Opinion ID: 887214
Heading Depth: 2
Heading Rank: 2

Heading: Unconstitutional Delegation

Text: ¶ 18 As shown earlier, the definition of actuarial equivalent, changes the method by which the Board calculates the benefits under Option 2. The District Court decided that H.B. 294 gave the Board unconstrained discretion. It cited § 19-2-403(8), MCA (2001), which provides that, [u]pon the basis of the findings of the actuary pursuant to 19-2-405, the board shall adopt actuarial rates and rates of regular interest it determines appropriate for the administration of the retirement systems. (Emphasis added.) Deciding that § 19-2-303(4), MCA (2001), gave the Board unconstrained discretion, the District Court concluded it violated the separation of powers in Montana Constitution Article III, Section 1. [2] The Board argues that Montana Constitution Article VIII, Section 15(2), gives the Board discretion to adopt new actuarial determinations. It cites Duck Inn v. Montana State University-Northern (1997), 285 Mont. 519, 526, 949 P.2d 1179, 1183, as an example of the Montana Constitution delegating powers directly. ¶ 19 Montana Constitution Article III, Section 1, provides: Separation of powers. The power of the government of this state is divided into three distinct branches  legislative, executive, and judicial. No person or persons charged with the exercise of power properly belonging to one branch shall exercise any power properly belonging to either of the others, except as in this constitution expressly directed or permitted. Montana Constitution Article V, Section 1, provides: Power and structure. The legislative power is vested in a legislature consisting of a senate and a house of representatives. The people reserve to themselves the powers of initiative and referendum. Montana Constitution Article VIII, Section 15, provides: Public retirement system assets. (1) Public retirement systems shall be funded on an actuarially sound basis. Public retirement system assets, including income and actuarially required contributions, shall not be encumbered, diverted, reduced, or terminated and shall be held in trust to provide benefits to participants and their beneficiaries and to defray administrative expenses. (2) The governing boards of public retirement systems shall administer the system, including actuarial determinations, as fiduciaries of system participants and their beneficiaries. ¶ 20 In Bacus v. Lake County (1960), 138 Mont. 69, 77-82, 354 P.2d 1056, 1060-63, we relied on 1889 Montana Constitution Article IV, Section 1, in striking down a delegation of legislative power to an administrative agency. With minor stylistic changes, the current Montana Constitution Article III, Section 1, is identical to that 1889 section. Section 1 of Article III prohibits any branch from exercis[ing] any power properly belonging to either of the others, except as in this constitution expressly directed or permitted.  (Emphasis added.) Generally, the Legislature has the legislative power, Mont. Const. Art. V, § 1, but Section 1 of Article III specifically allows another branch to exercise the power properly belonging to another branch if the Constitution expressly directs or permits. ¶ 21 In Duck Inn, we interpreted Montana Constitution Article X, Section 9(2)(a), which states: The government and control of the Montana university system is vested in a board of regents of higher education which shall have full power, responsibility, and authority to supervise, coordinate, manage and control the Montana university system and shall supervise and coordinate other public educational institutions assigned by law. We decided that the Montana Constitution directly gave the Board of Regents authorityindependent of any Legislature delegation. Duck Inn, 285 Mont. at 526, 949 P.2d at 1183. We concluded that the phrase full power, responsibility, and authority gives the Board of Regents the authority to rent[] its facilities to private persons and organizations for parties, reunions, conventions and receptions. Duck Inn, 285 Mont. at 521, 526, 949 P.2d at 1180, 1183. Similarly, Montana Constitution Article VIII, Section 15(2), states that the Board shall administer the system, including actuarial determinations. . . . ¶ 22 Baumgardner attempts to distinguish the powers allocated to the Board of Regents from the powers allocated to the Board by arguing that the delegation in Article X, Section 9(2)(a), giving full power, responsibility, and authority is broader than the words in Article VIII, Section 15(2), that only delegate the power to administer the system. While the constitutional delegation to the Board of Regents may be broader, we hold that Article VIII, Section 15(2), is sufficiently broad to allow the Board to define actuarial equivalent. ¶ 23 Baumgardner argues that the intent behind Montana Constitution Article VIII, Section 15, was to limit the retirement funds (1) to pay retirement benefits, (2) to pay to administer the system, and (3) to require the systems to be funded in an actuarially sound manner. He argues that the power to define actuarial equivalent does not fit any of these goals. This analysis absolutely ignores the textual mandate of Montana Constitution Article VIII, Section 15(2), which requires the Board to administer the system, including actuarial determinations. ¶ 24 Montana Constitution Article III, Section 1, specifically allows one branch to exercise the power properly belonging to another branch if the Constitution expressly directs or permits. The Constitution does so in Article VIII, Section 15(2). Under the principles of Duck Inn, to the extent administering that system requires actuarial determinations, Montana Constitution Article VIII, Section 15(2), gives the Board authority to make those determinations. In this case, the Board had the power to determine the actuarial methods by which to make Option 2 actuarially equivalent to the original retirement benefit in § 19-3-904, MCA (2001). Sections 19-2-303(4) and -1501, MCA (2001). ¶ 25 Because the Montana Constitution itself delegated the authority to the Board to make actuarial determinations, the District Court erred in concluding that the Legislature and H.B. 294 unconstitutionally delegated authority to the Board to make those actuarial determinations. ¶ 26 Reversed. We Concur: KARLA M. GRAY, C.J., PATRICIA O. COTTER, JIM RICE, JOHN WARNER, BRIAN MORRIS and JAMES C. NELSON, JJ.