March 7, 2008
JOHN S. REDDEN, PETITIONER-APPELLANT,
BOARD OF TRUSTEES, PUBLIC EMPLOYEES' RETIREMENT SYSTEM, RESPONDENT-RESPONDENT.
On appeal from the Board of Trustees of the Public Employees' Retirement System, Department of Treasury.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 5, 2008
Before Judges Skillman and Winkelstein.
Appellant John S. Redden appeals from a final decision of respondent Board of Trustees of the Public Employment Retirement System (PERS Board), which dismissed his petition seeking full credit in the Prosecutors Part for his prior service in the PERS.
In early 2002, chapter 366 of the Laws of 2001, later codified at N.J.S.A. 43:15A-155 to -161, was enacted into law. Chapter 366 established a separate Prosecutors Part within PERS, with the intention of providing prosecutors enhanced pension benefits.
This statute raised various issues of interpretation. The PERS Board addressed many of those issues by the adoption on June 21, 2004 of administrative regulations. N.J.A.C. 17:2-8.1 to -8.16.
Redden and various other deputy attorneys general and assistant prosecutors filed an appeal challenging the validity of those regulations. We upheld the challenged regulations in an unpublished opinion. Ouslander v. Pub. Employees Ret. Sys., No. A-6287-03 (App. Div. June 22, 2005). However, we preserved the right of any PERS member affected by the regulations to challenge their validity "as applied if that member could show that the circumstances of the particular case warrant it." (slip op. at 35.) The Supreme Court subsequently denied the appellants' petition for certification. 185 N.J. 595 (2005). Following the issuance of our opinion and the Court's denial of certification, Redden continued to pursue his petition to have his prior PERS service credits transferred to the Prosecutors Part. The matter was presented to an Administrative Law Judge (ALJ) based on stipulated facts. The critical stipulated fact was that Redden was not an assistant prosecutor on the effective date of chapter 366, January 7, 2002. Under the regulations of the PERS Board interpreting chapter 366, a PERS member had to be an assistant prosecutor on that date to be entitled to transfer prior PERS service credits into Prosecutors Part service credits. Based on this interpretation of chapter 366, the amount of the pension Redden was entitled to receive upon his anticipated retirement on January 31, 2007 at the age of fifty-five was the same amount he would have received if chapter 366 had not been enacted, that is, $66,181 annually. The ALJ determined that the issues to be resolved were whether Redden could transfer his PERS service credit to the Prosecutors Part and, if not, whether he was entitled to a refund of the part of his pension contributions to the Prosecutor's Part that exceeded the contributions he would have been required to make as a regular PERS member. The ALJ concluded in a written decision that both of these issues had been decided adversely to Redden by our opinion in Ouslander, and that even though Redden characterized his petition as an "as-applied" challenge to the regulations, it was in actuality "a facial attack on the validity of the regulations, a matter already addressed in Ouslander[.]" Accordingly, the ALJ recommended dismissal of Redden's petition. The PERS Board adopted the ALJ's recommended initial decision.
On appeal, Redden presents the following arguments:
I. AS APPLIED TO THIS CASE, THE PERS REGULATION (N.J.A.C. 17:2-8.11(c)) PROHIBITING A REFUND OF EXCESS CONTRIBUTIONS WHEN A RETIRING PROSECUTOR IS FORCED TO ELECT REGULAR PERS BENEFITS IS INVALID BECAUSE IT IS CONTRARY TO THE LEGISLATIVE INTENT AND VIOLATES THE STATE AND FEDERAL CONSTITUTIONS.
A. The regulation is invalid because it is contrary to the legislative intent of providing enhanced pension benefits to a retiring prosecutor.
B. As applied in this case N.J.A.C. 17:2-8.11(c) violates the contract clauses of the United States and New Jersey Constitutions.
C. As applied in this case N.J.A.C. 17:2-8.11(c) violates principles of substantive due process and equal protection of the law.
D. The prior Appellate Division opinion.
II. THE APPLICATION OF PERS'S REGULATIONS PROHIBITING APPELLANT FROM RECEIVING CREDIT FOR PRIOR ESTABLISHED PERS SERVICE IS INVALID BECAUSE IT CREATES A RESULT WHICH IS CONTRARY TO THE EXPRESSED LEGISLATIVE INTENT AND VIOLATES EQUAL PROTECTION PRINCIPLES.
A. The plain meaning of the prosecutors part legislation requires that credit be given for prior PERS service.
B. The common practice of transferring credit when a public employee moves to a new position and the transfer statute require that credit be given for prior service.
C. A refusal to give appellant credit in the prosecutors part for his prior established PERS service violates state and federal equal protection principles.
D. The 2003 amendment does not evince a legislative intent of denying credit for pre-January 7, 2002 service; it merely provides county prosecutors with credit for post-January 7, 2003 service.
We agree with the ALJ's conclusion that most of Redden's arguments were rejected in Ouslander and that Redden, as a party to that appeal, is bound by our decision. See Raymond v. N.J. State Parole Bd., 221 N.J. Super. 381, 384-85 n.1 (App. Div. 1987) (observing that an unpublished opinion is "binding as against a party").
In holding that a PERS member who was not employed as an assistant prosecutor on the January 7, 2002 effective date of chapter 366 could not transfer prior PERS service credit into the Prosecutor's Part, we stated: The key date for the Prosecutors Part is the effective date of Chapter 366, January 7, 2002. If a member was serving as a prosecutor on that date, all of his regular PERS service credit was automatically transferred to the Prosecutors Part without additional cost to the member. N.J.S.A. 43:15A-156(a). . . .
To transfer regular PERS service credit into the Prosecutors Part, the regulations require the prosecutor to have been employed as a prosecutor on the effective date of Chapter 366, January 7, 2002. N.J.A.C. 17:2-8.4. For prosecutors hired after that date, any prior regular PERS service remains in their regular PERS account. N.J.A.C. 17:2-8.5.
. . . [Chapter 366] does not allow service credit for prior employment to be purchased and credited to the Prosecutors part unless: (1) the prosecutor held that position on the effective date of Chapter 366[.]
[slip op. at 6, 11, 22.]
In rejecting the argument that a PERS member who was required to join the Prosecutors Part and pay the higher 7.5% pension contribution rate was entitled to a refund of the difference between that contribution rate and the regular 5% PERS pension contribution rate, we stated:
Appellants contend that N.J.A.C. 17:2-8.11(c) is invalid because it allows for election of the largest possible retirement allowance and then confiscates a prosecutor's higher contributions if the prosecutor chooses to combine his dual accounts, one account for his Prosecutors Part credit and another account for his regular PERS credit, into a traditional PERS benefit instead of taking a separate Prosecutors Part benefit and regular PERS benefit. Appellant claims that the regulation causes a forfeiture and is, therefore, illegal and void. We disagree.
This argument is raised because the Board fixed the contribution rate for the Prosecutors Part at seven-and-one-half percent of the member's salary and a regular PERS member contributes a lesser rate of four or five percent. Although this argument has some apparent facial appeal, we believe its flaw in that it misunderstands the nature of pensions. . . .
. . . Given the Board's authority to establish the contribution rate and to adjust it as necessary, we perceive no invalidity in a regulation that prohibits a refund for the difference between the Prosecutors Part rate and the regular PERS rate.
. . . We conclude that appellants' claim for a refund lacks merit. [slip op. at 27-29.]
We agree with the panel's analysis in Ouslander and reject Redden's arguments for reconsideration of that decision. We also reject Redden's constitutional arguments. The premise of his equal protection argument is that because he elected the same pension benefit he would have been entitled to receive if chapter 366 had not been enacted, he is similarly situated to non-Prosecutors Part members of PERS. Therefore, the argument continues, he was denied equal protection in being required to pay the Prosecutors Part 7.5% pension contribution rate rather than the regular 5% contribution rate. However, Redden's membership in the Prosecutors Part would have entitled him to the higher pension benefits to which such members are entitled if he had continued his employment for a longer period of time rather than electing to retire at age fifty-five. Therefore, we are satisfied that the opportunity Redden's membership in the Prosecutors Part afforded for him to qualify for a larger pension than other members of the PERS provided a rational basis for requiring him to contribute at that higher rate.
We also reject Redden's argument that the increase in his pension contribution rate from 5% to 7.5% based on his membership in the Prosecutors Part constituted an impairment of the obligation of contracts, in violation of Article I, Section 10, Clause 1 of the United States Constitution and Article IV, section VII, paragraph 3 of the New Jersey Constitution. A public employee pension, including the employee's contribution rate, is purely a matter of legislative policy and does not create a contractual obligation by the employer to the employee. See Spina v. Consol. Police & Fireman's Pension Fund Comm'n, 41 N.J. 391, 398-405 (1964). Moreover, chapter 366 did not result in any diminution in Redden's entitlement to pension benefits. Under this statute, he was guaranteed at least the amount of benefits to which he would have been entitled if he had remained a member of the regular PERS pension system and also afforded the opportunity if he served for a sufficient additional period of time as an assistant prosecutor to qualify for the enhanced new benefits provided to members of the Prosecutors Part.
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