Opinion ID: 2546975
Heading Depth: 3
Heading Rank: 2

Heading: Interpreting AS 14.25.060

Text: TRS members may claim retirement credit for military service, Alaska BIA service, or teaching outside Alaska, but must pay TRS arrearage indebtedness for the claimed years. Alaska Statute 14.25.060 establishes several rates for calculating the arrearage indebtedness. Subsection (a) reads in relevant part: If a member first joined the service before July 1, 1990, and has military service or Alaska Bureau of Indian Affairs (BIA) service, or if a member joined the system before July 1, 1978, and has creditable outside service, the member is indebted to the system as follows: (1) At the time of first becoming a member of the system, the arrearage indebtedness is seven percent of the base salary multiplied by the total number of years of creditable outside, military, and Alaska BIA service.... Subsection (d) provides: If a member first joined the system on or after July 1, 1990, and has military service or Alaska BIA service, the member's indebtedness shall be determined under (a) of this section except that the percentage multiplier is 8.65 percent. Also relevant is subsection (b)(1), which provides: If a member joins the system on or after July 1, 1978, and has creditable outside service, the member may claim this service. If claimed, the member is indebted to the system as follows: (1) The arrearage indebtedness is the full actuarial cost of providing benefits for the service being claimed. Compound interest at the rate prescribed by regulation shall be added to the arrearage indebtedness beginning the date the actuarial cost is established to the date of payment or the date of retirement, whichever occurs first. The Bartleys asserted that subsection (a) was applicable to all of their years of non-TRS teaching servicefor both the BIA and non-BIA service. The Division rejected this contention. With regard to the BIA service, the Division applied subsection (d). And with regard to the non-BIA outside service, the Division applied subsection (b). The Board affirmed the Division's interpretation.
Alaska Statute 14.25.060(a) applies to determine arrearage indebtedness with respect to two types of non-TRS service: (1) military or BIA service when the member first joined the service before July 1, 1990 and (2) outside service when the TRS member joined the system before July 1, 1978. This subsection, however, is modified by subsection (d), which raises the percentage multiplier to 8.65 percent for military or BIA service if a member first joined the system on or after July 1, 1990. The history of AS 14.25.060 suggests that subsection (d), with its higher multiplier, was intended to increase the percentage multiplier for arrearage indebtedness applicable to BIA service for members who did not join the TRS until after 1990. In 1977, AS 14.25.060(a) was amended to provide for a multiplier of 7.0 percent to calculate certain arrearage indebtedness: If a member has military service or Alaska Bureau of Indian Affairs (BIA) service, or if a member joined the system before July 1, 1978, and has creditable outside service. Sec. 3, ch. 128, SLA 1977. That description was retained when the statute was rewritten in 1980. See Sec. 6, ch. 13, SLA 1980. In 1990 the legislature changed 14.25.060(a) to its current language. Simultaneously, the legislature created AS 14.25.060(d): If a member first joined the system on or after July 1, 1990, and has military service or Alaska BIA service, the member's indebtedness shall be determined under (a) of this section except that the percentage multiplier is 8.65 percent. Sec. 3, ch. 97, SLA 1990. The effective date for both changes was July 1, 1990. See Sec. 18, ch. 97, SLA 1990. Historical context suggests that the 1990 revisions continued to require arrearage indebtedness for BIA service to be calculated using a percentage multiplier for members who began their Alaska BIA service before July 1, 1990. But, under AS 14.25.060(d), if the member who performed such service did not join the TRS system until on or after July 1, 1990, then the arrearage indebtedness for this Alaska BIA service is calculated using 8.65 percent, rather than 7.0 percent, as the base salary multiplier. The Bartleys joined the TRS system after July 1, 1990 and had BIA service prior to 1990. Alaska Statute 14.25.060(d), enacted in 1990 before the Bartleys joined the TRS system, covers the Bartleys' situation with respect to their BIA service. Because the Bartleys performed the BIA service before 1990 they are entitled to have their arrearage indebtedness for that service calculated using a percentage multiplier, rather than actuarial cost. But because they did not join the TRS system until after July 1, 1990, the correct multiplier is 8.65 percent. The Board did not err in approving the Division's calculations of the Bartleys' arrearage indebtedness for Alaska BIA service. The Bartleys suggest that they were constitutionally entitled to a calculation using 7.0 percent as the multiplier because that rate was formerly available to all TRS members who had served in the BIA before 1975. But the right to accrued pension benefits, arising from article XII, section 7 of the Alaska Constitution, attaches upon enrollment in TRS. See Flisock v. State, Division of Retirement & Benefits, 818 P.2d 640, 643 (Alaska 1991). The Bartleys are thus constitutionally entitled to have their pension benefits calculated under the law in effect when they joined TRS in 1991, not the law that was in effect when they joined the Alaska BIA service in 1968.
The Bartleys also contend that the Division erred in calculating their arrearage indebtedness for their non-BIA outside service using the actuarial cost under AS 14.25.060(b). They contend that under AS 14.25.060(a) the Division was required to use the percentage multiplier method to calculate their arrearage indebtedness for all of their prior teaching servicenot just the BIA service. They also contend that the Division's actuarial cost calculations were erroneous and that the Division erred by adding interest to their arrearage indebtedness for non-BIA outside service. The Bartleys contend that subsection (a) of AS 14.25.060, which states that the arrearage indebtedness is seven percent of the base salary multiplied by the total number of years of creditable outside, military and Alaska BIA service demonstrates a legislative intent to require aggregation of all service claimed by a membernot just the BIA service. But the language of AS 14.25.060(a)(1) does not warrant such a construction. For members with BIA service predating July 1, 1990, only their BIA service constitutes creditable service within the meaning of AS 14.25.060(a)(1), or as applicable here, AS 14.24.060(d). Arrearage indebtedness for non-BIA service for members who joined the TRS system on or after July 1, 1978 is established under AS 14.25.060(b), which reads: If a member joins the system on or after July 1, 1978, and has creditable outside service, the member may claim this service. If claimed, the member is indebted to the system as follows: (1) The arrearage indebtedness is the full actuarial cost of providing benefits for the service being claimed. Compound interest at the rate prescribed by regulation shall be added to the arrearage indebtedness beginning the date the actuarial cost is established to the date of payment or the date of retirement, whichever occurs first. The Bartleys' arrearage indebtedness for non-BIA outside service should be calculated at full actuarial cost pursuant to this subsection. The Division had found the actual cost of crediting the Bartleys with their non-BIA outside service to be 20.034% of the average base salary plus interest. Substantial evidence in the record supports the Board's findings. The Division's calculations are consistent with AS 14.25.060(b) and do not, as the Bartleys contend, violate their constitutional rights to retirement benefits under the laws in effect when they joined TRS in 1991. [1] The agency properly calculated the Bartleys' arrearage indebtedness for non-BIA outside service.