Court Opinion

ID: 6264153
Source: CourtListenerOpinion
Date Created: 2022-02-17 23:23:33.618074+00
Date Added: 2024-06-11T08:59:46.085008
License: Public Domain

LARSEN, Justice,
concurring and dissenting.
Before us are the cross appeals of the American Federation of State, County and Municipal Employees Council 13, AFL-CIO and Joint Bargaining Committee of the Pennsylvania Social Services Union and the Pennsylvania Employment Security Employees’ Association, Locals 668 and 675, SEIU, AFL-CIO, and Dennis J. Solecki and Lea F. Barbush (collectively AFSCME), and the State Employees’ Retirement Board (Board) challenging an order of the Commonwealth Court which granted partial summary judgment to both AFSCME and the Board. This action was initiated by AFSCME seeking enforcement of the Commonwealth Court’s order of March 7, 1984 entered in the case of AFSCME v. Commonwealth, 80 Pa.Cmwlth. 611, 472 A.2d *371746 (1984), aff'd sub nom, Association of Pennsylvania State College and University Faculties v. State System of Higher Education, 505 Pa. 369, 479 A.2d 962 (1984) which permanently enjoined the Board from collecting pension contributions in excess of five (5%) percent from employees who were members of the State Employee’s Retirement System prior to the enactment of Act 31 of 1983 which became effective July 22, 1983. Under Section 7 of Act 31 the basic pension contribution for members of the retirement system, was increased from five (5%) percent to six and one-quarter (674%) percent. The Commonwealth Court held in its March 7, 1984 ruling that Section 7 of Act 31 which mandated the increased pension contribution rate was an unconstitutional impairment of the right to contract for both vested and non-vested members. 80 Pa.Cmwlth. at 616, 472 A.2d at 748.
AFSCME initiated the present action for enforcement of previous order of March 7,1984 alleging that the Board was improperly requiring the 6V4% employee contribution rate to the following members of the retirement system:
(1) Employees who have been suspended, terminated or discharged from employment and have subsequently been returned to employment because of an arbitration award, civil service order, court order, lawsuit, or settlement of a claim for reinstatement;
(2) Employees who have been separated from their employment and subsequently returned to work pursuant to statutory or contractual provisions such as recall rights;
(3) Employees who have been on extended authorized leaves of absence with or without pay;
(4) Employees who have been separated from employment either voluntarily or involuntarily and who subsequently returned in a manner or method reinstating their accrued seniority rights including credit for prior service; and
(5) Employees who have been separated either voluntarily or involuntarily from their employment and who *372have subsequently returned to active pay status but who maintained their member’s status throughout the separation period.
AFSCME argues that, pursuant to a management directive issued after the March 7, 1984 order, the Board improperly imposed the new 6x/4% contribution rate on employees who were members of the retirement system prior to Act 31 but who became separated, either voluntarily or involuntarily, from active employment for a period of in excess of fourteen (14) calendar days and who returned to active employment after July 21, 1983.
The Commonwealth Court agreed, in part, with AFSCME and held:
“[The] prior March 7, 1984 order applies to all employees who were members of the [State Employees Retirement System] prior to the enactment of Act 31 and who, in spite of a break in service, maintained their membership by leaving their accumulated contributions in the retirement fund.” (Emphasis in original.)
111 Pa.Cmwlth. at 89, 533 A.2d at 788. The Commonwealth Court went on to grant partial summary judgment to AFSCME by directing enforcement of its March 7, 1984 order as to separated employees who are active members of the retirement .system by virtue of continuing their pension contributions, and as to those separated employees who are inactive members of the retirement system by virtue of maintaining their accumulated deductions in the fund. 111 Pa.Cmwlth. at 89-91, 533 A.2d at 789. The Commonwealth Court also granted partial summary judgment to the Board by holding that the increased contribution rate of 6x/4% may be applied to separated employees who withdrew their accumulated deductions prior to resuming state employment. Id. Since I would hold that the Commonwealth Court erred in granting partial summary judgment to the Board, I must dissent to the majority’s per curiam order affirming the Commonwealth Court’s opinion and order.
This Court has recognized that the retirement system constitutes a contract between the governmental employer *373and its employees. The contract is created when the employee becomes a member of the employees’ retirement system. See Catania v. Commonwealth, State Employees’ Retirement Board, 498 Pa. 684, 450 A.2d 1342 (1982) (plurality opinion); Hickey v. Pittsburgh Pension Board, 378 Pa. 300, 106 A.2d 233 (1954). Indeed, the Commonwealth Court in its order of March 7, 1984 held that the increase in the pension contribution rate from 5% to 6XA% as applied to vested and non-vested members of the system was an unconstitutional impairment of the right to contract. Every state employee who was a member of the system prior to the passage of Act 31 has contractual rights in the system established at the time of membership. As long as membership in the retirement system continues1 or the employment relationship is maintained, the contractual rights may not be impaired. The Commonwealth Court in granting partial summary judgment to the Board sanctioned an impairment of those rights in this case by authorizing the Board to impose the higher 6XA% contribution rate as to employees who were members of the retirement system prior to the effective date of Act 31, and who temporarily left active state employment and withdrew previous pension contributions before returning to state service. The order permits the higher rate even though the employee who has returned to active employment maintained an employment relationship while separated.
An employee who was a member of the retirement system prior to the enactment of Act 31, who is unjustly *374discharged from state service and who, many months later, prevails in his claim for reinstatement, should not be subject to the increased pension contribution rate because he had to withdraw his previous pension contributions to provide for himself and his family. The same is true for an employee who is laid off and withdraws his pension contributions to survive while waiting for return to active service under either civil service law in a collective bargaining agreement. In each case the separated employee has maintained an employment relationship and upon return to active employment is entitled to be restored to his prior position with the same contractual rights initially acquired upon membership in the retirement system.
I would reverse that part of the Commonwealth Court Order which grants summary judgment to the Board.

. The State Employees’ Retirement Code defines four kinds of membership in the retirement system:
Active Member. A State Employee, or a member on leave without pay, for whom pickup contributions are being made to the fund. Annuitant. Any member on or after the effective date of retirement until his annuity is terminated.
Inactive Member. A member for whom no pickup contributions are being made but who has accumulated deductions standing to his credit in the fund and who is not eligible to become or has not elected to become a vestee or has not filed an application for an annuity.
Vestee. A member with ten or more eligibility points who has terminated state service and has elected to leave his total accumulated deductions in the fund and to defer receipt of an annuity.