Court Opinion

ID: 9543048
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:41:39.204662+00
Date Added: 2024-06-11T15:09:35.635411
License: Public Domain

WOLFE, Justice
(concurring).
I concur. Mr. Justice LATIMER has done a helpful piece of work in tracing the development of local teachers’ retirement associations in this state. He has also pointed out many of the difficult questions which are presented by the proposal of the retirement commission to dissolve the association pursuant to the 1949 amendment and why in the instant proceeding, because of the absence of the Board of Education of Ogden City as a party, we are unable to determine the constitutionality of that amendment. With the sole objective in mind of aiding counsel for the parties in any further litigation which may hereafter be had in regard *574to the dissolution of the retirement association, I will state what appears to me as a possible ground upon which the 1949 amendment can be upheld as constitutional. It is to be borne in mind that nothing said in this opinion or in any other opinion in this case is a pronouncement of this court nor, we assume, the final opinion of any member of this court. We wish to leave all questions open for further argument and final determination in any subsequent proceeding which may be had where all necessary parties are present. •
As stated in the opinion of Mr. Justice LATIMER, Mrs. Newcomb as a part of her contract of employment with the Board of Education of Ogden City became entitled tó an annuity upon her retirement. Chap. 70, Sec. 9, Laws of Utah, 1917, provided that every teacher who accepted employment with the Board of Education of a first or second class city in which a teachers’ retirement association had been theretofore organized became a member of such retirement association by virtue of his employment. As a member of a retirement association the plaintiff was obligated to contribute a certain percentage of her annual salary to the association and the Board of Education was obligated to match her contribution. The annuity to be paid to her upon retirement was not a gift, but in effect compensation for past services performed. Gubler v. Utah State Teachers’ Retirement Board, 113 Utah 188, 192 P. 2d 580, 2 A. L. R. 2d 1022.
In the case of Driggs v. Utah State Teachers Retirement Board, 105 Utah 417, 142 P. 2d 657, this court held that .under the State Teachers’ Retirement Act a retired school teacher had a vested right to a pension in the amount to which he was legally entitled at the time of his retirement. Thus it would seem to follow in the instant case, that Mrs. Newcomb upon her retirement in 1938 acquired, by virtue of the statutes in effect as of that date, a vested right to ■an annuity of $600 unless the funds of the retirement association were insufficient to pay the full amount of all claims for refunds and annuities made against it, in which *575case she would be entitled to her prorata share of the “funds that are available.” Whether by the phrase “funds that are available” the legislature meant only “current funds” or both “current” and “permanent” funds is not clear. The act provides that “current expenditures” are to be paid out of “current funds” only, but does not define what constitutes a “current expenditure” and does not state whether an annuity payment is a “current expenditure.” I’ am inclined to think that the payment of an annuity is a “current expenditure” and hence can be paid only from “current funds.” This does not mean, of course, that upon dissolution the plaintiff would not be entitled to share in the distribution of the permanent fund. As to how the funds should be distributed upon dissolution, I express no opinion.
An argument may be made that Mrs. Newcomb did not' acquire upon her retirement a vested right to an annuity of $600 or her prorata share of the “funds” available. Under Section 75-29-8, U. C. A. 1943, which was in effect at the time of her retirement, the retirement commission, is given the authority to increase or decrease the rate of salary deductions subject to the approval of % of the members of the association and the board of education. Thus-it can be argued that Mrs. Newcomb could not legally com-, plain if the commission lowered the salary deduction rate so low that the financial demands upon the association greatly exceeded the proceeds coming into the association, from teachers’ salary deductions and matching funds paid', by the board of education, and hence the association could pay Mrs. Newcomb only a nominal amount as her prorata, share of the “funds” available. The difficulty with this', argument is that it is very doubtful whether the legislature intended that the power given to the commission to increase or decrease the salary deduction rate be used by the commission to dry up the replenishing sources of the funds. It is more reasonable to conclude that the legislature intended that that power be used by the commission to raise *576and lower the deduction rate as the demands upon the association varied from time to time with the view in mind at all times to keep the association solvent.
The plaintiff’s complaint, however, is not that the commission now proposes to reduce the contribution rate so low that she will receive only a nominal amount as an annuity, but that the commission pursuant to the 1949 amendment now proposes to terminate the association. It is contended by counsel for the association that it is necessary to terminate the association because the annuity plan is actuarially unsound. I have found no authority from jurisdictions adopting the rule which we did in the Driggs case, supra, i. e. that a retired school teacher has a vested right to an annuity in the amount to which he was entitled upon his retirement (whether the amount be certain as in the Driggs case or certain subject to a condition as in the instant case) holding that, because a public retirement system is actuarially unsound, the legislature may terminate the system without providing the retired pensioners with a substantial substitute for that of which they were deprived. It may be admitted for the purposes of this case that the legislature could alter, amend or modify the retirement system in order to strengthen its fibres and make it actuarially sound. But amending, modifying and altering is not the same as termination.
In Board of Education in Louisville v. City of Louisville, 288 Ky. 656, 157 S. W. 2d 387, the legislature of Kentucky had provided for the merging of local teachers’ retirement associations with the state teachers’ retirement association because the local associations were actuarially unsound. The statute authorizing the merger provided that if merger was effectuated, the state association must assume the obligations of the local associations. Had the statute not so provided, the court indicated, the rights of retired teachers in the local retirement associations would be impaired. The Supreme Court of California recently held in Kern v. City of Long Beach, 29 Cal. 2d 848, 179 P. 2d 799, that a pen*577sion system may be terminated if those who have acquired vested rights therein are given a substantial siibstitute for that which they lose.
As heretofore stated, the plaintiff by virtue of her contract of employment with the Board of Education of Ogden City acquired a vested right to an annuity upon her retirement. The amount of the annuity was to be measured by the provisions of the retirement act in effect at the date of her retirement and was to be paid from the funds of the retirement association to which the plaintiff by her contract was required to contribute. It may well be that the Board of Education of Ogden, however, being the party with whom the plaintiff contracted, is the party ultimately or primarily responsible for the payment of the annuity to the plaintiff and thus if pursuant to the 1949 amendment the retirement association is terminated, the Board of Education of Ogden City may have to pay the plaintiff’s annuity directly to her or provide other means by which she will receive the annuity. There is nothing in the 1949 amendment which purports to relieve boards of education from their obligations, if any, to retired teachers who have acquired vested rights to annuities. The amendment merely authorizes the abolishing of the instrumentality by which and the fund out of which the annuity was to be paid. Thus it may be that if the association is terminated, the Board of Education of Ogden City will have to determine and pay to the plaintiff an amount equal to what she would have received had the association not been terminated. If this is so, then there can be no objection made against the 1949 amendment on the ground that it impairs the plaintiff’s vested right to an annuity. Whether the amount of the annuity which the Board may have to pay in case of dissolution should be determined upon the basis of the salary deduction rate existing at the time of the termination of the association and on the number of teachers employed by the Board each year, or upon some other basis will have to be determined. It can readily be seen that the possibility *578that the Board of Education may have to respond to pay the annuities of teachers who are deprived of them by the termination of the retirement association, makes it imperative that the Board be a party to any proceeding to determine the constitutionality of the 1949 amendment.