Opinion ID: 1412004
Heading Depth: 2
Heading Rank: 1

Heading: Obligations Imposed on State by Public Pension Plans

Text: A review of this Court's rulings concerning the obligations imposed on the state as a result of various public pension funds is necessary to understand why the bond sale authorized by the Act does not fall within the previous liability exception to the debt provision. [20] In Booth v. Sims, 193 W.Va. 323, 456 S.E.2d 167 (1995), this Court explained why the creation and operation of public retirement systems do not ordinarily create debt in violation of the state constitution: This Court concluded long ago that our pension systems do not involve the creation of an unconstitutional debt. State ex rel. Board of Governors v. Sims, 133 W.Va. 239, 244, 55 S.E.2d 505, 508 (1949). Although Sims did not discuss the rationale behind its reasoning on this issue,... it should now be clear that pension systems are constitutional for the same reasons that special revenue bonds are constitutional: The pledge for the pension fund derives from the actuarially sound contributions of the employees and the Division; that is, the fund is expected to generate its own money to meet its eventual obligations. Because money is expected to be put away as a condition precedent to fund the system, pensions are legitimate debts of the State. Consequently, W.Va. Const. art. VI, § 51B(3)(d) requires the Governor to prepare a yearly budget that allows for payment of pensions as constitutionally created debt of the State. 193 W.Va. at 332-33, 456 S.E.2d at 176-77. The mechanism that prevents the pension obligation from being unconstitutional in terms of its characterization as a debt is the expectation that the employee contributions plus the state/employer's statutorily specified contribution levels will provide sufficient funds to meet the required level of annual benefit payments. In syllabus point fourteen of Booth, we recognized the remedy that is available to a pensioner upon the state's failure to make pension installments: Because pensions are a lawful debt of the State, the proper remedy for any failure to pay a pension is a mandamus action against the state treasurer and auditor. The funding of any pension program is the legislature's problem-not the state employees' problem and once the legislature establishes a pension program, it must find a way to pay the pensions to all employees who have substantial reliance interests. 193 W.Va. at 328, 456 S.E.2d at 172. As this Court explained in Booth, there is no enforceable cause of action by a retiree against the state treasurer or auditor until the funds are not available to pay the pension benefits to which retirees are statutorily entitled. In the seminal case addressing the obligations of the State to meet its pension commitments, we acknowledged that [t]he realization and protection of public employees' pension property rights is a constitutional obligation of the State. Syl. Pt. 18, in part, Dadisman v. Moore ( Dadisman I ), 181 W.Va. 779, 384 S.E.2d 816 (1988). We further recognized in syllabus nineteen of Dadisman I that [t]he payment of statutorily promised pension benefits, on maturity, is a general and moral obligation of the State. Id. at 782, 384 S.E.2d at 819. We specifically identified the constitutional underpinnings for the protections that attach to the rights of public employees to receive statutorily established pension benefits. Those constitutionally mandated principles include protection from the impairment of contracts and require application of due process principles when modifications are sought that would affect the receipt of vested retirement benefits. Based on the contractual nature of such pension rights, the state is obligated to remit to public retirees those retirement benefits to which they are entitled by law. See id. at 791-92, 384 S.E.2d at 828-29.