of money it would take to pay off their plaintiff class, not the effect of the interpretation on the system as a whole. This position ignores the rule of statutory construction that, absent a change by the legislature, the statute will apply to all state employees who will retire in the future.
Furthermore, we find the Employees' interpretation of the statute, which would have the unused annual leave added after the total is averaged, leads to an absurd result that the Legislature could not have intended. See Gentry v. Yonce, 337 S.C. 1, 522 S.E.2d 137, 143 (1999) ("Statutes should not be construed so as to lead to an absurd result."); Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 440 S.E.2d 364 (1994) (the court should reject a meaning when to accept it would lead to a result so plainly absurd that it could not have been intended by the legislature). We hold the Employees' interpretation of the statute leads to the absurd result of rendering the State Retirement System actuarially unsound.
As discussed previously, the Retirement System's actuary, Overholser, and Cavanaugh testified that the present value of the unfunded liability created by the Employees' interpretation is $1.177 billion dollars. (15) Overholser further testified the inclusion of an additional unfunded liability of $1.177 billion dollars would increase the unfunded amortization period of the System from nineteen to fifty-five years. (16) The Government Accounting Standards Board mandates that public pension plans' amortization period should not exceed thirty years. On the evidence presented to the trial court, the State Retirement System would become actuarially unsound if this Court adopts the Employees' interpretation. Furthermore, an employer's bond and credit rating can be affected by an amortization period in excess of thirty years, and can impact an employer's ability to borrow.
Construing the statute so as to cause such a devastating impact on the fiscal integrity of the State Retirement System, especially in the absence of any fiscal impact report or meaningful debate from the Legislature, would lead to an absurd result that could not have been intended by the legislature.
II. The Use of the Term "May" Does Not Grant the Retirement System Unlimited Discretion
JUSTICE BURNETT (concurring in part and dissenting in part): I concur with Parts II and III of the majority opinion. (18) However, I respectfully dissent from Part I of the opinion.
The dispute in this case concerns the General Assembly's 1986 amendment to the definition of "average final compensation" for State employee retirement purposes found in South Carolina Code Ann. § 9-1-10(17) (Supp. 1999). (19) See Act. No. 540, Part II, § 25A, 1986 Acts 4897. (20) More particularly, the dispute concerns the amendment's effect on the calculation of the value of unused annual leave.
Prior to 1978, § 9-1-10(17) defined "average final compensation" as follows:
Even though the statute did not refer to accrued unused annual leave, the South Carolina Retirement System credited retiring employees with all accrued unused annual leave when calculating the average final compensation for retirement benefits. There was no limit on the amount of accrued annual leave for which an employee could receive credit. (21)
In 1978, the General Assembly amended § 9-1-10(17), to provide, in relevant part, as follows:
(17) "Average final compensation" with respect to those members retiring on or after July 1, 1970, shall mean the average annual earnable compensation of a member during the three consecutive fiscal years of his creditable service producing the highest such average; an amount up to and including forty-five days termination pay for unused annual leave may be added to the pay period immediately prior to retirement and included in the average as applicable. . . . (22)
See Act No. 408, 1978 Acts 1295.
The 1978 amendment altered the definition of "average final compensation" by limiting the creditable accrued unused annual leave to forty-five days. In addition, it included the annual leave credit in a retiree's average final compensation only if the pay period immediately prior to retirement was within the employee's three highest consecutive fiscal years. As a result of the 1978 amendment, employees generally retired on the last day of their last fiscal year to ensure receipt of credit for any accrued unused annual leave in their average final compensation. The number of employees who retired at the end of the fiscal year produced administrative difficulties for the Retirement System.
In 1986, the General Assembly again amended the definition of "average final compensation." The 1986 amendment provides:
The parties agree the 1986 amendment changed the definition of average final compensation by using the average earnable compensation during the twelve highest consecutive quarters, rather than the three highest consecutive years, in calculating average final compensation. This amendment allowed employees to retire at the end of a quarter without losing credit for accrued unused annual leave, instead of at the end of the fiscal year. The amendment alleviated the Retirement System's burden of servicing the bulk of employees who retired at the end of the fiscal year.
The parties disagree, however, as to whether the 1986 amendment also changed the method of including accrued unused annual leave in the average final compensation. The Retirement System asserts the amendment did not change the method. According to the Retirement System, pursuant to the 1986 amendment, the value of any unused annual leave is added to the highest consecutive twelve quarters before averaging to determine the average final compensation. Employees, on the other hand, claim the 1986 amendment provides that the value of any unused annual leave is added to the average final compensation after the average is taken. I agree with Employees.
"[W]here a statute is complete, plain, and unambiguous, legislative intent must be determined from the language of the statute itself." Charleston County Parents for Public Schools, Inc. v. Moseley, ___ S.C. ___, ___, 541 S.E.2d 533, 536 (2001). "If a statute's language is plain and unambiguous, and conveys a clear and definite meaning, there is no occasion for employing rules of statutory interpretation and the court has no right to look for or impose another meaning." Paschal v. State Election Comm'n, 317 S.C. 434, 436, 454 S.E.2d 890, 892 (1995).
In my opinion, § 9-1-10(17) is unambiguous. The statute clearly states the value of up to forty-five days unused annual leave "may be added to the average final compensation." (Emphasis added). This language clearly provides that annual leave value is added to the average final compensation, not included in the average. Because § 9-1-10(17) is clear on its face, there is no reason for the court to apply the rules of statutory construction and "the court has no right to look for or impose another meaning." Id.
Second, contrary to the majority's assertion, this Court has never considered the extent of legislative history and debate on a proposed statutory amendment as a factor in interpreting an ambiguous statute. (24) However, if the extent of legislative history and debate were a factor, then the limited amount of floor debate on § 9-1-10 suggests there was little, if any, controversy surrounding its enactment.
Third, this Court has never held that the title of a bill is a factor used in determining legislative intent behind a statutory enactment. (25) Accordingly, the fact that the title to the 1986 Appropriations Act does not mention an increase in retirement benefits does not assist the Court in construing the 1986 amendment.
Instead, South Carolina Constitution Article III, § 17 requires that the title of a legislative act serve as notice of its general subject. (26) The purpose of this constitutional provision is to prevent the General Assembly from being misled into the passage of bills containing provisions not indicated in their titles and to apprize the citizens of the subject of proposed legislation, thereby giving them an opportunity to be heard. Hercules, Inc. v. South Carolina Tax Comm'n, 274 S.C. 137, 262 S.E.2d 45 (1980); Colonial Life & Accident Ins. Co. v. South Carolina Tax Comm'n, 233 S.C. 129, 103 S.E.2d 908 (1958), superseded on other grounds I'On, L.L.C. v. Town of Mt. Pleasant, 338 S.C. 406, 526 S.E.2d 716 (2000). The Court has repeatedly held that "[t]he title of an act need not be a complete index of its contents. The constitutional mandate is satisfied where the title states the general subject, and the provisions in the body of the act are germane thereto and provide the means, methods, or instrumentalities for the accomplishment of the general purpose." Hercules, Inc. v. South Carolina Tax Comm'n, supra, 274 S.C. at 141, 262 S.E.2d at 47; see also Colonial Life & Accident Ins. Co. v. South Carolina Tax Comm'n, supra; McCollum v. Snipes, 213 S.C. 254, 49 S.E.2d 12 (1948).
Here, the title of the 1986 Appropriations Act provides:
TO AMEND SECTIONS 9-1-10 AND 9-11-10 OF THE 1976 CODE, RELATING TO THE SOUTH CAROLINA RETIREMENT SYSTEM AND THE SOUTH CAROLINA POLICE OFFICERS' RETIREMENT SYSTEM, SO AS TO CHANGE THE DEFINITION OF AVERAGE FINAL COMPENSATION FROM AVERAGE ANNUAL EARNABLE COMPENSATION OF A MEMBER DURING THREE CONSECUTIVE FISCAL YEARS TO TWELVE CONSECUTIVE QUARTERS.
The title of the 1986 Appropriations Act refers to amending § 9-1-10 so as to change the definition of average final compensation. Since the title covers the general subject, the definition of average final compensation contained in § 9-1-10, the statute complies with article III, § 17, and is constitutionally sufficient.
Fourth, the Court has never used the lack of a fiscal impact statement as a factor in statutory interpretation. Moreover, South Carolina Code Ann. § 2-7-72 (Supp. 2000) requires the principal author of a bill to submit an estimated fiscal impact statement whenever a bill or resolution necessitating the expenditure of funds is introduced in the General Assembly. (27) As the majority opinion correctly notes, testimony from the principal author of the 1986 amendment is inadmissible evidence of legislative intent. Similarly, the failure of the principal author to submit a fiscal impact statement is not evidence of the General Assembly's intent in amending a statute.
Finally, like the majority, I am also concerned about the fiscal impact of the 1986 amendment on the financial stability of the Retirement System and the State's creditworthiness. However, I question whether adoption of the Employees' interpretation leaves the Retirement System in the dire financial condition predicted by the Retirement System.
As I read the trial record, the Retirement System's actuary testified the Employees' interpretation of § 9-1-10(17) produces a $1.177 billion unfunded liability if all current retirees and all current active State employees are included in the estimate. This number assumes that all current State employees will remain employed by the State until their retirement, a fact that is highly unlikely. Applying the Employees' interpretation of § 9-1-10(17) solely to current retirees, however, produces a liability of approximately one-fourth the actuary's estimate.
1. The General Assembly also amended S.C. Code Ann. § 9-11-10(14) (Supp. 1998) involving the Police Officer Retirement System. The issues regarding that amendment are identical to the issues regarding the amendment of section 9-1-10(17). To avoid redundancy, we only discuss the amendment's effect on section 9-1-10(17) and will address the issues in terms of that statute. There are no significant differences between the two sections and our decision applies equally to each provision.
2. The formula provided in this section is:
$96,190 (the total of his 12 highest quarters) + $5,875
Monthly Payment Under Retirement System's approach