Jerri Jeaneen Legato
Charleston, West Virginia
Counsel for the Appellant
David K. Hendrickson
Lora A. Arthur Dyer
Hendrickson & Long
Charleston, West Virginia
Counsel for the Appellee
(1) In violation of constitutional or statutory provisions; or (2) In excess of the statutory authority or jurisdiction of the agency; or (3) Made upon unlawful procedures; or (4) Affected by other error of law; or (5) Clearly wrong in view of the reliable, probative and substantial evidence on the whole record; or (6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.
W.Va. Code § 29A-5-4(g). Combining these principles, we held in syllabus point one of
Muscatell v. Cline, 196 W.Va. 588, 474 S.E.2d 518 (1996), that [o]n appeal of an
administrative order from a circuit court, this Court is bound by the statutory standards
contained in West Virginia Code § 29A-5-4(a) and reviews questions of law presented de
novo; findings of fact by the administrative officer are accorded deference unless the
reviewing court believes the findings to be clearly wrong.
With these standards in mind, we proceed to determine whether the trial court committed error in reversing the Board's denial of Appellee's request to reclassify a portion of his service years.
After the Board denied his application to become an unlimited participant under the amended language of West Virginia Code § 18-23-4a, Dr. Nesselroad, inter alia, sought a writ of mandamus from the Circuit Court of Kanawha County. (See footnote 12) Because the petitioners in that action sought to alter their pension plan status before the statutory amendment was rescinded, the trial court granted a writ of mandamus on the issue of the petitioners' right to become unlimited participants in TRS. This right of participation, however, was determined to be prospective in operation only. (See footnote 13) The trial court expressly rejected the petitioners' argument that there was an implied right to make additional pension payments and thereby be placed on par with those higher education members who had previously made buy back contributions between March 6, 1971, and March 6, 1972, as part of their election to become unlimited participants. See W. Va. Code § 18-7A-14a. Reasoning that the provisions of West Virginia Code § 18-7A-14a for making the requisite back payments during the temporally specified period remain[ed] in full force and effect under the current retirement statutes, the trial court dismissed petitioners' belated attempt to make back payments into STRS [TRS] for the years they failed to fully participate in such system.
Following the issuance of the mandamus ruling on June 30, 1988, Dr. Nesselroad opted to participate in TRS as an unlimited participant on a prospective basis. Less than one year later, Appellee retired. In 1990, Dr. Nesselroad and other higher education members filed a petition with the Circuit Court of Kanawha County, seeking to obtain a writ of mandamus to compel the Board to recalculate their retirement benefits. Nesselroad I, 188 W.Va. at 194, 423 S.E.2d at 597. In Nesselroad I, higher education members like Dr. Nesselroad, who became prospective unlimited participants as a result of the short-lived 1988 amendment to West Virginia Code § 18-23-4a, sought to have their annuity payments calculated without reference to the statutory proviso language governing the computation of benefits for those years when a member's contributions to TRS were subject to salary caps because they were also making contributions to TIAA/CREF. See Nesselroad I, 188 W.Va. at 196-97, 423 S.E.2d at 599-600; W.Va. Code § 18-7A-26(a) (2008). Characterizing the requested recalculation of benefits as an attempt to gain credit for prior service for which they had made no contributions to the system, we affirmed the trial court's denial of the writ. Nesselroad I, 188 W.Va. at 194, 423 S.E.2d at 597.
The current proceeding, which Dr. Nesselroad instituted in 2005, is the third time Appellee has sought to obtain extraordinary relief in connection with the calculation of his retirement benefits. At issue here is whether his annuity should be recalculated based on 12.354 years at a full salary figure of $44,840 instead of 5.762 years at that figure as the Board has determined. Appellee contends that this recomputation is warranted because the service years he seeks to have added (6.592) to the years calculated upon a full salary occurred during a time period when non-higher education and higher education members contributed to TRS based upon the same salary caps.
As we recognized in Nesselroad I:
Computation of annual retirement benefits from STRS [TRS] is governed by Code, 18-7A-26(a)  which, in relevant part, defines a member's annual retirement benefit as the sum of:
Two percent of the member's average salary multiplied by his total service credit as a teacher. In this paragraph average salary shall mean the average of the highest annual salaries received by the member during any five years contained within his last fifteen years of total service credit: Provided, that the highest annual salary used in this calculation for certain members employed by the West Virginia Board of Regents (See footnote 14) at institutions of higher education under its control shall be four thousand eight hundred dollars, as provided by section fourteen-a [§ 18-7A-14a] of this article and chapter.
188 W.Va. at 196, 423 S.E.2d at 599 (footnote added and emphasis in original). We explained that the statutory reference to certain members employed by the West Virginia Board of Regents was a reference to individuals like Dr. Nesselroad who were split participants before opting to become unlimited participants in TRS. Id. at 196, 423 S.E.2d at 599.
The calculation of retirement benefits for a member like Dr. Nesselroad who previously was a split participant in TRS necessarily requires a bifurcated computation, as we explained in Nesselroad I:
For the period before 1988, when appellants were split participants contributing to STRS [TRS] only on the basis of the first $4,800 of salary, appellees compute the retirement benefit for appellants, in accordance with W.Va. Code, 18-7A-26 , as 2 percent of $4,800 multiplied by the total service credit compiled during appellants' status as split participants. For the period since appellants' 1988 election to be unlimited participants in STRS [TRS], appellees compute the retirement benefit as 2 percent of the appellants' average salary for the five highest years during the years since the election, multiplied by the appellants' total number of years compiled as full members. These two figures are then added to determine the total retirement benefit payable.
188 W.Va. at 196, 423 S.E.2d at 599.
The Board relied upon the same proviso language contained in West Virginia Code § 18-7A-26 that we found to be controlling in Nesselroad I to deny Dr. Nesselroad's request for reclassification in the case sub judice. See 188 W.Va. at 196, 423 S.E.2d at 599. In its recommended decision, the Board determined that the difference in contribution rates between higher education and non-higher education, which occurred from 1963 forward, is not the triggering factor for the bifurcated annuity calculation. Instead, what controls the computation of a former split participant's benefits is the proviso language of West Virginia Code § 18-7A-26. Based on Dr. Nesselroad's decision to remain a split participant and to forego the opportunity to become an unlimited participant under West Virginia Code § 18- 7A-14a, the Board concluded that the service years at issue were subject to the express limitation on final average salary to $4,800.00 provided in West Virginia Code § 18-7A-26. We agree.
Through its enactment of West Virginia Code § 18-7A-14a, the Legislature created a finite opportunity for higher education members to reach back and make up for the years in which they had not participated in TRS on a full salary basis. By taking advantage of the statutorily-specified buy back payment provisions, a higher education member was placed on even footing with the non-higher education members in terms of retirement benefits. That the Legislature intended the buy back payments to have a retroactive effect is clear:
[A]ny such member who . . . makes the required additional
payment will then be considered entitled to retirement, death,
withdrawal and all other benefits under the retirement system to
the same extent as if he had been paying into the retirement
system the full amount provided by law for [non-higher
education] members . . . throughout the period of his
membership in the retirement system.
W.Va.Code § 18-7A-14a (emphasis supplied).
If Appellee had elected to become an unlimited participant by timely complying with the buy back provision of West Virginia Code § 18-7A-14a, the fact that he had once made salary-capped contributions would not have had a correspondent reductive effect on his TRS retirement benefits. This is because the statute specified that such an individual became entitled to retirement . . . benefits . . . as if he had been paying into the retirement system the full amount provided by law for [non-higher education] members . . . throughout the period of his membership in the retirement system. W.Va. Code § 18-7A- 14a. Critically, however, Dr. Nesselroad chose not to accept the one-time offer extended by the Legislature to be treated as though he had been contributing as an unlimited participant from the beginning of his membership in TRS. See id.
Appellee's decision not to become an unlimited participant pursuant to the provisions of West Virginia Code § 18-7A-14a is what prevents him from having the questioned service years calculated as full service years _ not the fact of his salary-capped contributions. (See footnote 15) See W.Va. Code § 18-7A-26. Once the time period passed for making the buy back payment and gaining full participant status _ a status that had a retroactive reach to the start of an individual's membership in TRS -- the non-electing higher education member effectively waived the opportunity to transform his pre-1971 contribution years from salary-capped years into full participation years. See W.Va. Code § 18-7A-14a. Having thus waived the opportunity to have those pre-1971 contribution years treated as full participation years, there is no basis for Appellee's attempt, almost forty years later, to gain statutory benefits that clearly expired on March 6, 1972. See W.Va. Code § 18-7A-14a.
The trial court concluded that the provisions of West Virginia Code § 18-7A- 14a were inapplicable because the service years at issue (1950-1960) pre-date the period of time covered by the buy back (1963-1970). As discussed above, West Virginia Code § 18- 7A-14a has a retroactive reach to the beginning of an individual's membership in TRS for those higher education members who elected to participate in the buy back. And the benefits attached to that retroactive reach (calculation of annuity based on full salary) vanished with the expiration of the statutory buy back period. See W.Va. Code § 18-7A- 14a. Consequently, the trial court erred in its determination that the service years at issue could be calculated for annuity purposes as full salary years rather than being subject to the $4,800 multiplier imposed by the proviso language contained in West Virginia Code § 18- 7A-26.
As additional support for its ruling that Dr. Nesselroad was entitled to have the service years at issue calculated based upon his full salary rather than the $4,800 multiplier, the trial court seized upon a singular sentence of mere dicta from Nesselroad I. In relating how the contributions of higher education and non-higher education members to TRS were structured before 1963, we stated: Their contributions to the system, and their future benefits, however were limited to their full salary or a statutorily established maximum, whichever was higher. Nesselroad I, 188 W.Va. at 195, 423 S.E.2d at 598 (emphasis supplied). Taking the emphasized language out of context, the trial court reasoned that Dr. Nesselroad's full salary for annuity purposes ($48,400) was higher than the $4,800 statutory maximum and thus opted to employ the higher figure for purposes of annuity calculation. In reaching this conclusion, the trial court overlooked two critical issues of historical consequence. First, because TRS was a defined contribution plan during this time period, future benefits were directly related to contributions during the specified pre-1963 time period. And, second, as the Board related, the statutory maximum was often higher than the salaries of the contributing members during this time period. See supra note 6 (delineating maximum salary contributions from 1941-1963). Upon examination, the language from Nesselroad I relied upon by the trial court to support its use of a full salary rather than a $4,800 multiplier for calculating the annuity payment relative to the subject service years is simply inapposite. See 188 W.Va. at 195, 423 S.E.2d at 598.
As a final basis for its decision, the trial court looked to our decision in Crock v. Harrison County Board of Education, 211 W.Va. 40, 560 S.E.2d 515 (2002), to conclude that no changes could take effect with regard to Dr. Nesselroad's pension once he was a member of TRS. The basis upon which we applied the principle of grandfathering in Crock was express statutory language providing that no reduction in benefits could take place with regard to benefits in existence on a specified date. Id. at 45, 560 S.E.2d at 520. In contrast to Crock, there is no correspondent statutory clause in effect here that proscribes any reduction in benefits that had already been extended. Of even more import, however, is the fact that the Board did not take any benefits away from Dr. Nesselroad. Appellee voluntarily gave up the opportunity to avail himself of the benefits offered by the Legislature through the enactment of West Virginia Code § 18-7A-14a. As a result, neither this Court's decision in Crock nor the principle of grandfathering have any bearing on the matter before us.
Based on the foregoing, we determine that the Board correctly concluded that Dr. Nesselroad was not entitled to a reclassification of the service years at issue. Those years were properly determined to be subject to the $4,800 multiplier under the statutory proviso set forth in West Virginia Code § 18-7A-26. Because we determine that the trial court lacked any of the requisite statutory grounds for reversing the administrative ruling of the Board, the decision of the Circuit Court of Kanawha County is reversed. See W.Va. Code § 29A-5-4.