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Bartley v. Alaska Dep't. of Administration (4/15/2005) sp-5888
Bartley v. Alaska Dep't. of Administration (4/15/2005) sp-5888
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, e-mail
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
CORALIE BARTLEY and )
WILLIAM CLARK BARTLEY, ) Supreme Court No. S-10392
)
Appellants, ) Superior Court No.
) 3AN-99-12749 CI
v. )
)
STATE OF ALASKA, ) O P I N I O N
DEPARTMENT OF )
ADMINISTRATION, TEACHERS? )
RETIREMENT BOARD, ) [No. 5888 - April 15, 2005]
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Sharon L. Gleason, Judge.
Appearances: Kristine A. Schmidt, Kenai, for Appellants.
Kathleen Strasbaugh, Assistant Attorney General, and
Bruce M. Botelho, Attorney General, Juneau, for Appellee.
Before: Fabe, Chief Justice, Matthews, Eastaugh, Bryner, and
Carpeneti, Justices.
PER CURIAM.
I. INTRODUCTION
After teaching for seven years with the North Slope Borough School
District, Coralie and William Bartley retired under a retirement incentive program offered
through Alaska?s Teachers? Retirement System (?TRS? or ?system?), a retirement plan
for Alaska teachers administered by the Department of Administration, Division of
Retirements and Benefits.1 Although the Bartleys expected to qualify for normal
retirement, the division determined that they were eligible only for early retirement; the
division also calculated that they owed substantially more than they had expected to pay
for prior years of creditable teaching service outside the system. After unsuccessfully
challenging the division?s rulings before the Teachers? Retirement Board and the superior
court, the Bartleys filed this appeal. We conclude that the board and the superior court
correctly applied the controlling law except in calculating the arrearages due for the
Bartleys? creditable outside teaching service. We therefore remand for recalculation of
these arrearages but affirm in all other respects.
II. FACTS AND PROCEEDINGS
From 1968 to 1970 Coralie and William Bartley taught in Alaska for the
Bureau of Indian Affairs (?BIA?). They then left the state and taught outside Alaska
before returning in 1991 to teach for the North Slope Borough School District. The
Bartleys first became TRS members when they began teaching for the borough school
district; they spent seven years with the district, teaching in Point Hope and Kaktovik.
TRS members become eligible for retirement benefits under the provisions
set out in AS 14.25.110. Subsection .110(a) of that statute describes the eligibility
requirements for ?normal? retirement benefits; subsection .110(b) specifies the
requirements for ?early? retirement. Separate provisions of Alaska law allow TRS
members to claim retirement credit for certain non-TRS service ? military service,
Alaska BIA service, and teaching service outside Alaska. To receive credit for this non-
system service, however, TRS members must pay ?arrearage indebtedness? representing
contributions that they would have paid to the TRS had they been working as TRS
members. Calculation of arrearage indebtedness is governed by AS 14.25.060. Under
this provision, the exact amount of arrearage due in a given case depends on several
variables, including the number of years and particular kinds of non-TRS service claimed
and the time when the TRS member first joined the system.
During the 1997-98 school year, the Bartleys applied to the division for
retirement under the system?s 1996 retirement incentive program (RIP). The RIP allowed
eligible teachers to claim three extra years of service in the system. In addition to this
extra time and the seven years they had spent in the TRS, the Bartleys requested credit for
prior years of teaching service in the Alaska BIA and outside the state. When they
submitted their applications, the Bartleys expected that their total creditable time would
allow them to receive normal retirement benefits; they also expected that the division
would calculate their arrearage indebtedness for prior non-TRS service using the 7%
annual rate specified in AS 14.25.060(a).
After receiving the Bartleys? applications, the division tentatively confirmed
that they qualified for retirement under the RIP but did not specify whether they would be
eligible for normal or early retirement. In further correspondence during the school year,
the Bartleys questioned the division?s estimated calculations of their arrearages and
indicated that they were seeking normal retirement.
The division eventually calculated the Bartleys? arrearage indebtedness
using two separate rates ? one to establish the debt for their teaching service in the BIA
and another to determine the debt for their service outside the state. Specifically, the
division used the 8.65% rate specified in AS 14.25.060(d) to calculate the debt for their
two years of BIA service and the full actuarial cost method specified in
AS 14.25.060(b)(1) to determine indebtedness for their years of teaching service outside
Alaska. The Bartleys questioned these calculations but submitted their resignations from
the school district in January 1998 and left Alaska at the end of the school year in May.
Soon after they left Alaska, the Bartleys received a letter from the division informing
them that they would receive early retirement under AS 14.25.110(b) but did not qualify
for normal retirement under subsection .110(a).
The Bartleys appealed to the TRS board, contesting the division?s eligibility
determination and challenging its calculation of their arrearage debt. After conducting an
evidentiary hearing, the board affirmed the division?s determinations and rejected the
Bartleys? legal and equitable claims.
The Bartleys appealed next to the superior court and moved for a trial de
novo. After Superior Court Judge Karen L. Hunt denied a trial de novo, Superior Court
Judge Sharon L. Gleason issued a written opinion affirming the board?s decision. Judge
Gleason found that the division had properly calculated the Bartleys? arrearage
indebtedness under AS 14.25.060 and had correctly determined that they were ineligible
for normal retirement under AS 14.25.110(a)(1). Based on these findings, the judge
rejected the Bartleys? claims that the division had violated their statutory and
constitutional rights. The judge also found no basis for invoking estoppel against the
division or granting other equitable relief. Last, Judge Gleason found, the division had
neither deprived the Bartleys of the benefits promised under their RIP nor violated the
implied covenant of good faith and fair dealing.
The Bartleys appeal.
III. DISCUSSION
On appeal, the Bartleys renew the claims they asserted below.2 Having
reviewed the briefs and the record, we agree with Judge Gleason?s decision as to all but
one issue: the question of what method must be used to calculate the Bartleys? arrearage
indebtedness for their outside teaching service. We turn to that issue first.
A. Arrearage Indebtedness
The Bartleys? challenge to the determination of their arrearage indebtedness
turns largely on the division?s interpretation of AS 14.25.060. When the Bartleys first
joined the TRS in 1991, AS 14.25.060 provided, in relevant part:
(a) If a member first joined the service before
July 1, 1990, and has military service or Alaska Bureau of
Indian Affairs (BIA) service, or if a member joined the system
before July 1, 1978, and has creditable outside service, the
member is indebted to the system as follows:
(1) At the time of first becoming a member of
the system, the arrearage indebtedness is seven percent of the
base salary multiplied by the total number of years of
creditable outside, military, and Alaska BIA service. The
administrator shall add compound interest at the rate
prescribed by regulation to the arrearage indebtedness
beginning July 1, 1963, or at the time the member first
becomes eligible to claim the service, whichever is later, to
the date of payment or the date of retirement, whichever
occurs first.
. . . .
(b) If a member joins the system on or after July 1,
1978 and has creditable outside service, the member may
claim this service. If claimed, the member is indebted to the
system as follows:
(1) The arrearage indebtedness is the full
actuarial cost of providing benefits for the service being
claimed. Compound interest at the rate prescribed by
regulation shall be added to the arrearage indebtedness
beginning the date the actuarial cost is established to the date
of payment or the date of retirement, whichever occurs first.
. . . .
(d) If a member first joined the system on or after
July 1, 1990, and has military service or Alaska BIA service,
the member?s indebtedness shall be determined under (a) of
this section except that the percentage multiplier is 8.65
percent.[3]
Here, the division calculated arrearage indebtedness for the Bartleys? prior
BIA service using subsection .060(d)?s 8.65% multiplier; the division calculated the
arrearage for their outside service under the full actuarial cost method set out in
subsection .060(b)(1). In affirming the division?s and board?s determinations that these
provisions applied to the Bartleys? case, the superior court reasoned:
Alaska Statute 14.25.060(a) applies to determine
arrearage indebtedness with respect to two types of non-TRS
service: (1) military or BIA service when the member ?first
joined the service before July 1, 1990? and (2) outside service
when the TRS member ?joined the system before July 1,
1978.? This subsection, however, is modified by subsection
(d), which raises the percentage multiplier to 8.65 percent for
military or BIA service ?if a member first joined the system
on or after July 1, 1990.?
In the superior court?s view, ?[b]ecause the Bartleys performed the BIA
service before 1990 they are entitled to have their arrearage indebtedness for that service
calculated using a percentage multiplier, rather than actuarial cost. But because they did
not join the TRS system until after July 1, 1990, the correct multiplier is 8.65 percent.?
Following the same approach, the court concluded that subsection .060(b)(1) governed
the Bartley?s arrearage indebtedness for outside service and that the Bartleys? outside
teaching service therefore did not qualify as creditable service governed by subsection
.060(a)(1).
The Bartleys challenge the board?s and superior court?s interpretation of
AS 14.25.060, maintaining that it conflicts with the plain meaning of subsection .060(a).
They assert that, by requiring seven percent of the base salary to be ?multiplied by the
total number of years of creditable outside, military, and Alaska BIA service,?4
subsection .060(a) necessarily prohibits ?service splitting? ? in other words, treating
outside service and BIA service differently.
We agree that the challenged interpretation conflicts with the plain meaning
of AS 14.25.060(a). The express terms of subsection .060(a) apply to the Bartleys?
situation because the Bartleys previously served in the Alaska Bureau of Indian Affairs
and ?first joined the service before July 1, 1990.?5 The formula spelled out in this
subsection requires an eligible claimant?s entire ?arrearage indebtedness? to be calculated
at the rate of ?seven percent of the base salary multiplied by the total number of years of
creditable outside, military, and Alaska BIA service.?6 In the Bartleys? case, subsection
.060(d) partly modifies subsection .060(a): because the Bartleys first joined the TRS ?
?the system? ? after July 1, 1990, subsection (d) substitutes a multiplier of 8.65% for the
7% multiplier specified in subsection (a). In all other respects, however, subsection (d)
leaves subsection (a)?s method of calculating arrearages unchanged, expressly requiring
?the member?s indebtedness . . . [to] be determined under (a) of this section except that
the percentage multiplier is 8.65 percent.?7 As the Bartleys correctly point out, the plain
language of subsection .060(a) requires the same multiplier to be used in calculating
arrearages for all creditable non-TRS service: ?At the time of first becoming a member of
the system, the arrearage indebtedness is seven percent [or 8.65 percent if subsection
.060(d) applies] of the base salary multiplied by the total number of years of creditable
outside, military, and Alaska BIA service.?8
The superior court ruled that subsection .060(d)?s reference back to
subsection .060(a) applied only to the Bartleys? prior BIA service ? in other words, that
their arrearages for creditable BIA service should be calculated under subsection .060(a)
?except that the percentage multiplier is 8.65 percent.?9 By contrast, the superior court
reasoned, the Bartleys? indebtedness for their outside service had to be calculated by the
actuarial cost method set out in subsection .060(b) because that subsection best described
the Bartleys? situation: subsection .060(b) expressly requires arrearages to be determined
by ?the full actuarial cost of providing benefits? ?[i]f a member joins the system on or
after July 1, 1978, and has creditable outside service.?10 Yet as already pointed out
above, the plain language of subsection .060(d) militates against this interpretation
because it designates subsection .060(a) as the proper method of calculating arrearages for
the ?member?s indebtedness? without expressly limiting that indebtedness to periods of
military or BIA service.
Of course, the plain meaning of a statute does not always control its
interpretation, for we have recognized that legislative history can sometimes alter a
statute?s literal terms. But under Alaska?s sliding-scale approach to statutory
interpretation, ?the plainer the language of the statute, the more convincing contrary
legislative history must be.?11 Here, we find no legislative history contrary to the plain
meaning of AS 14.25.060. In fact, the version of this provision that immediately
preceded the one applicable to the Bartleys? case reinforces the plain meaning of
AS 14.25.060(d), as we described it above.
Before 1990, AS 14.25.060 set only two rates that could be used in
calculating a new TRS member?s arrearage indebtedness for prior creditable non-TRS
service.12 The first rate was spelled out in former subsection .060(a). That provision
specified that ?the arrearage indebtedness is seven percent of the base salary multiplied
by the total number of years of creditable outside, military, and Alaska BIA service.?13
Former subsection .060(a) applied this rate to two distinct sets of TRS members: those
with creditable ?military service or Alaska Bureau of Indian Affairs (BIA) service,?
regardless of when they joined the TRS; and those with ?creditable outside service,? but
only if they ?joined the system [the TRS] before July 1, 1978.?14
The second arrearage rate set out in former AS 14.25.060 was described in
subsection .060(b)(1), which required arrearage indebtedness to be calculated at ?the full
actuarial cost of providing benefits for the service being claimed.?15 By its own terms,
subsection .060(b)(1) applied this rate only ?[i]f a member joins the system on or after
July 1, 1978 and has creditable outside service.?16 Moreover, because former subsection
.060(a)(1) entitled any member with creditable military or BIA service to have the seven-
percent rate applied in calculating arrearages for all prior creditable service ? that is,
military, BIA, and outside service17 ? the full-actuarial-cost method set out in former
subsection .060(b)(1) implicitly excluded members with creditable outside service who
were also entitled to claim either BIA or military service at seven percent under
subsection .060(a)(1) ? in other words, under former subsection .060(a)(1), subsection
(b)(1)?s full-actuarial-cost provision would not apply to TRS members claiming creditable
outside service and military or BIA service or those claiming only creditable outside
service who joined the TRS before July 1, 1978.
An opinion issued by the Attorney General in 1982 confirms this plain-
language interpretation of the pre-1990 version of AS 14.25.060:
AS 14.25.060, as amended in 1977, divides the TRS
membership into two groups, as follows:
(1) those who either have military service or Alaska
Bureau of Indian Affairs service, or who joined the system
before July 1, 1978 and have creditable outside service of any
kind, and
(2) those who joined the system on or after July 1,
1978 and have creditable outside service.[18]
As the Attorney General interpreted the pre-1990 provision, the first group of members it
defined had a vested right to have their arrearage indebtedness calculated under the non-
actuarial method set out in subsection .060(a): ?The statute in question, AS 14.25.060,
extends this protection to those persons who either were former members on July 1, l978,
or who claim credit for military or Alaska BIA service.?19 In the Attorney General?s
view, the statute would never subject these members to service splitting ? that is, it
would never require a TRS member who had a right to pay arrearages at seven percent for
creditable BIA or military service to pay at the higher, full-actuarial-cost rate for
concurrently claimed outside service:
A person in the first group must pay seven percent of
his or her base salary for each year of creditable outside
service. A person in the second group must pay full actuarial
cost for all creditable outside service. It is our opinion that
the statutory classification is unambiguous and does not
permit you to require any person who either was a member of
the system before July 1, 1978 or who claims military or BIA
service credit to pay the full actuarial cost of creditable
outside service.[20]
In 1990, however, the legislature amended the TRS statutes to increase new
TRS members? annual TRS contributions from seven percent to 8.65 percent beginning
January 1, 1991.21 The change triggered the need to adopt a corresponding increase in the
arrearage-indebtedness rate for TRS members first joining the system after the 1990
contribution increase. This new class of TRS members could properly be charged for
arrearages at the same increased rate they would pay for their annual TRS contributions
? 8.65 percent ? even if they had prior military or BIA service that entitled them to
escape paying for arrearages based on full actuarial cost.
The legislature addressed the need to define the arrearage rate for this newly
created class by amending former AS 14.25.060(a) and adding a new subsection to
AS 14.25.060, subsection .060(d).22 The amendment to subsection .060(a) changed the
definition of TRS members qualifying to have their arrearage indebtedness calculated at
seven percent by excluding TRS members with creditable military or Alaska BIA service
who first joined that service on or after July 1, 1990, the effective date of the legislation
enacting the 1990 TRS contributions increase.23 In turn, the newly added subsection
.060(d) dealt with all members originally included in subsection .060(a) who had a vested
right to claim prior creditable service at a non-actuarial rate but whose contribution rate
was not frozen at seven percent. Specifically, subsection .060(d) defines this new group
to include all TRS members with creditable military or BIA service who first joined the
TRS on or after the 1990 amendment?s effective date, July 1, 1990;24 the subsection
requires these members to pay arrearages at the increased rate of 8.65 percent, but
continues to exempt them from full actuarial costs by mandating that ?the member?s
indebtedness shall be determined under [subsection .060] (a) except that the percentage
multiplier is 8.65 percent.?
Although subsection .060(d) does not explicitly mention outside service, this
omission proves inconsequential. Under both the current and prior versions of subsection
.060(a), only two ways exist for a TRS member with prior creditable outside service to
escape paying full actuarial costs for arrearages: (1) by joining the TRS before July 1,
1978, which would vest the member with the right to a seven-percent arrearage rate as of
1978; or (2) by tying the outside-service claim to a claim for military or BIA service,
which would peg the arrearage rate for the member?s outside service to the rate that
would govern the concurrent claim for military or BIA service. Hence, no TRS member
claiming credit for prior outside service alone could ever be charged for arrearage
indebtedness at the 8.65 percent rate set out in subsection .060(d).
We recognize that it is possible to construct a contrary meaning for
subsection .060(d). Because that subsection specifically mentions only military service
and BIA service, and does not mention creditable outside service, a question potentially
arises whether that subsection?s reference to ?the member?s indebtedness? was intended
by the legislature to be limited to military or BIA service. Although the answer to that
question is not necessarily self-evident from the text of subsection .060(d), the legislative
history we discuss above convinces us that the legislature did not intend, when it enacted
subsection .060(d) in 1990, to limit the cross-reference to subsection .060(a) to military or
BIA service, and thus did not intend to exclude creditable outside service from
application of the 8.65% interest rate.
In summary, then, the legislative history of section .060 reinforces the plain
language of the current provision?s subsection .060(d). We thus conclude that the
statute?s plain meaning applies here. When subsection .060(d) applies to part of a
member?s claim, the subsection?s language requires that the member?s entire arrearage
indebtedness must be calculated following the method set out in subsection .060(a),
except that the 8.65% multiplier adopted in subsection .060(d) replaces subsection
.060(a)?s seven-percent multiplier. Because neither subsection .060(a) nor subsection
.060(d) permits split calculation of arrearage indebtedness for claims mixing prior outside
service with military or BIA service, the board?s decision to calculate the Bartleys?
outside service arrearages under subsection .060(b) must be reversed. These arrearages
must be recalculated under the method set out in subsection .060(a)(1), except that an
8.65% rate must apply.
B. Eligibility for Normal Retirement Benefits
The next issue we face is whether the board correctly found the Bartleys to
be eligible only for early, rather than normal, retirement benefits. We agree with the
superior court?s decision to affirm the board on this point and adopt the well-reasoned
discussion of this point set out in the superior court?s Decision and Order, which we
attach as an appendix to this opinion. We add the following observations to those made
by the superior court.
As previously noted, the Bartleys? eligibility for normal retirement turns on
the meaning of AS 14.25.110. Specifically, the Bartleys argue that they meet the
requirements of subsection .110(a)(1) which provides for normal retirement benefits only
when a TRS member ?was first hired before July 1, 1975, has attained the age of 55
years, and has at least 15 years of credited service, the last five of which have been
membership service or is otherwise vested in the system.?25 The division interpreted this
provision?s phrase ?first hired? as referring solely to the date that a TRS member is first
hired into a TRS position. But the Bartleys contend that the phrase includes the date a
member is first hired into any creditable non-TRS service. Hence, the Bartleys insist,
they qualify for normal retirement because they were first hired into the BIA service
before July 1, 1975.
The superior court rejected the Bartleys? interpretation after carefully
analyzing AS 14.25.110?s history and purpose. To the extent that the court?s thorough
analysis leaves any room for ambiguity, we find it helpful to consider the division?s
interpretation of this provision. The division?s 1991 handbook gave the following
response to the question ?When will I be eligible to retire and start receiving monthly
benefits??:
That depends on your age and TRS service. If you
meet the minimum TRS service requirements described below
and you were first hired under the TRS:
ú before July 1, 1990, you can retire at age 55 for normal
retirement or age 50 for early.
ú after June 30, 1990, you can retire at age 60 for normal
retirement or age 55 for early.
(Emphasis added.)
At their hearing before the board, the Bartleys acknowledged that they
received and read this portion of the handbook and that they understood that the
division?s interpretation would not entitle them to normal retirement. Despite their
knowledge of the division?s interpretation, which was confirmed for them by a division
representative, the Bartleys elected to take the position that the handbook explanation did
not apply to them.
Although we generally rely on our independent judgment when we decide
questions involving pure statutory interpretation, we have recognized that an agency?s
interpretation of a law within its area of jurisdiction can help resolve lingering ambiguity,
particularly when the agency?s interpretation is longstanding.26 In such cases we have
suggested that precedent counsels restraint and directs us to look for ?weighty reasons?
before substituting our judgment for the agency?s.27 Here, as reflected by its 1991
handbook, the division?s interpretation of AS 14.25.110?s ?first hired? language is
longstanding, and so provides additional support for the interpretation the superior court
gleaned from the statute?s history and purpose. Because the superior court?s
interpretation conforms with the division?s consistent application of the statute, we hold
that the superior court correctly rejected the Bartleys? claim of entitlement to normal ?
rather than early ? retirement.28
C. Denial of De Novo Hearing
The Bartleys raise one additional claim not addressed in the superior court?s
Decision and Order: they argue that the court erred in denying their request for a trial de
novo. We have previously recognized that the decision whether to allow a trial de novo is
committed to the superior court?s sound discretion.29 Here, our review of the record
reveals no abuse of discretion. As the superior court correctly noted in rejecting the
Bartleys? various claims of procedural unfairness, the board gave the Bartleys an ample
opportunity to develop and present all their claims. Because we see no procedural
deficiency that would have required the superior court to hear new evidence on appeal,
we find no abuse of discretion in the superior court?s denial of the Bartleys? motion for a
de novo hearing.
IV. CONCLUSION
For these reasons, we REVERSE the board?s calculation of the Bartleys?
arrearage indebtedness for their prior creditable BIA service and REMAND for
recalculation as provided in this opinion; in all other respects, we AFFIRM.
A P P E N D I X
IN THE SUPERIOR COURT FOR THE STATE OF ALASKA
THIRD JUDICIAL DISTRICT AT ANCHORAGE
CORALIE BARTLEY and )
WILLIAM CLARK BARTLEY, )
)
Appellants, )
v. )
)
STATE OF ALASKA, DEPARTMENT OF )
ADMINISTRATION, TEACHERS? )
RETIREMENT BOARD, )
)
Appellee. )
) Case No. 3AN-99-12749 CI
DECISION AND ORDER ON APPEAL
I. INTRODUCTION
Coralie Bartley and William Clark Bartley appealed to the Teachers?
Retirement Board contending that the Division of Retirement and Benefits (1) had used
an incorrect methodology to compute the cost to the Bartleys of purchasing additional
retirement benefits based on the Bartleys? prior years of teaching outside of the State
Teachers? Retirement System; and (2) had erred in concluding that the Bartleys were not
eligible for normal retirement benefits, but only early retirement benefits. The Board
affirmed the Division?s determinations. The Bartleys now appeal the Board?s decision.
II. FACTS AND PROCEEDINGS
Coralie Bartley and William Clark Bartley (the Bartleys) both taught for the
Bureau of Indian Affairs (BIA) in Alaska from 1968 to 1970. They then taught outside of
Alaska for a number of years. Beginning in August 1991 and continuing through the end
of the school year in 1998, the Bartleys taught for the North Slope Borough School
District (the District). They became members of the State Teachers? Retirement System
(TRS) when they joined the District in 1991.
During the last school year that they taught for the District, the Bartleys both
applied to the Division of Retirement and Benefits (the Division) for normal retirement
under a retirement incentive program (RIP) made statutorily available for a limited time.
The Bartleys believed that their prior Alaska BIA service would permit them to buy
additional TRS retirement benefits for their BIA and outside service at a rate calculated
under AS 14.25.060(a). Under this statute, the purchase rate is calculated by using 7.0
percent as a base salary multiplier. The Bartleys also believed that after buying in two
years of BIA service and at least six years of outside service they would be eligible for
normal retirement at their then-current age of 55.
The Bartleys first each requested TRS credit for their two years of BIA
service. The Division calculated their arrearage indebtedness for that service under AS
14.25.060(d), which uses 8.65 percent as the base salary multiplier. The Bartleys later
requested TRS credit for their years of outside teaching service. The Division calculated
their arrearage indebtedness for that service using the full actuarial cost method of AS
14.25.060(b).
In May 1998, the Division informed the Bartleys that they were not eligible
for normal retirement. Instead, under the Division?s interpretation of the applicable
statutes, the Division determined that the Bartleys were early retirees.
The Bartleys appealed the Division?s decision to the Teacher?s Retirement
Board (the Board). The Bartleys argued that the correct interpretation of the applicable
statutes required that their arrearage indebtedness be calculated at 7% for both their BIA
and outside teaching, and that the Bartleys were entitled to normal retirement benefits.
The Bartleys also contended that they had detrimentally relied on Division
representations that they would be eligible for normal retirement.
The Board made factual findings and issued a written decision (Decision 99-
4). The Board interpreted the applicable statutes in the same manner as the Division with
regard to both the arrearage indebtedness and the early retirement issues. The Board also
rejected the Bartleys? equitable estoppel claim.
The Bartleys appeal to this court from the Board?s decision.
III. DISCUSSION
A. Standards of Review
Appellate courts review agency factual findings under the substantial
evidence standard and will uphold factual findings if the agency record contains relevant
evidence a reasonable person would accept to support them. Handley v. State, Dep?t of
Revenue, 838 P.2d 1231, 1233 (Alaska 1992).
Courts use their independent judgment to decide questions of constitutional
law and substitute their judgment for that of the agency to decide legal questions not
involving agency expertise or fundamental policy choices. Rollins v. State, Dep?t of
Revenue, 991 P.2d 202, 206 (Alaska 1999); Handley, 838 P.2d at 1233.
In contrast, appellate courts review legal issues implicating agency expertise
or fundamental policy choices only to ensure that the agency decision was not arbitrary,
capricious, or unreasonable. Bering Straits Coastal Management Program v. Noah, 952
P.2d 737, 741 (Alaska 1998); Handley, 838 P.2d at 1233. The agency?s interpretations of
its own regulations are subject to review only to ensure the interpretations are reasonable
and not arbitrary. Handley, 838 P.2d at 1233; Jager v. State, 537 P.2d 1100, 1107 n. 23
(Alaska 1975).
The interpretation of AS 14.25.060 and AS 14.25.110 and the application of
these statutes to the Bartleys are not matters that involve agency expertise. Therefore,
this court will substitute its judgment in interpreting these statutory provisions. Similarly,
?whether equitable estoppel applies [to particular facts] is a question of law not involving
agency expertise? that courts answer using their independent judgment. State v. Schnell, 8
P.3d 351, 355 (Alaska 2000); see also Power Constructors, Inc. v. Taylor & Hintze, 960
P.2d 20, 26 (Alaska 1998). On the estoppel issues, deference is due only to the agency?s
findings of fact.
B. Interpreting AS 14.25.060
TRS members may claim retirement credit for military service, Alaska BIA
service, or teaching outside Alaska, but must pay TRS ?arrearage indebtedness? for the
claimed years.
Alaska Statute 14.25.060 establishes several rates for calculating the
arrearage indebtedness. Subsection (a) reads in relevant part:
If a member first joined the service before July 1, 1990, and
has military service or Alaska Bureau of Indian Affairs (BIA)
service, or if a member joined the system before July 1, 1978,
and has creditable outside service, the member is indebted to
the system as follows:
(1) At the time of first becoming a member of the
system, the arrearage indebtedness is seven percent of the
base salary multiplied by the total number of years of
creditable outside, military, and Alaska BIA service. . . .
Subsection (d) provides:
If a member first joined the system on or after July 1, 1990,
and has military service or Alaska BIA service, the member's
indebtedness shall be determined under (a) of this section
except that the percentage multiplier is 8.65 percent.
Also relevant is subsection (b)(1), which provides:
If a member joins the system on or after July 1, 1978, and has
creditable outside service, the member may claim this service.
If claimed, the member is indebted to the system as follows:
(1) The arrearage indebtedness is the full actuarial cost
of providing benefits for the service being claimed.
Compound interest at the rate prescribed by regulation shall
be added to the arrearage indebtedness beginning the date the
actuarial cost is established to the date of payment or the date
of retirement, whichever occurs first.
The Bartleys asserted that subsection (a) was applicable to all of their years
of non-TRS teaching service ? for both the BIA and non-BIA service. The Division
rejected this contention. With regard to the BIA service, the Division applied subsection
(d). And with regard to the non-BIA outside service, the Division applied subsection (b).
The Board affirmed the Division?s interpretation.
1. The Bartleys? arrearage indebtedness for their BIA service is
properly calculated under AS 14.25.060(d).
Alaska Statute 14.25.060(a) applies to determine arrearage indebtedness
with respect to two types of non-TRS service: (1) military or BIA service when the
member ?first joined the service before July 1, 1990? and (2) outside service when the
TRS member ?joined the system before July 1, 1978.? This subsection, however, is
modified by subsection (d), which raises the percentage multiplier to 8.65 percent for
military or BIA service ?if a member first joined the system on or after July 1, 1990.?
The history of AS 14.25.060 suggests that subsection (d), with its higher
multiplier, was intended to increase the percentage multiplier for arrearage indebtedness
applicable to BIA service for members who did not join the TRS until after 1990. In
1977, AS 14.25.060(a) was amended to provide for a multiplier of 7.0 percent to calculate
certain arrearage indebtedness:
If a member has military service or Alaska Bureau of Indian
Affairs (BIA) service, or if a member joined the system before
July 1, 1978, and has creditable outside service. Sec. 3, ch.
128, SLA 1977.
That description was retained when the statute was rewritten in 1980. See Sec. 6, ch. 13,
SLA 1980. In 1990 the legislature changed 14.25.060(a) to its current language.
Simultaneously, the legislature created AS 14.25.060(d):
If a member first joined the system on or after July 1,
1990, and has military service or Alaska BIA service,
the member?s indebtedness shall be determined under
(a) of this section except that the percentage multiplier
is 8.65 percent. Sec. 3, ch. 97, SLA 1990.
The effective date for both changes was July 1, 1990. See Sec. 18, ch. 97, SLA 1990.
Historical context suggests that the 1990 revisions continued to require arrearage
indebtedness for BIA service to be calculated using a percentage multiplier for members
who began their Alaska BIA service before July 1, 1990. But, under AS 14.25.060(d), if
the member who performed such service did not join the TRS system until on or after July
1, 1990, then the arrearage indebtedness for this Alaska BIA service is calculated using
8.65 percent, rather than 7.0 percent, as the base salary multiplier.
The Bartleys joined the TRS system after July 1, 1990 and had BIA service
prior to 1990. Alaska Statute 14.25.060(d), enacted in 1990 before the Bartleys joined the
TRS system, covers the Bartleys? situation with respect to their BIA service. Because
the Bartleys performed the BIA service before 1990 they are entitled to have their
arrearage indebtedness for that service calculated using a percentage multiplier, rather
than actuarial cost. But because they did not join the TRS system until after July 1, 1990,
the correct multiplier is 8.65 percent. The Board did not err in approving the Division?s
calculations of the Bartleys? arrearage indebtedness for Alaska BIA service.
The Bartleys suggest that they were constitutionally entitled to a calculation
using 7.0 percent as the multiplier because that rate was formerly available to all TRS
members who had served in the BIA before 1975. But the right to accrued pension
benefits, arising from article XII, section 7 of the Alaska Constitution, attaches upon
enrollment in TRS. See Flisock v. State, Department of Retirement & Benefits, 818 P.2d
640, 643 (Alaska 1991). The Bartleys are thus constitutionally entitled to have their
pension benefits calculated under the law in effect when they joined TRS in 1991, not the
law that was in effect when they joined the Alaska BIA service in 1968.
2. The Division properly calculated the Bartleys? arrearage
indebtedness for non-BIA outside service under AS 14.25.060(b).
The Bartleys also contend that the Division erred in calculating their
arrearage indebtedness for their non-BIA outside service using the actuarial cost under
AS 14.25.060(b). They contend that under AS 14.25.060(a) the Division was required to
use the percentage multiplier method to calculate their arrearage indebtedness for all of
their prior teaching service ? not just the BIA service. They also contend that the
Division?s actuarial cost calculations were erroneous and that the Division erred by
adding interest to their arrearage indebtedness for non-BIA outside service.
The Bartleys contend that subsection (a) of AS 14.25.060, which states that
?the arrearage indebtedness is seven percent of the base salary multiplied by the total
number of years of creditable outside, military and Alaska BIA service? demonstrates a
legislative intent to require aggregation of all service claimed by a member ? not just the
BIA service. But the language of AS 14.25.060(a)(1) does not warrant such a
construction. For members with BIA service predating July 1, 1990, only their BIA
service constitutes ?creditable service? within the meaning of AS 14.25.060(a)(1), or as
applicable here, AS 14.24.060(d).
Arrearage indebtedness for non-BIA service for members who joined the
TRS system on or after July 1, 1978 is established under AS 14.25.060(b), which reads:
If a member joins the system on or after July 1, 1978, and has
creditable outside service, the member may claim this service.
If claimed, the member is indebted to the system as follows:
(1) The arrearage indebtedness is the full actuarial cost
of providing benefits for the service being claimed.
Compound interest at the rate prescribed by regulation shall
be added to the arrearage indebtedness beginning the date the
actuarial cost is established to the date of payment or the date
of retirement, whichever occurs first.
The Bartleys? arrearage indebtedness for non-BIA outside service should be
calculated at full actuarial cost pursuant to this subsection. The Division had found the
actual cost of crediting the Bartleys with their non-BIA outside service to be 20.034% of
the average base salary plus interest. Substantial evidence in the record supports the
Board?s findings. The Division?s calculations are consistent with AS 14.25.060(b) and do
not, as the Bartleys contend, violate their constitutional rights to retirement benefits under
the laws in effect when they joined TRS in 1991.1 The agency properly calculated the
Bartleys? arrearage indebtedness for non-BIA outside service.
C. The Bartleys are not eligible for normal retirement under AS 14.25.110.
While the Bartleys were teaching for the District the legislature passed a
retirement incentive program (RIP) that made three years of retirement credit available for
a limited time to encourage eligible TRS members to retire. See Ch. 92, SLA 1997; ch.
65, SLA 1996. Participation in the RIP for teachers like the Bartleys was conditioned on
their eligibility to retire under AS 14.25.110, which makes different retirement benefits
available to TRS members depending on their ages and years of service. Under AS
14.25.110(a) normal retirement benefits are available to a TRS member who meets
specified criteria. Under AS 14.25.110(b) lesser early retirement benefits are available to
younger TRS members who satisfy certain of the criteria listed in AS 14.25.110(a).
The Bartleys assert that they qualified for normal retirement under
14.25.110(a)(1), which provides that normal retirement is available to a member who
was first hired before July 1, 1975, has attained the age of 55
years, and has at least 15 years of credited service, the last
five of which have been membership service or is otherwise
vested in the system[.] (emphasis added)
1. Interpreting ?first hired?
On appeal to this court, the Bartleys insist that they were qualified for
normal retirement under AS 14.25.110(a)(1) because they were first hired by the BIA
before July 1, 1975. The Division and Board both interpreted AS 14.25.110(a)(1) as
making normal retirement available only to those teachers first hired before July 1, 1975
by a TRS employer. To resolve this dispute, this court must interpret ?first hired,? the
meaning of which is a question of law not involving agency expertise that the court
answers using its independent judgment. Cf. Flisock v. State, Division of Retirement and
Benefits, 818 P.2d 640, 642 (Alaska 1991).
a. Prior statutory language
In the 1960?s there was no distinction between normal and early retirement;
TRS members were eligible for retirement at age 55 if they had been in membership
service for the prior five years and had a total of at least 10 years of membership service
and 15 years of creditable service. See Sec. 4, ch. 86, SLA 1963 (amending AS
14.25.110). By 1973, normal retirement was available to 60-year-old teachers with 15
years of creditable service, the last five of which were membership service, but 55-year-
old teachers with such records were only eligible for early retirement. See Sec. 8, ch. 66,
SLA 1973 (repealing and reenacting AS 14.25.110). In 1974, the governing statute was
modified to permit 60-year-old teachers with 8 years of membership service to retire
normally, but there was no modification of the retirement requirements for 55-year-olds.
See Sec. 2, ch. 57, SLA 1974 (amending AS 14.25.110(a)).
The distinction between teachers hired before and after July 1, 1975
originated in legislative changes adopted in 1975. Chapter 173 of the 1975 Session Laws
changed AS 14.25.110(a) to read as follows:
A teacher is eligible for normal retirement if he has completed
either
(1) at least 15 years of creditable service, the last five of
which have been membership service, except that a member
first hired after July 1, 1975 must have eight years of
membership service, and has attained the age of 55 years . . .
See Sec. 1, ch. 173, SLA 1975. As a result of these changes, 55-year-old teachers with
15 years of creditable service hired after July 1, 1975 were required to have at least eight
years of membership service ? three more years of membership service than was
required of teachers first hired before July 1, 1975.
The statute was again revised in 1980, but retained the requirement of eight
years of membership service for normal retirement of 55-year-old teachers hired after
July 1, 1975:
A member is eligible for a normal retirement benefit if he
(1) was first hired before July 1, 1975, has at least 15 years of
credited service, the last five of which have been membership
service;
(2) has attained the age of 55 years and has at least eight years
of membership service; [or]
(3) has attained the age of 55 years, has at least 5 years of
membership service, and has at least three years of Alaska
BIA service;
?
Sec. 14, ch. 13, SLA 1980. Although the permutations for BIA service shifted slightly
during legislative changes in 1986, the lower membership service requirement for
teachers first hired before July 1, 1975 endured. See Sec.1, ch. 177, SLA 1986 and Sec.1,
ch. 81, SLA 1986.
When the minimum normal retirement age for teachers with eight years of
membership service increased from 55 years to 60 years in 1990, the legislature retained
the provision permitting teachers first hired before July 1, 1975 to retire at age 55 based
on fifteen years of credited service, the last five of which were membership service. See
Sec. 5, ch. 97, SLA 1990. A second bill passed in 1990 modified the requirements to AS
14.25.110(a)(1) to permit the normal retirement of 55-year-old teachers based either on
fifteen years of credited service the last five of which were membership service or on
being ?otherwise vested in the system.? See Sec. 1, ch. 79, SLA 1990.
b. Interpreting the language in effect when the Bartleys worked
for the District as active TRS members
Since the 1990 revisions, Alaska Statute 14.25.110(a) has provided that
a member is eligible for a normal retirement benefit if the
member
(1) was first hired before July 1, 1975, has attained the age of
55 years, and has at least 15 years of credited service, the last
five of which have been membership service or is otherwise
vested in the system[.]
The statutory language ?first hired before July 1, 1975? thus preserves a historical
distinction between teachers hired before and after the effective date of the 1975
legislative revisions. The continued distinction makes sense because teachers who joined
the TRS system before that date cannot constitutionally be made subject to subsequent
increases in age and length of service requirements. See Flisock v. State, Division of
Retirement & Benefits, 818 P.2d 640, 643 (Alaska 1991) (interpreting article XII, section
7 of the Alaska Constitution).
AS 14.25.110(a) specifies that ?a member is eligible for a normal retirement
benefit if the member (1) was first hired before [a certain date] and [satisfies certain
service criteria].? The use of the word ?member,? and the historical and statutory context
of AS 14.25.110(a)(1) suggest that the term ?first hired? refers to when a member was
first hired into the TRS system, and does not refer to the date on which a teacher may
have been first hired into other creditable employment.
The Bartleys point to other statutes in which the legislature has been more
explicit about which employment satisfies time-sensitive hiring requirements. But greater
specificity in unrelated statutes does not prove that the legislature intended to interpret
?first hired? in this statute to refer to the teacher being first hired into any creditable
employment before July 1, 1975. And, contrary to the Bartleys? suggestion, there is no
legal or equitable preference favoring a construction of ?first hired? that would make
normal retirement available to 55-year-old teachers who entered the TRS system toward
the end of careers begun elsewhere before 1975. Comparison to other TRS members now
eligible for normal retirement ? such as those with 25 years of credited service or 20
years of membership service ? does not demonstrate that the legislature intended to
make TRS members with only 15 years of credited service, 5 in membership service,
eligible for normal retirement benefits at age 55 simply because they were first hired into
creditable service by a non-TRS employer before July 1, 1975.
The Bartleys, who did not become TRS members until they were hired by
the District in 1991, were not entitled to a normal retirement benefit under AS
14.25.110(a)(1) because they were not ?first hired? into the TRS system before July 1,
1975.
2. Otherwise vested
Alaska Statute 14.25.110(a)(1) provides that normal retirement benefits are
available to a member who
was first hired before July 1, 1975, has attained the age of 55
years, and has at least 15 years of credited service, the last
five of which have been membership service or is otherwise
vested in the system[.] (emphasis added)
The Bartleys contend that they should qualify for normal retirement under
AS 14.25.110(a)(1) because they must be ?otherwise vested.? They contend that they
must have been vested because participation in the RIP was limited to vested TRS
members. See Sec. 2, ch. 65, SLA 1996.
An active member of TRS is vested if the member has any of the following:
(A) 15 years of service, the last five of which have been
membership service, for a member first hired before July 1,
1975;
(B) eight years of membership service;
(C) five years of membership and three years of BIA service;
(D) 12 school years of part-time membership service or 12
school years in each of which the member earned either part-
time or full-time membership service.
AS 14.25.220(42). The Bartleys reason that since they were accepted into the RIP and
they do not satisfy vesting criteria (B), (C), or (D), they must have been ?first hired before
July 1, 1975? under subsection (A) and therefore qualify for normal retirement benefits
under AS 14.25.110(a)(1).
The Bartleys? argument is without merit. At the time of the Bartleys?
retirement, AS 14.25.110 required that 55-year-old teachers have at least five years of
TRS service and at least three years of BIA service to be entitled to early retirement.
Since 2000, early retirement has been available to teachers with at least five years of
membership service and Alaska BIA service, which when added to the membership
service, will equal at least eight years. See Sec. 7, ch. 68, SLA 2000. The Division may
well have designated the Bartleys early retirees based on AS 14.25.110(b) and
expansively interpreted former AS 14.25.110(a)(3) in the manner now codified in the
2000 amendment. The Division might also have generously interpreted vesting criteria
(C), which is identical for former AS 14.25.110(a)(3), so as to allow the Bartleys to
participate in the RIP based on their seven years of membership service and two years of
BIA service. There is no indication that the Division considered the Bartleys to be vested
based on having first been hired before July 1, 1975. And if the Division had done so,
that error does not constrain this court?s independent interpretation of the statutory
prerequisites to normal retirement or the vesting criteria.
Under a strict construction of the then-existing statute, the Bartleys did not satisfy any of
the vesting criteria. Yet the issue is immaterial, because the Bartleys were accepted into
the RIP program as early retirees, and received the substantial benefits of that program.
The Division?s favorable determination to the Bartleys in that regard is not on appeal.
Irrespective of that determination, the Bartleys were not first hired by a TRS employer
until 1991 and are not entitled to normal retirement benefits.
3. Estoppel
The Bartleys also contend that the Division should be equitably estopped
from designating them as early retirees because it did not more clearly and promptly
reject their requests for normal retirement. There are four elements to equitable estoppel:
?(1) assertion of a position by conduct or word, (2) reasonable reliance thereon, . . . (3)
resulting prejudice? and, when estoppel is claimed against the state, (4) a lack of
significant prejudice to the public interest. See Municipality of Anchorage v. Schneider,
685 P.2d 94, 97 (Alaska 1984).
The Board noted that the Bartleys received a smaller benefit as early retirees
than they would as normal retirees and that granting the Bartleys normal retirement would
not significantly prejudice the public interest. But the Board found that when
communicating with the Bartleys before their retirement, the Division had never asserted
that the Bartleys were entitled to normal retirement. Instead, the Board found that in its
communications with the Bartleys, the Division had recited facts consistent only with
early retirement benefits. The Board also found that the Bartleys had ignored the
implications of the Division?s communications. Ultimately, the Board rejected the
Bartleys? estoppel claims because two of the elements ? assertion of a position by the
Division and reasonable reliance thereon by the Bartleys ? were not present. There is
substantial support in the record for the Board?s findings with respect to whether the
Division asserted a contrary position that the Bartleys reasonably relied upon.
In December 1997 the Division informed both Bartleys of their indebtedness
for their claimed years of BIA service. In February 1998 the Division sent the Bartleys
letters acknowledging receipt of their applications to participate in the RIP, stating that
they would not be able to retire unless they fully paid their indebtedness for their claimed
BIA service, and listing paperwork that the Bartleys still needed to file. The Division?s
letter expressly stated that the Bartleys? retirements were subject to their satisfaction of
the statutory prerequisites to retirement. In March 1998 the Division sent the Bartleys a
letter projecting the price of claimed outside service and asking for written confirmation
that they desired to claim the service. The Bartleys wrote the Division requesting fewer
years of outside service and suggesting that before recalculating their arrearage the
Division should examine AS 14.25.060(d) and 14.25.060(a). In April 1998 the Division
sent the Bartleys updated figures and clearly stated that it would calculate their
indebtedness for their non-BIA outside service at actuarial cost under AS 14.25.060(b),
rather than by using a percentage multiplier, because the Bartleys had not joined TRS
until after July 1, 1990. In May 1998 the Division responded in writing to questions from
the Bartleys regarding calculation of their arrearage indebtedness for outside service and
clearly stated that both Bartleys would be considered early retirees.
The Bartleys note that the Division did not use the words ?early retirement?
in its prior letters and contend that by accepting their retirement applications the Division
impliedly asserted that it would find them eligible for normal retirement. But, as Mr.
Bartley conceded in his testimony before the Board, the Division had not told the Bartleys
whether they would be early or normal retirees. The record contains substantial support
for the Board?s finding that the Division did not affirmatively assert that the Bartleys
were entitled to normal retirement.
The Bartleys argue that the Division had a duty to more explicitly inform
them that they would not be eligible for normal retirement and that they should not be
expected to have divined that the Division would not accept their BIA service as the date
for having first been hired for the purposes of AS 14.25.110. But, even if the Division
might have more promptly and clearly asserted that the Bartleys were not entitled to
normal retirement, the Bartleys? estoppel claim must fail because the record supports the
Board?s finding that the Bartleys did not actually rely on the Division?s representations.
As the Board observed in its decision, Mr. Bartley testified that the Bartleys? expectations
of normal retirement were based on their own interpretation of legal materials, not on
representations made by the Division. Mr. Bartley also testified that he understood early
on that the Division interpreted the law differently than he did.
Because substantial evidence supports the Board?s finding that the Bartleys
did not actually rely on an assertion by the Division that they would be eligible for normal
retirement, the Bartleys? claim of equitable estoppel is rejected.
4. RIP credit
RIP participants gain eligibility for three additional years of benefit, which
are allocated as follows: (1) as years toward age or service requirements for normal
retirement; (2) as years toward age and service requirements for early retirement; (3) as
years reducing the actuarial adjustment for early retirement; then (4) as years of credited
service for calculating retirement benefits. Sec. 2, ch. 65, SLA 1996.
In the section of their brief protesting their denied eligibility for normal
retirement, the Bartleys also assert that they were not properly granted the full benefit of
the RIP program. They claim that the Division?s March 19, 1998 letters demonstrate that
they were not properly given RIP credit and that if the Division insisted on designating
them as early retirees, it was required to consider them 58 years old instead of 55.
The Division contends that the RIP credit was correctly applied. Since the
Bartleys were first hired into the TRS in 1991, normal retirement would not be available
to them until age 60. And since the Bartleys were only 55, adding an additional three
years would not render them eligible for normal retirement. But under the Division?s
generous reading of AS 14.25.110(a)(3), the Bartleys did not need any additional years of
age or service to be eligible for early retirement. The Division therefore properly used the
three RIP years to lessen the actuarial reduction that would otherwise have been required
under AS 14.25.110(j).
That practice is in accordance with the priority system of the RIP.
D. Good faith and fair dealing
The Bartleys contend that duties of good faith and fair dealing implicit in
their contracts as public employees were breached by the Division in three ways: (1)
interpreting the applicable statutes so as to diminish the Bartleys? retirement benefits; (2)
overcharging the Bartleys for their claimed outside service; and (3) failing to properly
account for their RIP credit. But, as discussed above, the Division calculated the
Bartleys? retirement benefits in accordance with the statutes in effect when the Bartleys
joined the TRS system. There has been no violation of the terms of the Bartleys?
contracts as public employees.
E. Procedural validity of Division regulations
Finally, the Bartleys ask this court to hold that the Division?s policies and
practices with regard to AS 14.25.060 are invalid because they violate statutory
provisions governing the implementation of agency regulations, AS 14.25.022 and AS
44.62.030.
The Administrative Procedure Act provision that the Bartleys claim has
been violated, AS 44.62.030, facially applies to the regulations promulgated by any state
agency. But AS 14.25.022 expressly exempts regulations adopted by the Alaska
Teachers? Retirement Board from the requirements of the Administrative Procedure Act.
Because regulations adopted by the Teachers? Retirement Board are exempted by statute
from the requirements of the Administrative Procedure Act, the Bartleys claim that the
regulations related to AS 14.25.060 are void for violation of AS 44.62.030 must fail.
Alaska Statute 14.25.022 sets forth an alternative set of procedural
requirements for regulations promulgated by the Teachers? Retirement Board, including
publishing proposed regulations in the Alaska Administrative Register and Code. See AS
14.25.022(b). The Bartleys contend that the Division?s practices for interpreting AS
14.25.060 violate AS 14.25.022(b) because they were not properly published. But even
assuming that agency regulations related to AS 14.25.060 were not properly published,
the Bartleys? benefits were properly calculated in accordance with the underlying statutes.
Therefore, this court need not reach the validity of the interpretative regulations.
CONCLUSION
The decision of the Teachers? Retirement Board is AFFIRMED.
Entered at Anchorage, Alaska this 25th day of September 2001.
/s/ Sharon Gleason
SHARON L. GLEASON
Superior Court Judge
1 AS 14.25.010-.030.
2 When the superior court acts as an intermediate court of appeal, we review
the agency?s decision directly. See Handley v. State, Dep?t of Revenue, 838 P.2d 1231,
1233 (Alaska 1992). Generally, we exercise independent judgment when reviewing
issues of statutory interpretation. Union Oil Co. of California v. State, Dep?t of Revenue,
560 P.2d 21, 23 (Alaska 1977). But this broad power of review does not necessarily
preclude us from deferring to an agency?s reading of statutory language. Id. at 25.
3 AS 14.25.060(a)(1) has since been amended. See ch. 92, ? 4, SLA 2004
(substituting ?system? for ?service?).
4 AS 14.25.060(a)(1) (emphasis added).
5 Id.
6 Id.
7 AS 14.25.060(d).
8 AS 14.25.060(a)(1) (emphasis added).
9 AS 14.25.060(d).
10 AS 14.25.060(b) & (b)(1).
11 Alaskans For Efficient Gov?t Inc. v. Knowles, 91 P.3d 273, 275 (Alaska
2004) (quoting Ganz v. Alaska Airlines, Inc., 963 P.2d 1015, 1019 (Alaska 1998)).
12 Specifically, former AS 14.25.060 provided, in relevant part:
(a) If a member joined the system before July 1,
1978 and has creditable outside service, or if a member has
military service or Alaska Bureau of Indian Affairs (BIA)
service, the member is indebted to the retirement fund as
follows:
(1) At the time of first becoming a member of
the system, the arrearage indebtedness is seven per cent of the
base salary multiplied by the total number of years of
creditable outside, military and Alaska BIA service.
Compound interest at the rate prescribed by regulation shall
be added to the arrearage indebtedness beginning July 1,
1963, or at the time of first becoming employed as a member,
whichever is later, to the date of payment or the date of
retirement, whichever occurs first.
. . . .
(b) If a member joins the system on or after July 1,
1978 and has creditable outside service, the member may
claim this service. If claimed, the member is indebted to the
retirement fund as follows:
(1) The arrearage indebtedness is the full
actuarial cost of providing benefits for the service being
claimed. Compound interest at the rate prescribed by
regulation shall be added to the arrearage indebtedness
beginning the date the actuarial cost is established to the date
of payment or the date of retirement, whichever occurs first.
See ch. 128, ? 3, SLA 1977, as amended by ch. 13, ? 6, SLA 1980.
13 Former AS 14.25.060(a)(1) (set out in note 12, above).
14 Former AS 14.25.060(a).
15 Former AS 14.25.060(b)(1).
16 Former AS 14.25.060(b).
17 Former AS 14.25.060(a)(1).
18 1982 Op. Att?y Gen. No. J-66-738-81 (January 4, 1982).
19 Id. at n.1 (emphasis added).
20 Id. (emphasis added).
21 Ch. 97, ? 1, SLA 1990 (amending AS 14.25.050(a) (1970)).
22 Ch. 97, ?? 2, 3, SLA 1990.
23 Ch. 97, ? 2, SLA 1990.
24 Ch. 97, ? 3, SLA 1990.
25 AS 14.25.110(a)(1).
26 Union Oil Co. v. State, Dep?t of Revenue, 560 P.2d 21, 23, 25 (Alaska
1977); cf. 2B NORMAN J. SINGER, SUTHERLAND ON STATUTES AND STATUTORY
CONSTRUCTION ? 49:05, at 52-53 (6th ed. 2000) (?Ordinarily, courts should give great
weight to the frequent, consistent, and long-standing construction of a statute by an
agency charged with its administration, particularly with respect to a statute that is
susceptible of two different interpretations.?).
27 Kelly v. Zamarello, 486 P.2d 906, 910-11 (Alaska 1971). See also Bullock
v. State, Dep?t of Community & Reg?l Affairs, 19 P.3d 1209, 1210 (Alaska 2001)
(affirming the superior court?s decision, after concluding that ?the Department?s
interpretation is continuous, long-standing, and not arbitrary or capricious?); Nat?l Bank
of Alaska v. State, Dep?t of Revenue, 642 P.2d 811, 815 (Alaska 1982); State, Dep?t of
Revenue v. Debenham Elec. Supply Co., 612 P.2d 1001, 1003 n.6 (Alaska 1980).
28 For essentially the same reasons, we agree with the superior court?s
disposition of the Bartleys? equitable and implied-covenant claims. In addition, we note
that the Bartleys? proposed interpretation of the ?first hired? provision appears to be
textually implausible. Members of the military are rarely ?hired? into military service;
since military service is a chief component of creditable non-TRS service, it seems
unlikely that the legislature would have chosen the term ?first hired? to refer generally to
all creditable non-TRS service.
29 State v. Dupere, 721 P.2d 638 (Alaska 1986) (stating that claimants against
the state do not have a right to trial de novo, but Appellate Rule 609 gives the superior
court discretion to order a trial de novo).
1 The Bartleys also contend that the Division violated their due process rights
by failing to disclose the methods it used to determine the actuarial cost of their non-BIA
outside service, but the Bartleys do not cite any legal authority in support of their
argument and have therefore waived the issue. Cf. Wernberg v. Matanuska Elec. Ass?n,
494 P.2d 790, 794 (Alaska 1972).
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Appendix
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