The Issue Whether Petitioner is entitled to receive Florida Retirement System (FRS) benefits from her deceased spouse’s retirement account, pursuant to FRS Option 3 (lifetime monthly benefit to joint annuitant).
Findings Of Fact Petitioner, Lettie Jones, is the wife of FRS member, James Jones, and a designated beneficiary of his FRS account. Respondent, Department of Management Services, Division of Retirement, is the state agency with the responsibility to administer the FRS. Background Findings Mr. Jones applied to the State of Florida for disability retirement on July 13, 1994. On his application, Mr. Jones noted that the “[m]uscles in [his] feet and legs [were] deteriorating.” In response to a question regarding any other physical impairments, Mr. Jones answered, “Losing strength in right hand.” The record does not reflect the effective date of Mr. Jones’ retirement. Mr. Jones suffered a stroke in April 1996. On January 27, 1997, Mr. Jones obtained from the state an “Estimate of Disability Retirement Benefits” listing the approximate monthly benefit payment amounts for all four FRS payment options. On that date, Mr. Jones also obtained Form 11o, the FRS retirement benefit election option form, and Form FST 12, the FRS beneficiary designation form. On March 18, 1997, Mr. Jones executed Form 11o, choosing Option 2 for payment of his monthly retirement benefits, and Form FST 12, designating Petitioner as primary beneficiary, and his daughter as contingent beneficiary, of his retirement account. Form 11o provides the following explanation of Option 2: A reduced monthly benefit payable for my lifetime. If I die before receiving 120 monthly payments, my designated beneficiary will receive a monthly benefit in the same amount as I was receiving until the monthly benefit payments to both of us equal 120 payments. No further benefits are then payable. Form 11o requires the spouse’s signature acknowledging the member’s election of Option 2. The spousal acknowledgment section appears in a box on Form 11o following the description of Options 1 and 2. The first line inside the box reads, in all capital letters, “THIS SECTION MUST BE COMPLETED IF YOU SELECT OPTION 1 OR 2.” On March 18, 1997, Petitioner signed the box on Form 11o acknowledging her husband’s election of Option 2. Mr. Jones received more than 120 monthly retirement benefit payments prior to his death in 2013. Petitioner’s Challenge Petitioner alleges that Mr. Jones lacked the capacity to make an informed election of benefit payments on March 18, 1997, because he had reduced cognitive function. Both Petitioner and her daughter testified that they accompanied Mr. Jones to the FRS office on March 18, 1997, but were not allowed to “go back” with him when he met with an FRS employee to select his retirement option and execute Form 11o.2/ Petitioner admitted that she did sign the box on Form 11o, which acknowledges spousal election of Option 2, but testified that the form was blank at the time her husband presented it to her for signature. Petitioner signed the spousal acknowledgment on Form 11o the same day her husband executed the form. Petitioner introduced no evidence, other than the testimony of her daughter, that Mr. Jones suffered from reduced cognitive function on March 18, 1997. The fact that Mr. Jones suffered a stroke in 1996 is insufficient evidence to prove that he lacked the mental capacity to make an informed retirement option selection on the date in question.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of Retirement, enter a final order denying the relief requested in the Petition for Administrative Hearing. DONE AND ENTERED this 25th day of October, 2016, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of October, 2016.
The Issue Whether Petitioner is entitled to a refund of retirement contributions for the period from February 1, 1960, through January 1975.
Findings Of Fact Until January 1975, the Florida Retirement System and its predecessor, the State and County Officers and Employees Retirement System (SCOERS), were contributory retirement plans, in which state employees contributed a portion of their wages toward their retirement benefits. In January 1975, FRS became a non-contributory retirement plan, in which the employer paid all contributions to the plan. On February 1, 1960, Petitioner, who was then known as Rebecca Jamis or James Lee, began her state employment at Florida State Hospital (FSH), located in Chattahoochee, Florida. During her employment, Petitioner was enrolled in the state’s retirement plan and contributed $2,188.01 to that plan. In 1980, Petitioner was convicted of a felony offense and was sentenced to prison. She began serving her sentence in state prison in June 1980. Due to her imprisonment, Petitioner’s employment at FSH terminated on July 29, 1980. At some unknown date, Respondent received form FRS-M81 requesting a refund of Petitioner's contributions to the state’s retirement plan. Pursuant to the state's document retention policy, the original form was destroyed many years ago with a microfilmed copy of the front of the form retained by DMS. The microfilmed copy of this form does not reflect the date the form was signed. Additionally, except for the agency number and various signatures, information contained in the refund request form was typed in. The date of termination of Petitioner’s employment was also typed on the form, indicating the form was completed after Petitioner was imprisoned. More importantly, the form was purportedly signed by Petitioner with the name she used at the time. However, the address on the request was not Petitioner’s residence but was the 1980 address of Florida State Hospital Credit Union. At the time, Petitioner had a loan at the credit union, although she denies having an account there. Petitioner also did not hear any more from the Credit Union about her loan and does not know what happened to it. The regularly kept records of the Division indicate that on November 4, 1980, pursuant to this request for refund, Respondent issued Warrant No. 264829 in the amount due Petitioner for a refund of her retirement contributions. The warrant was issued to Petitioner and mailed as instructed to the address of the credit union. Again due to the passage of time, a copy of this warrant is no longer available. Moreover, the credit union records are not available. However, Charlene Fansler performed a search of un- cashed state warrants for Warrant No. 264829. The warrant was not on the list of warrants that remained outstanding. Further, the warrant had not escheated to the State as abandoned property. As such, the evidence demonstrated that the warrant was paid by the State. In 1990, at the age of 60 and several years after her release from prison, Petitioner requested a refund of her retirement contributions. On May 24, 1990, Respondent denied Petitioner’s request based on the 1980 refund of those contributions. At the time, Respondent did not advise Petitioner of her chapter 120 hearing rights; and therefore, did not provide Petitioner with a clear point of entry for an administrative hearing. However, Petitioner was clearly aware that DMS claimed that she had been issued a refund of her contributions and was, therefore, not entitled to a further refund. Petitioner took no action in 1990 even though she did not personally receive the 1980 refund because and claimed to not have signed the refund request form. In 2012, 32 years after the 1980 warrant was issued and 22 years after the 1990 denial of her request for refund, Petitioner, at the age of 82, again requested a refund of her retirement contributions based on her claim that she did not sign the 1980 refund request form and the fact that she did not personally receive the refund warrant. Respondent submitted the microfilmed copy of the signed refund request form and known handwriting exemplars of Petitioner's signature to the Florida Department of Law Enforcement (FDLE) laboratory for analysis. Kesha White, a handwriting analyst with FDLE, analyzed the documents and concluded that they were more likely than not signed by the same person. Her finding was not conclusive due to the limits of analyzing signed documents preserved on microfilm. Indeed, the signatures on the refund form and the known handwriting samples of Petitioner's signature are very similar and appear to be by the same person. In this case, the better evidence demonstrates that Petitioner signed the 1980 refund request form and, due to the passage of time, has simply forgotten that she did so. By signing that form, Petitioner instructed Respondent to issue and mail the warrant to the address for the credit union listed on the form. Respondent complied with that request. Given these facts, Petitioner is not entitled to another refund of her retirement contributions.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division enter a Final Order finding that Petitioner was issued a refund of retirement contributions for the period from February 1960, through January 1975, and dismissing Petitioner's request for hearing. DONE AND ENTERED this 21st day of May, 2013, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 2013. COPIES FURNISHED: Rebecca Thomas 1929 Hamilton Street Quincy, Florida 32351 Thomas E. Wright, Esquire Department of Management Services Division of Retirement Suite 160 4050 Esplanade Way Tallahassee, Florida 32399 Dan Drake, Director Division of Retirement Department of Management Services Division of Retirement Post Office Box 9000 Tallahassee, Florida 32315-9000 Jason Dimitris, General Counsel Department of Management Services Division of Retirement Suite 160 4050 Esplanade Way Tallahassee, Florida 32399
Findings Of Fact The following findings of fact are based upon stipulations entered into and adopted by the parties on December 15, 1986, January 9, 1987, and January 12, 1987, which were confirmed by all parties at the final hearing: The League is a wholly owned instrumentality of its member cities. The League is charged in its bylaws to work for the general improvement of municipal government and its effective administration in this state. Further, it is charged with representing its membership on statewide issues affecting municipal government. The City is a municipal corporation organized and existing under the laws of the State of Florida. The City has five (5) "local law" municipal retirement funds, including three (3) police plans and two (2) firefighter plans, all of which receive excise tax revenue from the tax fund established in Chapters 175 and 185, Florida Statutes. The Department has responsibility for administering Chapters 175 and 185, Florida Statutes (1986). On November 7, 1986, the Department published notice in the Florida Administrative Weekly of its intent to adopt rules to implement Chapters 175 and 185, Florida Statutes, pertaining to municipal firefighter and police pension funds and to provide for interpretations, standards, applications, enforcement and administration thereof. The published notice stated there would be a public hearing on December 2, 1986, and the public hearing was held on that date. On November 26, 1986, the League filed its petition for administrative determination of the invalidity of certain of the proposed rules. The League represents over 390 cities throughout the State of Florida. As part of their municipal administration, many of these cities maintain firefighter pension funds that receive premium tax pursuant to Chapter 175, Florida Statutes, and police officer pension funds that receive premium tax pursuant to Chapter 185. A number of these cities maintain "local law plans" as defined by proposed rules 4-14.028 and 4-54.019; a number of the League's member cities maintain "chapter plans" as defined by the same proposed rules. Such plans are required by the proposed rules to meet certain standards which affect the cities' responsibilities in relation to said plans. Thus, the League, which is required to work for the effective administration of municipal government, is substantially affected by the proposed rules. The City is a substantially affected party pursuant to Section 120.54(4)(a),(d), Florida Statutes. All cities operating pension plans which receive funds pursuant to Chapter 175 and Chapter 185 have a duty to adequately fund said plans annually to meet the normal costs of the plan as well as fund any actuarial deficiency over a 40 year period. A number of local law plans presently have procedures and provisions which vary from the procedures and provisions in those sections of Chapters 175 and 185 which are addressed by proposed rules 4-54.024, 4-54.035, 4-54.036, 4- 54.037, 4-54.039, 4-54.040, 4-54.041, 4-54.044 and 4-54.047. The Department has copies of all pension plans which receive funds pursuant to Chapters 175 and 185 in their possession. Case No. 86-4722RP involves a challenge to certain proposed rule amendments to Chapter 4-54, Florida Administrative Code. Case No. 86-4723RP involves a challenge to certain proposed rule amendments to Chapter 4-14, Florida Administrative Code. Many of the proposed rule amendments to Chapters 4-14 and 4-54, Florida Administrative Code, which are being challenged are substantially similar. The statutory authority relied on for corresponding, similar proposed rule amendments in Chapters 4-14 and 4-54 are substantially similar, and the legal issues involved in the challenge to those corresponding proposed rules are identical. As a result of the public hearing held by the Department on December 2, 1986, the Department has agreed and stipulated to modify and/or withdraw certain proposed amendments to Chapter 4-54 which follow, as well as corresponding proposed amendments to Chapter 4-14, and in consideration thereof the Petitioners have agreed to withdraw their objections thereto: 4-54.018 Scope. These rules apply to all municipal firefighters in this State who participate in a pension fund which receives money from the premium tax provided for in ss. 175.101-175.131, Florida Statutes, as well as all municipal firefighter pension boards and municipalities having a municipal fire- fighter pension fund or system which receives state excise tax revenue from the tax fund established in Chapter 175, Florida Statutes, except as otherwise provided herein. The Department shall withdraw subsections (2) and (3) and renumber subsection (4) of proposed rule 4-54.023. The Department shall withdraw subsection (8) and renumber subsections (9), (10) and (11) of proposed rule 4-54.048. The Department shall withdraw subsection (3) of proposed rule 4-54.031. The League agrees to withdraw its challenge to proposed rule 4-54.032, but said withdrawal shall not prejudice its right to later challenge said rule pursuant to Sec. 120.56, Florida Statutes. The City did not object to this proposed rule. The Department shall amend subsection (2)(a) of proposed rule 4-54.024, Florida Administrative Code, to read: 4-54.024(2) A "professionally qualified" consultant means a consultant who meets the following minimum criteria: (a) he must offer his services on a "hard dollar" or flat fee as opposed to or in addition to a commission type basis. The League shall withdraw its objections to proposed rule 4-54.038. The City did not object to this proposed rule. 4-54.020 Minimum Standards Except as otherwise provided herein and Chapter 175, Florida Statutes, Chapter 175, excluding Section 175.351, Florida Statutes, provides minimum standards for (a)(line through original) all chapter funds. and (b) for all local law funds established on or after October 1, 1986. (line through original) Except as otherwise herein and in Chapter 175, Florida Statutes, Section 175.351, Florida Statutes, provides minimum standards for all local law funds. (established prior to October 4, 1986.(line through original) 4-54.029(4) The Department of Insurance shall withhold distribution of Chapter 175 tax revenues as allocated to a Chapter Fund or Local Law Fund which is not in compliance with the applicable requirements of Chapter 175 or Section 175.351. (or these rules.(line through original) 17. The application of Sections 175.071(5), 175.121, 175.162, 175.171, 175.181, 175.191, 175.231, 175.251, 175.261 and 175.333, Florida Statutes, will have an economic impact as defined in Section 120.54, Florida Statutes, (actuarial or administrative costs) on a number of local law municipal pension funds and those municipalities (including the City) that are not presently complying with these sections. The impact of these applications is ascertainable within an identifiable range. The issue of whether these statutory sections, and resulting economic impact, are made applicable to these funds by the provisions of Chapter 175, Florida Statutes, or by the proposed changes to Chapter 4-54, Florida Administrative Code, is not resolved by stipulation or agreement of the parties. During the hearing and also subsequent thereto, the parties further stipulated that: There is a difference in benefits available under the City's pension plans for firefighters enacted by special act and ordinance, and benefits available under a Chapter 175, Florida Statutes, plan. In their respective proposed final orders, Petitioners have listed the proposed rules which remain at issue, following stipulations and voluntary dismissals. (See League proposed finding of fact 23 and City proposed conclusion of law 4.) Proposed rules at issue are: Rule Chapter 4-54 Rule Chapter 4-14 4-54.024(3) 4-14.033(3) 4-54.027 4-14.036 4-54.029(2) 4-14.037(2) 4-54.033(2) 4-14.040(2) 4-54.034 4-14.041 4-54.035 None 4-54.036 4-14.042 4-54.037 4-14.043 4-54.039 4-14.045 4-54.040 4-14.046 4-54.041 4-14.047 4-54.045 4-14.051 4-54.047 None 4-54.048(3)(5)(6)(7)(10) 4-14.053(3)(5)(6)(7)(10) 4-54.049 4-14.054 The following findings of fact are based upon the evidence presented at final hearing: Based on the testimony of Dr. John J. Fenstermaker, who was accepted as an expert in English grammar and sentence structure, the phrase "approved by a majority of the firefighters" found in Section 175.351(13), Florida Statutes, modifies the nouns "board of trustees of the pension fund" and "official pension committee", instead of the verb in the sentence. However, the phrase does not mean that a majority of firefighters must approve the membership of the board of trustees or official pension committee. Rather, it means that a majority must approve action by the board of trustees or committee relative to the placement or use of certain income. A reasonable construction of the statute is that majority approval is required for the board of trustees or committee to act, but not that the make-up or membership of these bodies must be approved each time they propose to place or use certain income from the premium tax referred to in said statute. Proposed rule 4-54.048(7), Florida Administrative Code, is therefore authorized by, consistent with, and implements Section 175.351(13), Florida Statutes. The City's firefighter and law enforcement pension plans have received distributions of state premium tax funds pursuant to Chapters 175 and 185, Florida Statutes, for the last five years. The provisions of the City's local plans are very similar. Actuarial valuations of the City's firefighter and law enforcement pension plans are performed by the City's actuary as required by Chapter 112, Part VII, Florida Statutes. The City's local pension plan for firefighters does not presently apply or conform to the requirements of: Section 175.071(5), Florida Statutes, which requires the board of trustees to retain an independent consultant professionally qualified to evaluate the performance of professional money managers at least once every three years; Section 175.171, Florida Statutes, which deals with optional forms of retirement income; Section 175.181, Florida Statutes, which concerns the designation of beneficiaries; Section 175.191, Florida Statutes, dealing with disability benefits; and Section 175.261, Florida Statutes, regarding reports to Respondent. The Department promulgated an Economic Impact Statement in connection with the proposed rules in Chapter 4-54 which states, in pertinent part, that: Pursuant to Section 120.54(2), Florida Statutes, the State of Florida, Department of Insurance has considered the economic impact associated with the implementation of proposed Rule Chapter 4-54 which relates to municipal firefighters' pension funds. Chapter 175, Florida Statutes, was amended by Chapter 86-41, Laws of Florida, generally effective on October 1, 1986 with some exceptions. The amendments of Chapter 175, Florida Statutes, contained in Chapter 86-41, Laws of Florida, had and will have an economic impact upon the Department, the municipalities receiving state excise tax funds provided for in Chapter 175, Florida Statutes, and the firefighters' pension boards of trustees and pension funds. That economic impact was addressed fully in the legislation and enactment of Chapter 86-41, Laws of Florida. These rules, which augment, interpret, and provide for definitions, application and enforcement of Chapter 175, Florida Statutes, as amended by Chapter 86-41, Laws of Florida, will have no additional impact or nominal additional impact on those entities affected by Chapter 86-41, Laws of Florida. * * * 2. An Estimate of the Cost or Economic Benefit to all Persons Directly Affected by the Proposed Action. Insurance Companies: None. Insurance Agents: None. General Public: None. Municipalities: None, except for minor interest cost if a violation of 175.131, Florida Statutes occurs. Firefighter Pension Boards: None. * * * 5. A statement of the Data and Methods Used in Making Each of the Above Estimates. METHODOLOGY Costs and benefits of the proposed rule are estimated on marginal basis, i.e., additional costs or benefits over and above those associated with normal operations of the affected entity. The relevant costs or benefits to any economic impact are the net additions associated with implementation of the action. DATA The data used in calculating costs and benefits are derived from Departmental experience and statistics. The estimated cost to the agency for implementing the proposed changes was made by responsible agency staff personnel. The Department's Economic Impact Statement for proposed rule Chapter 4-14 is substantially similar to the above. It is clear from the Notice published by the Department, as well as its Economic Impact Statement, that the proposed rules which are here at issue implement Chapters 175 and 185, as amended by Chapters 86-41 and 86-42, Laws of Florida, respectively.
The Issue The issue in this case is whether the Petitioner, Mr. Robert P. Hatcher, is eligible to retire under the Florida Retirement System rather than under the Teachers' Retirement System.
Findings Of Fact The Petitioner was employed by the Hillsborough County School Board on August 25, 1959, and was enrolled in the Teachers' Retirement System (TRS) at that time. The Petitioner worked for the Palm Beach County School Board for 27 years, from 1966 through May 15, 1992. The Petitioner worked with no breaks in service during all years in which the Legislature provided open enrollment periods for members of the TRS to transfer to the Florida Retirement System (FRS). The Petitioner was aware of the open enrollment periods, but declined all opportunities to transfer to the FRS. In this regard, the Petitioner specifically rejected membership in the FRS for the 1974 and 1978 open enrollment periods by signed ballots dated November 27, 1974, and November 2, 1978. Petitioner voluntarily terminated his employment with the Palm Beach County School Board on May 15, 1992. Following his termination with the Palm Beach County School Board, Petitioner began seeking employment with an agency that participated in the FRS in order to become eligible to transfer from the TRS to the FRS. The Petitioner's first contact with the Okeechobee County School Board (OCSB) was approximately two years ago when Dr. Mary Gray, Petitioner's acquaintance, introduced Petitioner to Mr. Owens. The Petitioner approached Mr. Owens in an attempt to obtain employment with the OCSB. The Petitioner sought employment with the OCSB for the sole purpose of obtaining entry into the FRS. Mr. Owens recruited and interviewed the Petitioner for the position of Custodian I at the OCSB. At the time the Petitioner was recruited and interviewed, Mr. Owens knew the Petitioner wanted to work for the OCSB for the sole purpose of establishing retirement eligibility. The Petitioner requested that he be hired to work only long enough to establish retirement eligibility by working for a state employer that was a member of the Florida Retirement System. Prior to the Petitioner's request, the OCSB had never had such a request before. The OCSB hired the Petitioner with the knowledge that he had health problems and believing that he would not be able to perform the duties of custodian for more than a short period of time. By letter dated June 23, 1993, the OCSB approved the Petitioner's employment as Custodian I for the OCSB effective June 30, 1993. The Custodian I position was classified as a regular position, not a short-term position. The Petitioner reported to work at the Okeechobee High School on June 30, 1993. He answered phones for several hours, performed some inventory work, then resigned that afternoon. The OCSB acknowledged receipt of the Petitioner's resignation letter, effective June 30, 1993, by letter dated August 2, 1993. The Petitioner submitted an application for membership in the FRS to the OCSB on June 30, 1993. Prior to his employment with the OCSB, the Petitioner investigated the possibility of transferring from the TRS to the FRS. The Petitioner was neither told nor did he receive any written communication by the DOR that he could transfer to the FRS based upon employment for one day. By letter dated August 16, 1993, the Respondent notified the Petitioner that he could not obtain entry into the FRS because his employment was not bona fide, but that he could retire under the TRS. If the Petitioner were to retire under the TRS, his Option 1 monthly benefit payment would be $2,571.64; his Option 3 monthly benefit payment would be $2,396.25. Under the FRS, Petitioner's Option 1 monthly benefit payment would be $3,054.91; his Option 3 monthly benefit payment would be $2,771.20.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Division of Retirement issue a final order concluding that the Petitioner is not eligible for participation in the Florida Retirement System and denying Petitioner's application for transfer from the Teachers' Retirement System to the Florida Retirement System. DONE AND ENTERED this 6th day of January 1994 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of January 1994. APPENDIX The following are my specific rulings on all proposed findings of fact submitted by all parties. Findings submitted by Petitioner: Paragraphs a and b: Accepted in substance. Paragraph c: Accepted in part and rejected in part; accepted that the Petitioner obtained the described employment, but rejected that the employment was bona fide. Paragraph d: Accepted in part and rejected in part. The conclusion that the one day was sufficient to qualify the Petitioner for transfer to FRS is rejected as incorrect and as not warranted by the evidence; the remainder of the facts in this paragraph are accepted. Paragraph e: Rejected as constituting a conclusion of law, rather than a proposed finding of fact; a conclusion which is, in any event, not warranted by the evidence in this case. Paragraph f: Rejected as constituting a conclusion of law, rather than a proposed finding of fact; a conclusion which is, in any event, not warranted by the evidence in this case. Findings submitted by Respondent: All of the proposed findings of fact submitted by the Respondent have been accepted in whole or in substance in the Findings of Fact made in this Recommended Order. COPIES FURNISHED: Jodi B. Jennings, Esquire Division of Retirement Building C Cedars Executive Center 2639 North Monroe Street Tallahassee, Florida 32399-1560 Allan L. Hoffman, Esquire 1610 Southern Boulevard West Palm Beach, Florida 3406 J. McMullian, III, Director Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560 William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Sylvan Strickland, Acting General Counsel Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue The central issues in this case are (1) whether Petitioner is eligible for membership in and retirement benefits from the Teachers' Retirement System; and (2) whether Petitioner is entitled to receive as a refund contributions paid by his employing agency and, if so, how much and at what interest rate.
Findings Of Fact Petitioner, currently sixty-six years old, was employed as a professor of economics and finance at the University of South Florida (USF), Tampa, Florida, from September 1965 through August 31, 1981, when he terminated employment. As a member of the teaching faculty, Petitioner automatically became a compulsory member of the Teachers' Retirement System (TRS) and remained a member throughout his tenure at USE. When Petitioner originally enrolled in the TRS in September 1965, he signed an enrollment form entitled "Teachers' Retirement System of Florida, Enrollment Blank New Teachers." The form provided general information concerning the TRS, and included information about contributions, service credit, and service retirement benefits under the TRS. The enrollment form provided in part the following: I understand that the full amount of deductions from my compensation for annuity purposes with compound interest will be returned to me if I leave the service without a retirement benefit or will be paid to my beneficiary if I die in active service. At all times relevant hereto, the TRS required that members make contributions of six-quarter percent of their total salaries to their retirement accounts. Of this amount, six percent went into the TRS member's retirement account and the quarter percent was allocated to the Survivors' Benefits Fund. In addition to the contributions made by TRS members, employers were required to contribute matching funds to the TRS Retirement Fund. While employed at USF, the prescribed six quarter percent of Petitioner's salary was deducted, with six percent appropriately posted to his TRS retirement account. During the time Petitioner was employed at USF, the employer contribution paid by USF to match Petitioner's contribution was $23,846.06. Had Petitioner remained a member of TRS, he would have been eligible to begin receiving benefits in February 1993. While employed at USF, Petitioner was given the option to transfer from the TRS to the newly created Florida Retirement System on five different occasions: December 1970; June 1971; July 1972; January 1975; and January 1979. Through information disseminated by Respondent, TRS members were notified that by transferring to the "new" Florida Retirement System, they would become mandatory members of the federal Social Security System. Petitioner chose to remain in TRS rather than transfer to the Florida Retirement System, thereby foregoing membership in the federal Social Security System. In August 1981, prior to his normal age of retirement, Petitioner terminated his employment with USF and requested that Respondent refund Petitioner's retirement contributions. In making the request, Petitioner completed and signed a form entitled, "Request for Refund," FRS M81. Completion of this form is a requisite for receiving retirement refunds and applies to members of any of the Florida retirement systems. The Request for Refund states: I hereby make application for refund of my accumulated contributions in the Florida Retirement Systems. I do waive for myself, my heirs and assignees all rights, title and interest in the Florida Retirement Systems. On the reverse side of the Request for Refund card, is the following: Under the provision of the Florida Statutes, a member MUST terminate employment before he can obtain a refund. * * * The refund process may be started upon receipt of this application. It may be necessary to issue a second refund after all payrolls on which a member's name appears are received and audited by the Retirement System Office. A member who has ten or more years of creditable service has a vested interest in retirement and may leave his contributions on deposit indefinitely and qualify for deferred retirement. Pursuant to Petitioner's request, the Division refunded $22,153.10 to Petitioner in October 1981. The refund, which was provided in three warrants, included all employee contributions and earned interest posted to Petitioner's retirement account as of the date of the refund. Petitioner's refund was provided in three separate warrants because the system in place, in 1981, was incapable of generating a single check for an amount in excess of $9,999.99. In late 1995 or early 1996, Petitioner called the Division of Retirement to inquire about his benefits under the TRS. Petitioner made after this call after he reviewed his Social Security wage earning history and learned that no contributions had been posted to his Social Security account during the sixteen years he had been employed at USF. Upon reviewing the Petitioner's request, Respondent discovered that $1,692.96 remained in Petitioner's TRS account. Of the amount remaining in Petitioner's account, $292.63 represented Petitioner's employee contributions, and $1,400.33 was earned interest. Respondent's failure to refund Petitioner's $292.63 and the interest earned thereon as soon as these moneys were posted to Petitioner's account was the result of an unintentional accounting error. Under the procedures used by the Division at that time, Petitioner's most recent employee contributions were not posted to his account until November or December 1981. The interest earned on Petitioner's employee contributions were not posted to Petitioner's account until the end of the 1981/1982 fiscal year. This matter is addressed in the Request for Refund which notified members that "it may be necessary to issue a second refund" after all payrolls on which the member's name appears have been posted. After discovering this inadvertent accounting error, Respondent initially agreed to refund Petitioner the outstanding $1,692.96. Subsequently, the Division of Retirement agreed to pay Petitioner $1,692.96 plus six a-half percent interest from October 1981, for a total amount of $4,088.31. The six and a- half percent interest rate is the current rate established by Respondent. Pursuant to Petitioner's request, Respondent has not yet refunded Petitioner's outstanding employee contributions and interest, pending the culmination of this proceeding. At the time Petitioner completed and signed the Request for Refund, it was his intention to obtain all of his contributions and interest. It was not until Petitioner's inquiry in 1995 or 1996 that he became aware that a small amount of his employee contributions and interest thereon had not been refunded. Petitioner believes that because Respondent did not refund all moneys due him, some $1,692.96, he retained membership in the TRS and is now able to retire from that system with a partial benefit. Alternatively, Petitioner asserts that he is entitled to receive as a refund, all contributions paid into his retirement fund, including the contributions paid by USF. According to Petitioner, his understanding and belief in this regard is based on an explanation provided to him by Dr. John Milliken, the Dean of the College of Business at USF. Petitioner's understanding in this regard was not correct. At some point prior to Petitioner's terminating his employment at USF, he reviewed a Summary Plan Description (SPD) which was issued by the Division of Retirement in 1980. One section of the SPD, Refund of Contributions, provides in relevant part: If a member terminates employment he may elect to receive a refund of all the contributions he has made to the retirement system, except those made to the Survivors' Benefit Trust Fund. Furthermore, the first paragraph of the Summary Plan Description states: This brochure contains basic information on the Teachers' Retirement System, established by Ch. 238, Florida Statutes. It is not intended to be a comprehensive review of the Teachers' Retirement System and should not be used in place of the law on questions of interpretation and appli-cation. Any question which are not answered by this brochure may be addressed to the Div. of Retirement, . . . . Based on Petitioner's reading of the provision of the SPD quoted in paragraph 20 above, it was his "judgment" and "impression" that any refund prior to retirement, would include both employee and employer contributions and the interest on these contributions. At no time did Petitioner verify his interpretation with the Division of Retirement or the USE Personnel Office.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of Retirement enter a final order finding that Petitioner, John C. Deiter, is (1) ineligible for retirement benefits under the Teachers' Retirement System and (2) is not entitled to receive employer contributions and interest thereon. DONE AND ENTERED this 3rd day of September, 1997, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELDK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1997. COPIES FURNISHED: Murray B. Silverstein, Esquire POWELL, CARNEY, HAYES and SILVERSTEIN, P.A. Barnett Tower One Progress Plaza, Suite 1210 St. Petersburg, Florida 33701 Stanley M. Danek, Senior Attorney Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399 A. J. McMullian, III, Director Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399
The Issue The issue presented is whether Petitioner's application for retroactive retirement benefits should be granted.
Findings Of Fact Petitioner was employed by the Palm Beach County Sheriff's Office for approximately twelve years, working in a special risk capacity. As a result of that employment, he was a member of the Florida Retirement System. In 1972 Petitioner completed Respondent's form FRS-M10 setting forth his membership as a special risk member of the Florida Retirement System as of November 1, 1970. Petitioner resigned his position on March 15, 1982, when he was 47 years of age and had more than ten years of creditable service. At the time of his resignation, he was employed in the position of Inspector, Director of Law Enforcement, the third in command at the Sheriff's Office. There are approximately 550,000 active members in the Florida Retirement System. Many members choose not to submit an application for retirement benefits on their normal retirement date for a variety of reasons. An application for retirement benefits is a prerequisite for the establishment of an effective retirement date for a member of the Florida Retirement System. In September of 1991, Petitioner applied for retirement benefits. At the time of his application, he was 57 years of age. Petitioner never contacted Respondent to request information or advice regarding his retirement benefits prior to filing his retirement application in September of 1991. Based upon receipt of Petitioner's application for retirement benefits in September of 1991, Respondent established October 1, 1991, as Petitioner's effective retirement date. In October of 1986 Petitioner received from the Palm Beach County Sheriff's Office a copy of some of Respondent's forms which are utilized by persons filing applications for retirement benefits. Some of the information included in that package relates to persons who are regular members of the Florida Retirement System, not special risk members.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioner's request to change his effective retirement date and denying Petitioner's request for retroactive retirement benefits. DONE and ENTERED this 1st day of September, 1992, at Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of September, 1992. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 92-0849 Petitioner's proposed findings of fact numbered 1 and 3-5 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 2 has been rejected as being contrary to the evidence in this cause. Petitioner's proposed findings of fact numbered 6-13 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondent's proposed findings of fact numbered 1-10 have been adopted either verbatim or in substance in this Recommended Order. COPIES FURNISHED: Mary Alice Gwynn, Esquire Suite 302 215 Fifth Street West Palm Beach, Florida 33401 Larry D. Scott, Esquire Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee FL 32399-1560 A. J. McMullian, III, Director Division of Retirement Building C Cedars Executive Center 2639 North Monroe Street Tallahassee, Florida 32399-1560 Larry Strong Acting Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue The ultimate issues in this case are: 1) whether certain agency statements made by the Respondent, DIVISION OF RETIREMENT, regarding the application of the provisions of Chapters 175 and 185, Florida Statutes, to pension plans for municipal fire fighters and police officers are "rules" as defined by Section 120.52(16), Florida Statutes; 2) if so, whether the agency is required to promulgate such "rules" in accordance with Section 120. 535, Florida Statutes; and 3) whether such "rules" constitute an invalid exercise of delegated legislative authority in violation of Section 120.56, Florida Statutes Specifically, the issues in this case relate to the criteria required of municipal pension plans to qualify for state funds. Chapters 175 and 185, Florida Statutes, provide for pension plans for fire fighters and police officers, and authorize two types of pension plans. "Chapter plans" are created by state law, and "local law plans" are created either by special act of the Legislature or by municipal ordinance. The gist of the CITY OF ST. PETERSBURG's Section 120.535 Petition is that the DIVISION is attempting by non-rule policy to impose the same requirements relating to terms, conditions, and benefits on local law plans that the DIVISION requires of chapter plans. Specifically, the alleged non-rule policies of the DIVISION of which the CITY complains are: 1) the definition of "credited service"; 2) the definition of "average final compensation"; 3) the disallowance of a Social Security offset; 4) the interpretation of "disability retirement"; 5) the requirement that all of the CITY's pension plans be in compliance in order to receive state funds; 6) the release of funds to other municipalities not found in compliance; 7) the failure to enforce Rule 60Z-1.004, Florida Administrative Code, which defines "credited service;" and, 8) the application of a declaratory statement issued to the City of Boca Raton to other municipalities. As set forth below, the requirements for local law plans have been the subject of extensive prior litigation. In rejecting a challenge to the constitutionality of these statutes, the Court in City of Orlando v. State Department of Insurance, 528 So.2d 468 (Fla. 1st DCA 1988) stated: Chapters 175 and 185 create a purely voluntary program whereby municipalities may receive state-collected taxes, imposed on property and casualty insurance premiums, with which to fund retirement programs for local police and fire fighters. In exchange for receipt of these funds, the legislature has established certain criteria under which the funds must be operated and managed. Id. at 469. The dispute in this case again focuses on determining what criteria the legislature has established for the operation and management of such local pension plans in order to establish whether a local plan complies with the statute for purposes of receiving state-collected tax funds. Petitioner, CITY OF ST. PETERSBURG, and Intervenors, FLORIDA LEAGUE OF CITIES and CITY OF LARGO, take the position that Respondent, DIVISION OF RETIREMENT, has made non-rule policy statements, and required compliance therewith, which go beyond the criteria established by the legislature for participation in the program. Petitioner contends that such statements violate Section 120.535, Florida Statutes, because the statements constitute unpromulgated rules, and further that such statements violate Section 120.56, Florida Statutes, because the statements constitute invalid exercises of delegated legislative authority. Respondent, DIVISION OF RETIREMENT, takes the position that the statements are not "rules" as defined in Section 120.56(12), Florida Statutes, that even if the statements are "rules" it is not practicable or feasible for the agency to promulgate the statements as rules, and that the statements merely apply the provisions of Chapters 175 and 185, Florida Statutes, as intended by the legislature, and therefore do not violate Section 120.56, Florida Statutes.
Findings Of Fact Parties Petitioner, the CITY OF ST. PETERSBURG (CITY), is a municipality of the State of Florida which participates in the voluntary program to receive state- collected taxes imposed on property and casualty insurance with which to fund retirement programs for its municipal fire fighters and police under Chapters 175 and 185, Florida Statutes, respectively. Intervenor, CITY OF LARGO (LARGO), also is a State of Florida municipality participating in such local plans for fire fighters and police. LARGO has standing to intervene in this proceeding. Intervenor, FLORIDA LEAGUE OF CITIES (LEAGUE), represents municipalities participating in such local plans for fire fighters and police. The LEAGUE has standing to intervene in this proceeding. Respondent, DIVISION OF RETIREMENT (DIVISION), is the agency of the State of Florida charged with the statutory duty to administer the voluntary program by which municipalities receive state-collected taxes imposed on property and casualty insurance with which to fund local plans under Chapters 175 and 185, Florida Statutes. Prior to 1993, the Florida Department of Insurance was the responsible state agency to administer Chapters 175 and 185, Florida Statutes. Intervenors, MICHAEL MOORE and RICHARD FEINBERG are municipal fire fighters with the CITY and have standing to intervene in this proceeding. (Russell M. Rizzo, a municipal police officer and an intervenor in case No. 95- 2637, did not request to intervene in the Section 120.535 action, case No. 95- 5089.) History Chapters 175 and 185, Florida Statutes, relating to pension plans for fire fighters and police, authorize two types of retirement or pension plans. One type is called "chapter plans" and the other is known as "local law plans." Chapter plans are created under state law, and the provisions of Chapters 175 and 185, Florida Statutes, control the plans' terms, conditions and benefits. Local law plans are purely voluntary and are created either by special act of the Legislature, or by municipal ordinance. The special act or municipal ordinance contain the provisions relating to the terms, conditions, and benefits of the local law retirement plan. Both chapter plans and local law plans receive funds from the state-collected premium tax on property and casualty insurance. The CITY has operated local law retirement plans for fire fighters and police since 1951. The CITY's police and fire fighter plans were first chartered by special act of the Legislature. The fire fighter charter plan has been closed to new members since approximately 1970. The CITY in 1970 established a supplemental retirement plan for fire fighters which was enacted by CITY ordinance. The CITY's police and fire fighter pension plans are subject to union negotiation, and cannot be unilaterally amended. City of Tallahassee v. Public Employee Relations Commission, 393 So.2d 1147 (Fla. 1st DCA 1981). In this respect, the CITY may not have the authority to make unilateral changes to its local law plans in order to comply with directives of the DIVISION. The CITY has voluntarily participated on a continuing basis in the program created under Chapters 175 and 185, Florida Statutes, whereby the CITY has received state-collected taxes imposed on property and casualty insurance premiums with which to fund its local plans for fire fighters and police. The CITY has received such funds until calendar year 1994. In 1986 the Legislature significantly amended Chapters 175 and 185, Florida Statutes. See Chapters 86-41 and 86-42, Laws of Florida. Chapter 86-41 pertained to municipal fire fighters; Chapter 86-42 pertained to municipal police officers. As indicated above, the constitutionality of these statutes was upheld in City of Orlando v. State Department of Insurance, supra. In section 1. of each act, the Legislature added substantially the same legislative intent language: Therefore, the Legislature declares that it is a proper and legitimate state purpose to provide a uniform retirement system for the benefit of fire fighters as hereinafter defined, and intends, in implementing the provisions of s. 14, Art. X of the State Constitution as they relate to municipal fire fighters' pension trust fund systems and plans, that such retire- ment systems or plans to be managed, administered, operated, and funded in such manner as to maximize the protection of the fire fighters' pension trust funds. This chapter hereby establishes minimum standards for the operation and funding of municipal fire fighters' pension trust fund systems and plans. After the enactment of Chapters 86-41 and 86-42, Laws of Florida, the Department of Insurance undertook rulemaking to implement the provisions of the acts. The CITY and the LEAGUE challenged the proposed rules under Section 120.54, Florida Statutes. The Department's proposed rules were upheld by a DOAH Hearing Officer. On appeal, the First District Court of Appeal reversed the order of the Hearing Officer, and held that the majority of the department's proposed rules were invalid because statutory provisions governing chapter pension plans, which were not made expressly applicable by the Legislature to local fire fighter and police plans, did not preempt municipal power with respect to pension plans. Florida League of Cities, Inc. v. Department of Insurance, 540 So.2d 850 (Fla. 1st DCA 1989) review denied 545 So.2d 1367 (Fla. 1989), [hereinafter referred to as the "Rules Case"]. In 1988 the CITY and the Department of Insurance engaged in litigation regarding the compliance of the CITY's local law plans with the Department's construction of the statute. This litigation was ultimately settled by the Department's agreement not to withhold the CITY's premium tax funds. During 1990 and 1991, the Department of Insurance also engaged in litigation with numerous other municipalities regarding compliance of local law plans with the provisions of Chapters 175 and 185, Florida Statutes. The Department settled these cases and continued to distribute premium tax funds to these local law plans with the understanding that the disputed issues would be better resolved through rulemaking. The Department of Insurance conducted staff workshops to discuss rulemaking; however, the Department did not thereafter initiate formal rulemaking under Chapter 120, Florida Statutes, with regard to promulgation by rule of compliance requirements for local law plans under Chapters 175 and 185, Florida Statutes. In 1993 the Legislature transferred statutory responsibility for the administration of Chapters 175 and 185, Florida Statutes, from the Department of Insurance to the DIVISION. The legislative transfer effected a transfer of all programs as well as personnel. Since the legislative transfer in 1993, the DIVISION has made a continuous and good faith effort to present these issues to the Legislature for resolution. During the 1996 Session, HB 1951 and SB 2484 have been introduced. These bills specifically address the issues presented in this case. Stipulated Facts The following facts verbatim were set forth by the parties in the Prehearing Stipulation: The DIVISION admits to the authenticity of all documents contained within its files, including, but not limited to, interoffice memoranda, correspondence to and from the DIVISION and/or the Department of Insurance which are contained in the files of the Division, and any correspondence copied to the DIVISION and/or the Department of Insurance which are contained in the files of the DIVISION. The DIVISION takes the position that Sections 175.032 and 185.02, Florida Statutes, (Definitions), apply to local law plans. (The) Position of (the agency in) Declaratory Statement DMS-DR-94-18 was issued to the City of Boca Raton pursuant to Section 120.565, Florida Statutes. It is the position of the DIVISION that a plan containing a mandatory retirement age violates the Older Worker Benefits Protection Act; and that pension plans which violate this federal law are not eligible for distribution of premium tax funds under Sections 175.351 and 185.35, Florida Statutes. It is the position of the DIVISION that fire fighters disabled from duties of a fireman as defined in Section 175.032, Florida Statutes, are eligible for disability benefits. The CITY admits that the Social Security offset contained in its supplemental fire pension plans could possibly reduce a fire fighter's pension below two (2) percent for each year of credited service; however, the CITY specifically has no knowledge that this has or will occur. The CITY admits that Sergeant Rizzo has accrued in excess of thirty- two (32) years of service. The CITY admits that the police pension plan contains a maximum pension plan benefit of 60 percent of the highest pay step of the lowest rank held during the previous three years, which benefit Sgt. Rizzo became eligible for after twenty-five (25) years of active service. The CITY admits after thirty (30) years of service Sgt. Rizzo will retire with a pension benefit equal to less than two (2) percent for each year of active service. The CITY admits that Sgt. Rizzo was permitted to cease all employee contributions to his pension plan after twenty-five (25) years of service. The 1994 premium taxes are withheld from the CITY by the DIVISION. Prior to 1994 the DIVISION, or its predecessor agency, the Department of Insurance, have never withheld Chapter 175 or 185 insurance tax premium moneys from the CITY. The DIVISION has not initiated the rulemaking process with regard to definition of the term "average final compensation" in Section 175.351, Florida Statutes, and there are currently no existing promulgated rules that apply to local law plan definitions for "average final compensation" for the DIVISION. The DIVISION has not initiated the rulemaking process with regard to definition of the term "average final compensation" in Section 185.35, Florida Statutes, and there are currently no existing promulgated rules that apply to local law plan definitions for "average final compensation" for the DIVISION. It is the position of the DIVISION that Rule 60Z-1.004, Florida Administrative Code, defining "credited service" contradicts Chapter 185, Florida Statutes, and is not enforced. It is the position of the DIVISION that all municipal pension plans submitted for review must comply with the non-rule policy at issue in the present case in order to receive Chapter moneys pursuant to Sections 175.351 and 185.35, Florida Statutes. It is the position of the DIVISION that the pension plans of the City of St. Petersburg do not fulfill the requirements of Section 175.351, Florida Statutes, to qualify for release of state premium tax moneys. It is the position of the DIVISION that the pension plans of the City of St. Petersburg do not fulfill the requirements of Section 185.35, Florida Statutes, to qualify for release of state premium tax moneys. It is the position of the DIVISION that the term "credited years of service" as used in Section 175.351(4) and 185.35(1)(d), Florida Statutes, is to be defined in accordance with the term "aggregate number of years of service" and "aggregate number of years of service with the municipality" under Sections 175.032(1)(a) and 185(1)(b), Florida Statutes, respectively. It is the position of the DIVISION that it has the authority under Chapters 175 and 185, Florida Statutes, and Chapter 60Z, Florida Administrative Code, to withhold Chapter 175 and 185 premium tax money to plans not in compliance with Sections 175.351 and 185.35. It is the position of the DIVISION that it has the authority to release payment of Chapter 175 and 185 premium tax moneys to plans not in compliance with Sections 175.351 and 185.35, Florida Statutes, provided the municipality is making good faith efforts to bring the violations into compliance.
Findings Of Fact The petitioner Petitioner, Huey G. Manges, was employed as a fire fighter by the Port Everglades Authority (the Port) in September 1961, and over the years rose through the ranks until in 1975 or 1976 he became Chief of the department. Petitioner served as Chief until 1988 or 1989, and was then promoted to Public Safety Director. As an employee of the Port, petitioner was a member of the Florida Retirement System. The Port's deferred compensation plan In 1983, the Port adopted a deferred compensation plan for all employees. The plan provided that employees could "make contributions into the fund in an amount not to exceed 33.3 [percent] of base salary, with a maximum cap of $7500." Under the plan, the Port, as the employer, made no contribution to the plan. In September 1984, the plan was amended to create a special provision for "key management persons," as an incentive to motivate them to perform in an outstanding manner and to encourage their continued commitment to the Port. At the time, it was observed that such employees have "extensive responsibilities," and "are not compensated for the many hours they work beyond the normal '40- hour' work week." As amended, the Port matched the qualified "key management person['s]" contribution on a dollar for dollar basis, not to exceed a maximum of 5 [percent] of base salary." The combined employer/employee contribution was limited to $7,500, annually. Among the positions designated as "key management persons" was the position of Fire Chief. Subsequently, at a date not apparent from the record, but at least 5 years before petitioner's retirement, the plan was amended to its current format, and further refined the classes of participants. For employees, such as petitioner, who had attained senior management Grade 9 or higher under the Port's management pay plan, and who elected to participate in the plan by executing a participation agreement, the Port agreed to contribute, on behalf of the employee, "an annual amount equal to the lesser of (i) $7,500 or (ii) 10 [percent] of such Employee's Compensation," regardless of whether they contribute to the plan. For employees below senior management Grade 9, and who elected to participate in the plan, the Port agreed to make "a matching contribution equal to 100 [percent] of the amount of a Participant's annual Deferred Compensation, up to an annual maximum matching contribution of 5 [percent] of the Participant's Compensation." According to petitioner, he participated in the plan from its inception, and "maxed it" each year. [Transcript, page 56]. By such testimony, it is concluded that the annual contribution to his deferred compensation account was $7,500, and that the Port's contribution varied, over the years, from a "dollar for dollar" match under the September 1984 amendment, to a full $7,500 contribution during the period that included, at least, petitioner's last five years of employment with the Port. Petitioner's retirement and subsequent events In or about June 1994, petitioner applied with respondent, Division of Retirement, for retirement under the Florida Retirement System, and his request was approved effective July 1, 1994. Since that date, petitioner has duly received his monthly retirement benefits, as calculated from the Division's records at the time of his retirement. On March 8, 1995, petitioner, through counsel, wrote to the Division and requested that his retirement benefits be recalculated predicated on an error he felt was committed by the Port in its contributions to the Florida Retirement System on his behalf. Such error, petitioner contended, was the Port's failure to treat the contributions it made to his deferred compensation account as retirement creditable wages, and to make the necessary contributions to the State Retirement Account. Essentially, petitioner wanted the Division to collect the contributions from the Port, and then recalculate his average final compensation to include the $7,500 annual contribution by the Port, and adjust his pension payments accordingly. 2/ Regarding petitioner's contention, the proof demonstrates that from the inception of the plan until May 1989, the Port, unbeknownst to the Division, had included the contribution it made to an employee's deferred compensation plan in calculating an employee's retirement creditable wages and Florida Retirement System (FRS) contributions. In May 1989, Mary Meynarez, the new director of finance for the Port, wrote to the Division concerning the propriety of such treatment. That letter was in response to a conversation the Port's CPA had with the Division, wherein he was advised that employer contributions to a deferred compensation plan were not subject to FRS contributions because gross or retirement creditable wages do not include matching contributions or fringe benefits. Ms. Meynarez's letter sought written confirmation of the Division's position. By letter of May 19, 1989, the Division advised Ms. Meynarez, consistent with its long established interpretation of the retirement laws, that such was the Division's position. Thereafter, the Port made no further contributions to the FRS based on its contribution to an employee's deferred compensation plan, and it submitted and received from the Division a credit adjustment for the erroneous payments for prior periods. Given the Division's interpretation of the retirement laws, it concluded that the Port properly excluded the contributions it made to his deferred compensation account when calculating FRS contributions, and by letter of July 5, 1995, advised petitioner that his retirement benefits had been correctly calculated and no adjustment would be made. Such letter further advised petitioner of his right to a section 120.57 hearing if he disagreed with the Division's decision. Petitioner timely filed such a request, and this proceeding duly followed. Pertinent legislation and the Division's interpretation Section 121.021(24), Florida Statutes, defines "average final compensation," as that term is used in deriving a members retirement benefits under the Florida Retirement System, to mean: [T]he average of the 5 highest fiscal years of compensation for creditable service prior to retirement, termination, or death . . . The payment for . . . bonuses, whether paid as salary or otherwise, shall not be used in the calculation of the average final compensation. Prior to 1989, section 121.021(22) defined "compensation," as that term is used in the Florida Retirement System, as follows: (22) "Compensation" means the monthly salary paid a member, including overtime payments and bonuses paid from a salary fund, as reported by the employer on the wage and tax statement (Internal Revenue Service form W-2) or any similar form. When a member's compensation is derived from fees set by statute, compens- ation shall be the total cash remuneration received from such fees. Under no circum- stances shall compensation include fees paid professional persons for special or particular services. During the course of the 1989 Legislative session, proposals were made to amend the provisions of section 121.021(22). The reason for amendment was twofold. First, pursuant to subsection 121.021(22) and (24) bonuses were included in the definition of "compensation" but excluded when calculating "average final compensation." This resulted in a conflict because retirement contributions were due on bonuses, but bonuses could not be used in calculating a member's "average final compensation." Second, the definition of "compensation" was silent with regard to the treatment of salaries paid to employees who participated in a deferred compensation, salary reduction, or tax- sheltered annuity program. Consequently, although the Division had consistently interpreted the subsection to so provide, it was felt appropriate to amend the statute to clearly provide that an employee's election to defer a portion of his salary to a deferred compensation plan did not reduce his retirement creditable wages. As a consequence, pursuant to Chapter 89-126, Section 1, Laws of Florida (1989), subsection 121.021(22), effective June 26, 1989, was amended to read as follows: "Compensation" means the monthly salary paid a member by his or her employer for work per- formed arising from that employment, including overtime payments paid from a salary fund. Under no circumstances shall compensation in- clude fees paid professional persons for special or particular services or include salary payments made from a faculty practice plan operated by rule of the Board of Regents for eligible clinical faculty at the Univer- sity of Florida and the University of South Florida. [For all purposes under this chapter, the compensation or gross compensation of any member participating in any salary reduction, deferred compensation, or tax-sheltered annuity program authorized under the Internal Revenue Code shall be deemed to have been the compen- sation or gross compensation which the member would have received if he or she were not participating in such program] [Emphasis added]. Here, while recognizing that the contributions made by the Port to petitioner's deferred compensation plan may be part of a management package designed to encourage employment fidelity, the Division considers such payments fringe benefits, similar to employer paid health and life insurance, and not "compensation," as defined by subsection 121.021(22) for retirement purposes. In reaching such conclusion, the Division first points to the provision of subsection 121.021(22), as amended, which provides that "[f]or all purposes under this chapter, the compensation or gross compensation of any member participating in any salary reduction, deferred compensation, or tax- sheltered annuity program . . . shall be deemed to have been the compensation or gross compensation which the member would have received if he or she were not participating in such program." Since petitioner would not have received the $7,500 Port contribution had he not elected to participate in the Plan, the literal application of the statutory language would exclude such payments from the definition of "compensation or gross compensation" for retirement purposes. In contrast, petitioner points out that the amendment to subsection 121.021(22) relied upon by the Division was not occasioned to address the peculiarities of his situation, but was designed to clarify that the portion of the employee's salary he elected to defer would not reduce his retirement benefits. Such issue is distinct, according to petitioner, from the issue of whether employer contributions to a deferred compensation plan are "compensation" for retirement purposes. While petitioner may be correct as to the purpose of the amendment to subsection 121.021(22), such does not compel the conclusion that the Division's literal application of that subsection, as excluding employer contributions from the calculation of retirement creditable wages, was not consistent with the Legislature's intent. In concluding that the Division's interpretation is reasonable and consistent with the purpose and intent of subsection 121.021(22), it is observed that under that subsection "compensation" is defined to mean "the monthly salary paid a member by his . . . employer for work performed." "Monthly salary," as observed by the Division, is commonly understood and reasonably read to refer to the fixed compensation for services paid to the employee on a regular basis or, as in petitioner's case, his fixed monthly salary under the Port's management pay plan, and does not include fringe benefits, such as employer matching payments or contributions to a deferred compensation plan. 3/ Consequently, the Division's decision to exclude such benefits from the calculation of petitioner's retirement benefits under the Florida Retirement System was reasonable. 4/
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered dismissing petitioner's petition for formal hearing, and denying his request for additional retirement benefits. DONE AND ENTERED this 13th day of June, 1996, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of June, 1996.
The Issue The issues in this case are whether Petitioner was provided incorrect, inaccurate, and erroneous information, and, if so, if she may transfer to the Florida Retirement System (FRS) Pension Plan (Pension Plan) by paying a “buy-in” amount of $2,418.55, consistent with the amount quoted to Petitioner in January 2020.
Findings Of Fact Ms. Evangelisto has been continuously employed by an FRS- participating employer since August 2012. As a new employee of an FRS-participating employer, Ms. Evangelisto had a choice to enroll in one of two FRS retirement plans: the Pension Plan or the Investment Plan. The Pension Plan is administered by the Florida Division of Retirement (Division of Retirement), which is housed within the Department of Management Services. The Pension Plan is a defined benefit plan; the benefit is formula-based. The formula used for calculating a pension plan benefit is based on total years of creditable service at the time of retirement, membership class, and average final compensation. See § 121.091, Fla. Stat. The Investment Plan is administered by SBA. The Investment Plan is a defined contribution plan; the benefit is based on gains and losses due to market performance. On January 22, 2013, Ms. Evangelisto enrolled in the Investment Plan, with an effective date of February 1, 2013. This choice is considered Ms. Evangelisto’s initial election. Ms. Evangelisto is still enrolled in the Investment Plan. After making an initial election, an employee may make a “second election” if still employed with an FRS-participating employer, earning salary and service credit. Ms. Evangelisto may utilize a second election to move into the Pension Plan, but must pay a “buy-in” amount to do so. This sum is derived from an actuarial calculation conducted by the Division of Retirement. To effectuate a second election, Ms. Evangelisto must complete and submit a 2nd Election Retirement Plan Enrollment Form (2nd Election Form) to the Plan Choice Administrator. The 2nd Election Form may be obtained by calling the MyFRS Financial Guidance Line or through the MyFRS.com website. When completed, the form may be submitted by facsimile, mail, or by electronic submission through the MyFRS.com website. Respondent is required to provide FRS Investment Plan participants with educational services, including: disseminating educational materials; providing retirement planning education; explaining the Pension Plan and the Investment Plan; and offering financial planning guidance on matters such as investment diversification, investment risks, investment costs, and asset allocation. See § 121.4501(8)(b), Fla. Stat. Respondent provides these educational services through Ernst & Young (EY), a contracted third-party administrator. EY financial planners provide information to FRS employees via the MyFRS Financial Guidance Line. On multiple occasions over the years, going back to as early as July 2018, Ms. Evangelisto spoke to EY financial planners via the MyFRS Financial Guidance Line to request a calculation of her buy-in amount.2 In July 2018, Ms. Evangelisto contacted the MyFRS Guidance Line to request her buy-in amount. In August 2018, she received a comparison estimate. The comparison estimate provided the estimated buy-in amount, the current value of her Investment Plan, and the amount of out-of-pocket funds 2 Ms. Evangelisto testified that she made requests to determine her buy-in amount even prior to 2018. Ms. Evangelisto would have to pay to buy into the Pension Plan. This out-of- pocket sum is the result of the difference between the buy-in amount determined by the Division of Retirement and her Investment Plan account balance. The amounts contained in the comparison estimate are only valid for the calendar month in which they are issued. From July 2018, through March 2019, there were numerous communications between Petitioner and EY Financial Planners by telephone conversation, email, and through voice messages. Ms. Evangelisto made requests for buy-in amounts and received updated comparison estimates in November 2018 and March 2019. On January 13, 2020, Petitioner requested a calculation of her buy-in amount. On January 22, 2020, she received a comparison estimate which set forth an out-of-pocket cost of $2,418.55 to transfer to the Pension Plan. The estimate indicated that it was valid until January 31, 2020. On February 14, 2020, Petitioner requested another calculation of her buy-in amount. On March 12, 2020, she received a comparison estimate with an out-of-pocket cost of $7,198.64. The estimate indicated that it was valid until March 31, 2020. Ms. Evangelisto testified that she did not transfer to the Pension Plan, after being provided comparison estimates, because she did not have the funds to pay for the associated out-of-pocket cost. On June 24, 2020, Petitioner called the MyFRS Guidance Line to request yet another comparison estimate. During this conversation, Petitioner inquired about potential changes to the buy-in amount associated with becoming “vested.” The conversation was recorded and later transcribed by a court reporter: Ms. Evangelisto: Does the cost to buy into the pension change significantly once you would be vested at the eight years? EY financial planner: I actually don’t know if it would or not. Ms. Evangelisto: Okay. EY financial planner: I can try to find out. I don’t think it’s necessarily based on vesting, but more the years of service. Ms. Evangelisto: Okay. During the June 24, 2020, call, the EY financial planner told Ms. Evangelisto that she could expect the comparison estimate in three weeks. Ms. Evangelisto agreed to July 16, 2020, for a follow-up call. On July 9, 2020, Ms. Evangelisto received an email from EY, but the email did not contain the requested comparison report. On July 15, 2020, Ms. Evangelisto called the MyFRS Guidance Line to follow up on her June 24 request and to ask about the July 9 email. The EY financial planner calculated the buy-in costs for her over the phone. He provided a verbal, estimated out-of-pocket cost of $17,657.00 to buy into the Pension Plan. Surprised by this number, which was over $10,000 higher than the out-of-pocket estimate provided in March 2020, Ms. Evangelisto asked why the cost increased. This telephone call was also recorded and later transcribed by a court reporter. Relevant parts of the conversation are as follows: Ms. Evangelisto: Does it normally jump up heftily at eight years of service -- EY financial planner: No. No. Ms. Evangelisto: -- or like in a yearly increment? EY financial planner: No. Ms. Evangelisto: It doesn’t? EY financial planner: It -- okay, you have been watching in and monitoring it very closely, so you had in December, January, March, and now we are a July figure. If all of those other figures were consistent, while the increase due to the change in the underlying interest rate might have a negative impact, it shouldn’t be so much that it’s going to bump up the cost by another $10,000. The EY financial planner promised to look into the numbers to ensure they were not miscalculated. On the same day, the EY financial planner called Ms. Evangelisto back and left a voicemail. He stated that the out-of-pocket cost he provided on the earlier phone call was correct and that the number had substantially increased because Ms. Evangelisto hit the eight-year vesting mark.3 The previous calculations were based on having an unvested account balance. Ms. Evangelisto returned the EY financial planner’s call and he confirmed the information he provided in the voicemail. Ms. Evangelisto asked EY financial planners, on two occasions, if her buy-in amount (and resulting out-of-pocket costs) would increase upon becoming vested. On the first occasion, during the June 24 call, the EY financial planner told her that he “did not know” and would endeavor to provide her with an answer by July 16. Unfortunately for Ms. Evangelisto, the final date to make the switch to the Pension Plan before the substantial increase4 was June 30. Ms. Evangelisto reached out to the MyFRS Guidance Line on July 15, prior to her scheduled July 16 call. On this occasion, the EY financial planner provided incorrect information when he told her that buy-in amounts did not 3 In her Proposed Recommended Order, Ms. Evangelisto asserted that she became “vested” on July 1, 2020, after completing eight years of creditable service with FRS-participating employers. 4 It is important to note that the amount to buy into the Pension Plan increased every time Ms. Evangelisto requested a calculation, albeit not the sizeable jump that occurred when she became vested. substantially increase upon vesting. This proved to be inconsequential, however, as the increase to Ms. Evangelisto’s buy-in amount had occurred as of July 1, 2020, prior to the EY planner providing the incorrect information. An EY financial planner provided inaccurate information to Ms. Evangelisto when he indicated that no substantial jump would occur upon vesting. Nevertheless, Ms. Evangelisto is required to pay a buy-in amount as calculated by the Division of Retirement when she chooses to move forward with making the second election. Petitioner did not prove that she should be entitled to pay the buy-in amount calculated in January 2020. That amount was valid until January 31, 2020, and the document provided to Ms. Evangelisto clearly notified her of such. Ms. Evangelisto still has a one-time second election to move into the Pension Plan.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the State Board of Administration enter a final order dismissing Petitioner’s Florida Retirement System Investment Plan Petition for Hearing. DONE AND ENTERED this 21st day of January, 2021, in Tallahassee, Leon County, Florida. S JODI-ANN V. LIVINGSTONE Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us COPIES FURNISHED: Elisha Marie Evangelisto 4604 20th Avenue West Bradenton, Florida 34209 Deborah Stephens Minnis, Esquire Ausley McMullen, P.A. Post Office Box 391 Tallahassee, Florida 32302 Ash Williams, Executive Director & Chief Investment Officer State Board of Administration 1801 Hermitage Boulevard, Suite 100 Post Office Box 13300 Tallahassee, Florida 32317-3300
Findings Of Fact Jean E. Preus is a registered real estate broker and was so registered at all times here relevant. Tax Shelter Real Estate, Inc., and Tax Shelter Real Estate of America, Inc., are corporate brokers registered by the Florida Board of Real Estate and were so registered at all times here relevant. Tax Shelter Real Estate, Inc., and Tax Shelter Real Estate of America, Inc., are wholly owned subsidiaries of another corporation controlled by S. William Preus, the husband of Respondent. The family owns the majority, if not all, of the stock in this controlling corporation. S. William Preus is president of Corporate Financial Planning of Florida, whose business is primarily providing computer printouts and expertise to insurance agents setting up retirement plans for clients. Preus holds the degree of Chartered Life Underwriter (CLU) although at present he sells no insurance, but deals primarily with the insurance companies in assisting their agents. On 28 October 1980 at the request of insurance agents, Edward LaGrave and Don Hansman, S. William Preus, enroute from a seminar in Daytona to his office in St. Petersburg, met with the owners of Peebles Tractor Company in Winter Haven, Florida, to present information on a Keogh Plan for employees of Peebles. Jean E. Preus accompanied her husband to this meeting. LaGrave and Hansman provided Preus with a list of employees of Peebles, their ages and salaries, from which it was determined that some $27,000 per year could be invested in an employee retirement plan such as a Keogh Plan. In the presentation Preus used prototype trust documents prepared by Lincoln Trust Company and, if the Peebles Tractor Company opted for the plan he presented, it was his intention to forward the application to Lincoln Trust to serve as trustee of the plan. Preus had purchased one or more time-sharing condominium units and was impressed with the appreciation he had noticed in the selling price of such units in the past two years. He was especially impressed with the Bahia Mar development at which he had purchased a unit and who had additional time-sharing units to sell. Time-sharing is those housing units sold to various individuals for one week out of the year as a vacation home with the capability of swapping usage with similar units in other places. At Bahia Mar the unit owner sold one- week usage per year on a 99-year lease with the property managed by the developer and rented if the owner does not want to occupy the unit during his week's ownership. Preus proposed time-sharing units as a suitable investment vehicle for the Peebles Tractor Company employees retirement fund and Jean E. Preus showed pictures of the condominium units they owned at Bahia Mar. Peebles was not interested in purchasing time-sharing units for their employees' retirement fund and no sales were made. Had Peebles bought any of the Bahia Mar units, Respondents would have received a ten percent commission. Preus had obtained the Lincoln Trust forms from Lincoln Trust Company at an earlier date by simply requesting the forms. He obtained additional forms from Flagship Bank in a similar fashion. William A. Preus, the adult son of Respondent who also works with his father, had called Lincoln Trust before the October 28 meeting and learned the fees had been changed since the forms he had on hand were printed. He amended the forms used by S. William Preus to reflect this change in the fees charged by Lincoln Trust Company when the presentation was made to Peebles Tractor Company. The day following the Peebles meeting Preus contacted Lincoln Trust Company and learned they would no longer accept financed real estate in an employee retirement plan for which they served as trustee. Specifically, they would not accept funds to invest in financed time-shared condominium units. Formerly, Lincoln Trust had accepted financed raw land at Sugarwood Mills (in Florida) in such a retirement plan (Exhibit 11). In order to protect employee benefit plans Congress enacted the Employees Retirement Income Security Act (ERISA), 29 USCS 1001, et seq. Tax advantages accrue to those plans complying with ERISA, the federal tax laws and regulations promulgated pursuant thereto. All investments are not acceptable; however, the principal requirement is that funds placed in such accounts be prudently invested. Regulations have been promulgated disqualifying investments and certain personal property such as gold coins in ERISA plans, which type investment was formerly allowed. No regulations specifically authorize or bar ERISA investments in time-shared condominium units. Although trustees such as Lincoln Trust Company will not accept time-shared units in ERISA accounts, testimony was presented that Flagship Bank of Tampa would accept such investments in ERISA accounts. No evidence was presented that Jean E. Preus made any representations regarding the acceptability of time-shared units in an employee retirement account. According to her testimony she has no knowledge of ERISA plans and her participation in the October 28 1980, meeting was limited to showing pictures of and describing the time-shared unit she owned at Bahia Mar.
