Board of Trustees of the Maryland State Retirement & Pension Systems v. Hughes

CHASANOW, Judge.

We are called upon in this ease to determine whether former Governor Harry Hughes was entitled to receive both his State pension and a State salary while he served as Governor of the State of Maryland. For the reasons discussed below, we hold that former Governor Hughes was not entitled to receive both his State pension and a State salary during his tenure as Governor.

I.

This appeal arises out of a decision by the Board of Trustees of the Maryland State Retirement and Pension Systems (the Board) holding that the Maryland State Retirement Agency (the Agency) properly suspended former Governor Harry Hughes’s (Hughes) retirement benefits during his tenure as Governor. Prior to his election as Governor, Hughes had twenty-two years of State service both as a member of the General Assembly and later as the Secretary of the State Department of Transportation. By virtue of his State service, Hughes earned retirement benefits under the Employees’ Retirement System of the State of Maryland (the ERS). Hughes was eligible under Maryland Code (1957, 1988 Repl. Vol.), Article 73B, § 11(12)¹ to receive retirement benefits upon his retirement on June 1, 1977. Section 11(12) provides in pertinent part:

“[I]f any person, while being a member of the State Employees’ Retirement System, has been or may hereafter be appointed or elected to any State office, or promoted by an express appointment by the appointing authority with the express concurrence of the Secretary of Personnel to any position within the State government which is not a part of the classified service and which is not covered by the provisions of Article 64A ... for a fixed or indefinite term and not be continued in office after serving in such position for a period of one (1) year, reappointed or reelected, provided that the termination of employment was involuntary, except for officials elected or appointed prior to July 22,1981, as determined by the Secretary of Personnel, after the completion of sixteen years of creditable service, regardless of age, such member may elect, in lieu of the withdrawal of his accumulated contributions, to have such contributions paid to him in an annuity of equivalent actuarial value, in which event he shall also be paid a pension equal to the ordinary disability pension that would have been payable at such time had he been retired on an ordinary disability retirement____ Should such beneficiary be appointed or elected to any office, the salary or compensation of which is paid by the State, his retirement allowance shall cease, and he may again become a member of the retirement system and shall contribute thereafter at the same rate he paid prior to his retirement____”

After Hughes was nominated for Governor in 1978, the Agency wrote Hughes a letter notifying him that if he is elected Governor his retirement allowance would cease under § 11(12). That letter stated:

“As you know, you retired under the provisions of Article 73B, Section 11(12) which reads in part:

‘Should such beneficiary be appointed or elected to any office, the salary or compensation of which is paid by the State, his retirement allowance shall cease, and he may again become a member of the retirement system and shall contribute thereafter at the same rate he paid prior to his retirement____

Once Hughes was elected and assumed the Governor’s office on January 17, 1979 and began to receive a State salary, the Agency suspended payment of his ERS retirement allowance. When Hughes left the office of Governor, the Agency reinstated the retirement benefits Hughes had accrued based on his service as a member of the General Assembly and as Secretary of the Department of Transportation and this pension was paid concurrently with his gubernatorial pension.

In May of 1987, Hughes requested Bennett H. Shaver, then Executive Director of the Agency, to review the appropriateness of the Agency’s suspension of his retirement benefits while he served as Governor. Mr. Shaver advised Hughes that the Agency’s decision to suspend his retirement benefits was in accordance with applicable law. Hughes wrote another letter to Mr. Shaver contending that because his gubernatorial pension was covered under a different retirement system than the ERS, the retirement benefits he was receiving pursuant to § 11(12) should not have been suspended. Mr. Shaver again informed Hughes that the Agency’s decision to suspend his retirement benefits was done in accordance with applicable law. Nevertheless, after Hughes wrote another letter expressing dissatisfaction with the Agency’s response, Mr. Shaver wrote a letter to the Attorney General requesting that the Attorney General issue an opinion regarding whether § 11(12) mandated the cessation of Hughes’s retirement benefits during his tenure as Governor. The Attorney General issued an opinion which agreed with the Agency’s decision to suspend Hughes’s retirement benefits while he was serving as Governor. In his opinion, the Attorney General concluded:

“The provision for suspension of retirement benefits is evidently designed to prevent ‘double-dipping’—that is, the simultaneous receipt of retirement benefits and a salary from the State. That policy is similarly embodied in provisions regarding other retirement systems____ As this office observed in connection with a provision that reduces a judge’s pension under certain circumstances, ‘that policy is not uniquely applied to only one class of retirees. Rather, it is a policy similarly reflected in other statutes, applicable to other State retirees____’ ” (Citations omitted).

73 Op.Att’y Gen. 304, 308-09 (1988) (quoting 69 Op.Att’y Gen. 260, 267 (1984)). Approximately three years after the Attorney General’s opinion, Hughes requested a hearing on whether the Agency appropriately suspended his retirement benefits during his tenure as Governor. The Agency granted the request for a hearing and the matter was referred to the Office of Administrative Hearings. A hearing was held before Administrative Law Judge Louis N. Hurwitz on May 1, 1992. Following the hearing, the Administrative Law Judge issued a proposed decision which agreed with the opinion of the Attorney General that the Agency appropriately suspended retirement benefits to Hughes while he was serving as Governor. The Administrative Law Judge noted that § ll(12)’s purpose and effect is to prevent a beneficiary from receiving ERS benefits while receiving a State salary and that the General Assembly “carved out no ... exception for Governor Hughes.” The Administrative Law Judge concluded that “[w]hile other pensions have been established since the creation of the ERS ..., [n]o law was enacted establishing a separate, distinct and unique pension system [for governors and the gubernatorial retirement plan] cannot be interpreted or misconstrued as being separate and distinct from the ERS.” Thus, the judge concluded that the Agency’s decision to suspend Hughes’s retirement benefits was appropriate. The Board adopted the Administrative Law Judge’s recommendation as its final administrative decision.

Hughes appealed the Board’s decision to the Circuit Court for Baltimore City. The circuit court (Byrnes, J.) determined that the issue could not be resolved on the record and remanded the case to the Agency for the taking of additional evidence. Hughes filed a Motion to Alter, Amend and/or Revise Judgment and requested the circuit court to rule in his favor “based on the facts in the record, the legislative history and the agency practice.” The circuit court denied the motion and the Agency appealed to the Court of Special Appeals. Prior to the intermediate appellate court’s consideration of this case, we issued a writ of certiorari to consider whether Hughes was entitled to receive both his ERS retirement allowance and a State salary while he served as Governor of the State of Maryland.²

II.

Our task in the instant case is to determine whether the Agency appropriately applied § 11(12) to suspend Hughes’s retirement benefits during his tenure as Governor. In interpreting the meaning of a statute, we begin with “the words of the statute, giving them their ordinary and natural import.” Fairbanks v. McCarter, 330 Md. 39, 46, 622 A.2d 121, 125 (1993). In Frost v. State, 336 Md. 125, 647 A.2d 106 (1994), we discussed the considerations involved in construing a statute:

“In analyzing a statute, we must always be cognizant of the fundamental principle that statutory construction is approached from a ‘ “commonsensical” ’ perspective. Thus, we seek to avoid constructions that are illogical, unreasonable, or inconsistent with common sense. Furthermore, we do not read statutory language ‘in isolation or out of context [but construe it] in light of the legislature’s general purpose and in the context of the statute as a whole.’ In GEICO v. Insurance Comm’r, 332 Md. 124, 630 A.2d 713 (1993), we explained that ‘[c]ontext may include related statutes, pertinent legislative history and “other material that fairly bears on the fundamental issue of legislative purpose or goal____’” 332 Md. at 132, 630 A.2d at 717 (quoting Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628, 632-33 (1987)).” (Citations omitted).

Frost, 336 Md. at 137-38, 647 A.2d at 112. Additionally, in interpreting a statute, “it may not be necessary to go further than the scrutiny of statutory language, for the language itself may be sufficiently expressive of the legislative purpose or goal.” Morris v. Prince George’s County, 319 Md. 597, 603, 573 A.2d 1346, 1349 (1990).

Further, when reviewing an agency’s interpretation of a statute, we have held that, “[a]lthough never binding upon the courts, the contemporaneous interpretation of a statute by the agency charged with its administration is entitled to great deference, especially when the interpretation has been applied consistently and for a long period of time.” Balto. Gas & Elec. v. Public Serv. Comm’n, 305 Md. 145,161, 501 A.2d 1307, 1315 (1986); see also 2B Norman J. Singer, Sutherland Statutory Construction § 49.05, at 17 (5th ed. 1992). Bearing in mind these principles, we believe that the Agency’s interpretation of § 11(12) follows a logical and common sense approach to the language of the statute and hold that the Agency correctly determined that Hughes’s ERS retirement benefits were properly suspended during Hughes’s tenure as Governor.

At the time of Hughes’s retirement on June 1, 1977, he began receiving a retirement annuity pursuant to § 11(12). When an individual receives a retirement allowance under § 11(12), that section places a limitation on that individual’s continuing eligibility to receive his or her retirement benefits. The limitation enumerated in § 11(12) provides that “[sjhould such beneficiary be appointed or elected to any office, the salary or compensation of which is paid by the State, his retirement allowance shall cease____” Given that Hughes was an ERS beneficiary, which is defined as “any person in receipt of a pension, an annuity, a retirement allowance, or other benefits as provided by this article,” see § 1(11); that he was an elected or appointed official; and that his gubernatorial compensation was paid by the State, it appears that, based upon the plain language of § 11(12), the statute mandated that Hughes’s retirement benefits be suspended while he received a State salary during his tenure as Governor.

In support of his argument that his retirement benefits were improperly suspended, Hughes contends that the prohibition contained in § 11(12) against receiving an ERS pension while receiving a State salary would be applicable to him only if he were both a beneficiary and a member of the ERS. He argues that upon assuming the office of Governor he became a member of the Gubernatorial Retirement Plan (GRP), and was no longer a member of the ERS. Thus, he contends that he was not subject to the § 11(12) prohibition against receiving an ERS retirement while receiving a State salary. We disagree. Although the circuit court determined that additional information was necessary to determine whether Hughes was an ERS “member” after he assumed the office of Governor, under the plain language of § 11(12) it is immaterial whether Hughes continued to be a member of the ERS after he assumed the office of Governor because the prohibition against receiving an ERS retirement benefit while receiving a State salary depends solely on whether Hughes was a beneficiary of the ERS. See § 11(12) (“should such beneficiary be appointed or elected to any office ... his retirement allowance shall cease”) (emphasis added).

The definitions of “member” and “beneficiary” are independent of one another. See § 1(4) (defining “member”) and § 1(11) (defining “beneficiary”). An individual’s beneficiary status looks to what benefits were earned in the past and how they will be disbursed, while an individual’s membership status looks to what additional benefits will accrue in the future. Section 11(12) does not condition the suspension of retirement benefits on whether the elected or appointed official is a member of the ERS. The prohibition in § 11(12) means what it says—when a beneficiary of an ERS pension is elected or appointed to an office in which the compensation is paid by the State, that beneficiary may not simultaneously receive a State salary and an ERS retirement benefit. Thus, for purposes of the suspension of Hughes’s retirement benefits under § 11(12), whether Hughes continued to be a member of the ERS after he assumed the office of Governor is not relevant.

Hughes also argues that § 11(12) does not apply to an ERS beneficiary who is subsequently appointed or elected to any state paid office which is covered by a retirement system that is separate from the ERS. He argues that because post-1979 governors receive their retirement benefits pursuant to the GRP as embodied in § ll(19)(b),³ they belong to a system separate and distinct from the ERS. Thus, he contends that because he was not receiving a retirement allowance from the same system in which he was earning future retirement benefits, he should have been able to receive his § 11(12) ERS pension while receiving his gubernatorial salary. For the reasons discussed below, we agree with the Board that the GRP is not a separate retirement system from the ERS but is merely a retirement plan under that retirement system.

Hughes first argues that governors are not covered under the provisions of the ERS because they are not “employees” under the ERS definition contained in § 1(3). He argues that although the language of § 1(3) does not specifically exclude governors from the definition of “employee,” the clear intent of the legislature was to exclude persons covered by separate pension systems from the provisions of the ERS. Thus, he ■ argues that because he was covered under the GRP, he is not subject to the ERS prohibition against receiving a retirement allowance and a State salary under § 11(12). We disagree. For purposes of the ERS, the term “employee” for whom compensation is provided for by the State is defined by Art. 73B, § 1(3) to “include any appointed or elected employee of the State.” Among those excluded from the definition of employee are those eligible members of “the Teachers’ Retirement System of the State of Maryland or of the State Police Retirement System or any judge of the circuit courts, Court of Appeals of Maryland, Court of Special Appeals, and District Courts____” § 1(3).

"[R]etirement allowances and benefits for persons serving in the office of Governor after January 17, 1979, and their spouses shall be payable in accordance with this subsection. A person serving in the office of Governor after January 17, 1979, shall be eligible to receive a retirement allowance equal to one third the annual salary received during his last term of office, provided that the Governor has served at least one full term and has attained age 55____ This retirement allowance or pension shall be suspended and not paid during any period when the former Governor is employed by any agency of the State of Maryland.”

Hughes argues that the list of those excluded from the definition of employee under § 1(3) is not all-inclusive and thus, simply because governors are not excluded from the definition of “employee” does not mean that governors do not belong to a separate retirement system. He argues that the failure to exclude governors from § 1(3) is merely an oversight on the part of the legislature and the legislature did not intend to include governors under the provisions of the ERS. Nevertheless, the legislature has never seen fit to correct that “oversight” by exempting governors from the definition of employee in § 1(3) even though the GRP has been in effect since 1971. Further, although Hughes argues that the legislature did not exclude governors from § l(3)’s definition of employee because it would have had the effect of denying all pre-1979 governors and their spouses coverage under the ERS, the legislature could have excluded only post-1979 governors from the definition of employee under the ERS to insure that pre-1979 governors and their spouses would retain their benefits under the ERS. Given that the legislature chose not to exclude governors from the ERS definition of employee but excluded others who belong to separate retirement systems from that definition, it indicates that governors are appointed or elected “employees” under the ERS definition and are thus covered under the provisions of the ERS.

Additional support for the fact that the GRP is not a separate retirement system from the ERS is that the GRP does not exhibit the same characteristics as those retirement systems that are separate from the ERS. In enacting the GRP, the legislature stated that its purpose was to “change the formula for computing the allowance or pension paid to retired governors and their widows in certain circumstances.” See Chapter 239 of the Acts of 1971. Thus, the GRP provides for a retirement allowance for governors and their spouses but contains no language indicating that it established a new retirement system. Id. In addition, the GRP receives its funding from the ERS and contains no provisions for the administration and management of the plan. See 1985 Interim Report to the General Assembly by the Joint Committee on Pensions. In contrast, separately created pension systems normally contain separate statutory provisions for the administration, management and funding of the system. See, e.g., § 156(e) now codified at Md.Code (1993,1994 Repl.Vol.), State Personnel and Pensions Art., § 25-102 (providing for the management, administration and funding of the Correctional Officers’ Retirement System). Hughes argues that there were no provisions established for the management, funding and administration of the GRP because, until at least 1983 when the first post-1979 Governor would be eligible for the pension, there was nothing to manage, fund or administer. Although that may be the case, had the legislature intended to create a separate retirement system, there is no reason why it could not have provided for the management, administration and funding of that system when it enacted the GRP. Thus, the fact that the GRP contains no provisions for management, administration or funding, as other separate retirement systems do, further evidences that the legislature did not intend it to be a separate retirement system from the ERS. See also 1985 Interim Report to the General Assembly by the Joint Committee on Pensions (including the GRP as part of the ERS and noting that “[t]here is a combined accumulation fund for all of the foregoing plans except Judges’____” and that each of the other listed retirement systems contains its own accumulation funds).

Additionally, the GRP has never been codified as a separate retirement system. When the GRP was enacted, it was codified as subsection (18) under § 11 which established the general benefit provisions for members of the ERS. The retirement systems which were separate from the ERS, however, were codified under separate provisions in Article 73B. See, e.g., Pensions of Judges and Their Surviving Spouses, §§ 55-63A; Correctional Officers’ Retirement System, § 156.

Hughes relies heavily on the fact that the Governor’s Salary Commission extensively studied the Governor’s salary and recommended that the GRP be a separate retirement system from the ERS. In that regard, Hughes cites the Minutes of a meeting of the Governor’s Salary Commission on December 15, 1977 which state:

“[T]he Commission dropped its recommendation that the plan be tied to the Employee Retirement System ... proposing instead ... that there be a separate gubernatorial retirement plan____”

See Governor’s Salary Commission Minutes (Dec. 15, 1977). Although the Salary Commission made such a recommendation, the ultimate legislation that became the GRP does not contain any indicia that the legislature intended to create a separate retirement system. While pertinent legislative history may properly be considered, in the instant case, the fact that the Governor’s Salary Commission recommended that the GRP be a separate retirement system is not persuasive in light of the specific language of the GRP which never states or even intimates that the GRP is a separate retirement system. We agree with the Board’s decision that while “[i]t is true that the GRP is not comparable with other plans within the ERS ... because it is non-contributory, and the benefits and determination of eligibility are distinctly dissimilar. The differences do not have the effect of placing the GRP in a separate system.” Thus, we find that the GRP is not a separate retirement system from the ERS.

Hughes further argues that he was entitled to continue to receive his ERS pension while serving as Governor because retirees of other State pension plans may obtain reemployment with the State and continue to receive their pensions. We initially note that our cases have held that pension provisions established for different groups of State employees need not be uniform. Hargrove v. Board of Trustees, 310 Md. 406, 424, 529 A.2d 1372, 1381 (1987) (noting that “not all variances among different pension systems need be justified by the State”), cert. denied, 484 U.S. 1027, 108 S.Ct. 753, 98 L.Ed.2d 766 (1988); Clark v. Tawes, 187 Md. 195, 200, 49 A.2d 463, 465 (1946) (stating that “[t]he class of statutes usually known as retirement acts which provide pensions for different classes of State employees need not be alike as to all employees”). In noting the difference in pension plans in Hargrove, we observed that “retired judges may accept permanent post-retirement employment at the state and local level, subject only to an offset, while other retired state employees will lose their pension benefit if they accept certain such permanent employment.” 310 Md. at 424-25, 529 A.2d at 1381.

Some retirement systems that are separate from the ERS have provisions which permit retirees to obtain some types of reemployment with the State without forfeiting their entire retirement benefits while receiving a State salary. See, e.g., § 86(9)(a) (containing the conditions upon which retired members of the Teachers’ Retirement System may secure State employment without forfeiting their retirement benefits while employed); § 56(c)(1) (containing the conditions upon which retired judges may accept State employment without forfeiting their retirement benefits while employed). In contrast, § ll(19)(b) provides that a “retirement allowance or pension shall be suspended and not paid during any period when the former Governor is employed by any agency of the State of Maryland.” Additionally, § 11(12) of the ERS, under which Hughes retired, specifically provides that a beneficiary’s retirement allowance shall cease if that beneficiary is appointed or elected to an office in which the salary is paid by the State. Thus, although retirees of other pension plans may secure some type of reemployment with the State and continue to receive a retirement allowance, retirees under § 11(12) who are subject to the limitation on the receipt of retirement benefits may not do so.⁴

Finally, Hughes argues that ERS retirees who subsequently become judges have apparently been permitted to continue to receive their ERS benefits while receiving a judicial salary. Thus, he argues that because a judge, as well as a governor, is an elected or appointed official receiving a State salary, Hughes also should have been able to collect his ERS retirement benefit while receiving his gubernatorial salary. The Attorney General’s opinion discussing the appropriateness of suspending Hughes’s retirement benefits apparently assumed that ERS retirees who become judges are permitted to continue to receive their ERS pension along with their judicial salary. See 73 Op.Att’y Gen. 304, 306-07 (1988). The Attorney General states that because a judge is specifically excluded from the ERS definition of “employee” under § 1(3), “a judge’s continued receipt of a retirement allowance from the ERS does not create a situation in which an employee is receiving a retirement allowance from a system in which he or she is simultaneously earning entitlement to additional retirement benefits to be paid in the future.” Id. The Attorney General’s rationale, however, does not address how an ERS beneficiary, even if that beneficiary is not an “employee” as defined in § 1(3), may escape the specific prohibition in § 11(12) if he or she becomes an elected or appointed official whose salary is paid by the State. Under the plain language of § 11(12), the cessation of retirement benefits does not depend upon whether the person who retired from the ERS is earning additional retirement benefits in that system. Pursuant to § 11(12), the suspension of retirement benefits is mandatory if the elected or appointed official is an ERS beneficiary who is receiving a State salary.

Hughes claims that the aim of § ll(12)’s prohibition on receiving an ERS retirement allowance and a State salary “is to prevent an elected official from receiving benefits from the ERS during the same period ... he was a member of and earning a second pension from the ERS.” We believe the statute clearly expresses a broader purpose. As we previously stated, because § 11(12) does not condition the cessation of retirement benefits on an individual’s membership status in the ERS, the aim of the statute is not merely to prevent an ERS beneficiary from receiving a retirement allowance if that beneficiary is earning a second pension from the ERS but is rather to prevent State funds from being utilized to pay both an ERS pension and a State salary. Although at the time of the Agency’s decision, there was “no set policy regarding the receipt of a pension and a salary simultaneously,” see 1980 Interim Report to the Maryland General Assembly of the Joint Committee on Pensions, we find that, as the circuit court noted, the State of Maryland has generally indicated an “intent that ‘double-dipping’ be discouraged.” In fact, the “double-dipping” prohibition enumerated in § 11(12) is also embodied in other retirement plans. See generally 73 Op. Att’y Gen. at 308-09. Although the circuit court held that the Board failed to take into proper consideration “[a] legislative history which reveals that ... there was no effective, consistent de facto double-dipping prohibition,” the legislative history does not contradict the plain meaning of § 11(12) which prohibits retirees under that section from receiving their retirement allowance while receiving a State salary.

III.

In conclusion, we hold that the Board’s determination that § 11(12) prohibited Hughes from collecting his retirement allowance during his tenure as Governor was correct. Because we hold that Hughes’s retirement benefits were appropriately suspended while he was receiving a State salary during his tenure as Governor, we need not consider whether Hughes is entitled to interest on those suspended payments.

JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY REVERSED. CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO AFFIRM THE DECISION OF THE BOARD OF TRUSTEES OF THE MARYLAND STATE RETIREMENT AND PENSION SYSTEMS.

1 . For purposes of consistency with the administrative decision, we shall refer to the statutes that were in effect at the time of the administrative decision. Thus, unless otherwise specified, all references to § 1 ef seq. are to Maryland Code (1957, 1988 Repl.Vol.), Article 73B, which was the law in effect at the time of the Agency’s decision. Section 11(12) is currently codified in Md.Code (1993, 1994 Repl.Vol.), State Personnel and Pensions Art., § 22-404.

2 . We note that the circuit court’s order remanding this proceeding to the administrative agency for the taking of additional evidence is an appealable final order. See Schultz v. Pritts, 291 Md. 1, 6, 432 A.2d 1319, 1322 (1981); see also Eastern Stainless Steel v. Nicholson, 306 Md. 492, 501, 510 A.2d 248, 252 (1986). Thus, this case is appropriately before this Court on appeal.

3 . The gubernatorial retirement plan was originally enacted by Chapter 239 of the Acts of 1971 as Article 73B, § 11(18). It was later renumbered § 11(19) and then later recodified in Md.Code (1993, 1994 Repl.Vol.), State Personnel and Pensions Art. § 22-405. Since the GRP as codified in § 11(19) was the section relied upon by the Board in its decision, we shall refer to that section unless otherwise specified. Section 11(19)(b) provides in pertinent part:

4 . We note that even those retirement systems which permit some type of reemployment by the State without forfeiting retirement benefits provide that the retirement benefits are generally offset by the amount of the State salary. See, e.g., § 86(9) (providing that the State salary and the retirement benefits "shall not exceed in amount the average final compensation upon which such retirement allowance was based ... "); § 56(c)(1) (providing that the State salary and the retirement benefits "may not exceed in amount the compensation upon which the retirement allowance is based ... ”). Thus, although some retirement systems allow a retiree to continue to collect retirement benefits upon the retiree’s reemployment with the State, generally the retirement plans do not permit the type of "double dipping” Hughes requests, i.e. receiving a full State salary while receiving a full retirement pension.