Court Opinion

ID: 9576858
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:29:25.006985+00
Date Added: 2024-06-11T13:19:34.442899
License: Public Domain

Rosellini, J.
(concurring) — I concur in the result reached by the majority. However, I am opposed to the majority's needless and continuing attempts to limit the scope of protections guaranteed our citizenry by the constitutional prohibitions of gifts or loans of public money or credit. See State Housing Fin. Comm'n v. O'Brien, 100 Wn.2d 491, 500, 671 P.2d 247 (1983) (Rosellini, J., dissenting); In re Marriage of Johnson, 96 Wn.2d 255, 268, 634 P.2d 877 (1981) (Dore, J., concurring in part, dissenting in part). The majority makes reference to Johnson and Housing Fin. as severely limiting the previous scope of our opinions on the subject. The majority indicates that the focus of inquiry is on the "risk of loss" posed to the public treasury or taxpayer and that only those activities which jeopardize state or municipal assets are prohibited. This approach to lending of credit cases also provides that there is no violation of the prohibitions so long as the loan or gift of credit serves a statutory objective to benefit a deserving class of the public.
The constitutional prohibition is intended to do more than merely protect the public treasury. An equally important thrust of the provision is to prohibit private individuals, associations, or corporations from deriving special privileges or advantages from the State or its municipalities. See Port of Longview v. Taxpayers, 85 Wn.2d 216, 533 P.2d 128 (1974).
I am opposed to the "risk of loss" analysis for the same reasons set forth in the dissent in Housing Fin. and will not *60further reiterate them here. The instant action simply does not call upon this court to apply the "risk of loss" approach.
To analyze the present controversy correctly, this court need only determine that there is adequate consideration in exchange for the service credit and employer contributions to the retirement system. The existence of ample consideration negates the City's allegation that the scheme constitutes an unconstitutional gift or loan of the City's credit.
As the majority opinion recognizes, there is abundant consideration for the challenged payment of money by the City to the State. The required contribution by the City is not voluntary in any sense. The contribution is compelled by statute and is merely one of several legal obligations the City assumed when it elected to join the Public Employees' Retirement System (PERS) as a participating employer instead of attempting to operate its own pension system for city employees. See RCW 41.40.080, .350, .361, .370, .410. In return for the City's assumption of these legal obligations, the State gave consideration to the City by assuming the legal obligation to admit present and future city employees to membership in PERS and to pay those employees benefits according to the provisions of RCW 41.40. Once the City's employees become members of PERS, the provisions of RCW 41.40, including the promise of service credit contained in RCW 41.40.160(2), become part of their contract of employment. Payment of additional employer contributions pursuant to RCW 41.40.160(2) is only one component of a broad agreement between the State and the City which is supported by consideration on both sides. The State did not compel the City to purchase Cedarcrest Golf Course or to put the course's employees on the city payroll. Having done both, however, the City became legally obligated under its previous agreement with the State to pay the employer's contribution required by RCW 41.40.160(2).
The obvious purpose behind RCW 41.40.160(2) is to encourage existing employees of private enterprises to stay on if offered employment by an acquiring public agency. *61The Legislature apparently took note of the general tendency of employees to terminate their service upon a change of ownership of a business. It also undoubtedly recognized that a widespread and sudden loss of key experienced personnel can have devastating consequences for any organization. To help acquiring public agencies retain trained personnel, the Legislature enacted RCW 41.40-.160(2). Its purpose was not to grant additional compensation for past service to private employers but instead to offer additional compensation for future service to public employers.
In Aldrich v. State Employees' Retirement Sys., 49 Wn.2d 831, 307 P.2d 270 (1957), this court construed a former version of RCW 41.40.010(10) to require the granting of PERS service credit for a nearly 5-year period of service rendered to the federal government before the employee in question became eligible to participate in PERS. The trial court in Aldrich had concluded that to allow the employee to receive PERS credit for such service in the calculation of his retirement allowance, when the employee was already receiving a benefit for the same period under the federal Civil Service Retirement System, would be a gratuity and would violate Const. art. 2, § 25 and Const. art. 8, § 7. This court rejected that theory on the basis of the reasoning in Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956), in which we stated:
In this state, a pension granted to a public employee is not a gratuity but is deferred compensation for services rendered. The contractual nature of the obligation to pay a pension when the employee has fulfilled all of the prescribed conditions was recognized in Luellen v. Aberdeen, 20 Wn. (2d) 594, 148 P. (2d) 849 (1944), in Benedict v. Board of Police Pension Fund Com'rs, 35 Wn. (2d) 465, 214 P. (2d) 171, 27 A. L. R. (2d) 992 (1950), and in Ayers v. Tacoma, 6 Wn. (2d) 545, 108 P. (2d) 348 (1940). Had we held in those cases, or were we to hold now, that the pension statutes provide for the payment of gratuities, we would be bound to hold further that such statutes are contrary to the provisions of Art. *62II, § 25, and Art. VIII, § 7, of the Washington constitution and are therefore void.
Bakenhus, at 698. We held in Aldrich that the service credit here in issue would not be gratuitous as long as state employment under the PERS statute followed the period for which the employee was granted the prior service credit:
Prior service credit for services antedating the effective date of the state employees' retirement act cannot, standing alone, support a pension under the rule of the Bakenhus case. There must be, in addition thereto, some service rendered after the effective date of the act, so that the act will constitute a part of the contract governing the subsequent employment. Then the pensions provided for under the act constitute deferred compensation for the subsequent service and are not gratuities predicated merely upon the prior service.
Aldrich, at 833-34. See also Johnson v. Aberdeen, 14 Wn. App. 545, 544 P.2d 93 (1975).
Following the reasoning of Aldrich, there is no violation of Const, art. 8, § 7, prohibiting a gift or loan of the City's credit. The analysis employed here follows our long-standing approach to lending of credit cases and simply does not require any discussion of the ill conceived "risk of loss" approach.
Conclusion
I concur in the result reached by the majority simply because I find that there existed adequate consideration for the prior service credit and employer contributions.