How does the Texas ERS privatization retirement option add years to a worker's age and service credit?

Texas AG Opinion JC-0027: The ERS Privatization Retirement Option Adds a Full Three Years

Plain-English summary

The Legislature created a temporary retirement break in Government Code section 814.1041 for state employees at three agencies (the Workforce Commission, Human Services, and Mental Health and Mental Retardation) whose jobs were eliminated by privatization or workforce reductions. The "3 + 3" option in subsection (b) lets such an employee retire if adding three years to both age and service credit would make them eligible under the normal retirement rule in section 814.104(a), and it computes the annuity on accrued service credit increased by three years. A state representative asked whether the Employees Retirement System had read the provision correctly.

The Attorney General split the answer. On the first ERS interpretation, that subsection (b) does not apply to an employee already eligible to retire when the position is eliminated, the opinion agreed. The whole point of the provision is earlier retirement eligibility, which means nothing to someone who is already eligible. The bill analysis and fiscal note pointed the same way, describing it as earlier eligibility for affected employees and not as a change for those already eligible under existing law.

On the second ERS interpretation, the opinion disagreed. ERS read the statute to add only the minimum service credit needed to make a person eligible, so someone one month short of eligibility would get only one month, not a full three years. The opinion held that this contradicts the plain text: subsection (b) says age and service credit are "each increased by three years," and the annuity is computed on accrued service credit "increased by three years." The opinion acknowledged the odd result (a person one month short gets nearly three extra years of credit, while a person who became eligible one month before privatization gets none) but said it could not rewrite the literal language. A post-enactment letter from the bill's sponsors saying they meant only the minimum did not change the analysis, because individual or after-the-fact legislator statements are not controlling legislative history. The ERS rule capping the supplement below three years, 34 Texas Administrative Code section 73.41(c), conflicted with the statute and was therefore invalid.

The opinion also flagged two things it could not decide: whether the ERS reading hurt older employees, and whether it raised an issue under the federal Age Discrimination in Employment Act. Both turn on fact questions outside the opinion process.

Currency note

This opinion was issued in 1999. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Who qualifies for the section 814.1041 privatization retirement option?
The opinion concluded subsection (b) applies only to affected-agency employees who are not already eligible to retire under section 814.104(a) when their positions are eliminated by privatization or workforce reduction. Someone already eligible to retire gains nothing from it.

How much extra credit does the "3 + 3" option give?
A full three years added to both age and service credit, and the annuity is computed on accrued service credit increased by three years. The opinion held the statute means a literal three years, not just the minimum needed to reach eligibility.

Could ERS limit the supplement to the minimum needed to qualify?
No. The opinion concluded that ERS's interpretation, and its rule at 34 Texas Administrative Code section 73.41(c), conflicted with the statute's plain "increased by three years" language and was invalid. An agency cannot adopt a rule contrary to the plain text of the statute.

Did the bill sponsors' later letter about their intent change the result?
No. The opinion explained that post-enactment statements by legislators, even a bill's principal authors, are not controlling legislative history. Courts focus on the literal text, so the sponsors' letter favoring the minimum-credit reading did not override the statute's words.

Background and statutory framework

Ordinary retirement eligibility comes from Government Code section 814.104(a): a member is eligible at age 60 with five years of service, or when age plus service credit equals 80. Section 814.1041 created a temporary alternative for employees of the named agencies whose positions were eliminated by privatization or service reductions before September 1, 1999 (subsection (f)). Subsection (b) is the "3 + 3" option, and subsection (c) is a separate "5 + 5" deferred option. The provision was added by Senate Bill 1102 of the 75th Legislature in 1997.

On the first question, the opinion used legislative history (authorized by Government Code section 311.023(3)), the House Pensions and Investments Committee bill analysis and the fiscal note, to confirm that subsection (b) provides earlier eligibility for those not yet eligible, which is meaningless for someone already eligible. On the second question, it applied the plain-meaning rule, focusing on the literal text (Boykin v. State), and held that "increased by three years" cannot be read as "increased by the minimum needed." The opinion rejected the sponsors' post-enactment letter as non-controlling (General Chem. Corp. v. De La Lastra; Regional Rail Reorganization Act Cases; prior Opinion DM-321), and concluded that an agency rule contrary to the statute's plain language is invalid (Sharp v. House of Lloyd, Inc.). It declined to reach the age-impact and Age Discrimination in Employment Act questions (29 U.S.C. sections 621-34), which are fact questions outside the opinion process (citing DM-154 and DM-158).

Citations

Statutes and rules:

• TEX. GOV'T CODE ANN. §§ 814.104(a), 814.1041(a)-(c), (f) (Vernon Supp. 1999); § 311.023(3) (Vernon 1998)
• 34 TEX. ADMIN. CODE § 73.41(c) (1998)
• 29 U.S.C. §§ 621-34 (1994) (Age Discrimination in Employment Act of 1967)

Cases:

• Boykin v. State, 818 S.W.2d 782 (Tex. Crim. App. 1991)
• General Chem. Corp. v. De La Lastra, 852 S.W.2d 916 (Tex. 1993)
• Regional Rail Reorganization Act Cases, 419 U.S. 102 (1974)
• Sharp v. House of Lloyd, Inc., 815 S.W.2d 245 (Tex. 1991)

Prior Attorney General opinions discussed: DM-154 (1992), DM-158 (1992), DM-321 (1995), and Letter Opinion 95-085.

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0027
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1999/jc0027.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

OFFICE OF THE ATTORNEY GENERAL, STATE OF TEXAS
JOHN CORNYN

March 31, 1999

The Honorable Ron Lewis
Chair, Energy Resources Committee
Texas House of Representatives
P.O. Box 2910
Austin, Texas 78768-2910

Opinion No. JC-0027

Re: Construction of section 814.1041 of the Government Code, which provides for a "temporary service retirement option" for certain state employees (RQ-1115)

Dear Representative Lewis:

You ask whether the Employees Retirement System of Texas ("ERS") has correctly interpreted section 814.1041 of the Government Code, which provides a temporary service retirement option for certain state employees affected by privatization or other reductions in the workforce. The ERS is correct in applying section 814.1041(b) only to an employee who is not eligible to retire under section 814.104(a) of the Government Code when his or her position is eliminated. The ERS rule providing that a member of the affected employee class who is not eligible to retire without the age and service supplement will receive only the minimum service credit necessary to meet eligibility is inconsistent with the statute and is therefore invalid.

Eligibility for retirement is ordinarily determined according to section 814.104(a) of the Government Code, which states, with certain exceptions, that a member with service credit in the ERS is eligible to retire and receive a service retirement annuity "if the member is at least 60 years old and has 5 years of service credit in the employee class" or "if the sum of the member's age and amount of service credit in the employee class, including months of age and credit, equals the number 80." TEX. GOV'T CODE ANN. § 814.104(a) (Vernon Supp. 1999). Section 814.1041 provides for eligibility under different circumstances:

(a) This section applies only to members of the employee class whose positions with the Texas Workforce Commission, the Texas Department of Human Services, or the Texas Department of Mental Health and Mental Retardation are eliminated as a result of contracts with private service providers or other reductions in services provided by those agencies and who separate from state service at that time.

(b) A member described by Subsection (a) is eligible to retire and receive a service retirement annuity if the member's age and service credit, each increased by three years, would meet age and service requirements for service retirement under Section 814.104(a) at the time the member separates from state service as described by Subsection (a). The annuity of a person who retires under this subsection is computed on the person's accrued service credit increased by three years. (Emphasis added.)

(c) A member described by Subsection (a) becomes eligible to retire and receive a service retirement annuity on the date on which the member would have met the age and service requirements for service retirement under Section 814.104(a) had the member remained employed by the state if, on the date of separation from state service, the member's age and service credit, each increased by five years, would meet age and service requirements for service retirement under Section 814.104(a). The annuity of a person who retires under this subsection is computed on the person's accrued service credit.

Id. § 814.1041(a)-(c). These provisions, adopted by the 75th Legislature, apply "only to positions eliminated by privatization or other reductions in workforce before September 1, 1999." Id. § 814.1041(f).

Your question relates to the following interpretations of section 814.1041(b) adopted by ERS in implementing this provision:

1. A member of the affected employee class who is otherwise eligible to retire without the addition of three years to age and service credit will receive no additional years of service credit in computing the member's annuity;

2. A member of the affected employee class who is not eligible to retire without the age and service supplement will receive only the minimum service credit necessary to meet eligibility.

Letter from Honorable Ron Lewis, State Representative, to Honorable Dan Morales, Attorney General (Mar. 17, 1998) (on file with Opinion Committee). You are concerned that these interpretations are inconsistent with the statute, the purpose of which, you assert, is to lessen the adverse impact of privatization by providing additional benefits to the affected employee class. Specifically, you ask whether the ERS has correctly interpreted and applied section 814.1041(b), "taking into consideration the legislative history, the written provisions enacted, and the adverse impact on the older members of the employee class." Id. at 2.

At the outset, we note that we cannot evaluate the impact of the ERS interpretations on older members of the employee class. This involves questions of fact, which cannot be addressed in an attorney general opinion. Nor can we address your concern that the ERS interpretations may raise an issue of age discrimination under the federal Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621-34 (1994). See Tex. Att'y Gen. Op. No. DM-154 (1992) (summarizing provisions of Age Discrimination in Employment Act of 1967). Whether a particular application of section 814.1041(b) as interpreted by ERS is consistent with the federal act involves questions of fact, which cannot be resolved in an attorney general opinion. See Tex. Att'y Gen. Op. No. DM-158 (1992) at 2-3 (discussing the federal Civil Rights Act of 1964 and stating that opinion process cannot answer fact questions relating to federal act).

In response to your request, the ERS confirms your description of its interpretation of section 814.1041(b). ERS further states:

We believe that Tex. Gov't Code Ann. § 814.1041(b) does not apply at all to employees who are otherwise eligible to retire at the time of the privatization. In addition, if an employee does become eligible for retirement by virtue of the 3 + 3 feature, the employee's annuity is calculated by increasing the employee's service credit only by the amount needed for the employee to become eligible to retire.

Letter Brief from William S. Nail, Deputy Executive Director & General Counsel, ERS, to Sarah J. Shirley, Office of the Attorney General (May 11, 1998) (on file with Opinion Committee). The ERS rule implementing section 814.1041 of the Government Code incorporates these interpretations:

(c) To be eligible for benefits under § 814.1041(b) or § 814.1041(c), the member's age and service at the time of separation must not otherwise qualify the member for service retirement benefits. . . . Service creditable under § 814.1041(b) for age and service shall be in equal increments not to exceed the maximum of three years of service and three years of age. For a member retiring under the provisions of § 814.104(a), only the amount of age or service credit needed for eligibility shall be added.

34 TEX. ADMIN. CODE § 73.41(c) (1998).

We first consider whether section 814.1041(b) applies only to persons who would be ineligible to retire without the increase in age and service credit it provides. In addressing your questions, we begin with the relevant language of section 814.1041(b):

(b) A member described by Subsection (a) is eligible to retire and receive a service retirement annuity if the member's age and service credit, each increased by three years, would meet age and service requirements for service retirement under Section 814.104(a) at the time the member separates from state service as described by Subsection (a). (Emphasis added.)

TEX. GOV'T CODE ANN. § 814.1041(b) (Vernon Supp. 1999).

We believe that the legislative history of this bill supports the ERS construction of section 814.1041(b) as to the class of employees it benefits. See id. § 311.023(3) (Vernon 1998) (in construing a statute, a court may consider legislative history, among other matters). This provision was adopted by Senate Bill 1102 of the 75th Legislature, which made various changes in the statutes governing the ERS. The bill analysis on Senate Bill 1102 prepared for the House Pensions and Investments Committee describes this provision as follows:

Adds a new section 814.1041 to provide service retirement option for employees of . . . [certain state agencies] whose positions are eliminated as a result of privatization.

Two options are provided. One allows members whose positions are eliminated to retire upon separation if adding 3 years of age and 3 years of service credit makes them eligible for retirement . . . [Discussion of second option (§ 814.1041(c))].

The Fiscal Note to Senate Bill 1102 states:

Among the changes that will have an actuarial impact are . . . earlier retirement eligibility for certain employees of the Texas Workforce Commission, the Texas Department of Mental Health and Mental Retardation and the Texas Department of Human Services . . . .

Section 814.1041(b) provides earlier retirement eligibility for persons whose positions were eliminated. Earlier retirement eligibility is not meaningful for persons already eligible to retire; the time for early retirement has already passed. It can apply only to persons who are ineligible to retire without the increments in years of age and service credits allowed by section 814.1041(b). Moreover, neither the bill analysis nor the fiscal note suggests that the enactment will affect the benefits of persons eligible to retire under existing law. Accordingly, ERS has, in our opinion, correctly determined that section 814.1041(b) does not apply to employees who are otherwise eligible to retire without the addition of three years to age and service credit.

We address the second ERS interpretation that you question: that a member of the affected employee class who is not eligible to retire without the age and service supplements will receive only the minimum service credit necessary to meet eligibility. We conclude that the ERS interpretation is incorrect, because it is contrary to the plain language of the statute.

Section 814.1041(b) provides that certain employees are eligible to retire "if the member's age and service credit, each increased by three years, would meet age and service requirements for service retirement under Section 814.104(a) at the time the member separates from state service as described by Subsection (a)." The statute plainly states that the age and service credit are each to be "increased by three years," not merely by the minimum amount of age or service credit needed for eligibility. In addition, "[t]he annuity of a person who retires under this subsection is computed on the person's accrued service credit increased by three years." Id. § 814.1041(b) (Vernon Supp. 1999) (emphasis added).

The bill analysis to Senate Bill 1102 also states that the option provided by section 814.1041(b)

allows members whose positions are eliminated to retire upon separation if adding 3 years of age and 3 years of service credit makes them eligible for retirement with the additional service credit counting for purposes of computing an annuity.

Both section 814.1041(b) and its description in the bill analysis plainly state that three years are to be added to age and service credit of persons affected by that provision and that the three years of additional service credit will count for purposes of computing an annuity. ERS points out that this construction magnifies the differences between persons who benefit from section 814.1041(b) and persons who are eligible to retire aside from that provision. For example, a person who needs only one month of service to be eligible to retire would receive an additional two years and eleven months of service in calculating his or her annuity, while a person terminated due to privatization one month after becoming eligible for retirement would not receive any additional service credit. While we acknowledge this difficulty with section 814.1041(b), we cannot disregard its literal meaning.

The ERS has submitted a letter from the primary sponsors of Senate Bill 1102 stating that "it was the intent that the annuity of a person retiring under Section 814.1041(b) be computed by increasing a person's service credit only by the amount needed by that person to become eligible for retirement." Letter from Senator Ken Armbrister & Representative Barry Telford, to Ms. Sheila W. Beckett, Executive Director, ERS, (July 15, 1997) (on file with Opinion Committee). In interpreting statutes, the courts "seek to effectuate the 'collective' intent or purpose of the legislators who enacted the legislation." Boykin v. State, 818 S.W.2d 782, 785 (Tex. Crim. App. 1991) (en banc) (citation omitted). To accomplish this, it necessarily focuses its attention on the literal text of the statute. Id.; Tex. Att'y Gen. LO-95-085, at 7, n. 4. "[T]he intent of an individual legislator, even a statute's principal author, is not legislative history controlling the construction to be given a statute." General Chem. Corp. v. De La Lastra, 852 S.W.2d 916, 923 (Tex. 1993). Accordingly, post-enactment statements by legislators are not evidence of legislative intent. Regional Rail Reorganization Act Cases, 419 U.S. 102, 132 (1974); Tex. Att'y Gen. Op. No. DM-321 (1995) at 1-2, n. 1.

The provision of the ERS rule limiting to less than three years the additional years of age and service credit granted under section 814.1041(b) is inconsistent with the statute and therefore invalid. Sharp v. House of Lloyd, Inc., 815 S.W.2d 245, 247-48 (Tex. 1991) (comptroller could not promulgate rule that was contrary to the plain language of the statute).

SUMMARY

Section 814.1041 of the Government Code provides a temporary service retirement option under the Employees Retirement System of Texas for employees of certain state agencies whose positions are eliminated because of privatization or other reductions in workforce. Section 814.1041(b) provides that an employee is eligible to retire and receive a service retirement annuity if the member's age and service credit, each increased by three years, would meet the requirements of section 814.104(a) of the Government Code, the general provision for retirement. Section 814.1041(b) applies only to an employee who is not eligible to retire under section 814.104(a) of the Government Code when his or her position is eliminated.

The service annuity of a person who retires under section 814.1041(b) is computed on the person's accrued service credit increased by three years. The ERS rule providing that a member of the affected employee class who is not eligible to retire without the age and service supplement will receive only the minimum service credit necessary to meet eligibility is inconsistent with the statute and is therefore invalid.

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 L. Garrison
Assistant Attorney General