ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
The above-captioned case is before the Administrative Law Court (ALC or Court) pursuant to S.C. Code Ann. § 9-21-60 (Supp. 2006) for a contested case hearing. In this matter, Petitioner Walter Taylor (“Petitioner”) challenges the Final Agency Determination issued by Respondent South Carolina Budget and Control Board, South Carolina Retirement Systems (“Respondent”) on May 17, 2007, in which it denied his request for a waiver of the requirements of S.C. Code Ann. § 9-1-1550(B)(2) (Supp. 2000) as applied to his monthly service retirement allowance. Specifically, Petitioner contends that the early retirement reduction provided for in section 9-1-1550(B)(2) should be removed from his retirement allowance as a result of his post-retirement employment with the State. In response, Respondent maintains that Petitioner’s service retirement allowance was properly reduced pursuant to section 9-1-1550(B)(2) and that Petitioner is not eligible for a waiver or elimination of that reduction because of his post-retirement state employment.
After notice to the parties, a hearing on the merits was held before me on October 25, 2007 at the Court in Columbia, South Carolina. After carefully weighing all the evidence and testimony, I conclude that Petitioner is not eligible for a waiver of the requirements set forth in section 9-1-1550(B)(2) as applied to his monthly service retirement allowance.
STIPULATIONS OF FACT
Pursuant to ALC Rule 25(C), the parties submitted Stipulations of Fact to the Court at the hearing of this matter. Specifically, the parties stipulated to the following:
1. Petitioner Walter Taylor is a retired member of the South Carolina Retirement System (“SCRS”), who retired from employment as a program manager with the State Budget and Control Board on July 1, 2000.
2. On the date of his retirement, Petitioner was sixty-two years and nine months old and had accrued twenty years, nine months, and twenty-five days of creditable service in SCRS.
3. Petitioner’s average final compensation at retirement was determined to be $56,910.49. Seventy-five percent (75%) of Petitioner’s average final compensation at retirement is $42,682.87.
4. After his retirement, Petitioner returned to work with the Budget and Control Board as a temporary employee receiving an hourly salary. Petitioner’s return to work with the Board included employment between January 3, 2003, and March 13, 2007, as an interim coordinator for the State’s efforts to secure federal funding under the “E-Rate” grant program.
5. Upon returning to work for the Budget and Control Board in 2003, Petitioner’s annual compensation from the Board—and his only compensation from a covered employer in SCRS—for calendar year 2003 was approximately $16,212.50.
6. Petitioner’s annual compensation from the Board—and his only compensation from a covered employer in SCRS—for calendar year 2004 was approximately $31,687.50.
7. Petitioner’s annual compensation from the Board—and his only compensation from a covered employer in SCRS—for calendar year 2005 was approximately $37,250.00.
8. Petitioner’s annual compensation from the Board—and his only compensation from a covered employer in SCRS—for calendar year 2006 was approximately $46,187.50.
9. Petitioner’s annual compensation from the Board—and his only compensation from a covered employer in SCRS—for the period between January 1, 2007, and June 30, 2007, was approximately $11,575.00.
FINDINGS OF FACT
Having observed the witnesses and reviewed the exhibits presented at the hearing and closely passed upon their credibility, and having taken into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of the evidence:
1. Petitioner retired from employment as a program manager with the State Budget and Control Board on July 1, 2000. In this position, Petitioner was the first person appointed as the E-Rate coordinator for South Carolina. The E-Rate program was established by the United States Congress in 1996 under the Telecommunications Act (“Act”). The Act provides funds to all states to enable internet technology to be available in all libraries and kindergarten through 12th-grade classrooms at discounted rates. In order to qualify for this particular funding, a state must complete the application for funding every year and submit the application to the appropriate agency by a certain date.
2. In December of 2002, the employee responsible for submitting the application for funding under the E-Rate program resigned, and the deadline to apply for such funding for the following fiscal year was February 2003.
3. In early 2003, Petitioner was recruited by the Budget and Control Board to complete the E-Rate funding application by the February 2003 deadline due to his extensive knowledge of the program and its requirements. Petitioner agreed to this request and became reemployed with the Budget and Control Board on January 3, 2003 as a temporary employee receiving an hourly salary. Further, Petitioner agreed to remain employed as the interim coordinator under the E-Rate grant program until another individual could be hired and trained for the position. Shortly thereafter, an individual was hired by the Budget and Control Board and trained for this position but subsequently resigned.
4. Petitioner again agreed to remain with the program until a competent replacement could be hired and trained. However, soon thereafter, the South Carolina E-Rate program was audited by the Federal Communications Commission (FCC). The FCC is the granting agency for the E-Rate program. Because of the additional work created by the audit – in addition to his regular job responsibilities – a competent replacement could not be hired and trained until approximately March of 2007.
5. Petitioner only returned to employment after his retirement to assist the State of South Carolina in obtaining critical funding under the E-Rate program.
6. Pursuant to S.C. Code Ann. § 9-1-1790(C), Petitioner made mandatory contributions to SCRS during the final two years of his employment with the state as a working retiree.
7. During his employment, Petitioner made several inquiries to the Human Resources Department concerning the waiver or elimination of the early retirement reduction.
8. On the date of his initial retirement, Petitioner was sixty-two years and nine months old and had accrued twenty years, nine months, and twenty-five days of creditable service in SCRS. Because Petitioner retired before the age of sixty-five and had not been credited with thirty years of state service by his retirement date, his monthly service retirement allowance was reduced by approximately eleven (11) percent.
9. Petitioner ceased working with the Budget and Control Board as a temporary employee on March 13, 2007. At the time of his retirement on March13, 2007, Petitioner was sixty-nine years old. Further, Petitioner has remained retired since this date.
10. On March 14, 2007, Petitioner submitted a memorandum to the Executive Director of South Carolina Budget & Control Board (“Board”) and asked the Board to waive the early retirement reduction of his retirement allowance required by section 9-1-1550(B)(2) in light of his additional four years of state employment as a working retiree.
11. Petitioner’s request was forwarded to Respondent on March 21, 2007, and, on May 17, 2007, Respondent issued Final Agency Determination No. 07-006 denying Petitioner’s request for a waiver of the early retirement reduction applied to his service retirement allowance.
12. Petitioner challenged that Final Agency Determination by filing a notice for a contested case hearing before this Court on June 1, 2007.
CONCLUSIONS OF LAW
1. This Court has jurisdiction over this contested case pursuant to S.C. Code Ann. §§ 9-21-60 (Supp. 2006) and 1-23-600(B) (Supp. 2006).
2. Petitioner presents three issues to the Court: (1) whether Petitioner is eligible for a waiver of the requirements provided in S.C. Code Ann. § 9-1-1550(B)(2) (Supp. 2000); (2) because Petitioner made contributions to SCRS during the final two years of his employment as a working retiree as required by S.C. Code Ann. § 9-1-1790(C) (Supp. 2006), whether he is eligible to receive additional retirement benefits for those two years of service; and, (3) whether Petitioner’s early retirement reduction should be removed because his employer failed to adequately respond to his inquiries regarding the steps necessary for waiving or eliminating the reduction while he was employed as a working retiree.
The version of section 9-1-1550(B)(2) in effect at the time of Petitioner’s retirement provided that:
[i]f the member’s service retirement date occurs before his sixty-fifth birthday and before he completes the thirty years of creditable service, his service retirement allowance is computed as in item (1) above [which sets out the standard service retirement calculation] but is reduced by five-twelfths of one percent thereof for each month, prorated for periods less than a month, by which his retirement date precedes the first day of the month coincident with or next following his sixty-fifth birthday.
S.C. Code Ann. § 9-1-1550(B)(2) (Supp. 2000).
Further, section 9-1-1790(C) provides that:
A retired member shall pay to the system the employee contribution as if the member were an active contributing member if an employer participating in the system employs the retired member. The retired member does not accrue additional service credit in the system by reason of the contributions required pursuant to this subsection and subsection (B) of this section.
S.C. Code Ann. § 9-1-1790(C) Supp. 2006).
3. Petitioner is the moving party in this matter and has the burden of establishing, by a preponderance of the evidence, that he is entitled to a waiver of the requirements of Section 9-1-1550(B)(2). See Leventis v. S.C. Dep’t of Health & Envtl. Control, 340 S.C. 118, 132-33, 530 S.E.2d 643, 651 (Ct. App. 2000) (holding that the burden of proof in administrative proceedings generally rests upon the party asserting the affirmative of an issue); see also 73A C.J.S. Public Administrative Law and Procedure § 240 at 49 (2004) (“In administrative proceedings, the general rule is that an applicant for relief, benefits, or a privilege has the burden of proof, and the burden of proof rests upon one who files a claim with an administrative agency to establish that required conditions of eligibility have been met.”).
4. The South Carolina General Assembly has established various procedures for Retirement System members to comply with in seeking resolution of disputes and claims with the Retirement Systems. A member may ask the Director to review an initial decision by the Retirement Systems which is unfavorable. The claimant has the opportunity to present his or her claim in writing. The Director, or a person designated by the Director, may conduct a conference concerning the claim prior to the issuance of a Final Agency Determination by the Director. The Director must make a Final Agency Determination in writing concerning the claimant’s appeal. S.C. Code Ann. § 9-21-50 (Supp. 2006). If the Final Agency Determination is unfavorable, the member may request a hearing with this Court. S.C. Code Ann. § 9-21-60 (Supp. 2006).
5. The chief administrative law judge of this Court assigns each case to an administrative law judge who hears the case de novo in accordance with the Court’s rules of procedure. S.C. Code Ann. §§ 1-23-600(C) (2006) and 9-21-60 (Supp. 2006). After conducting a hearing, the assigned administrative laws judge issues a written final decision that must contain separate findings of fact and conclusions of law. S.C. Code Ann. § 1-23-350 (Supp. 2006) and ALC Rule 29(C).
6. The trier of fact must weigh and pass upon the credibility of the evidence presented. S.C. Cable Television Association v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). The trial judge who observes a witness is in the best position to judge the witness’ demeanor and veracity and evaluate his testimony. McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982).
DISCUSSION
In this matter, Petitioner primarily contends that the reduction of his retirement allowance required by section 9-1-1550(B)(2) – due to his early retirement – should be waived because, at the request of the Budget and Control Board, he returned to temporary employment with the State for an additional four years after his retirement, continuing to work until he was sixty-nine years old. Petitioner has further argued that, because he made contributions to SCRS during the final two years of his employment as a working retiree as required by section 9-1-1790(C), he should accrue additional retirement benefits for those two years of service. Lastly, Petitioner contends that the early retirement reduction should be removed because his employer failed to adequately respond to his inquiries regarding the steps necessary for waiving or eliminating the reduction while he was employed as a working retiree. For the reasons set forth below, these contentions cannot be sustained.
As a preliminary matter, it should be noted that Petitioner’s retirement benefits have been properly reduced as a result of his retirement before the age of sixty-five with less than thirty years of service. When Petitioner retired on July 1, 2000, he was only sixty-two years old and had less than twenty-one years of credited service with the State. Accordingly, because Petitioner was not yet sixty-five years old and had not been credited with thirty years of state service by his retirement date, his monthly service retirement benefit was properly reduced by approximately eleven percent pursuant to section 9-1-1550(B)(2) based upon his age at the time of his retirement.
However, Petitioner’s primary position in this matter is not that his retirement benefits were incorrectly reduced upon his retirement. Rather, he contends that the reduction should be waived in light of his subsequent, post-retirement employment with the State. Nevertheless, Petitioner is not entitled to the relief he seeks. Because section 9-1-1550(B)(2) does not provide for the waiver or other cancellation of the benefit reduction contained in that subsection, the only means by which Petitioner could have removed the early retirement reduction of his benefit and retired with a full retirement allowance would have been to once again become an active member of SCRS and to have subsequently retired with sufficient age or years of service for the full benefit. See, e.g., § 9-1-1550(B)(1) (Supp. 2006) (calculating the full retirement benefit for a member whose retirement date occurs on or after his sixty-fifth birthday or who has more than twenty-eight years of credited service). Sections 9-1-1790 and 9-1-1590 govern the effect of a retiree’s return to state employment on his retirement benefits and on his membership status in the SCRS, respectively.
Under section 9-1-1790, with a sufficient break in service, a retired member of SCRS may return to state employment at any salary without affecting the monthly retirement allowance he receives under the System. § 9-1-1790(A). While both the employer of a working retiree and the working retiree himself must pay, respectively, the standard employer and employee contributions to the System, a working retiree is not considered an active member of the System and does not earn service credit in the System during such employment. See § 9-1-1790(C) (noting that these contributions are only calculated “as if the member were an active contributing member” and providing that a return-to-work retiree “does not accrue additional service credit in the [S]ystem by reason of the contributions” required to be paid by the employer and retiree) (emphasis added).
Section 9-1-1590 does, however, provide a mechanism for a working retiree to return to active membership in the System. Under that section, if a working retiree is restored to active employment with the State for at least forty-eight consecutive months at an annual compensation equal to or greater than seventy-five percent of his average final compensation at retirement, he may elect to cease his retirement allowance and rejoin the System as an active, contributing member. § 9-1-1590; see also § 9-1-1790(A) (stating that the provisions of section 9-1-1590 apply to a working retiree who is employed for at least forty-eight consecutive months). Upon electing to return to active membership in the System, a retiree may also receive service credit for the period he was employed as a return-to-work retiree if he repays all retirement benefits received during that period and makes a contribution equal to the amount he would have contributed to the System had he been an active member during that period. § 9-1-1590. Thus, while section 9-1-1590 does provide an avenue for a working retiree to return to active membership, it must be emphasized that a working retiree may be restored to active membership in the System only if he meets the compensation and duration requirements of that section and if he affirmatively elects to become an active member during the period of his reemployment.
Based upon the above-referenced statutes, Petitioner’s request for additional retirement benefits is denied. As section 9-1-1790(C) makes clear, the fact that Petitioner was reemployed by the Budget and Control Board after his retirement—and even paid contributions to the System during some of that time—did not make him an active member of the System during his reemployment and does not entitle him to any additional service credit for his employment. § 9-1-1790(C). Further, although Petitioner was employed by the Board as a working retiree for approximately forty-eight consecutive months, he was only paid an annual compensation equal to or greater than his average final compensation for one of the years in question, calendar year 2006. Accordingly, because Petitioner did not sustain his annual compensation at a level equal to or greater than his average final compensation for at least four years during his reemployment, Petitioner was not eligible to resume active membership in the System under the provisions of section 9-1-1590 as a result of his post-retirement employment with the Board. § 9-1-1590. Moreover, even if Petitioner had met the eligibility requirements for resuming active membership in SCRS during his employment with the Board, he failed to make the affirmative election required by section 9-1-1590 to return to active membership in the System before terminating his employment with the Board.
Finally, Petitioner’s contention that his employer failed to respond to his questions regarding the waiver or elimination of the early retirement reduction does not provide a basis for the removal of the reduction from his retirement allowance. As discussed above, Petitioner failed to satisfy the compensation requirements for resuming active membership in SCRS under section 9-1-1590 during his reemployment with the Board, and thus had no means of eliminating the early retirement reduction applied to his retirement benefits. Further, upon his return to work with the Board in 2003, Petitioner received a letter from the Retirement Systems that informed him of his option, under section 9-1-1590, to return to active membership in the System upon completing four consecutive years of covered employment at an annual salary of at least 75% of his average final compensation. In particular, the letter notified Petitioner that, if he elected to resume his membership, “[u]pon subsequent retirement, the monthly benefit will be recalculated as if [he] is retiring for the first time.” Thus, even if Petitioner’s employer failed to address his inquiries about eliminating the early retirement reduction on his monthly benefit, this letter gave Petitioner sufficient knowledge of his eligibility for the resumption of active service, which could have led to an increase in his retirement benefit.
In sum, the working retiree provisions of section 9-1-1790 did not make Petitioner an active member of SCRS by virtue of his reemployment with the Board alone, and Petitioner did not satisfy the compensation requirements of section 9-1-1590 that could have allowed him to return to active membership in the System as a result of that employment. Therefore, the early retirement reduction applied to Petitioner’s service retirement allowance under section 9-1-1550(B)(2) must remain.
CONCLUSION
Because Petitioner retired in 2000 at the age of sixty-two with less than thirty years of service, his monthly service retirement allowance has been properly reduced pursuant to section 9-1-1550(B)(2), which does not contain any authorization for the wavier or cancellation of the benefit reduction provided therein. Furthermore, although Petitioner was reemployed by the Budget and Control Board for several years after his retirement, Petitioner did not earn sufficient compensation to return to active membership in SCRS and subsequently retire on a full retirement allowance based upon that employment. Accordingly, while this Court fully respects the value of Petitioner’s post-retirement employment with the State, I conclude that Petitioner’s request for a waiver of the requirements of section 9-1-1550(B)(2) as applied to his monthly
retirement benefit must be denied.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that Petitioner’s request for a waiver of the requirements set forth in section 9-1-1550(B)(2) is denied.
IT IS FURTHER ORDERED that Petitioner’s request for additional retirement benefits for his two years of service in which he made contributions to SCRS is denied.
IT IS FURTHER ORDERED that Petitioner’s request for the early retirement reduction to be removed based upon his employer failing to adequately respond to his inquiries regarding the steps necessary for waiving or eliminating the reduction while he was employed as a working retiree is denied.
AND IT IS SO ORDERED.
_______________________________
Marvin F. Kittrell
Chief Administrative Law Judge
November 8, 2007
Columbia, South Carolina
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