The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 6693

August 16, 1991

RETIREMENT & PENSIONS:

Dual receipt of retirement allowance and salary under State Employees' Retirement Act

RETIREMENT & PENSIONS:

Membership in the State Employees' Retirement System for political appointees

Where a retirant under the State Employees' Retirement Act is receiving a retirement allowance, and the person returns to state employment as an employee and again becomes a member of the State Employees' Retirement System under the Act, the person's pension is suspended while the person remains a state employee.

An elected or appointed state official may choose not to become a member of the State Employees' Retirement System and where the appointed official is a member of a state board, commission or council receiving a per diem rate as a member of such entity, the appointee is excluded from membership under the Act for all such board, commission or council service.

Honorable Vincent "Joe" Porreca

State Representative

The Capitol

Lansing, Michigan

You have requested my opinion on two questions concerning the State Employees' Retirement Act, 1943 PA 240, MCL 38.1 et seq; MSA 3.981(1) et seq.

You first ask whether OAG, 1945-1946, No 0-4106, p 675 (April 23, 1946), remains valid. That opinion concluded that where a retirant under the State Employees' Retirement Act (hereafter Act) is receiving a retirement allowance, and returns to state employment as an employee and again becomes a member of the State Employees' Retirement System under the Act, the person's pension is suspended while the person remains a state employee.

When OAG, 1954-1956, No 0-4106 issued, Sec. 16 of the Act relevantly provided:

Should any member become a beneficiary, or die, or should he separate or be separated from state service without leave of absence before attaining age 60 years, except as provided in sections 18 and 20 subdivision (f), he shall thereupon cease to be a member: ... Should he again become employed by the state he shall enter the retirement system as a new member and his membership service shall be computed from the date he last became a member: Provided, however, That an employee who has heretofore re-entered or who hereafter re-enters state service within 1 year from the date of his separation, and who has left his contributions on deposit with the retirement system or returns thereto all refunds he may have received, shall be returned to the status, either as original member or new member, which he held at the time of his separation.

Construing the operative language of Sec. 16, OAG, 1945-1946, No 0-4106, first observed that where a person had ceased to be a member under the Act and reentered state service within one year after separation, the person would possess the same membership status that existed at the time of separation. However, where the person reentered service after becoming a "beneficiary," Sec. 16 required that the person must enter as a new member of the system under the Act. It is noted that section 1(1) of the Act defined "beneficiary" to mean "any person in receipt of a retirement allowance, pension, or other benefit provided by this act." OAG No 0-4106 then concluded that a retirant under the Act was not required to " 'give up' his pension" in order to return to state service (pp 675-676), but that the retirement allowance "is suspended during the time he is employed by the state after such retirement. Upon his ceasing to be so employed, his pension again becomes effective." (p 676.)

The current language of Sec. 16 of the Act demonstrates that the conclusion reached in OAG No 0-4106 remains sound:

Except as otherwise provided in this act, if a member separates or is separated from state service without leave of absence before becoming eligible to retire with a pension payable from funds of the retirement system, he shall thereupon cease to be a member and he shall forfeit credit for all service rendered by him prior to the date he last separated from state service. If he again becomes employed by the state he shall again become a member of the retirement system. An employee who has heretofore reentered or who hereafter reenters state service within 5 years after the date of his last separation from state service, or who accumulated 5 or more years of continuous service credit as a member of the retirement system after reentering state service, shall have the service credit forfeited by him at the time he last separated from service restored to his credit, if he has not withdrawn his accumulated contributions from the employees' savings fund, or he returns to the fund all amounts he may have previously withdrawn therefrom, together with regular interest thereon computed from the date of withdrawal to the date of repayment. In the event a member becomes a retirant or dies, he shall thereupon cease to be a member. [Emphasis added.]

The last sentence of Sec. 16, providing that where "a member becomes a retirant ..., he shall thereupon cease to be a member," reinforces the conclusion reached in OAG, 1945-1946, No 0-4106, that, where a retiree is receiving an allowance under the Act and returns to state service and, therefore, again becomes a "member" under the Act, the person's allowance is suspended during the period of subsequent state employment.

Although the Legislature has amended the Act many times since OAG, 1945-1946, No 0-4106, was rendered in 1946, the Legislature has not acted to change the conclusion reached in OAG, 1945-1946, No 0-4106.

The State Employees' Retirement System has observed the conclusions of OAG, 1945-1946 No 0-4106 since 1946. See e.g., Memorandum of Rita Pontz, Manager, Subject: Working After Retirement (October 5, 1989):

Attorney General Opinion No 4016, dated April 23, 1946, tells that it is against public policy for a person to be an employee (of the state) and a retiree at the same time. Therefore, if a state retiree returns to state employment, his/her pension is to be suspended for the month in which the work occurred, regardless of how much of the month the person worked.

In Luttrell v. Department of Corrections, 421 Mich 93, 105; 365 NW2d 74 (1984), the court stated:

[L]egislative silence in the face of an agency's construction of a statute "can only be construed as consent to the accuracy of that interpretation." [Citations omitted.] This doctrine is based on the assumption that the Legislature is aware of prior interpretations of its acts, and that the construction given a statute by those charged with its execution is likely to be the most accurate.

The Michigan Supreme Court has held that under the comparable language of the judges' retirement act, MCL 38.801 et seq; MSA 27.125(1) et seq, a judge is either a member or a retirant-beneficiary: "[h]e cannot be both at once." Hughes v. Judges' Retirement Board, 407 Mich 75, 89; 282 NW2d 160 (1979).

The Legislature is, of course, free to modify the prohibition against a retiree drawing an allowance under the State Employees' Retirement Act and simultaneously performing work for the state as a state employee.

It is my opinion, in answer to your first question, that where a retirant under the State Employees' Retirement Act is receiving a retirement allowance, and the person returns to state employment as an employee and again becomes a member of the State Employees' Retirement System under the Act, the person's pension is suspended while the person remains a state employee.

Your second question inquires whether a political appointee to a State of Michigan commission or board is required to become a member of the State Employees' Retirement System. The answer to your question is found in Sec. 13(2) of the Act, which, in pertinent part, provides:

All state employees except those specifically excluded by law and those who are members or eligible to be members of other statutory retirement systems in this state, shall become members of the retirement system. ... Elected or appointed state officials may elect not to become or continue as members of the retirement system by filing written notice with the retirement board. An appointed state official who is a member of a state board, commission, or council and who receives a per diem rate in his or her capacity as a member of the board, commission, or council shall be excluded from membership in the retirement system for the service rendered in his or her capacity as a member of the board, commission, or council.

It is my opinion, in answer to your second question, that an elected or appointed state official may choose not to become a member of the State Employees' Retirement System, and where the appointed official is a member of a state board, commission or council receiving a per diem rate as a member of such entity, the appointee is excluded from membership under the Act for all such board, commission or council service.

Frank J. Kelley

Attorney General