STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6301

June 14, 1985

CONSTITUTIONAL LAW:

Const 1963, art 9, Sec. 24--reasonableness of imposition of new faithful performance condition upon members of state-administered retirement systems

RETIREMENT AND PENSIONS:

Imposition of new faithful performance condition upon members of state-administered retirement systems

If enacted into law, a faithful performance condition applicable to all members of a state-administered retirement system requiring that, in order to receive a retirement allowance the member shall not be convicted of a misdemeanor or felony involving a breach of the public trust committed in the performance of public duties, would be reasonable and not subversive of the protections of Const 1963, art 9, Sec. 24.

Honorable Francis R. Spaniola

State Representative

The Capitol

Lansing, Michigan

You have requested my opinion on the following question:

In your letter of request, you indicate that your question is premised upon the enactment of legislation to impose a condition of 'faithful performance' upon all members of a state-administered retirement system in order to remain a member of the system and to receive retirement benefits. As stated in your letter, members convicted of a misdemeanor or a felony 'directly involving the member's conduct in carrying out the duties of the assigned position shall be considered a breach of 'faithful performance."

The analysis of your question should begin with OAG, 1977-1978, No 5188, p 116 (May 5, 1977), which concluded that a member of the State Employees' Retirement System who meets the age and service requirements of MCL 38.19; MSA 3.981(19), may not, in the absence of a statutory condition of faithful performance, be denied a retirement allowance because the employee was discharged from state service upon conviction of a misdemeanor involving state property. This conclusion was compelled by a study of the provisions of Const 1963, art 9, Sec. 24 and a review of the debates of the Constitutional Convention of 1961 that demonstrated most clearly the intent of the framers that the harsh common law rule of forfeiture of retirement benefits upon conviction of a crime committed during the course of employment was to be supplanted by a rule that the accrued financial benefits of a public retirement system are a contractual obligation. OAG, 1977-1978, No 5188, supra, expressly reserved, however, the question whether consonant with Const 1963, art 9, Sec. 24, the Legislature may impose a 'faithful performance' condition. Const, 1963, art 9, Sec. 24, provides:

Prior to ratification of Const 1963, art 9, Sec. 24, the Michigan Supreme Court held in Van Coppenolle v Detroit, 313 Mich 580; 21 NW2d 903 (1946), that retirement benefits for a city policeman convicted of the crime of conspiracy to violate the gambling laws while serving as a police inspector were lawfully terminated since 'faithful performance' is an implied condition of public employment.

In Advisory Opinion re Constitutionality of 1972 PA 258, 389 Mich 659, 662-664; 209 NW2d 200 (1973), the Supreme Court considered a certified question which, in part, concerned the small increase in the rate of contributions for certain members of the state public school employees' retirement system as ordered by 1972 PA 258, Sec. 17, in order to equalize contributions with other members of the system without a commensurate advantage as constituting a diminishment of benefits in violation of Const 1963, art 9, Sec. 24. Although the Supreme Court ruled that it was the intent of the people in ratifying Const 1963, art 9, Sec. 24, to obviate the harsh rule enunciated in Van Coppenolle v Detroit, nevertheless, the Supreme Court construed Const 1963, art 9, Sec. 24 as follows:

OAG, 1985-1986, No 6294, p ___ (May 13, 1985), applied this decision and concluded that the imposition of a new condition upon current members of the State Employees' Retirement System and the Public School Employees' Retirement System in the form of mandatory employee contributions in the average amount of $1,200.00 per year without any commensurate advantage to the employee member would violate Const 1963, art 9, Sec. 24 as unreasonable and subversive of the protected rights of current members of such retirement systems.

While there is no decision of a Michigan appellate court directly on point, the decision in Advisory Opinion re Constitutionality of 1972 PA 258 provides appropriate guidance. Under this decision, the Legislature is free to impose reasonable new conditions for earning retirement benefits, including obtaining the benefits which have accrued, upon public officer or employee members of state-administered retirement systems, provided that such conditions are not subversive of the constitutional protection afforded by Const 1963, art 9, Sec. 24.

No extended effort is required to demonstrate the reasonableness of a 'faithful performance' condition necessitating members of a state-administered retirement system to avoid engaging in criminal conduct while performing the duties of the respective public position. The public has every right to expect upright, efficient and honorable service from its servants. Placing such a condition into a state-administered retirement system statute would implement the public's right to conscientious service. Abstention from criminal activity while performing public duties imposes no new burden on the public servant. The duty to obey the law is an obligation of every citizen, regardless of occupation or calling.

Thus, the new condition to refrain from committing a misdemeanor or a felony while carrying out the duties of a public position is reasonable.

Turning to the issue whether imposition of the 'faithful performance' would be subversive of the constitutional protection of Const 1963, art 9, Sec. 24, it would be useful to measure its impact upon current members of state-administered retirement systems. Presently, assuming a member of the State Employees' Retirement System, for example, were convicted of a misdemeanor or felony committed during the performance of public duties and the services of the member were terminated by the state, continued membership of the convicted employee in the retirement system would cease, MCL 38.16; MSA 3.981(16), unless by age and years of credited service, the member would apply for and quality for a retirement benefit or for a deferred retirement benefit to be paid when the member reached retirement age. MCL 38.19; MSA 3.981(19). The member, of course, may also withdraw all contributions from the system and receive no retirement benefit. MCL 38.28; MSA 3.981(28).

Under MCL 38.19; MSA 3.981(19), a member of the State Employees' Retirement System may retire and receive a retirement allowance if the member has attained the age of 60 years or over and has 10 or more years of credited service. Further, a member with 15 or more years of credited service, upon attaining the age of 55 years but has not attained the age of 60, may retire and receive a reduced retirement allowance.

It is also noted that state employee members may continue to work until the age of 70 years so that it is possible that members of this system may continue in state service after they become eligible for a full retirement allowance or a reduced retirement allowance.

As to members who join this retirement system after enactment of the faithful performance legislation, it is clear that the faithful performance condition would be one of a number of conditions imposed by the Legislature in order to qualify for a retirement allowance. Since new members have no accrued financial benefits, there would be no conflict between the faithful performance condition and Const 1963, art 9, Sec. 24.

In the case of members with less than 15 years of service and who have not attained the age of 55 years so as to qualify for deferred retirement allowance, or with less than 10 years of service and who have not attained the age of 60 years, the condition of 'faithful performance' would not, under the reasoning of Advisory Opinion re Constitutionality of 1972 PA 258, constitute an impairment of accrued financial benefits since it is a reasonable condition imposed in order to obtain the financial benefits which have accrued, and therefore not subversive of the constitutional protections afforded by Const 1963, art 9, Sec. 24.

For those members of this retirement system who are otherwise eligible by service and age to receive a full or reduced retirement allowance, but choose to continue working and are convicted of a misdemeanor or felony arising from conduct of the public duties of the members, the question is more difficult. There is authority which holds a faithful performance condition imposed upon a member of a public retirement system after the rights of the member, although still working, to receive the benefits upon retirement have vested to be an impairment of the retirement benefit contract. Bellomini v State Employees Retirement Bd, 498 Penn 204; 445 A2d 737 (1982). See also, Kerner v State Employees' Retirement System, 72 Ill 2d 507; 382 NER2d 243 (1978). Contra: Gunning v Codd, 49 NY2d 495; 403 NE2d 1208 (1980).

It is noted that Bellomini v State Employees Retirement Bd, is a plurality opinion. The minority opinion condemned the decision for permitting the use of public money to reward for a lifetime public officials convicted of crimes committed in the performance of their public duties. Gunning v Codd found that permitting convicted public employees to remain in office pending sentence in order to obtain a lifetime pension to be intolerable.

The public policy implicit in the requirement of 'faithful performance' in order to qualify for a retirement allowance financed in whole or in part with public funds is salutory and needs no justification. The commission of crimes by public officers and employees in the performance of their duties is deserving of absolute condemnation.

It is noted that Const 1963, art 9, Sec. 24, second paragraph, mandates the annual, public funding of state-administered retirement systems. It is a 'solemn contractual obligation.' Kosa v State Treasurer, 408 Mich 356, 382; 292 NW2d 452 (1980).

As long as a person continues in the public service and as a member of a state-administered retirement system, although eligible because of age and years of credited service to retire and draw benefits immediately or at a future date, his service should continue to be upright, efficient and honorable. Abstention from criminal activity while performing public duties in order to receive a retirement allowance funded in whole or in part with public money is neither unreasonable or onerous. To construe Const 1963, art 9, Sec. 24 to require payment of a retirement allowance to a public servant convicted of a misdemeanor or a felony committed in the performance of public duties would not only be intolerable but itself subversive of the rurpose and intent of Const 1963, art 9, Sec. 24.

Since the condition of faithful performance which requires that a member of a state-administered retirement system shall not be convicted of a misdemeanor or felony directly involving the member's conduct in carrying out the duties of the assigned public position is a reasonable condition and one not subversive of Const 1963, art 9, Sec. 24, and in light of the Supreme Court decision construing this provision in Advisory Opinion re Constitutionality of 1972 PA 258 to permit imposition of reasonable conditions upon members of public retirement systems in order to obtain financial benefits which have accrued, legislative inactment of such a faithful performance condition would be equally binding upon those members of state-administered retirement system who by age and years of credited service are eligible to retire but continue in public employment and as members of a state-administered retirement system.

It is noted that the Michigan Penal Code, MCL 570.1 et seq; MSA 28.191 et seq, and certain other statutes define numerous felonies and misdemeanors. For example, MCL 752.901; MSA 28.603(1), makes it a misdemeanor to throw litter onto the right-of-way of a public highway. Assuming a member of the State Employees' Retirement System were charged and convicted of littering a public highway while traveling to another city in the performance of his duties, it is doubtful that a court would find the faithful performance condition, as applied, to be reasonable and not subversive of the protections of Const 1963, art 9, Sec. 24, to warrant loss of a retirement allowance. The misdemeanor violation, while certainly one not to be condoned, does not relate to the performance of the duties of the employee warranting the loss of a retirement allowance.

In order to sustain the valid application of a 'faithful performance' condition as reasonable and not subversive of Const 1963, art 9, Sec. 24 involving conviction of a misdemeanor or felony committed while performing public duties, the misdemeanor or felony must have been directly related to the performance of the public duties and involved a breach of the public trust.

It is my opinion, therefore, that if enacted into law, a faithful performance condition applicable to all members of a state-administered retirement system requiring that, in order to receive a retirement allowance the member shall not be convicted of a misdemeanor or felony involving a breach of the public trust committed in the performance of public duties, would be reasonable and not subversive of the protections of Const 1963, art 9, Sec. 24.

Your question is answered in the negative.

Frank J. Kelley

Attorney General