Public Employees Federation v. Cuomo

OPINION OF THE COURT

These appeals challenge the constitutionality of subdivision c of section 613 and subdivision c of section 606 of

Public Employees Federation v Cuomo and Collins v Cuomo are two article 78 proceedings converted to actions for a declaratory judgment and consolidated by order of Special Term. Civil Serv. Employees Assn. v Regan is a declaratory judgment action. In each action Special Term granted plaintiffs’ motions for summary judgment in part, declaring that subdivision c of section 613 of the Retirement and Social Security Law violated section 7 of article V of the New York Constitution. It denied plaintiff CSEA’s claim that subdivision c of section 606 was similarly invalid and it denied plaintiffs’ applications for a declaration that Tier III employees were entitled to recover contributions to the retirement system made after September 1, 1983. These cross appeals followed and are before us on consolidated direct appeals from those judgments (CPLR 5601, subd [b], par 2).

The case turns upon whether the statutes in question unconstitutionally diminish or impair the pension benefits of Tier III employees. We hold that they do and we modify the judgments of Special Term in both actions to declare that Tier III employees may withdraw their contributions after September 1, 1983 and the judgment in CSEA v Regan to declare that subdivision c of section 606 is unconstitutional as to the estates of Tier III members.

The facts are undisputed. Under section 517 of article 14 of the Retirement and Social Security Law, employees who joined or rejoined the New York State public retirement system on or after July 1,1976, and whose service with the State terminated before the completion of the 10-year vested period, were entitled to withdraw at the time of their termination from service contributions previously

The plaintiff and petitioner organizations represent public employees who are members of the New York State Retirement System. Petitioner J. Michael Collins and plaintiff Donna Rapisarda, one of the plaintiffs in CSEA v Regan, became members of the New York State Retirement System after July 1, 1976. Petitioner Collins is an Assistant District Attorney of Monroe County. He was still employed in that office at the time that he commenced this proceeding seeking to protect his right to obtain a refund of his contributions to the retirement system should he leave public service prior to the time his pension vested. Ms. Rapisarda resigned from employment with the State on August 31, 1983. She applied for a refund of her contributions to the retirement system on September 1, 1983 but her application was denied under authority of article 15 of the Retirement and Social Security Law because she was not 62 years of age. Plaintiffs Susan L. Taft, Leslie B. Taft, and Robert G. Taft, plaintiffs in CSEA v Regan, are designated beneficiaries of the estate of Roger Warren Taft, a Tier III employee who died on September 3, 1983. They challenge the constitutionality of the change in ordinary death benefits effected by subdivision c of section 606 of article 15 of the Retirement and Social Security Law.

Section 7 of article V of the Constitution of the State of New York was passed in response to this court’s determination that a member’s rights to the benefits or pension provided by a public retirement system do not become contractuál until the statutory conditions for retirement from civil service have been met (see Roddy v Valentine, 268 NY 228 ). It provides: “After July 1, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired.”

The court has examined the language of the section several times since its adoption to determine whether statutory changes in the computation or availability of

The State contends that petitioners’ claim must fail because article 14 of the Retirement and Social Security Law was enacted for a limited duration. Thus, it claims Tier III employees had no reasonable expectation that the constitutional benefits were permanent or protected from impairment by the Constitution. The contention was rejected in Matter of Central School Dist. No. 2 v New York State Teachers’ Retirement System ( 23 NY2d 213 ) in which the court examined changes in the “Death-Gamble” benefit provided for in the Retirement and Social Security Law. The provision had initially been enacted for a single year but was extended annually and was in effect at the time of the court’s decision. The petitioners, local school districts,

“The argument lacks force. The board’s recognition of the true nature of this liability as a permanent addition to the fund’s obligations was completely justified, if not required.

“Following the enactment of the constitutional provision prohibiting reductions in pension benefits (N.Y. Const., art. V, § 7), it has been customary for the Legislature to enact all new benefits on a year-to-year basis. The purpose of this is to permit the Legislature to subsequently change a provision which turns out to be unworkable. If the legislation were not on a year-to-year basis, it would be constitutionally impermissible to later make a change because of the vested rights acquired by the system’s members. This does not mean, however, that the benefits are intended to be temporary [emphasis added]. As a matter of fact, no benefit so enacted has later been discontinued. It would be foolhardy to assume that a benefit such as the ‘Death-Gamble’ will be discontinued after a year and to make no provision for the financing of future benefits” {id., at p 232).

Although the impairment of members’ benefits was not at issue in Central School Dist. No. 2, the court expressly stated that a limitation on the duration of a statute which confers a benefit does not render the benefit a temporary one. The same point was made directly in Mutterperl v Levitt ( 89 Misc 2d 428 , 432-433, affd 41 NY2d 956 ) in which we approved a holding that a statute which conferred upon a member, at the time he first joined the retirement system, the right to re-retire two years after rejoining the system was not rendered conditional by the limited duration of the statute. The logic of thus interpreting statutorily conferred benefits as permanent despite the limited duration of the statute is apparent. A contrary interpretation would render such a provision an unconstitutional impairment, conferring a benefit and then, upon expira

We also disagree with Special Term’s determination that subdivision c of section 606 of article 15 of the Retirement and Social Security Law did not violate the Constitution because no contributions were made toward the death benefit by the employee. It is undisputed that the beneficiaries of Tier III employees became entitled to the death benefit pursuant to subdivision a of section 508 of article 14 upon the death of the employee before age 60. The death benefit was therefore a benefit of membership in the retirement system rendered contractual in nature by section 7 of article V, regardless of whether specific funds were earmarked for a death benefit fund or not.

Accordingly, the judgment of Special Term in Public Employees Federation v Cuomo should be modified to declare that subdivision c of section 613 of article 15 of the Retirement and Social Security Law violates section 7 of article V of the New York State Constitution and is unconstitutional insofar as it purports to abrogate the rights of employees hired on or after July 1, 1976 and before September 1, 1983 to the return of contributions to the New York State Employees’ Retirement System made by them after July 1, 1976 and that such employees terminated before achieving 10 years’ service shall be entitled to return of contributions made on or after July 1, 1976, including contributions made after September 1,1983, and as so modified, affirmed, with costs to plaintiffs.

The judgment of Special Term in Civil Serv. Employees Assn. v Regan should be modified to declare that

Judges Jasen, Jones, Wachtler, Meyer and Kaye concur; Chief Judge Cooke taking no part.

In each case: Judgment modified in accordance with the opinion herein and, as so modified, affirmed, with costs to plaintiffs.