Opinion ID: 2614971
Heading Depth: 1
Heading Rank: 13

Heading: interest on additional pension benefits

Text: The Department argues that RCW 39.76.020(7) excuses the PERS I fund from any obligation to pay interest on the additional pension benefits awarded to the plaintiff class. This argument requires analysis of the interplay between RCW 39.76.010 and.020. The first statute provides in relevant part: Except as provided in RCW 39.76.020, every state agency and unit of local government shall pay interest at the rate of one percent per month, but at least one dollar per month, on amounts due on written contracts for public works, personal services, goods and services, equipment, and travel, whenever the state agency or unit of local government fails to make timely payment. (Italics ours.) RCW 39.76.010(1). The second statute provides the exception that comes into play in this case: RCW 39.76.010 does not apply to ... [p]ayment from any retirement system listed in RCW 41.50.030 [including PERS I] and chapter 41.24 RCW. (Italics ours.) RCW 39.76.020(7). The Department argues this last exception demonstrates a legislative intent that untimely pension payments not bear interest. The plaintiffs disagree. They argue that RCW 39.76.010 applies only to written contracts, and pension payments are not based on any written contracts. See Noah v. State, 112 Wn.2d 841, 774 P.2d 516 (1989) (holding that the pension statute itself does not constitute a written contract between the State and its employees and noting that no other written contract exists between these parties). The plaintiffs thus maintain RCW 39.76.020(7) does not apply here because all it does is exempt the PERS I fund from having to pay interest on written contracts. [19, 20] We reject the plaintiffs' interpretation as being far more restrictive than could have been intended by the Legislature. This court endeavors to avoid statutory interpretations that lead to unlikely, absurd or strained consequences. See State v. Fjermestad, 114 Wn.2d 828, 835, 791 P.2d 897 (1990). The only payments that retirement systems make are for pensions and for various administrative expenses. See, e.g., RCW 41.40.080, .083. There is no reason for the Legislature to set up a special exemption for payments from retirement systems if all that is being exempted is administrative expenses. Far more logical is the assumption that the Legislature enacted RCW 39.76.020(7) out of a concern to keep a lid on governmental pension liabilities. Moreover, when this statute was enacted in 1981, the Legislature could easily have believed that pension payments were owed under written contracts. This court had held since 1956 that the obligation to pay public employee pensions is contractual in nature, see Bakenhus v. Seattle, 48 Wn.2d 695, 698, 296 P.2d 536 (1956), and it was only in 1989 that this court definitively held in Noah that the PERS I statute itself did not constitute a written contract. Accordingly, we hold that the Legislature intended in RCW 39.76.020(7) to except PERS I pension payments from any interest requirements. This holding precludes the attachment of prejudgment interest. See Fiorito Bros., Inc. v. Department of Transp., 53 Wn. App. 876, 878-79, 771 P.2d 1166 (1989) (applying the statute to a claim for prejudgment interest, but not making any holding as to postjudgment interest). It likewise precludes postjudgment interest. Even though another statute states the general rule that judgments bear interest, see RCW 4.56.110, this general rule is subordinated by the more specific legislative decree that untimely pension payments are not subject to interest. See In re Little, 106 Wn.2d 269, 284, 721 P.2d 950 (1986) (when two statutes are in apparent conflict, the more specific statute is given preference). Accordingly, we overturn the trial court's awarding of interest on the additional pension obligations.