Mark A. Sorsaia, Esq.
TURLEY, SORSAIA & GARVIN
Winfield, West Virginia
Counsel for Petitioners
Robert M. Nunley, Esq.
Sr. Assistant Attorney General
Charleston, West Virginia
Counsel for Respondents
CHIEF JUSTICE NEELY delivered the Opinion of the Court.
JUSTICE BROTHERTON did not participate.
RETIRED JUSTICE MILLER sitting by temporary assignment.
RETIRED JUSTICE MILLER concurs in part, and dissents in part, and reserves the right to file a concurring and dissenting opinion.
1. Because money is expected to be put away as a
condition precedent to fund the state pension systems, pensions are
legitimate debts of the State.
2. To the extent that anything in Mullett v. City of
Huntington Police Pension Board, 186 W.Va. 488, 413 S.E.2d 143
(1991) or State ex rel. Fox v. Board of Trustees of Policeman's
Pension, 148 W.Va. 369, 135 S.E.2d 262 (1964), is inconsistent with
this opinion, they are overruled.
3. When considering the constitutionality of
legislative amendments to pension plans, an employee's eligibility
for a pension does not determine whether he or she has vested
contract rights. The determination of an employee's vested
contract rights concerns whether the employee has sufficient years
of service in the system that he or she can be considered to have
relied substantially to his or her detriment on the existing
pension benefits and contribution schedules.
4. Considerations of detrimental reliance do not alter
the applicable statutes controlling a state employee's eligibility
for a pension, itself. Until a public employee meets the relevant
age and service requirements for collection of a pension, he or she
may not receive a pension, and the existence of constitutionally protected reliance interests in pension benefit and contribution
schedules do not in any way alter the existing procedure for
reimbursing pension contributions into the plan upon a public
employee's voluntary or involuntary separation from state
5. In public employee pension cases, what often
concerns the court is not the technical concept of "vesting," but
rather the conditions under which public employees have a property
right protected under the contract clauses because of substantial
detrimental reliance on the existing pension system.
6. In pension cases, then, there are two distinct
issues of contract: (1) an employee's contract right to collect a
pension after statutory eligibility requirements have been met; and
(2) an employee's legitimate expectations, also contractual in
nature, that the government will not detrimentally alter the
pension scheme once the employee has spent sufficient time in the
system to have relied to his or her detriment. The first issue
involves whether the employee has remained in government service
for such a length of time that he or she can collect benefits; the
second issue involves the employee's reliance on promised
government benefits after years of government service but before
actual retirement age. Pension eligibility and reasonable
expectations about the system's benefits are entirely separate
7. By meeting certain eligibility requirements, a
public employee acquires a right to payment under a pension plan.
For any employee not yet eligible for payment, this is a mere
expectancy; if the public employee does not meet the age and
service requirements for benefits, his or her participation in a
state pension plan does not allow receipt of a pension. But
substantial employee participation in the system does create an
employee's reliance interest in pension benefits. An employee's
membership in a pension system and his or her forbearance in
seeking other employment prevents the legislature from impairing
the obligations of the pension contract once the employee has
performed a substantial part of his or her end of the bargain and
relied to his or her detriment.
8. Although participation in a government pension
system and forbearance in seeking other employment create an
employee's contract right to pension benefits under art. III, § 4
of our Constitution, such participation does not create contract
rights to government employment. The entitlement to continued
government employment continues to be controlled by civil service
statutes, applicable regulations, the due process and equal
protection clauses, the first amendment and other employment-
9. If an employee engages in misconduct during his or
her public service, he or she may forfeit rights to collect a pension later. Insofar as West Virginia Public Employees
Retirement System v. Dodd, 183 W.Va. 544, 396 S.E.2d 725 (1990)
holds that an employee's misconduct results in a forfeiture of the
entire pension, it is still good law because the requirement of
honorable service has been established in advance and has been made
an explicit part of the entire bargain. Otherwise, if misconduct
is not at issue, Dodd (and all other similar cases) no longer state
the law with regard to legislative amendments to a government
pension plan; thus, to the extent Dodd and other cases are
inconsistent with this opinion, they are overruled.
10. When the legislature structured the state trooper's
pension system to allow for retirement before age fifty, the State
encouraged state troopers to forego potential employment
opportunities today for real pension benefits tomorrow. By
promising pension benefits, the State entices employees to remain
in the government's employ, and it is the enticement that is at the
heart of employees' constitutionally protected contract right after
substantial reliance not to have their own pension plan
11. If the State (or its political subdivisions) promise
to defer salary until a person's retirement from state or local
employment and to pay that deferred salary in the form of a
pension, the State (or its political subdivisions) cannot eliminate this expectancy without just compensation once an employee has
substantially relied to his or her detriment.
12. The cynosure of an employee's W.Va. Const. art III,
§ 4 contract right to a pension is not the employee's or even the
government's contribution to the fund; rather, it is the
government's promise to pay.
13. In Dadisman v. Moore, 181 W.Va. 779, 384 S.E.2d 816
(1989), this Court emphasized the legislature's obligation to fund
pension systems on a sound actuarial basis. We are not
administrators, however, and we can only articulate what the law
is. It is for the governor and the legislature to enforce the law.
14. Because pensions are a lawful debt of the State, the proper remedy for any failure to pay a pension is a mandamus action against the state treasurer and auditor. The funding of any pension program is the legislature's problem--not the state employees' problem--and once the legislature establishes a pension program, it must find a way to pay the pensions to all employees who have substantial reliance interests.
15. Changes may be made in pension systems with regard
to new employees who have not yet joined the system and who have
not yet relied to their detriment on government promises of future
benefits. Furthermore, changes can be made with regard to employees with so few years of service that they cannot be said to
have relied to their detriment. Line drawing in this latter regard
must be made on a case-by-case basis, but after ten years of state
service detrimental reliance is presumed.
16. Our constitutional provision against the State's
impairment of obligations of contract, W.Va. Const. art. III, § 4,
means only that the government must keep its promises; art. III, §
4 does not mean or even imply that the government must make
promises in the first place.
17. To the extent that the government wishes to
apportion future wage increases between immediate cash payments to
existing workers and improved funding of pension systems, it may do
so: No state or local employee has a right to a wage increase, and
the State may ask workers to help make pension funds solvent by
contributing to the funds new money given to them by the State for
18. Because all employees who contribute to a state
pension fund and who have substantially relied to their detriment
on specific contribution and benefits schedules have immediate
legitimate expectations that rise to the level of constitutionally
protected contract property rights, we overrule Mullett v. City of
Huntington Police Pension Board, 186 W.Va. 488, 413 S.E.2d 143 (1991) and its test of reasonableness for determining the
constitutionality of legislative amendments to a pension plan.
19. The pension rights of all current state pension plan
members who have substantially relied to their detriment cannot be
detrimentally altered at all, and any alterations to keep the trust
fund solvent must be directed to the infusion of additional money.
"Detrimentally alter" means the legislature cannot reduce the
existing benefits (including such things as medical coverage) of
the pension plan or raise the contribution level without giving the
employee sufficient money to pay the higher contribution. Should
the legislature seek to reduce certain advantages of a pension
plan, it must offer equal benefits in their place as just
20. Until an employee becomes eligible to draw a
pension, his or her benefits can be determined on an actuarial
basis, and until such time as the employee's reliance interest is
so strong as effectively to preclude all other options, the State
may buy out the employee's contract property rights. At some
point, however, the worker has chosen to remain in public
employment for such a substantial part of his or her life that the
State can no longer purchase the employee's pension rights without
the acquiescence of the employee. At what point in an employee's
career it is no longer equitable for the State to buy back the
employee's contract rights on a sound actuarial basis without confounding principles forbidding the impairment of contracts can
be determined only on a case-by-case basis by the legislature and
21. Although the legislature may augment pension
property rights, the legislature cannot simply reduce a
participating employee's pension property rights once it
establishes the system unless the employee acquiesces in the change
to the pension plan or unless the employee has so few years in the
system that he or she has not detrimentally relied on promised
22. The legislature may increase a public employee's
salary contribution to a pension plan if it gives a corresponding
raise in salary or other benefits that offsets the public
employee's increased contribution to the system. To be valid under
W. Va. Const. art. III, § 4, the additional salary or other
benefits must at least cover the public employee's extra
contribution to the system.
23. This Court has never imposed a fiduciary duty upon
the contributing members of a pension system. Requiring public
employees to protect the future solvency of a pension system is an
unconstitutional shifting of the State's own burden.
24. W. Va. Code 15-2-26  (the increased contribution provision) and W. Va. Code 15-2-27(c)(2)  (the provision eliminating use of annual and sick leave to allow earlier benefits) do not impair the State's obligations of contract; however, to the extent that W. Va. Code 15-2-27a  (the provision reducing state troopers' cost-of-living adjustment) impairs the obligations of contract under W. Va. Const. art. III, § 4, it is unconstitutional.
This mandamus proceeding presents the question whether
certain 1994 amendments to our State's public safety pension plan
impair the obligations of contract under art. III, § 4 of the West
Virginia Constitution. We granted a rule to show cause to set the
law in clear and unambiguous terms concerning the pension rights of
thousands of West Virginia public employees who have given their
lives to government service and now rely for their future health,
welfare and security upon the promises made to them by their fellow
citizens through the elected legislature. For the reasons given
below, legitimate expectations of government servants cannot be
confounded after those servants have partially performed their part
of the bargain with the people, relied to their detriment, and
foreclosed other career options. Accordingly, to the extent that
we find the 1994 public safety amendments unconstitutional in this
opinion, we award the petitioners a writ of mandamus.
For the past seventy-five years, the West Virginia Division of Public Safety ["Division"]See footnote 1 has employed hundreds of state troopers. These troopers are charged with protecting the life, liberty and property of our citizens, and this Court takes judicial notice that law enforcement is a physically demanding and dangerous occupation. Rule 201, W.Va. Rules of Evidence.
In 1919, the Division began its mission with one hundred
and twenty-five men who had uniforms adapted from the World War I
infantryman uniform. Today, the Division employs over five hundred
men and women who are charged with law enforcement duties in what
remains a paramilitary organization.
The legislature established a pension plan for the Division's trooper members in 1935. The plan originally required all troopers to make contributions amounting to 4 percent of their salaries and it was provided that the Division would match these contributions with an equal 4 percent payment.See footnote 2
By 1993, the pension system required all state troopers
to pay 6 percent of their salaries into the retirement system, and
the Division made matching contributions of 12 percent. W.Va Code
15-2-26 . After meeting eligibilitySee footnote 3 for retirement, a state trooper could then expect to receive an annual pension equal to 5.5
percent of his or her cumulative lifetime earnings as a state
trooper or $6,000, whichever was greaterSee footnote 4. W.Va. Code 15-2-27(c)(1) and (2) . In other words, if a trooper had
earned $500,000 in total salary payments as a trooper over twenty-
five years of service, his or her pension would be $27,500 per year
for the rest of his or her life. In addition, beginning in 1988,
the legislature also allowed all eligible retired members who had
reached age fifty-six and over to collect an additional 3.75
percent of their pension awards as an annual annuity adjustment.
W.Va. Code 15-2-27a .
Before the legislature amended the plan's benefits in
1988, concern had arisen concerning the future solvency of the Division's pension system. According to a 1987 actuarial study,
the existing contributions into the system were not sufficient to
meet future pension payments, and the periodic increases in
benefits without the necessary additional contribution levels from
the employees and the Division created an $11,400,000 fund deficit.
Although the plan's contribution levels had remained at the 18 to
20 percent of salary during the 1970s and 1980s, the 1987 actuarial
review suggested that the required contributions should have been
between 25 and 30 percent of the existing salary level. By 1990,
the unfunded liability of the fund totalled over 88 million
dollars, and the actuarial report prepared for the Division
estimated the pension fund would be in a deficit by 2005.
Following the retirement of twenty-four state troopers
during the calendar year 1993See footnote 5, the legislature responded to
concerns about the fund's actuarial soundness and amended the
pension plan in 1994.See footnote 6 The newly wrought changes at issue here: (1) increased the monthly payroll deduction from state troopers'
salaries from 6 percent to 7.5 percent effective 1 July 1994 and
raised these contributions to 9 percent effective 1 July 1995;
(2) prohibited the state troopers' use of accumulated but unused
annual and sick leave as credit toward years of service in
determining eligibility for retirement benefits (effective 15 July
1994); and (3) reduced the public safety retirement annual annuity
(cost of living) adjustment from an annual 3.75 percent to 2
percent (effective 15 September 1994). W. Va. Code 15-2-26, 15-2-
27(c)(2) and 15-2-27a .See footnote 7
On the effective dates of the amendments, the petitioners
were all state police officers under the age of fifty who had over
twenty years' service with the Division.See footnote 8 Thus, although no law
compels them to do so, the petitioners may retire now and collect
their respective pensions on the date that each of them reaches the
age of fifty.See footnote 9 W. Va. Code 15-2-27(c)(2) [1988 and 1994].
Rather than retire before 15 September 1994 in order to
protect their rights to a greater annuity, however, the petitioners
sought to enjoin the respondents' implementation of the amendments
and filed a declaratory judgment action in the Circuit Court of
Kanawha County on 7 July 1994. The petitioners challenged the
constitutionality of the amendments under the contracts clauses of
the State and federal Constitutions. Thereafter, petitioners
brought this original mandamus action in this Court and on 16
September 1994, the circuit court dismissed the petitioners'
declaratory judgment action.
In the mandamus proceeding now before this Court, the
petitioners claim the pension amendments unconstitutionally impair
the vested rights to which they were entitled before the new
legislation. In reply, the respondents assert the petitioners have
no vested rights and that the amendments are reasonable because
they guarantee the future solvency of the public safety pension
Although we have never doubted the constitutionality of pension plans, our past decisions have not elaborated on the reasons why pensions are legitimate debts of the State. However, given the current financial condition of the Division's fund, as well as the impact of our decision here on future legislation that may affect the fund itself, this Court must first address the circumstances under which pensions of any sort are constitutional if we are to provide a complete statement on our pension law here.
W.Va. Const., art. X, § 4 provides "No debt shall be
contracted by this State, except to meet casual deficits in the
revenue, to redeem a previous liability of the State, to suppress
insurrection, repel invasion or defend the State in time of war;
but the payment of any liability other than that for the ordinary
expenses of the State, shall be equally distributed over a period
of at least twenty years." See also, W.Va. Const., art. X, § 6
(prohibiting the State from granting credit to municipalities and
from becoming an owner or stockholder in any company or
association). Because debt today leads directly to cuts in
services tomorrow, our constitutional provisions against state debt
"are designed to prevent one generation of politicians from helping
their friends whilst leaving the next generation of taxpayers to
foot the bill." Winkler v. School Building Authority, 189 W.Va.
748, 769, 434 S.E.2d 420, 441 (1993)(Neely, J., concurring).
The Winkler decision explored the constitutionality of
certain school revenue bonds that were to be liquidated from the
general revenue of the state. Before approving the bonds, the
legislature placed various disclaimers on the face of the bonds in
order to escape the application of our Constitution's prohibition
against the creation of state debt. These disclaimers stated that the legislature was neither creating a debt of the State in
violation of art. X, § 4, nor creating an obligation to appropriate
money to liquidate the bonds. After analyzing our previous cases
on the issue, as well as the reasons for our state's prohibition
against state-created debt, this Court ultimately concluded the
State could not shirk its responsibilities to fund the bonds once
it had undertaken its initial financial commitment. 189 W.Va. at
763, 764, 420 S.E.2d at 435, 436. We, therefore, forbade the
issuance of similar bonds in the future.
In Winkler, we did note, however, that in certain
instances the State could issue bonds when the bond proceeds,
themselves, were to be used to build projects such as toll bridges,
or buildings that generated money to liquidate the bond obligation.
189 W.Va. 748 at 756-758, 434 S.E.2d at 428-430 (discussing funding
arrangements that do not violate our constitutional debt
limitations). In these instances, a special fund derives from the
service itself, and, for this reason, lenders, not taxpayers, are
the only potential losers if the project does not generate the
This Court concluded long ago that our pension systems do
not involve the creation of an unconstitutional debt. State ex
rel. Board of Governors v. Sims, 133 W.Va. 239, 244, 55 S.E.2d 505,
508 (1949). Although Sims did not discuss the rationale behind its reasoning on this issueSee footnote 10, given our decision in Winkler it should
now be clear that pension systems are constitutional for the same
reasons that special revenue bonds are constitutional: The pledge
for the pension fund derives from the actuarially sound
contributions of the employees and the Division; that is, the fund
is expected to generate its own money to meet its eventual
obligations. Because money is expected to be put away as a
condition precedent to fund the system, pensions are legitimate
debts of the state. Consequently, W.Va. Const. art. VI, §
51B(3)(d) requires the Governor to prepare a yearly budget that
allows for payment of pensions as constitutionally created debt of
the State.See footnote 11
Until the passage of the amendments at issue in this
case, the legislature had not sufficiently increased the
contributions of the troopers and the Division to meet the State's
eventual pension debt, and according to a 1994 actuarial study, the
unfunded accrued liability for the troopers' retirement system now
totals $166,668,239. This is not the first time that this has
happened. In Dadisman v. Moore, 181 W.Va. 779, 384 S.E.2d 816
(1989), this Court confronted the financial problems of the Public
Employees Retirement System ["PERS"], which, because of
underfunding from the legislature, had incurred unfunded
liabilities totaling between $55 and $80 million.
Dadisman arose from an original mandamus proceeding brought by a retired public employee against various executive and legislative officials charged with administering PERS. We found the PERS officials had breached their contractual, statutory and trust duties to petitioner by failing to appropriate sufficient money to maintain the actuarial soundness of PERS and we granted a writ requiring proper funding of the system.
In an effort to maintain the actuarial soundness of the
Division's pension system here, the legislature enacted the
amendments to require greater contributions from the employees and
the employer. Thus, in addressing the mandamus action now before
us, we must consider whether the actuarial amendments, themselves,
are constitutional measures designed to insure the fund's solvency.
This Court has never expressly determined whether an employee, who otherwise satisfies the requirements for a pension but is still in active state service, may lose entitlements before he or she formally applies for retirement benefits. Instead, having often considered the issue of pension vesting in the context of retired employees who did not meet eligibility for pensions, we have decided some difficult cases that made incomplete law in this area.
We announced when a police officer may collect a pension
under our law in State ex rel. Fox v. Board of Trustees of
Policemen's Pension, 148 W. Va. 369, 135 S.E.2d 262 (1964):
The right to a pension for a member of a municipal fire department or police department is based upon and created by . . . statute [W. Va. Code 8-6-20 (1959)] and such right accrues or vests in such member only when all the statutory conditions are performed and all its requirements are complied with and satisfied. It is then and only then that a vested right to such pension accrues.
148 W. Va. at 373, 135 S.E.2d at 264 (citing State ex rel. Frye v. Bachrach, 175 Ohio State 419, 195 N.E.2d 803 (1964)).
Fox concerned a police officer's right to a pension after
his service ended with the City of Bluefield. When the officer
resigned, he had continuously served over twenty-five years with
the city, but he had not yet attained the age of fifty. After he
reached fifty, however, the officer immediately applied for a
pension, and the pension board denied his application. On appeal,
we affirmed the board's denial of benefits.
The result in Fox rested on our interpretation of W. Va.
Code 8-6-20 , which formerly governed an officer's
eligibility for a pension. Given the language of that statute, we
found it allowed "a pension only for a member of a municipal fire
department or police department who [had] been in the service of
such department for twenty years and who [was] a member of such
department when he [reached] the age of fifty years." 148 W. Va.
at 373, 135 S.E.2d at 265 [Emphasis added]. Because the officer
resigned from service before he became fifty, he did not meet the
requirements of the statute, and, consequently, he had no vested
right in a pension. 148 W. Va. at 375, 135 S.E.2d at 266. In
addition, Officer Fox had pled guilty to twenty-four felonies he
committed while he was a policeman, and we held the pension statute
also implicitly required honorable service to entitle an employee
to retirement benefits. Syl. Pt. 3, Fox.
In 1976, the legislature codified Fox's common law
requirement of honorable service for receipt of pension benefits at
W.Va. Code 5-10A-1 to 5-10A-10. We were eventually asked to decide
the constitutionality of these enactments as they affected the
rights of a long-term public employee who had been convicted of a
felony for actions taken while Sheriff of Marion County in West
Virginia Public Employees Retirement System v. Dodd, 183 W.Va. 544,
396 S.E.2d 725 (1990). Unlike Officer Fox, Sheriff Dodd had
contributedSee footnote 12 to the pension system for over twenty-five years at
the time the legislature made the above enactments, and he did not
commit his felony until his thirtieth year of employment.
Nevertheless, upon the sheriff's application for retirement
benefits, the board denied his pension.
The sheriff argued he should receive at least a prorated
portion of his pension for the services he rendered until he
violated the law. He also asserted the 1976 enactments
unconstitutionally impaired his pension rights under his employment
contract. This Court, however, found the enactments did not impair
the sheriff's contract because the implicit condition of honorable
service at all times was never satisfied and, therefore, his
contract rights to the pension never fully vested. 183 W.Va. at
550, 396 S.E.2d at 732. Given his misconduct, we held the sheriff
had forfeited his entire pension.
Both Fox and Dodd explored the issue of pension vesting in the context of employees who did not meet eligibility for benefits. However, Wagoner v. Gainer, 167 W.Va. 139, 279 S.E. 636 (1981), examined pension vesting as it applied to employees who were eligible and were receiving benefits.
In Wagoner, the legislature had passed amendments that reduced the pension benefits of retired supreme court justices and circuit court judges. Before the enactment of the amendments at issue in Wagoner, all eligible retired justices and judges could collect retirement benefits equal to 75 percent of the salary of their highest judicial office and their pensions went up as raises were given to active justices and judges. But, in 1979, the legislature repealed this "escalator provision," and the aggrieved retired judges challenged the legislation as an unconstitutional impairment of contract under the state and federal Constitutions. After the circuit court granted the judges a writ of mandamus allowing them payments under the earlier "escalator provision," the state auditor and treasurer appealed.
In Wagoner, the parties did not dispute that the
appellees could receive a pension; instead, the dispute centered in
the extent of the changes that the legislature could make to the
retired pensioners' plans. This Court discussed how other jurisdictions treated pension rights, and after a lengthy
examination of the subject, we concluded:
Legislative modifications to a pension plan must be reasonable, and the test for reasonableness is whether the alteration to the pension scheme serves to keep the system sound and flexible [citations omitted.] Thus, beside the fact that the rights of retired plan members cannot be detrimentally altered at all, alterations to keep the trust fund stable should first be directed at threats to the trust fund's solvency.
167 W. Va. at 154, 279 S.E.2d at 645. [Emphasis added].
By removing the "escalator provisions," the legislature
plainly subtracted benefits to which the appellees had a contract
right. Consequently, we found the legislation impaired the
obligations of contract. 167 W. Va. at 154, 279 S.E.2d at 646.
Until our decision in Dodd, Wagoner seemingly controlled
our analysis of public employees' pension rights. In fact, before
we issued the Dodd opinion, we held in Dadisman, supra, that
"retired and active PERS plan participants have contractually
vested property rights created by the pension statute, and such
property rights are enforceable and cannot be impaired or
diminished by the State." Syl. Pt. 16, Dadisman [Emphasis added].
As noted earlier, Dadisman, supra, found the executive
and legislative branches had failed to make the PERS fund
actuarially sound over the course of many years. In analyzing the
PERS trustees' duties to members of the fund, we concluded that the PERS trustees' failure to fund the pension system improperly
impaired the state's obligations of contract to the participating
The petitioners suggest Dadisman (and Wagoner) establish contractually vested property interests for all participants in a contributory pension program. Unfortunately, the petitioners' argument does not reflect our previous holdings on this issue because, as our discussion below will reveal, our cases have unnecessarily merged pension eligibility with pension vesting. Our most recent pronouncement on pension vesting, Mullett v. City of Huntington Police Pension Board, 186 W. Va. 488, 413 S.E.2d 413 (1991), serves as an example.
Mullett is deceptively similar to the case now before us because it considered whether the legislature could amend an activeSee footnote 13 employee's pension plan without unconstitutionally impairing the obligations of contract. Officer Mullett began his employment with the Huntington Police Department on 23 April 1968 and remained a full-time employee until his retirement in April 1991. During this period, to qualify for pension benefits, an officer needed at least twenty years' service under former W. Va. Code 8-6-20  ("1968 statute").See footnote 14 On the date of Officer Mullett's hire, the 1968 statute also conceivably allowed an officer with at least one day of military service to apply for an early pension.See footnote 15 In 1985, however, the legislature amended the 1968 statute to limit the military service provision by requiring a "one year or more" interruption of employment before an officer could apply for an early pension. W. Va. Code 8-22-25(c) and 8-22-27 .
In July 1977, Officer Mullett enlisted in the National
Guard, and his enlistment entailed various weekend drills and
summer camps until he retired from the police department. Although
he admitted his National Guard service did not interrupt his police
duties for a continuous year, Officer Mullett believed his guard
duty allowed him an early pension when he applied for one in 1990.
The pension board twice denied Officer Mullett's
application for an early pension.See footnote 16 The circuit court, however,
granted Officer Mullett his early pension because it believed the Wagoner case compelled the application of the 1968 statute in
effect at the time of the officer's hire.
On appeal by the pension board, we discussed whether the
officer could apply the provisions of the 1968 statute that
allegedly entitled him to an early pension. After considering the
facts, we decided he could not and held the 1985 legislation
applied to his case because there was not "any vesting of rights on
[Officer Mullett's] behalf in 1985, the . . . year [that the
legislature made the amendments]." 186 W. Va. at 493, 413 S.E.2d
at 148.See footnote 17 [Emphasis added]. We noted:
Until such time as Mr. Mullett was entitled pursuant to the applicable statute to apply for pension benefits, his rights were clearly not vested. [Emphasis added].
186 W. Va. at 494, 413 S.E.2d at 149 (citing, Fox, 148 W. Va. at 373, 135 S.E.2d at 264; accord Wagoner, 167 W.Va. at 146, 279 S.E.2d at 641 ["in a contributory pension plan, the pensioners' rights vest when all the conditions entitling them thereto have been fulfilled."])
Although the respondents agree that the petitioners may
apply for pensions now, which they may collect when they reach age
fifty, they argue our holding in Mullett limits vesting to retired-
- and not active-- plan members. In support of this contention, they direct us to Syllabus points 2 and 3 of Mullett, where we
When a municipal police officer retires and ceases to be a contributing member to a pension plan, his rights pursuant to such plan are vested and the pension contract becomes fully executed rather than executory.
During the time period when a pension contract is merely executory with respect to a particular individual due to the fact that he/she is still an active, participating member, the Legislature may amend the plan provided that any amendments survive a test of reasonableness.
The respondents claim this above language clearly precludes any vested pension interest of the petitioners. We now, upon careful reflection, disagree.
We must concede here that Mullett was one of those cases
where a hard case made, at least, incomplete law. Officer Mullett
was arguing for an utterly absurd result, namely that by reason of
his weekend warrior status he was entitled to the same military
benefits as a person who had served a standard tour of duty in a
regular, full-time armed force. Obviously, the legislature never
intended such a result and in Mullett we simply found it more
convenient to repair to the language of Fox to decide the case than
to discuss legislative intent in the face of inartful
draftsmanship. Now, however, we are squarely confronted with a
case where: (1) state employees (2) accepted employment with West
Virginia (3) under a compensation plan where a substantial part of
their entire compensation was to be deferred and paid through a pension (4) the conditions for the vesting of which were clear and
unambiguous and (5) (unlike Mullett) there was no inartful
draftsmanship leading to a wholly irrational result so beyond any
reasonable expectation that it amounted to a clerical error.
Consequently, to the extent that anything in Mullett or Fox (which
was also a hard case on the facts, given Officer Fox's felony
convictions) is inconsistent with this case, both Mullett and Fox
When considering the constitutionality of legislative amendments to pension plans, an employee's eligibility for a pension does not determine whether he or she has vested contract rights. Instead, the determination of an employee's vested contract rights concerns whether the employee has sufficient years of service in the system that he or she can be considered to have relied substantially to his or her detriment on the existing pension benefits and contribution schedules. We must, however, stress that our holding here does not alter the applicable statutes controlling a state employee's eligibility for a pension, itself. Until a public employee meets the relevant age and service requirements for collection of a pension, he or she may not receive a pension, and nothing in this opinion alters the existing procedure for reimbursing pension contributions into the plan upon a public employee's voluntary or involuntary separation from state employment. What we are concerned with today is not the technical concept of "vesting," but rather the conditions under which public employees have a property right not to have their pension system detrimentally altered that is protected under the contract clauses because of substantial detrimental reliance on the existing pension system.
In pension cases, then, there are two distinct issues of
contract: (1) an employee's contract right to collect a pension
after statutory eligibility requirements have been met; and (2) the
employee's legitimate expectations, also contractual in nature,
that the government will not detrimentally alter the pension scheme
once the employee has spent sufficient time in the system to have
substantially relied to his or her detriment. The first issue
involves whether the employee has remained in government service
for such a length of time that he or she can collect benefits; the
second issue involves the employee's reliance on promised
government benefits after years of government service but before
actual retirement age. Pension eligibility and reasonable
expectations about the system's continued benefits are entirely
By meeting certain eligibility requirements, a public
employee acquires a right to payment under a pension plan. For any
employee not yet eligible for payment, this is a mere expectancy;
if the public employee does not meet the age and service requirements for benefits, his or her participation in a state
pension plan does not allow receipt of a pension. But this same
participation does create an employee's reliance interest in
pension benefits. Consequently, an employee's membership in a
pension system and his or her forbearance in seeking other
employment prevents the legislature from impairing the obligations
of the pension contract once the employee has performed a
substantial part of his or her end of the bargain and has
substantially relied to his or her detriment.
Although participation in a government pension system and
forbearance in seeking other employment create an employee's
contract right to pension benefits under art. III, § 4 of our
Constitution, such participation does not create contract rights to
government employment. We must make clear, therefore, that
entitlement to continued government employment continues to be
controlled by civil service statutes, applicable regulations, the
due process and equal protection clauses, the first amendment and
other employment-related law. See, Adkins v. Miller, 187 W.Va.
774, 421 S.E.2d 682 (1992); Snyder v. Civil Serv. Commission, 160
W.Va. 762, 238 S.E.2d 842 (1977); Branti v. Finkel, 445 U.S. 507,
100 S.Ct. 1287, 63 L.Ed.2d 574 (1980); Elrod v. Burns, 427 U.S.
347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976).
If an employee engages in misconduct during his or her public service, he or she may nevertheless forfeit rights to collect a pension later. Thus, insofar as Dodd holds that an employee's misconduct results in a forfeiture of the entire pension, it is still good law because the requirement of honorable service (at least since 1976) has been established in advance and has been made an explicit part of the entire bargain. Otherwise, if misconduct is not at issue, Dodd (and all other similar cases) no longer state the law when we consider legislative amendments to a government pension plan; thus, to the extent that Dodd and other cases are inconsistent with this opinion, they are overruled.
Other jurisdictions have reached similar results when
considering the constitutionality of amendments to pension plans
because the judges in these jurisdictions also conclude the
deferred compensation embodied in a pension entitlement creates a
reliance interest in the state employee that the law of contracts
protects. See, Halpin v. Nebraska State Patrolmen's Retirement
System, 211 Neb. 892 at 897-898, 320 N.W.2d 910 at 913-914
(1982)(citing cases); Singer v. Topeka, 227 Kan. 356, 607 P.2d 467
(1980).See footnote 18 Although we agree with the holdings of these cases, we must elaborate on the reasons for our rules to avoid possible
Law enforcement is dangerous. Injuries and loss of life
are inherent in the occupation. In order to protect the public as
well as themselves, therefore, law enforcement officers must
necessarily have certain characteristics. They must be agile,
strong, flexible, resilient and have great stamina--all qualities
associated with youth. Because the State understands this, the
State seeks to recruit young persons for employment as state
troopers. Until 1994, W.Va. Code 15-2-7(c)  provided, in
part, that "[e]ach applicant for appointment shall be a person not
less than twenty-one nor more than thirty years of age, of sound
constitution and good moral character; shall be required to pass
such mental examination and meet other requirements as may be
provided for in regulations promulgated by the cadet selection
board; and shall be required to pass such physical examination as
may be provided for in regulations promulgated by the retirement
board: . . ."See footnote 19
When the legislature structures the state troopers' pension system to allow for retirement before age fifty, the legislature encourages suitable candidates to forego other employment opportunities today for real pension benefits tomorrow.See footnote 20 In practical terms, the State's promise results in the recruitment of many state troopers, who, although they may not attain the rank of CaptainSee footnote 21, may nevertheless complete twenty years' service and receive substantial retirement payments. The State's employment system for state troopers, then, not only results in a smooth recruitment of troopers, but also resembles the compensation system of the armed forces of the United States. Employees join the ranks early, complete their service during their most productive years, and then leave the system. By providing pensions, the State clearly entices troopers to remain in the government's employ, and it is the enticement that is at the heart of employees' constitutionally protected contract right after substantial reliance not to have their own pension plan detrimentally altered.
If the State (or its political subdivisions) promise to
defer salary benefits until a person's retirement from State (or local) employment, and then promises to pay those deferred salary
benefits in the form of a pension, the State (or its political
subdivisions) cannot eliminate this expectancy without just
compensation once an employee has substantially relied to his or
her detriment. To permit otherwise would be tantamount to allowing
the State (or its subdivisions) to steal a car an employee might
have purchased had he or she not been required to allow part of the
wage fund to be diverted to pension funding. The difference
between a pension and the car lies only in whether the employee may
enjoy the benefit today or must wait until tomorrow. Thus, when a
public employee has devoted substantial service to the state that
translates into substantial detrimental reliance, the State must
provide just compensation for any pension expectancy it eliminates.
Today's decision may, at first blush, appear harsh on legislatures and executives who are required to administer public employee pension funds and pay their benefits. The problem, however, is that both legislatures and executives in the past made then current promises to be fulfilled in the future by other legislatures and executives. It is a recurrent problem of government that today's elected officials curry favor with constituents by promising benefits that must be delivered by tomorrow's elected officials.
Unfortunately, the state troopers, secretaries, school
service personnel, teachers, highway workers, maintenance employees, assistant prosecuting attorneys and other ordinary state
and local workers are not sophisticated politicians who expect
their government to lie to them. When, therefore, today's
legislature and today's governor make those workers promises, those
workers believe the promises and organize their lives in the
expectation that their government and their employer will treat
them honorably. In these circumstances, the rules cannot be
changed after employees have substantially relied to their
detriment. The cynosure, then, of an employee's W.Va. Const. art.
III, § 4 contract right to a pension is not the employee's or even
the government's contribution to the fund; rather, it is the
government's promise to pay. Heretofore, in Dadisman, supra, we
have emphasized the legislature's obligation to fund pension
systems on a sound actuarial basis. We are not administrators,
however, and we can only articulate what the law is. It is for the
governor and the legislature to enforce the law.
Because pensions are a lawful debt of the State, the
proper remedy for any failure to pay a pension is a mandamus action
against the state treasurer and auditor. Although the actuarial
funding of the pension program may be an interesting issue for
lawyers, it means nothing to lay persons who work for this State as
troopers, secretaries and janitors and whose expertise is not in
the law. Upon attaining eligibility, workers expect to collect
their pensions, and their contracts do not condition these benefits
upon actuarial soundness of the system. Consequently, the funding of any pension program is the legislature's problem--not the state
employees'--and once the legislature establishes a pension program,
it must find a way to pay the pensions, at least to those persons
who have substantially relied.
Of course, this is not to say that changes may not be
made in pension systems with regard to new employees who have not
yet joined the system and who have not yet relied to their
detriment. Changes can be made with regard to employees with so
few years of service that they cannot be said to have substantially
relied to their detriment. Line drawing in this latter regard must
be made on a case-by-case basis, but after ten years of state
service detrimental reliance is presumed. Thus, our constitutional
provision against the State's impairment of obligations of
contract, W.Va. Const. art. III, § 4, means only that the
government must keep its promises; art. III, § 4 does not mean or
even imply that the government must make promises in the first
place. Furthermore, to the extent that the government wishes to
apportion future wage increases between immediate cash payments to
existing workers and improved funding of pension systems, it may do
so: No state or local employee has a right to a wage increase, and
(as in the case before us) the State may ask workers to help make
pension funds solvent by contributing to the funds new money given
to them by the State for this purpose.See footnote 22
As we noted earlier, under Wagoner, the legislature cannot "detrimentally alter" rights of vested retirees. However, in Mullett, we stated the Wagoner rule "does not automatically apply to amendments [that] affect the rights of non-retired employees." 186 W.Va. at 494, 413 S.E.2d at 149. If an active employee did not qualify for a pension when the legislature amended the plan, we formerly applied the "California rule":
An employee's vested [sic] contractual pension rights may be modified prior to retirement for the purpose of keeping a pension flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system. . . . Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees' pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantages to employees should be accompanied by comparable new advantages.
186 W.Va. at 495, 413 S.E.2d at 150. [Citations omitted].
According to Mullett, "the key concern raised by both Wagoner and the "California rule" . . . is disadvantage or detriment to the active members as a group rather than on an individual basis." 186 W.Va. at 495, 413 S.E.2d at 150. Because all employees who contribute to a state pension fund and who rely substantially to their detriment on a specific contribution and benefits schedule have immediate legitimate expectations that rise to the level of constitutionally protected contract property rights, we overrule Mullett's test of reasonableness for determining the constitutionality of legislative amendments to a pension system. By allowing the legislature to diminish pension benefits, the Mullett test frustrates the employees' reliance on the anticipated pensions that they legitimately expect to receive upon qualifying through years of service and age for benefits. We therefore find the Wagoner rule applies to the case here and we hold that the pension rights of all current plan members who have substantially relied cannot be detrimentally altered at all, and that any alterations to keep the trust fund solvent must be directed to the infusion of additional money. See, Syl. Pt. 3, Wagoner ("While the Legislature has the right to make reasonable alterations to the judicial pension fund, such alterations cannot impair the benefit level where there are extant statutorily-created inequities and special unfunded benefit provisions that affect the equal application of the law or the financial integrity or cost of the pension fund.")
"Detrimentally alter" means the legislature cannot reduce the existing benefits (including such things as medical coverage) of the pension plan or raise the contribution level without giving the employee sufficient money to pay the higher contributions.See footnote 23 Should the legislature seek to reduce certain advantages of a pension plan, it must offer other equal benefits in their place as just compensation. Thus, until an employee becomes eligible to draw a pension, his or her benefits can be determined on an actuarial basis, and until such time as the employee's reliance is so strong as effectively to preclude all other options, the State may buy out the employee's contract property rights. At some point, however, the worker has chosen to remain in public employment for such a substantial part of his or her life that the State can no longer purchase the employee's pension without the acquiescence of the employee. At what point in an employee's career it is no longer equitable for the State to buy back the employee's contract rights on a sound actuarial basis without confounding the principles forbidding the impairment of contracts can be decided only on a case-by-case basis by the legislature and the courts. Of course, the legislature may always augment pension property rights. But the legislature cannot reduce a participating employee's pension property rights once it establishes the system unless the employee acquiesces in the changes to the pension plan or unless the employee has so few years in the system that he or she has not detrimentally relied on promised pension benefits.
Turning to the case before us of the state troopers, we hold the petitioners clearly have property rights that cannot be withdrawn under the rules that we have explained because the petitioners are all state employees who have contributed into the fund and substantially relied to their detriment in investing more than half of their working lives with the State. When considering the constitutionality of the amendments under Wagoner's test as we have refined it here, therefore, we must determine whether the petitioners are offered any new advantages of equal or greater value to the plan's old benefits.
The initial amendment requires all state troopers to increase their contributions to 9 percent of their pay by 1 July 1995 without any corollary increase in the retirement award itself.See footnote 24 According to the respondents, the increased employee contributions are constitutional because (1) the Division must make greater contributions into the fund and (2) the legislature enacted other changesSee footnote 25 benefitting the state troopers, one of which included a $1,008 pay raise given to all state employees. Because our inquiry into the constitutionality of the amendments concerns the benefits that petitioners receive under the plan, how much the Division contributes to the fund cannot influence our analysis here. For this reason, we do not accept respondents' first argument. We do, however, find the legislature's other 1994 changes offer state troopers advantages of equal or greater value than the ones they expected under the former plan. Consequently, we find the initial amendment constitutional.
The legislature may increase a public employee's salary
contribution to a pension plan if it gives a corresponding raise in
salary or other benefits that offsets the employee's increased
contribution to the system. To be constitutional under art. III,
§ 4, the additional salary or other benefits must at least cover
the public employee's extra contribution to the system. Here, the
petitioners are required to contribute an additional 3 percent of
their salaries by 1 July 1995; however, the petitioners have also
received a $1,008 raise in salary, as well as other benefits that
we discussed in footnote 24. Therefore, we find the petitioners
have been extended benefits that offset their increased
contribution to the pension plan.See footnote 26
Under the next amendment (W.Va. Code 15-2-27(c)(2)
), state troopers can no longer credit accrued, but unused
annual leave and sick leave towards early collection of a pension
before age fifty. According to respondents, despite the language of W.Va. Code 5-6-13(e), it was not the practice of either the old
Public Safety Retirement Board or the Consolidated Public
Retirement Board ["Board"] to allow state troopers to use annual
and sick leave days at retirement in order to reach twenty-five
years of service and thereby begin receiving pensions before
becoming fifty. Instead, after the policy decision of the Board
(discussed in footnote 4), the practice was allowed only between 25
January 1994 and 12 March 1994See footnote 27. The respondents also contend the
practice of counting sick leave to allow increased payments did not
begin until 1988, and, consequently, the petitioners enjoy no less
advantage in this respect than they did six years ago.
Having examined the language of W.Va. Code 5-16-13(e)
, we find the provision does not allow state troopers to
receive benefits before reaching age fifty. The provision simply
entitles a retiree to collect additional money by using his or her
accumulated, but unused annual and sick leave; it does not concern
a state employee's eligibility for a pension as its last line makes
clear: "such credited service shall not be used in meeting initial
eligibility for retirement criteria, but only as additional service
credited in excess thereof." Apparently, the Board misunderstood
the clear use of the word "initial" that precludes troopers from
receiving benefits before reaching age fifty. It is clear to us
that "initial" serves to clarify the meaning of the first sentence regarding the use of annual and sick leave to allow larger, and not
earlier, benefit payments.
Given our construction of W.Va. Code 5-16-13(e) ,
we think the Board erroneously adopted its policy regarding
troopers' use of accrued, but unused annual and sick leave. We
find the state troopers had no legal right even before the
statutory amendment in this case to apply their accrued, but unused
leave to allow payment of a pension before age fifty. This Court,
therefore, holds the legislature did not impair this part of the
contract and we hold that because W.Va. Code 15-2-27(c)(2) merely
clarified but did not change existing law, it is constitutional.
The last amendment, W.Va. Code 15-2-27a , reduces
the petitioners' retirement cost of living adjustment from 3.75
percent to 2 percent.See footnote 28 The respondents do not argue otherwise;
instead, given the 1994 actuarial valuation of the public safety
pension system, the respondents argue that this amendment preserves
the future solvency of the fund. They also assert that the
petitioners have a fiduciary duty to the remaining beneficiaries of
the fund under Dadisman. We disagree.
Contrary to respondents' suggestion, this Court has never
imposed a fiduciary duty upon the contributing members of a pension
plan. Cf. Syl. Pt. 5, Dadisman (The PERS Trustees have the highest
fiduciary duty to maintain the terms of the trust, as spelled out
in the statute.) Requiring the petitioners to protect the future
solvency of the pension system is an unconstitutional shifting of
the state's own burden. Consequently, we find W.Va. Code 15-2-27a
 an unconstitutional impairment of the state's obligation of
its contract but only to the extent that it reduces the
petitioners' cost-of-living adjustment. See, doctrine of the least
intrusive remedy, Syl. pt. 2, Weaver v. Shaffer, 170 W.Va. 107, 290
S.E.2d 244 (1982). It is a close question whether the doctrine of
the least intrusive remedy is appropriate here; however, we believe
that on balance it probably best comports with legislative intent.
However, in light of this litigation, the legislature may amend
this section to remove benefits that it gave in the last session of
the legislature if, indeed, it was the intention of the legislature
to tie those benefits inexorably to the reduction of the cost-of-
living increase from 3.75 to 2 percent. Furthermore, the
legislature may reduce the cost of living adjustment for all state
troopers who have not yet substantially relied to their detriment.
Having read the actuarial studies submitted by
respondents, this Court acknowledges the legitimacy of the
respondents' concern regarding the future solvency of the public
safety pension system. Nevertheless, our holding here still allows the legislature to purchase pension rights of some active
employees. Furthermore, the legislature may completely amend
pension benefits as they involve persons who may someday in the
future enter into a public safety employment contract with the
state.See footnote 29 In short, this Court holds the legislature simply cannot
mess with the pension rights of state employees who have invested
a substantial part of their working lives with West Virginia.
The reason that we have spoken at such length on the
subject of government pensions is that increasingly courts are
government's preeminent institutional memory. American society has
become increasingly volatile, and our social failures in the last
twenty years have led to a popular dissatisfaction that translates
into pendulum-like changes in elected personnel at the polls. This
is democracy and certainly nothing to be decried. But courts, with
their life tenure (federal), long elected terms (West Virginia), or
Missouri plan retention systems (many other states) are
deliberately designed to provide continuity and memory.
Scores of thousands of little people have organized their
lives around government pensions, and while in a democracy
government has an opportunity for a new life and new direction
every four years, these little people do not. While what was
promised thirty years ago may not be of much concern to modernists
elected to change the mix of government services, cut taxes, or instantiate a new morality, what was promised thirty years ago
forms the core of life for those who once upon a time believed
their elected leaders.
Because we find W.Va. Code 15-2-26  (the increased
contribution provision) and 15-2-27(c)(2)  (the provision
eliminating use of annual and sick leave to allow earlier benefits)
 constitutional, we deny petitioners relief with regard to
these two provisions. However, to the extent that W.Va. Code 15-2-
27a  (the provision reducing petitioners' cost-of-living
adjustment) impairs the obligations of contract under W.Va. Const.
Article III, § 4, we grant a writ of mandamus ordering respondents
to forbear in implementing that part of the amendment at issue
here, and we order the respondents to reinstate the previous 3.75
percent annuity adjustment to which the petitioners were entitled
Writ granted as moulded.
Footnote: 1 Previously, the "Division of Public Safety" was known as the "Department of Public Safety," and the Division's members are popularly referred to as "state police" or "state troopers."
Footnote: 2 Miscellaneous fees also funded the system.
Footnote: 3 W.Va. Code 15-2-27  governs eligibility for collection of a pension. The statute provides that:
(a) The retirement board shall retire any
member of the [division] of public safety when
the member has both attained the age of fifty-
five years and completed twenty-five years of
service as a member of the [division],
including military service credit granted under the provisions of section twenty-eight
of this article.
(b) The retirement board shall retire any
member of the division of public safety who
has lodged with the secretary of the
consolidated public retirement board his or
her voluntary petition in writing for
(1) Has or shall have completed twenty-five
years of service as a member of the division
(including military service credit granted
under the provisions of section twenty-eight
of this article);
(2) Has or shall have attained the age of
fifty years and has or shall have completed
twenty years of service as a member of the
division (excluding military service credit
granted under section twenty-eight of this
(3) Being under the age of fifty years has or shall have completed twenty years of service as a member of the division (excluding military service credit granted under section twenty-eight of this article).
Footnote: 4 Under W.Va. Code 15-2-27(2), if a member had served twenty years or longer but less than twenty-five years as a member of the Division and was retired before reaching age fifty, payment of the pension would not begin until the member reached fifty. Beginning in 1988, however, W.Va. Code 5-16-13(e), part of the West Virginia Public Employees Insurance Act, conceivably allowed retiring troopers under the age of fifty to credit their accumulated annual and sick leave in order to satisfy the twenty-five year service requirement. This not only allowed troopers to increase their pensions, but also to draw them earlier. W.Va. Code 5-16-13(e)  currently states that:
In the alternative to the extension of
insurance coverage through premium payment
provided in the two preceding subsections, on
and after the first day of July, one thousand nine hundred eighty-eight, the participating employee's accrued annual leave and sick leave may be applied, on the basis of two days retirement service credit for each one day of accrued annual and sick leave, toward an increase in the employee's retirement benefits with such days constituting additional credited service in computation of such benefits under any state retirement system. However, such credited service shall not be used in meeting initial eligibility for retirement criteria, but only as additional service credited in excess thereof.
On January 25, 1994, the Consolidated Public Retirement Board
voted to allow a state trooper to use his accrued sick and annual
days to receive his pension before age fifty, as well as to collect
greater monthly benefits under Code 5-16-13(e). After this
decision, the legislature enacted W.Va. Code 15-2-27(c)(2), which
states that "[b]eginning on the fifteenth day of July one thousand
nine hundred ninety-four, in no event may the provisions of [W.Va.
Code 5-16-13] be applied in determining eligibility to retire with
either immediate or deferred commencement of benefit."
The constitutionality of this enactment, as it involves existing contract rights of the petitioners, is reserved for our discussion in section V.
Footnote: 5 According to the Consolidated Public Retirement Board's Annual Report for the year ending June 30, 1994, a total of fifty state troopers retired from the Division during fiscal year 1993- 94. Thirty-six of these retirements occurred during the six-month period between January 1, 1994 and June 30, 1994.
Footnote: 6 The legislature also enacted a new retirement system known as The West Virginia State Police Retirement Act ["Act"], W.Va. Code 15-2A-1 to 15-2A-19, which is intended to cover all future troopers of the Division. The petitioners claim the Act could be interpreted to apply to "all" troopers in the system before the enactment, and, consequently, that this enactment would create a
more severe reduction of benefits. For the reasons given below, however, we find the Act does not govern pension eligibility for any state trooper who was a member of the Division's pension fund before the amendments of 12 March 1994.
Footnote: 7 The 1994 legislature also amended certain provisions of the Division's pension plan that established new benefits for members. See n. 24, infra. Although not at issue here, these other provisions do influence our analysis of the constitutionality of the Amendments at issue, and, consequently, we reserve our discussion of them for section V.
Footnote: 8 The petitioners had also contributed into the Division's predecessor fund.
Footnote: 9 Alternatively, the petitioners contend they may also apply their respective accrued annual leave and sick leave time to allow their collection of a pension before age fifty. See the discussion in n. 4.
Footnote: 10 Sims arose from a mandamus action brought by the Board of Governors of West Virginia University to compel the state auditor to pay its teachers certain pensions as provided for by the Board.
This Court denied the writ because we concluded the legislature never authorized the Board to create a separate retirement program for its faculty with revenue that was derived from public money. Because Sims concerned the issue of the Board's authority to create a pension program, the opinion did not require a thorough discussion of the constitutionality of pension plans.
Footnote: 11 W.Va. Const. art. VI, § 51 controls our State's budget procedures. Under Subsection B, part 3 of the section, "[e]ach budget shall embrace an itemized estimate of the appropriations, in such form and detail as the governor shall determine or as may be prescribed by law: (a) For the legislature as certified to the governor in the manner hereinafter provided; (b) for the executive department; (c) for the judiciary department, as provided by law, certified to the governor by the auditor; (d) for payment and
discharge of the principal and interest of any debt of the State created in conformity with the Constitution, and all laws enacted in pursuance thereof; (e) for the salaries payable by the State under the Constitution and laws of the State; (f) for such other purposes as are set forth in the Constitution and in laws made in pursuance thereof." [Emphasis added]. The budget section of the State's finance division acts as staff agency for the Governor in the exercise of his powers and
duties under W.Va. Const. art. VI, § 51. See, W.Va. Code 5A-2-1 . According to W.Va. Code § 5A-2-12(5) :
Within fifteen days after the end of each
month of the fiscal year, the head of every
spending unit shall certify to the legislative
auditor the status of obligations and payments
of the spending unit for amounts of employee
benefits, including, but not limited to,
obligations and payments for social security
withholding and employer matching, public
employees insurance premiums and public
employees retirement and teachers retirement
systems. [Emphasis added].
When a spending officer submits an
expenditure schedule to the secretary as
required by this section, the spending officer
shall at the same time transmit a copy thereof
to the legislative auditor and the joint
committee on government and finance or its
designee. If a spending officer of a spending
unit fails to transmit such copy to the
legislative auditor on or before the beginning
of the fiscal year, the legislative auditor
shall notify the secretary, auditor and
treasurer of such failure, and thereafter no
funds appropriated to such spending unit shall
be encumbered or expended until the spending
officer thereof has transmitted such copy to
the legislative auditor.
In the event the legislative auditor
determines from certified reports or from
other sources that any spending unit is not
making all payments and transfers for employee
benefits from funds appropriated for that
purpose, the legislative auditor shall notify
the secretary of the administration, auditor
and treasurer of such determination and
thereafter no funds appropriated to such
spending unit shall be encumbered or expended
for the salary or compensation to the head of
the spending unit until the legislative
auditor shall determine that such payments or
transfers are being made on a timely basis.
In 1991, the legislature enacted "The Debt Management Act," W.Va. Code 12-6A-1 to 12-6A-7 ["DMA"], which currently supplements the State's creation of the finance division in W.Va. Code § 5A-2-1 et seq.. The DMA requires the director of the state Board of Investments to act as a liaison with the legislature on all debt matters, including, but not limited to debt issued by the state and its spending units.
Footnote: 12 Technically, Sheriff Dodd had received thirteen years of prior, noncontributing service credit under PERS for his participation before the implementation of the system in 1961.
Footnote: 13 Although retired by the time of his appeal, Officer Mullett was active at the time of the amendments affecting his pension plan.
Footnote: 14 Although Mullett gives 1968 as the date of the statute at issue, the legislative history actually reveals that at the time of the officer's hire, the statute had last been amended in 1967. However, to be consistent, we will refer to the statute as the "1968 statute."
Footnote: 15 The officer argued the 1968 statute required only a one day interruption for military service. Although this Court did not need to resolve the issue, we expressed doubt about this contention. Mullett, 186 W.Va. at 494, 413 S.E.2d at 149 n. 8.
Footnote: 16 For the sake of both brevity and clarity, we have not detailed Mullett's exact procedural history.
Footnote: 17 At the time of the 1985 amendments, Mr. Mullett had completed only 17 years of service. The retirement statute then in effect required at least twenty years' service before an officer became eligible to apply for a pension. See W. Va. Code 8-6-20 .
Footnote: 18 This Court acknowledges that contrary authority exists on this issue. See, Annot., Vested Right of Pensioner to Pension, 52 A.L.R.2d 437. Moreover, although most jurisdictions have adopted contract approaches when considering amendments to public employee pensions, they do not always agree on the time when a public employee acquires contract property rights in a pension. See, 60A Am.Jur.2d, Pensions and Retirement Funds, §1620 (discussing when public employees' rights in a pension "vest"). We think any further discussion of these concerns unnecessarily confuses our decision here, and, for this reason, we choose not to discuss the other approaches to public employee pension rights because this Court rejects them in their entirety.
Footnote: 19 W.Va. Code 15-2-7(c) formerly allowed modification of its age limit requirement for persons over the age of thirty with active duty military experience who were applying for positions as helicopter pilots in the Division. In 1994, the legislature eliminated this language and W.Va. Code 15-2-7(c) now requires only a minimum age of twenty-one to become a state trooper.
Footnote: 20 In a 1964 article "The New Property," Professor Charles A. Reich postulated that the wealth of more and more Americans depends upon a relationship to government. Reich, "The New Property," 73 Yale L. Rev. 733 (1964). Although the ownership of property in earlier times was thought to confer power on a person, the government now assumes such power over the regulation of property that it, in essence, controls wealth. As Professor Reich wrote:
[T]oday more and more of our wealth takes the
form of rights or status than of tangible
goods. An individual's profession or
occupation is a prime example. To many
others, a job with a particular employer is
the principal form of wealth. A profession or
a job is frequently far more valuable than a
house or bank account, for a new house can be
bought, and a new bank account created, once
a profession or job is secure. For the jobless, their status as governmentally assisted or insured persons may be the main source of subsistence. . . . To the individual, these new forms, such as a profession, job or right to receive income, are the basis of his various statuses in society, and may therefore be the most meaningful and distinctive wealth he possesses.
. . .
No form of government largess is more personal
or individual than an old age pension. No
form is more clearly earned by the recipient,
who, together with his employer, contributes
to the Social Security fund during the years
of his employment. No form is more obviously
a compulsory substitute for private property;
the tax on the wage earner and employer might readily have gone to higher pay and higher private savings instead. No form is more relied on, and more often thought of as property. . . .
73 Yale L. Rev. at 738-739, 769 [Emphasis added]. See also, Joseph William Singer, "The Reliance Interest in Property," 40 Stanford L. Rev. 611 (1988).
Footnote: 21 Under W.Va. Code 15-2-5 , a state trooper who completes a certain amount of service with the Division is entitled to receive reclassification up to the rank of Corporal without the requirement of a promotion. The longevity requirements are as follows: Trooper--less than three years; Senior Trooper--three years to eight years; Trooper First Class--nine years to fourteen years; Corporal--more than fourteen years. No officer, however, may progress to a rank higher than Corporal under the reclassification system, and any other promotion of an officer must result by appointment of the superintendent. W.Va. Code 15-2-4.
Currently, a third-year Trooper earns $22,308 per year, a Corporal earns $27,960 and the highest rank of career troopers Lieutenant Colonel earns $42,360. The rank of Colonel earns $60,000 and is reserved for the commanding officer who is appointed by the Governor. See, W.Va. § 15-2-2 .
Footnote: 22 For example, under W.Va. Code 51-2-13 , the legislature recently raised the salaries of circuit court judges from $65,000
to $80,000 effective 1 January 1995; at the same time, the legislature also increased the judges' required contributions
to the pension fund from 6 percent to 9 percent under W.Va. Code 51-9-4(a) . Although the legislature increased the judges' required contributions to the pension plan by 3 percent, the legislature nevertheless gave the judges more than enough money to meet the extra contribution. Before the amendment, each judge paid about $3,900 (6 percent of $65,000) to the pension fund; after 1 January 1995, each judge must pay about $7,200 (9 percent of $80,000) to the pension fund; however, the $15,000 new money given to the judges offsets the extra $3,300 burden and actually results in over an $11,000 gain to the judges.
By its own terms, W.Va. Code 51-9-4(b) , in fact, reveals that the legislature followed the rule we have now explained. The section reads: "[t]he Legislature finds that any increase in salary for judges of courts of record directly affects the actuarial soundness of the retirement system for judges of courts of record and, therefore, an increase in the required percentage contributions of members of that retirement system is the same subject for the purposes of determining the single object of this bill."
Footnote: 23 This does not mean that the legislature cannot modify medical benefits for working State employees since medical technology and the cost of medical care are constantly changing. However, if the state promises or implies to employees that at retirement they will receive the same medical benefits as active State employees at modest or no cost, then the State may not thereafter raise the cost of medical coverage disproportionately to cost raises applicable to working State employees or change the benefits in any way that does not apply as well to working State employees.
Footnote: 24 Under this Amendment, the Division must also increase its contributions according to the following schedule: thirteen percent by 1 July 1995, fourteen percent by 1 July 1996 and fifteen percent by 1 July 1997. The fund usually generates about 3 percent additional revenue from miscellaneous payments.
Footnote: 25 In particular, the 1994 Legislature amended W.Va. Code 15-2- 37  and 15-2-27a . W.Va. Code 15-2-37 formerly provided, in part, that "[a]ny member who shall be discharged by order of the superintendent after such member has or shall have served two full years or more as a member of [the Division] shall, at the request of such member, be entitled to receive from said
fund a sum equal to the aggregate of the principal amount of moneys deducted from the salary of such member and paid into said death, disability and retirement fund. . ." In other words, after two years, if a trooper were discharged, he or she could demand the return of all his or her pension contributions into the fund. However, W.Va. Code 15-2-37(a)  now allows troopers leaving the Division after two years to receive 4 percent interest on all their previous contributions into the fund. W.Va. Code 15-2-37(c)  also allows troopers who have completed ten years' service or more and who terminate their employment either to withdraw their contributions to the fund with interest or receive a deferred annuity when they reach age sixty-two. Before this amendment, the statute had required troopers to complete twenty years' service in order to receive an annuity, with exception for annuities payable as a result of disabilities.
Under former W.Va. Code 15-2-27a , retired state troopers who were receiving more than 8 percent of their aggregate salary from the fund were not allowed to collect the annuity adjustment until reaching age sixty-five. W.Va. Code 15-2-27a  completely eliminated this restriction, and, as noted above, all retired members of age fifty-six or older may receive the cost of living adjustment.
Footnote: 26 We are aware, of course, that the salary increase and other benefits extended to the state troopers may not totally offset the increased contributions of certain high ranking troopers. We think this is a de minimis problem that should be corrected by the legislature at its next session.
Footnote: 27 The Board discontinued the practice upon passage of the Amendment at issue on 12 March 1994.
Footnote: 28 As noted earlier, this Amendment also allows all state troopers to collect the annual cost-of-living adjustment at age 56. See n. 24. In our above discussion, we are concerned only with the constitutionality of the Amendment as it involves the reduction of the cost-of-living adjustment.
Footnote: 29 And, in fact, the legislature did this. See n. 6.