STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN F. MORACK, )

)

Petitioner, )

)

vs. ) CASE NO. 88-4183

) DEPARTMENT OF ADMINISTRATION, ) DIVISION OF RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on October 19, 1988, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: John F. Morack, pro se

10474 Green Trail Drive Boynton Beach, Florida 33436

For Respondent: Stanley M. Danek, Esquire

440 Carlton Building Tallahassee, Florida 32399-1550

BACKGROUND

This matter began on July 25, 1988, when respondent, Department of Administration, Division of Retirement (Division), advised petitioner, John F. Morack, that his request to transfer from the Teachers Retirement System to the Florida Retirement System had been denied. Thereafter, by letter dated August 2, 1988, petitioner requested a formal hearing to contest the agency's action. The matter was referred to the Division of Administrative Hearings on August 29, 1988, with a request that a hearing officer be assigned to conduct a hearing.

By notice of hearing dated September 19, 1988, a final hearing was scheduled on October 19, 1988, in West Palm Beach, Florida.

At final hearing, petitioner testified on his own behalf and offered petitioner's exhibits 1 and 2. Both exhibits were received into evidence. Respondent presented exhibits 1 and 2 which were received in evidence. The latter exhibits are the depositions of Tom F. Wooten, Chief of the Division's Bureau of Enrollment and Contributions, and petitioner, respectively.

There is no transcript of hearing. Proposed findings of fact and conclusions of law were filed by respondent on October 28, 1988. A ruling on each proposed finding of fact is made in the Appendix attached to this Recommended Order.

The issue is whether petitioner's request to transfer from the Teachers Retirement System to the Florida Retirement System should be granted.

Based upon all of the evidence, the following findings of fact are determined.

FINDINGS OF FACT

1. Petitioner, John F. Morack, is a member of the Teachers Retirement System (TRS). The TRS is administered by respondent, Department of Administration, Division of Retirement (Division). On April 18, 1988, petitioner began working for a new employer and concurrently filled out an application form to enroll in the Florida Retirement System (FRS), a plan also administered by the Division. By letter dated June 27, 1988, the Division, through its chief of bureau of enrollment and contributions, Tom F. Wooten, denied the request on the ground Morack failed to qualify for such a transfer. Dissatisfied with the agency's decision, Morack initiated this proceeding.

   
   

2. Petitioner first enrolled in the TRS on September 18, 1970, when he began employment as a dean at Broward Community College. At that time, he had no option to enroll in any retirement program except the TRS. Under the TRS, an employee did not have to make contributions to social security and earned "points" for calculating retirement benefits at a rate of 2% for each year of creditable service. In contrast, under the FRS, which was established in late 1970, members earned benefits at a rate of only 1.6% per year but were participants in the social security program. Finally, a TRS member could not purchase credit for wartime military service unless he was an employee at the time he entered the military service and was merely on a leave of absence. On the other hand, an FRS member could purchase credit for military service after ten years of creditable service as long as such military service occurred during wartime.

   
   

3. When the FRS was established in late 1970, members of the TRS were given the option of transferring to the newly created FRS or remaining on TRS. Morack executed a ballot on October 15, 1970 expressing his desire to remain on the TRS.

   
   

4. In November 1974, the Division offered all TRS members an open enrollment period to change from TRS to FRS. Morack elected again to remain on the TRS.

   
   

5. In the latter part of 1978, the Division offered TRS members a second open enrollment period to switch retirement systems. On November 21, 1978, Morack declined to accept this offer.

   
   

6. On January 1, 1979 Morack accepted employment with the Department of Education (DOE) in Tallahassee but continued his membership in the TRS. He remained with the DOE until July 1981 when he accepted a position in the State of Texas. However, because Morack intended to eventually return to Florida, he left his contributions in the fund.

7. Approximately two years later, petitioner returned to Florida and accepted a position at Florida Atlantic University (FAU) in Boca Raton as assistant vice president effective July 11, 1983. About the same time, he prepared the following letter on a FAU letterhead.

   
   

   To Whom it May Concern:

   This is to indicate that I elect remaining in TRS rather than FRS.

   (Signature) John F. Morack

   
   

   The letter was received by the Division on July 19, 1983, and the enrollment form was processed on November 2, 1983. Although Morack stated that he was told by an FAU official that he could not transfer plans at that time, there is no competent evidence of record to support this claim since the testimony is hearsay in nature.

   
   

8. On November 18, 1985, Morack requested the Division to audit his account for the purpose of determining how much it would cost to purchase his Korean War military service. On January 24, 1986, the Division advised Morack by memorandum that because he had "no membership time prior to (his) military service, that service is not creditable under the provisions of the Teachers' Retirement System."

   
   

9. During the next two years Morack requested two audits on his account to determine retirement benefits assuming a termination of employment on July 31, 1987 and June 30, 1988, respectively.

   
   

10. On April 14, 1988, Morack ended his employment with FAU and began working on April 18, 1988, or four days later, at Palm Beach Junior College (PBJC) as construction manager for the performing arts center. When he began working at PBJC he executed Division Form M10 and reflected his desire to be enrolled in the FRS. As noted earlier, this request was denied, and Morack remains in the TRS. The denial was based on a Division rule that requires at least a thirty day break in service with the state in order to change retirement plans after returning to state employment. Because Morack's break in service was only four days, he did not meet the requirement of the rule.

    
    

11. At hearing and on deposition, Morack acknowledged he had several earlier opportunities to transfer to the FRS but declined since he never had the benefits of the FRS explained by school personnel. As retirement age crept closer, petitioner began investigating the differences between the TRS and FRS and learned that the latter plan was more beneficial to him. This was because the FRS would allow him to purchase almost four years of military service, a higher base salary would be used to compute benefits, he could participate in social security, and there would be no social security offset against his retirement benefits. Also, petitioner complained that school personnel were not well versed in retirement plans and either were unaware of alternative options or failed to adequately explain them. As an example, Morack points out that when he returned from Texas in 1983 he was not told by FAU personnel about the change in the law now codified as subsection 121.051(1)(c). Finally he thinks it unfair that the Division counts four days employment in a month as a full month's creditable service for computing benefits but will not count his four days break in service in April 1988 as a full month for computing the time between jobs.

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over this subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

    
    

13. Subsection 121.051(1)(c), Florida Statutes (1987), is pertinent to this controversy and provides as follows:

    
    

    (c) After June 30, 1983, a member of

    an existing system who is reemployed after terminating his employment shall have at the time of reemployment the option of selecting to remain in the existing retirement system or to transfer to the Florida Retirement System. Failure to submit such selection in writing to the Division of Retirement within 6 months of reemployment shall result in compulsory membership in the Florida Retirement System.

    
    

14. To implement the above law, the Division has established by rule the required break in service between jobs to qualify employees for transfer to a different retirement system. Rule 22B-6.001(12), Florida Administrative Code (1987), defines a "break in service" as follows:

    
    

    1. BREAK IN SERVICE -- Means an interruption in the continuous service of a member where any of the following occurs:

       1. The member terminates his employment in a position covered by the Florida Retirement System or any existing retirement system and receives a refund of the accumulated contributions he has made, even though the member later claims prior service and repays the refunded contributions

       2. The member has an absence of one calendar month or more from an employer's payroll except for periods of absence where an employer-employee relationship continues to exist and such absence is creditable under the Florida Retirement System or one of the existing systems. [Emphasis added]

          
          

15. The agency's denial of Morack's request to change from the TRS to the FRS is based on subsection 121.05(1)(c) and Rule 22B-6.001(12). The statute provides that, after a member of a plan has terminated his employment with the state, he shall have the option of selecting a different plan at the time he is reemployed. However, to secure this option, Rule 22B-6.001(12) requires that a member have a break in service of at least one calendar month. In Morack's case, his break in service totaled only four days, which is far short of the necessary "one calendar month or more." Therefore, his request was properly denied.

16. While Morack would fare far better under the FRS than under the TRS in terms of retirement benefits, he must have one of two things occur in order to switch plans: (a) a one calendar month break in service, or (b) an open enrollment period as was previously offered by the state in 1974 and 1978.

Until one of these events occurs, Morack is ineligible to change retirement plans. This is true even though Morack's various employers may have been unaware of options available to him or failed to adequately explain to him the benefits and detriments of each retirement plan. Neither circumstance constitutes a legally sufficient ground for waiving the requirements of the law.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that petitioner's request to change retirement plans be DENIED. DONE AND ENTERED this 7th day of November, 1988, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 7th day of November, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4183

Respondent:

1. Covered in finding of fact 6. 2-4. Covered in finding of fact 7.

5. Covered in finding of fact 10. 6-7. Covered in finding of fact 11.

1. Covered in findings of fact 8 and 11.

2. Covered in findings of fact 1 and 10.

COPIES FURNISHED:

Mr. John F. Morack 10474 Green Trail Drive

Boynton Beach, Florida 33436

Stanley M. Danek, Esquire

440 Carlton Building Tallahassee, Florida 32399-1550

Andrew J. McMullian, III State Retirement Director Division of Retirement

Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560

Adis Maria Vila Secretary

Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

Augustus D. Aikens, Jr., Esquire general Counsel

Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

Docket for Case No: 88-004183

Orders for Case No: 88-004183