Judges: JOHN CORNYN, Attorney General of Texas
Filed Date: 6/10/1999
Status: Precedential
Modified Date: 7/6/2016
Office of the Attorney General — State of Texas John Cornyn The Honorable Kenneth Armbrister Chair, Criminal Justice Committee Texas State Senate P.O. Box 12068 Austin, Texas 78711-2068
Re: May city remit payments to Texas Municipal Retirement System that it failed to make more than 20 years ago? (RQ-1006)
Dear Senator Armbrister:
Your predecessor as Chair of the Senate Criminal Justice Committee inquired about correcting errors made in reporting members' contributions to the Texas Municipal Retirement System ("TMRS"). The TMRS is a public retirement system for cities, governed by chapters 851 through 855 of the Government Code and administered by a six-member board of trustees appointed by the governor. Tex. Gov't Code Ann. §
The opinion request from your predecessor stated that several police officers employed by the City of Port Arthur learned of errors in their respective TMRS accounts. The request letter explained this problem as follows:
[T]he City of Port Arthur, by clerical errors and/or omissions, failed to enroll these officers in the TMRS system upon the completion of their employment probationary periods. The affected employees were approximately hired in 1973 and were scheduled to become eligible to retire this next year. It was discovered that each officer was not enrolled for a period of months and therefore will not be eligible to retire for this additional period. The times range between two (2) and six (6) months.
Letter from Honorable John Whitmire, Chair of Senate Criminal Justice Committee, to Honorable Dan Morales, Attorney General (Sept. 29, 1997) (on file with Opinion Committee) [hereinafter Whitmire letter of 9/29/97].
A city employee receives credit in the retirement system for each month in which he or she performs services while a member of TMRS and makes the required contributions. Tex. Gov't Code Ann. §
Your predecessor first asked whether "section
A participating municipality that fails to remit before the 16th day of the month all contributions required by this subchapter to be made, . . . shall pay to the retirement system, in addition to the contributions, interest on the past-due amounts at an annual rate that is the total of the rates of interest credited by the retirement system to accounts in the municipality accumulation fund for the preceding calendar year, plus two percent.
Id. § 855.410(a).
The predecessor of section 855.410 was adopted by the same bill that enacted the predecessor of section 855.403, which fixes the time monthly contributions must be paid to the system. Senate Comm. on State Affairs, Bill Analysis, Tex. S.B. 505, 70th Leg., R.S. (1987). Sections 855.403 and 855.410 are related, in that one provision fixes the time each month for remitting the contributions, and the other requires the city to pay interest if it misses that deadline in any month.
Section 855.410 does not, however, address correcting a city's errors in deducting retirement contributions from members' compensation or remitting the proper amounts to TMRS. It can be contrasted with section
If, as a result of a reporting error on the part of a participating subdivision, a person has not received credited service or current service credit or has received less than the correct amount of current service credit for months in which the person performed service as an employee of the subdivision, the retirement system shall correct the error as authorized by this section.
Tex. Gov't Code Ann. §
Other subsections of Government Code section
The TMRS has no express authority to correct a city's errors in reporting an employee's service or in deducting and forwarding retirement contributions to it. Its enabling statute makes it responsible for administering the retirement system and authorizes it to adopt rules and perform reasonable activities it finds necessary or desirable for efficient administration of the system. Tex. Gov't Code Ann. §§
These questions require us to examine the reasons for limiting the time in which cities may correct errors in information provided to TMRS. A brief prepared by the attorneys for TMRS states that the four-year residuary statute of limitations for "[e]very action for which there is no express limitations period," Tex. Civ. Prac. Rem. Code Ann. §
The first opinion on correcting such errors, TMRS Opinion No. 144 (1985), addressed the misclassification of two employees as part-time employees some six years and twenty-eight years previously. G. Kendall letter of 11/11/85. The opinion stated as follows:
We do not mean to say that an error made in failing to enroll a person holding a position that requires him to be a member cannot be corrected retroactively. . . . [H]owever, the matter cannot be left unresolved for long periods of years. How long can a person wait before attempting to obtain correction of what he or she considers to be a mistake in failing to enroll him or her as a member of the System? If the right to membership is a "legal" right, it is required to be asserted within a period of four years from the time the right accrues. . . . [citing former Tex. Civ. Stat Ann. art. 5529 (1925), the predecessor of section 16.051 of the Civil Practices and Remedies Code]. . . . [W]hether the right is considered "legal" or "equitable" an unexcused delay in asserting it for a period beyond the longest applicable period of limitations (i.e., four years) bars its assertion as a "stale demand."
Id. at 4 (citations omitted).
Some purposes of limitations statutes are relevant to the four-year limit in the TMRS policy on correcting errors in the information that cities have reported to it. "The purpose of a statute of limitations is to establish a point of repose and to terminate state claims." Murray v. SanJacinto Agency, Inc.,
Opinion No. 205 (1993) addressed a city's failure to make contributions to the system on certain forms of compensation and concluded that "the City can correct its payroll records to reflect the additional compensation for a period not to exceed four years prior to the date of corrections, provided that the City's and the members' additional contributions (including interest) accompany such correction." Kendall letter of 11/29/93. It pointed out some of the reasons for the four-year time limitation: the practical need for a "cut off point" for correcting errors, the fact that any claim that might be asserted would be barred by limitations of actions, and the financial impact that a longer period of time for corrections would have. Id. at 2.
The TMRS brief explains the financial impact of long delays in correcting cities' errors in reporting employees' creditable service and remitting contributions. Each year a city's contribution rate is determined by the TMRS actuary, subject to approval by the TMRS board. Tex. Gov't Code Ann. §§
TMRS decisions about cities' contribution rates are made in reliance on the information provided to it. Long-delayed correction of that information might in particular cases interfere with accuracy of rates set in reliance on it. Cities of varying sizes participate in TMRS, with numbers of contributing employees ranging from 7,000 to 1. Id. at 7. Correction of the City of Port Arthur's errors involving a few months of service may have only a negligible effect on its retirement plan, but correction of long-term errors could have a major effect on the plan of a small municipality. Id.
The correction of long-term errors could have a more direct financial impact on cities. Where a city has failed to submit contributions to TMRS, correction of this error would require the employee and the city to make lump-sum payments to TMRS. This requirement could place a severe strain on the budget of a small city. Absent a limitations period, a small city that had considered someone to be a non-covered employee for many years might suddenly be obligated to make a lump-sum payment to TMRS in an amount greater than the city's entire payroll. Id.
We believe the TMRS policy allowing cities to correct only those errors made in the last four years implements the boards authority to "perform reasonable activities it finds necessary or desirable for efficient administration of the system." Tex. Gov't Code Ann. §
The expiration of the four-year time period for correcting errors does not raise a question of waiver. Waiver of a statutory right and/or a property interest cannot occur without an intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right. Sun Exploration Prod. Co. v. Benton,
Where an employee's enrollment in the retirement system has been delayed through a city's error, section
The Seventy-sixth Legislature has adopted a statute effective December 31, 1999, that expressly authorizes TMRS to correct errors of participating municipalities in reporting employees service. It is very similar to section
(a) If as a result of a reporting error on the part of a participating municipality a person has not received credited service or current service credit or has received less than the correct amount of current service credit for months in which the person performed service as an employee of the municipality, the retirement system shall correct the error as authorized by this section.
(b) A correction may not be made as to current service performed, or current service credit that should have been received, more than four years before the date an application for the correction, on a form approved by the board of trustees, is received by the retirement system.
Tex. Gov't Code Ann. §
Thus, the legislature has adopted a four-year limit for correcting a city's errors in reporting creditable service by its member employees. After the effective date of the enactment, section
Section
Yours very truly,
JOHN CORNYN Attorney General of Texas
ANDY TAYLOR First Assistant Attorney General
CLARK KENT ERVIN Deputy Attorney General — General Counsel
ELIZABETH ROBINSON Chair, Opinion Committee
Prepared by Susan Garrison Assistant Attorney General
Bayouth v. Lion Oil Co. , 27 Tex. Sup. Ct. J. 369 ( 1984 )
Hamilton v. Board of Firemen's Relief & Retirement Fund ... , 1966 Tex. App. LEXIS 2797 ( 1966 )
Creps v. Board of Firemen's Relief & Retirement Fund ... , 1970 Tex. App. LEXIS 2240 ( 1970 )
Sun Exploration and Production Co. v. Benton , 30 Tex. Sup. Ct. J. 350 ( 1987 )