Can a West Virginia municipal police or fire pension fund credit fractional years of service when calculating retirement benefits over 20 years of service, and what does the fund have to do if it has been doing so?

Plain-English summary

The Beckley Firemen's Pension and Relief Fund and the Beckley Policemen's Pension and Relief Fund had been calculating retirement benefits using fractional years of service: an officer who worked three months past the 20-year mark would get a 0.5% benefit increase (one-quarter of the 2% per-year statutory bump). The Municipal Pensions Oversight Board reviewed the funds in late 2020 and concluded the practice was wrong, asking the Attorney General to confirm.

The Attorney General agreed: the practice violates W. Va. Code § 8-22-25(b).

Why fractional years are not allowed. The statute calls for "additional years of service completed at the time of retirement in excess of twenty years of service." The verb "complete" means to bring something to a perfected state or to finish. A year is not "completed" if the worker has been at the job only part of the year. The legislature's choice of "completed years" is the answer.

Other parts of the statutory chapter use different units. Sections 8-22-16(d) and 8-22-25(a) refer to "twelve-consecutive-month periods." When the legislature uses different language in different parts of a statute, the courts assume different meanings were intended (Sebelius v. Auburn, 2013). The general legal principle of disregarding fractional time units (Steeley v. Funkhouser, 1969, on statutes of limitations) reinforces the same conclusion. And other West Virginia pension systems do expressly include fractional years (W. Va. Code §§ 5-10-14, 15-2A-6); the legislature knows how to require fractional credit when it wants to and did not do so here.

The opinion also notes the structural reason: pension provisions like § 8-22-25(b) are designed "to control[] the amounts paid in retirement benefits and to thereby ensure continued adequate funding of the [fund]" (Summers, 2005). Crediting fractional years risks overpayments that deplete the fund, which the legislature wants to avoid.

The fund's argument that the statute does not expressly prohibit fractional credit also fails. Municipal corporations have only the powers expressly conferred or clearly implied (Crouse v. Holdren, 1945). The opinion says statutory silence does not grant fractional-year authority.

The opinion also rejects the argument that equitable considerations should let beneficiaries keep overpaid amounts. W. Va. Consol. Pub. Ret. Bd. v. Clark (2021) recently held that pension beneficiaries cannot claim equitable reliance on payments at terms the statute does not permit, because "no promise [was] made" by the legislature.

What the fund must do. Section 8-22-27a requires a fund that learns of an overpayment error to correct it in a timely manner. The opinion applies that correction rule to the Beckley Funds' fractional-year calculations. The mechanics:

• Future payments must be adjusted to the correct calculation (no more fractional-year credit going forward).
• Past overpayments must be recouped from beneficiaries.

Two carve-outs apply. First, the correction must be "timely." Clark held that a 17-year delay was untimely, but the AG could not say from the available facts whether the Beckley funds' situation is timely. Second, retirees who left service before July 7, 2017 (the effective date of § 8-22-27a as enacted in 2017) can keep their overpayments only if the City of Beckley's Common Council passes a majority-vote authorization under § 8-22-27a(d). If the Council does that, it must also "authorize continued payment into the fund" equal to what it would have paid under the proper actuarial method, so the fund stays whole.

What about contributions paid during fractional years? If a beneficiary contributed during a partial year that did not count toward service credit, can they get those contributions back? The opinion says it is an "open question." Section 8-22-27a(c) refers to "mistaken or excess employee contributions" and gives the fund's board "sole authority for determining the means of return, offset or credit." The contributions are not "mistaken" because they were legally required at the time. But the word "excess" might cover this situation. Some other public pension systems explicitly permit refunds. Clark suggests the Court views employee payment obligations as separate from the entitlement to benefits, which complicates the refund question. The AG declines to definitively resolve the issue.

The opinion ends by noting that the Legislature has the power to revise § 8-22-25 to permit fractional years, to relieve beneficiaries of repayment obligations, or to clarify contribution refund rules. Until it does, the funds must apply the law as written.

What this means for you

Municipal police and fire pension fund trustees

The opinion concludes that W. Va. Code § 8-22-25(b) does not permit covered funds to credit fractional years of service when calculating the additional 2%-per-year and 1%-per-year benefits past 20 and past 25 years. The opinion concludes the Beckley Funds (and similarly situated funds) must (i) prospectively adjust annuity payments to the correct amount and (ii) seek repayment of past overpayments under § 8-22-27a(d), subject to two exceptions: the timeliness requirement of § 8-22-27a(a) (which the AG declines to apply on the facts presented, lacking the time-specific information), and the governing-body authorization under § 8-22-27a(d) for retirees who left service before July 7, 2017.

Municipal pension beneficiaries

The opinion concludes that beneficiaries' annuities calculated using fractional-year credit must be adjusted going forward to the correct (whole-years-only) calculation, and that past overpayments must be repaid under § 8-22-27a(d), subject to the timeliness rule and the pre-July 7, 2017 governing-body-authorization exception. The opinion calls the question whether contributions made during fractional years (for which no service credit is given) can be recouped under § 8-22-27a(c)'s "excess employee contributions" language an "open question" without clear statutory direction.

City council members and city attorneys

The opinion identifies § 8-22-27a(d) as authorizing the city's governing body, by majority vote, to "authorize continued overpayment of retirement benefits" for retirees who left service before July 7, 2017. The opinion notes that any such authorization must be coupled with the governing body's authorization to "continued payment into the fund in an amount equal to that which it would be responsible to pay under the applicable actuarial method used by the city without reduction to any retirement benefit."

Municipal Pensions Oversight Board

The opinion concludes the no-fractional-years rule is grounded in the statutory text of § 8-22-25(b) ("years of service completed"), reinforced by the legislature's contrasting use of "twelve-consecutive-month periods" elsewhere in the chapter (citing Sebelius v. Auburn Reg'l Med. Ctr. on different language signaling different meanings) and by parallel pension statutes (§ 5-10-14, § 15-2A-6) that expressly require fractional-year credit.

Actuaries advising municipal pension funds

The opinion concludes whole years (not fractional years) drive the additional-percent calculation under § 8-22-25(b). It cites W. Va. Consol. Pub. Ret. Bd. v. Clark for its finding that a 17-year delay in seeking correction was untimely. The opinion says it lacks the facts to decide timeliness for the Beckley Funds.

Common questions

Q: What does "year of service completed" mean?
A: A year worked from start to finish. Three months past the 20-year mark is not a "completed" year. The opinion ties this to the dictionary definition of "complete" (to bring to an end, to make whole).

Q: My fund has been crediting fractional years for decades. Does this opinion really require us to change? A: The opinion says covered funds cannot keep using fractional years to calculate benefits. It says the Beckley Funds must correct future payments and seek repayment of past overpayments if correction is timely and the city's governing body has not authorized continued overpayments for eligible retirees. It does not decide whether Beckley's correction would be timely.

Q: How does the Common Council authorization work?
A: For retirees who left service before July 7, 2017, the city's governing body can authorize continued overpayment by majority vote (§ 8-22-27a(d)). If it does, the city must also authorize continued payment into the fund equal to the actuarial amount.

Q: What if our fund's records do not show clearly which years a retiree completed? A: That is a recordkeeping problem the fund will need to resolve through its underlying employment records. The legal rule is whole years; the factual application requires clean data.

Q: Can the fund recoup overpayments by reducing future benefit payments? A: § 8-22-27a(d) authorizes the fund to seek repayment "in any manner permitted by the board of trustees." Reducing future benefit payments is one approach; lump-sum recoupment is another. The board has discretion within reasonable bounds.

Q: What happens to interest or earnings on the overpaid amounts? A: The opinion does not address this directly. Funds typically recoup the principal overpayment; whether interest or earnings are recoupable depends on the fund's documented practice.

Q: Are state pension funds (PERS, TRS) affected by this opinion? A: No. Other West Virginia pension systems (PERS at § 5-10-14, the State Police system at § 15-2A-6) expressly permit fractional-year credit. Those statutes are unchanged.

Q: Can I get back contributions I made during a fractional year if I do not get credit for it? A: The AG calls this an "open question." Section 8-22-27a(c) might cover it, but the AG could not find authority sufficient to give a definitive answer. Consult counsel.

Q: Does this opinion apply to non-Beckley municipal funds? A: The substantive rule (no fractional years under § 8-22-25(b)) applies to any covered fund. The procedural specifics (Common Council vote) apply to whichever municipality holds the fund. The Municipal Pensions Oversight Board may want to flag the issue for other municipalities to self-audit.

Q: How do we calculate the timeliness window for correction? A: Clark held that 17 years was untimely. Shorter periods are fact-specific. Document when the fund first learned of the error and when correction efforts began.

Background and statutory framework

The opinion concerns the Beckley Firemen's Pension and Relief Fund and the Beckley Policemen's Pension and Relief Fund. It compares their benefit rule with provisions in other West Virginia pension systems that expressly address fractional years.

Section 8-22-25 sets the benefit formula. Subsection (a) provides 60% of average salary after 20 years. Subsection (b) adds 2% per year for each completed year between 20 and 25, plus 1% per year for each completed year between 25 and 30, capping at 75% (15 additional percentage points). The phrase "years of service completed" is the textual hook for the AG's opinion.

The correction statute (§ 8-22-27a) was enacted in 2017. It requires funds to correct errors "in a timely manner," to prospectively adjust mistaken payments, and to seek repayment from overpaid beneficiaries. Subsection (d) gives the city's governing body majority-vote authority to authorize continued overpayment for retirees who left service before July 7, 2017, conditioned on the city's parallel commitment to fund the actuarial cost.

The opinion cites W. Va. Consol. Pub. Ret. Bd. v. Clark (2021) for its treatment of equitable reliance and for its conclusion that a 17-year delay in seeking correction was untimely. It does not attribute a retroactivity holding about § 8-22-27a to Clark.

Cross-statutory reference points reinforce the no-fractional-years reading. PERS at § 5-10-14 expressly credits "days and months" of service time. The State Police system at § 15-2A-6 expressly calculates based on "the number of full years and fraction of last year." The legislature's express inclusion of fractional credit in those statutes implies its conscious omission in § 8-22-25(b).

The opinion frames the contribution-refund question as open. Section 8-22-27a(c) refers to "mistaken or excess employee contributions" and gives the fund's board "sole authority for determining the means of return, offset or credit." The opinion notes that contributions made during fractional years are not "mistaken" (they were legally required), but the word "excess" might encompass them. The AG declines to definitively resolve the question, citing Jackson v. Belcher (2013) on the principle that statutory words have specific meaning.

Citations and references

Statutes (W. Va. Code unless noted):

• § 5-3-1 (AG opinions)
• §§ 8-22-25(a), (b), 8-22-16(d), 8-22-16a, 8-22-19a, 8-22-27a (municipal police/fire pensions)
• §§ 5-10-14 (PERS service credit), 15-2A-6 (State Police pension)

Cases:

• In re R.S., 244 W. Va. 564, 855 S.E.2d 355 (2021)
• State v. Gen. Daniel Morgan Post No. 548, VFW, 144 W. Va. 137, 107 S.E.2d 353 (1959)
• Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145 (2013)
• Steeley v. Funkhouser, 153 W. Va. 423, 169 S.E.2d 701 (1969)
• Summers v. W. Va. Consol. Pub. Ret. Bd., 217 W. Va. 399, 618 S.E.2d 408 (2005)
• State ex rel. Crouse v. Holdren, 128 W. Va. 365, 36 S.E.2d 481 (1945)
• W. Va. Consol. Pub. Ret. Bd. v. Clark, 245 W. Va. 510, 859 S.E.2d 453 (2021)
• M.H. v. C.H., 242 W. Va. 307, 835 S.E.2d 171 (2019)
• Jackson v. Belcher, 232 W. Va. 513, 753 S.E.2d 11 (2013)

Source

• Landing page: not separately published (the PDF is the official record)
• Original PDF: https://ago.wv.gov/media/17571/download?inline

Original opinion text

State of West Virginia
Office of the Attorney General
Patrick Morrisey
Attorney General

(304) 558-2021
Fax (304) 558-0140

January 21, 2022
Blair Taylor
Executive Director
Municipal Pensions Oversight Board
301 Eagle Mountain Road, Suite 251
Charleston, WV 25311
Dear Executive Director Taylor:

The Municipal Pensions Oversight Board ("the Board") has asked for an Opinion of the Attorney General about whether certain pension payments made by the Beckley Firemen's Pension and Relief Fund and Beckley Policemen's Pension and Relief Fund ("the Beckley Funds" or "the Funds") comply with West Virginia Code § 8-22-25. This Opinion is issued under West Virginia Code § 5-3-1, which provides that the Attorney General shall "give written opinions and advice upon questions of law ... whenever required to do so, in writing, by ... any ... state officer [or] board." To the extent this Opinion relies on facts, it is based solely on the factual assertions in your correspondence with the Office of the Attorney General.

Your letter explains that the Board conducted compliance reviews of the Beckley Funds in late 2020. During that review, the Board observed that the Beckley Funds were using "fractional years" of service, that is, months, to calculate pension benefits. The Board believes that these calculations are inconsistent with West Virginia Code § 8-22-25(b), which provides that pension funds must calculate benefits for eligible police and fire personnel using a member's "years of service completed."

Your letter therefore raises two legal questions:

(1) Does West Virginia Code § 8-22-25 allow pension funds to use fractional years in calculating pension benefits?

(2) If covered funds cannot use fractional years, what steps must the Beckley Funds take to rectify their benefit calculations?

As the Board did, we too conclude that West Virginia Code § 8-22-25(b) does not permit covered funds to include fractional years in their calculations. Thus, the Beckley Funds cannot continue using fractional years to calculate pension benefits. Further, with certain fact-specific caveats explained below, the statute requires the Beckley Funds to make prospective adjustments to annuity payments that have already begun and recoup amounts reflecting overpayments. We also conclude, however, that plan beneficiaries might be entitled to recoup any contributions made into the Funds during the fractional year, but that matter is an open question without clear statutory direction.

Discussion

I. West Virginia Code § 8-22-25(b) prevents the Beckley Funds from using fractional years to calculate benefits.

We start with the language of the relevant statute. See In re R.S., 244 W. Va. 564, 855 S.E.2d 355, 361 (2021). Here, Section 8-22-25(b) reads:

Any member of any such department who is entitled to a retirement pension under the provisions of subsection (a) of this section and who has been in the honorable service of such department for more than twenty years at the time of the member's retirement shall receive, in addition to the sixty percent authorized in said subsection (a): (1) Two additional percent, to be added to the sixty percent for each of the first five additional years of service completed at the time of retirement in excess of twenty years of service up to a maximum of seventy percent; and (2) One additional percent, to be added to such maximum of seventy percent, for each of the first five additional years of service completed at the time of retirement in excess of twenty-five years of service up to a maximum of seventy-five percent. The total additional credit provided for in this subsection may not exceed fifteen additional percent.

(emphases added).

Your questions center on the meaning of "years of service completed." The Beckley Funds read the statute to say that a beneficiary can be credited for less than a full year, such that benefits could be increased by fractional percentages. Under that view, for example, an employee who works for three months past his or her twentieth year of service would receive an additional 0.5% increase in retirement benefits.

But because the statute refers to "completed" years, it does not permit the Beckley Funds to take a fractional-year approach. "[T]he words of a statute are to be given their ordinary and familiar significance and meaning, and regard is to be had for their general and proper use." State v. Gen. Daniel Morgan Post No. 548, Veterans of Foreign Wars, 144 W. Va. 137, 145, 107 S.E.2d 353, 358 (1959). To "complete" something means "to bring to an end and especially into a perfected state," "to make whole or perfect," or "to mark the end of." Merriam-Webster.com (last visited Jan. 21, 2022). A year of service has not been "brought to an end" or "made whole" when the employee worked for part of the year, and the public employee cannot "mark the end of the service year. Thus, in referring to "completed," the statute directs that the employee must finish a full year of service.

Other parts of the statute that refer to months, not years, confirm this understanding. For example, both West Virginia Code §§ 8-22-16(d) and 8-22-25(a) use "twelve-consecutive-month periods." As a rule, the Legislature's "use of certain language in one part of the statute and different language in another can indicate that different meanings were intended." Sebelius v. Auburn Reg'l Med Ctr., 568 U.S. 145, 156 (2013) (cleaned up). And when a statute speaks to units of time, the law generally ignores fractional units. See, e.g., Steeley v. Funkhouser, 153 W. Va. 423, 427, 169 S.E.2d 701, 703 (1969). The Legislature has also expressly directed other pension systems to include fractional years, but it did not do so here. Compare W. Va. Code § 8-22-25(b), with id. § 5-10-14, and id. § 15-2A-6.

Further, both the Legislature and the Supreme Court of Appeals have said that pension-related provisions like Section 8-22-25(b) are designed to "control[] the amounts paid in retirement benefits and to thereby ensure continued adequate funding of the [fund]." Summers v. W. Va. Consol. Pub. Ret. Bd., 217 W. Va. 399, 404, 618 S.E.2d 408, 413 (2005); see also W. Va. Code
§ 8-22-16a. The Board's position is consistent with that purpose, as it prevents overpayments that could otherwise deplete the Funds.

Although the Funds correctly observe that the statute does not expressly prohibit fractional benefit increases, the law does not permit us to draw meaning from that silence here. The Funds were established by way of the City of Beckley's municipal powers. "A municipal corporation has no powers save those expressly conferred by the legislative department or clearly implied as an integral part of those granted by its charter or general statute." State ex rel. Crouse v. Holdren, 128 W. Va. 365, 367, 36 S.E.2d 481, 482 (1945). When in doubt, "the power is to be denied." Id. Here, because Section 8-22-25(b) does not confer or clearly imply the right to credit fractional years of service, statutory silence cannot lead to a different result.

We also do not expect that equitable considerations would lead a court to take a different view. We explained in a December 2017 Opinion to the Board that the relevant statutes do not leave room for such considerations. Since then, the Supreme Court of Appeals has reiterated that plan beneficiaries cannot claim an equitable-reliance interest in state retirement funds paid out on terms that the statute does not permit, as "no promise [was] made" by the Legislature in that circumstance "upon which Respondents, active or retired, could have relied." W. Va. Consol. Pub. Ret. Bd. v. Clark, 245 W. Va. 510, 859 S.E.2d 453, 466 n.73 (W. Va. 2021).

Thus, the structure the Legislature created in Section 8-22-25(b) does not leave room for the Funds to include fractional years.

II. Under West Virginia Code § 8-22-27a, the Beckley Funds may need to make corrections to annuity payments and member contributions.

The next question, then, is what the Beckley Funds must do to address payments premised on fractional-year calculations.

W. Va. Code § 8-22-27a requires covered funds to correct overpayments to fund beneficiaries:

If any error results in any member, retirant, beneficiary, entity, or other individual receiving from the plan more than he or she would have been entitled to receive had the error not occurred, the board of trustees, after learning of the error, shall correct the error in a timely manner.

As we explained in our December 2017 Opinion, this overpayment provision is written in non-discretionary terms; funds must correct the overpayment. See M.H. v. C.H., 242 W. Va. 307, 313, 835 S.E.2d 171, 177 (2019).

The statute then explains that, with certain exceptions, funds must prospectively and retrospectively correct the overpayments:

Unless otherwise authorized by the governing body of the city in which the fund was established as provided herein, if correction of the error occurs after annuity payments to a retirant or beneficiary have commenced, the board of trustees shall prospectively adjust the payment of the benefit to the correct amount. In addition, the member, retirant, beneficiary, entity, or other person who received the overpayment from the plan shall repay the amount of any overpayment to the municipal policemen's pension fund or municipal firemen's pension fund in any manner permitted by the board of trustees of that fund.

W. Va. Code § 8-22-27a(d).

There are, however, two limitations on this requirement. First, the statute requires the Funds to make corrections in a "timely" manner. See id. § 8-22-27a(a). "Timeliness" is often hard to define, and it usually depends on the facts of a given case. In Clark, for example, the Supreme Court of Appeals held that a seventeen-year delay seeking correction of an overpayment by the Public Employees Retirement System was not timely. 859 S.E.2d at 468.

We lack the facts to say whether a request for correction from the Funds would be "timely" here. Your letter does not state, for example, how long these overpayments have occurred, when they were first discovered, and what circumstances might justify any delay in failing to identify the problem sooner.

Second, the Legislature provided that "the governing body of the city in which the fund was established," namely, the Common Council for the City of Beckley, may allow for continuing overpayments to certain beneficiaries. W. Va. Code § 8-22-27a(d). The statute explains:

The governing body of the city in which the overpaying municipal fund is established may, by majority vote, authorize continued overpayment of retirement benefits for any member, retirant, beneficiary, entity, or individual who retired prior to the effective date of this section as enacted during the regular legislative session of 2017.

In other words, for fund members who retired before July 7, 2017 (the effective date of the enactment), the Common Council for the City of Beckley may authorize continued payment based on the incorrect fractional-years calculation. No repayment or prospective adjustment would then be required. Note, however, that the Common Council would also need to "authorize continued payment into the fund in an amount equal to that which it would be responsible to pay under the applicable actuarial method used by the city without reduction to any retirement benefit." Id.

Together, these potential exceptions show that if the Funds timely request correction, and if the Common Council for the City of Beckley does not authorize continuing overpayment, then Section 8-22-27a(d) would require the Beckley Funds to correct future payments and seek repayment of amounts paid out that reflected credit for fractional years.

Finally, the Beckley Funds suggest that if beneficiaries are not entitled to credit for fractional years, then those persons should be refunded any amounts paid into the fund during fractional years. West Virginia Code 8-22-27a(c) discusses "overpayments to the plan by the employee":

When mistaken or excess employee contributions or overpayments have been made to the plan, the municipal policemen's or municipal firemen's pension and relief fund board of trustees shall have sole authority for determining the means of return, offset or credit to or for the benefit of the individual making the mistaken or excess employee contribution of the amounts.

(emphasis added). The amounts members pay during partial years are not mistaken, as they were obliged by law to pay them. But because the statute refers to "excess" contributions by employees as well as mistaken ones, we believe the Beckley Funds may be correct in reading the statute to allow for a limited return of contributions. "[T]he Legislature is presumed to intend that every word used in a statute has a specific purpose and meaning," and "it is necessary to give effect to every word and part of a statute in order to effectuate its true meaning." Jackson v. Belcher, 232 W. Va. 513, 518, 753 S.E.2d 11, 16 (2013). A court might therefore read "excess" to embrace situations like this one, where an employee does not receive a benefit reflecting credit for a period during which non-mistaken contributions were made.

On the other hand, although one West Virginia statute permits members to obtain refunds of all their contributions when they leave their positions before benefits vest, it does not expressly contemplate refunds of some contributions once the benefits vest. See W. Va. Code § 8-22-19a. And as explained above, in at least some contexts, the Supreme Court of Appeals views members' obligation to pay separately from their entitlement to receive benefits. See Clark, 859 S.E.2d at 466 n.73. So, in West Virginia, it is an open legal question whether an employee may seek a refund of payments made during a specific period that does not then give rise to any attendant benefit. We find no available authority sufficient to resolve whether a reviewing court would conclude that "excess" for purposes of Section 8-22-27a(c) covers partial-year payments.

The Legislature has the power to change any of these provisions and grant whatever relief it decides is appropriate. The Legislature could, for instance, decide that no repayment of inappropriately paid benefits is necessary in circumstances like these. But until the Legislature acts, the Executive Branch must respect and apply the law as written. And currently, the governing statutes do not permit the Beckley Funds to calculate benefits based on fractional years.

Sincerely,

Patrick Morrisey
Attorney General
Lindsay See
Solicitor General
Caleb Seckman
Assistant Solicitor General