Untitled Texas Attorney General Opinion ( 2000 )


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  •      OFF,CE OF THE ATTORNEV GENERAL. STATE OF TEXAS
    JOHN CORNYN
    November 2,200O
    Mr. Donald E. Powell                                      Opinion No. JC-0302
    Chair, Board of Regents
    The Texas A&M University System                           Re: Validity of section 661.063, Government
    P.O. Box C-l                                              Code, with regard to payment for vacation
    College Station, Texas 77840-9021                         balances accrued prior to September 1, 1997
    (RQ-0246-K)
    Dear Mr. Powell:
    The Texas A&MUniversity        System (“A&M”) has asked this office whether section 661.063
    ofthe Government Code might abrogate the vestedvacationrights         ofcertain A&M employees which
    accrued prior to September 1, 1997, and therefore violate article 1, section 16 of the Texas
    Constitution. Assuming arguendo that vacation entitlement is “a vested right of the employee that
    cannot be destroyed or impaired by his resignation, dismissal or separation from State employment,”
    Tex. Att’y Gen. Op. No. M-1075 (1972) at 2, we conclude that the right which has vested is a right
    to be compensated for the time accrued, not a right to be so compensated at a particular rate or
    according to a particular formula. To hold otherwise, in our view, would violate “the established
    rule that all pension funds, financial assistance funds, annuities and such other benefits created by
    the Texas Legislature for the benefit of employees and other personnel of this State and the political
    subdivisions thereof as designated by statute or otherwise by law shall be subordinate to the right
    ofthe Legislature to abolish the system, diminish the accrued benefits, increase the benefits, change
    the eligibility for benefits or to otherwise alter or modify the method of payments of the benefits of
    any or all such funds.” Cook v. Employees Retirement Sys. of Texas, 514 S.W.2d 329,331 (Tex.
    Civ. App.-Texarkana      1974, writ ref d n.r.e.). Accordingly, the change in the method of computing
    payment for vacation balances for certain state employees which became effective, pursuant to
    section 661.063 of the Government Code, on September 1, 1997, does not impair any vested right
    of an employee who leaves state service after that date.
    As you explain the situation that gives rise to your question, prior to the amendment of
    section 661.063 by the 75th Legislature, all state employees were compensated for accrued vacation
    time “by multiplying the employee’s rate of compensation on the date of separation from
    employment by the total number of hours accrued.“’ However, as amended, section 661.063(b)
    reads in relevant part, “The payment under this subchapter to a state employee who separates from
    ‘Letter from Mr. Howard D. Graves, Chancellor, The Texas A&M University System, to Honorable John
    Comyn, Attorney General ofTexas at 2 (June 14,200O)(on file with Opinion Committee) [hereinafterRequest Letter].
    Mr. Donald E. Powell     - Page 2                 (X-0302)
    state employment while holding a position that does not accrue vacation time shall be computed
    according to this subsection. The employee’s final rate of compensation in the last position held that
    accrues vacation time shall be multiplied by the employee’s total number ofhours of vacation time
    determined under Section 661.064.” TEX. GOV’T CODE ANN. 5 661.063(b) (Vernon Supp. 2000).
    You point out that this change in the method ofcalculating the value of accrued vacation may
    significantly diminish that value for persons who transferred from positions which accrued vacation
    to those which did not at some time before September 1, 1997, and who had received one or more
    raises in pay in the interim. Request Letter, supra note 1, at 2-3. “[Ilfthey had separated from state
    employment prior to September 1,1997 they would have received a greater amount for payment of
    their accumulated vacation than they will when they ultimately leave state employment.”        
    Id. at 3.
    You note that an opinion issued by this office in 1972, Attorney General Opinion M-1075, averred
    that “vacation entitlement is. . . a vested right of the employee that cannot be destroyed or impaired
    by his resignation, dismissal or separation from State employment. It is a right that becomes vested
    in him as it is earned and a State employee should be compensated for all vacation time duly
    accrued.” Tex. Att’y Gen. Op. No. M-1075 (1972) at 2. In light of Opinion M-1075, you ask
    whether, in the context ofthis particular class of employees, the amended version of section 661.063
    abrogates their vested rights. Request Letter, supra note 1, at 2-3.
    As a preliminary matter, we note that, because contract questions usually involve disputed
    issues of fact of the sort this office cannot determine in the opinion process, this office does not
    construe such contracts in that process. Accordingly, we are not here making any conclusion about
    the particular contractual relation between A&M and any of its employees. We are concerned purely
    with the legal question of whether section 66 1.063 may violate the vested rights of the class of
    employees under consideration.      We conclude that it does not.
    Attorney General Opinion M-l 075, on the basis ofwhich your question is premised, is in our
    view of doubtful merit. It makes the rather broad assertion quoted above on the basis that the 1969
    Appropriations Act described vacation entitlement as “accrued,” and that “Webster’s Third New
    International Dictionary defines the word accrue as follows:        ‘To come into existence as an
    enforceable claim; vest as a right.“’ Tex. Att’y Gen. Op. No. M-1075 (1972) at 2. We are loath to
    overrule an opinion which does not appear to have been seriously questioned in the intervening
    twenty-eight years, but see Tex. Att’y Gen. Op. No. H-126 (1973), and accordingly we do not do
    so. But assuming arguendo that a right to be compensated for accrued vacation time is a vested
    right, it does not follow that an employee has a vested right to be compensated at a certain rate or
    according to a certain formula.
    As Attorney General Opinion M-1075 itselfnotes, “These accumulations ofrights are limited
    by statute.” Tex. Att’y Gen. Op. No. M-1075 at 2. The Supreme Court of the United States noted
    in a related context in Dodge v. Board of Education, “[A]n act merely fixing salaries of officers
    creates no contract in their favor, and the compensation named may be altered at the will of the
    Legislature. This is true also of an act fixing the term or tenure of a public officer or an employee
    of a state agency. The presumption is that such a law is not intended to create private contractual
    Mr. Donald E. Powell     - Page 3                  (X-0302)
    or vested rights, but merely declares a policy to be pursued until the Legislature shall ordain
    otherwise.” Dodge v. Board ofEduc. of the City of Chicago, 302 U.S. 74,78-g (1937).
    The presumption of which the Supreme Court speaks is a necessary one because of the
    impairment ofcontracts clauses ofboth the United States and Texas Constitutions. Article I, section
    10 of the United States Constitution provides that “No State shall           pass any . Law impairing
    the Obligation of Contracts     . .” Similarly, article I, section 16 of the Texas Constitution provides
    that “No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of
    contracts, shall be made.” If therefore any act of the Texas Legislature were construed to create a
    contractual obligation or grant a vested right, such act might be beyond the power of a later
    legislature to alter, amend, or abolish. The Supreme Court of Texas analyzed this difficulty in the
    same year in which the US. Supreme Court considered the Dodge case, and in relation to the same
    issue - the reduction of government pensions necessitated by the Great Depression.             In City of
    Dallas v. TrammelI, 
    101 S.W.2d 1009
    (Tex. 1937), a retired policeman sued the City of Dallas,
    arguing that by reducing his pension pursuant to a statute enacted by the 44th Legislature, the City
    had deprived him of a vested right.
    As the court framed the question presented, “[IIs the Legislature without constitutional power
    to repeal the laws upon which the pension system of the City of Dallas is based, or to modify their
    provisions in such way as to diminish the pensions payable to those who have become qualified to
    receive them so long as any one who has been granted a pension shall live?” 
    Trummell, 101 S.W.2d at 1011
    . The court answered this question in the negative: “In our opinion, the rule that the right
    of a pensioner to receive monthly payments from the pension fund after retirement from service, or
    after his right to participate in the fund has accrued, is predicated upon the anticipated continuance
    of existing laws, and is subordinate to the right of the Legislature to abolish the pension system, or
    diminish the accrued benefits ofpensioners thereunder, is undoubtedly the sound rule to be adopted.”
    
    Id. at 1013.
    In so holding the Trammel1 court quoted with approval the following language from the
    Supreme Court of Illinois’ decision in the Dodge case: “A right, to be within the protection of the
    Constitution, must be a vested right. It must be something more than a mere expectancy based upon
    an anticipated continuance of an existing law. If before rights become vested in particular
    individuals the convenience of the State induces amendment or repeal, such individuals have no
    cause to complain.” 
    Id. at 1014
    (quoting Dodge Y. Board ofEducation, 5 N.E.2d 84,86 (Ill. 1936))
    (emphasis added).
    The principle underlying these decisions was clearly enunciated by Justice Marshall in
    NationalRailroadPassenger       Corporation v. Atchison, Topeka andSanta Fe Railway Company, 
    470 U.S. 45
    1 (1985): “[Tlhe principal function of a legislature is not to make contracts, but to make laws
    that establish the policy ofthe state. Policies, unlike contracts, are inherently subject to revision and
    repeal, and to construe laws as contracts when the obligation is not clearly and unequivocally
    expressed would be to limit drastically the essential powers of a legislative body.” 
    Id. at 466.
    That principle, and the Trommell case itself, have been repeatedly reaffirmed by Texas courts
    in a variety of contexts. In Cook v. EmpZoyees Retirement System of Texas, the Texarkana appellate
    Mr. Donald E. Powell     - Page 4                  (X-0302)
    court denied a claim by the widow of a deceased fireman that her children were entitled to continue
    to receive certain benefits until they were twenty-one years of age, despite the fact that the legislature
    had lowered the age of majority to eighteen. “Appellant’s position is that Article I, Sec. 16 of the
    Texas Constitution, Vernon’s Ann. St., and Article 1, Sec. 10 of the United States Constitution
    forbid[] any retroactive laws from being passed which would impair the obligation under any
    contract. Appellant states that the rights of the children were vested before the ‘eighteen year old
    law’      became effective on August 27, 1973.” 
    Cook, 514 S.W.2d at 330
    . The court rejected this
    contention, reaffirming “the established rule that all       benefits created by the Texas Legislature
    for the benefit of employees and other personnel of this State        . shall be subordinate to the right
    of the Legislature to abolish the system, diminish the accrued benefits, increase the benefits, change
    the eligibility for benefits or to otherwise alter or modify the method of payment of the benefits of
    any or all such funds.” 
    Id. at 33
    1.
    Similarly in Lack v. Lack, 
    584 S.W.2d 896
    , 899 (Tex. Civ. App.-Dallas 1979, writ ref d
    n.r.e.), it was held that the inchoate contingent interest of a pensioner’s ex-wife in his death benefits
    could be divested by the Legislature; and in Reames v. Police Oflicers ’Pension Board of the City
    ofHouston, 
    928 S.W.2d 628
    (Tex. App.-Houston [14th Dist.] 1996, no writ), the court held that it
    was not an impairment of a vested right for a retired policeman who had been effectively re-
    employed by the City of Houston when it restructured the airport police for whom he had been
    working to be divested of his pension: “[A] pensioner in a statutory pension plan does not have a
    vested right to his pension. He merely has an expectancy based upon anticipated continuance of
    existing law. ‘The Legislature which created it can recall its bounty at its discretion.“’ 
    Reames, 928 S.W.2d at 632
    (quoting 
    TrammelI, 101 S.W.2d at 1014
    ).
    Based on the principle and the precedents we have set forth, it is our view that, while the cash
    value which might have been realized by certain A&M employees had they separated from state
    service on or before August 31, 1997, was materially diminished by the amendment of section
    661.063 ofthe Government Code effective September 1,1997, those employees had no vested right
    to that cash value, or to the method of computing payment for accrued vacation leave by which it
    was arrived at. They had a mere expectancy based upon the anticipated continuation of the old
    computation formula.       The Legislature had every right to change that formula, and by the
    amendment of section 661.063 it exercised that right. Accordingly, the A&M employees in question
    have suffered no constitutional injury by the amendment of section 661.063.
    As your second question, like your first, presupposes     a vested right to the former method of
    computation, we do not consider it.
    Mr.DonaldE.Powell      - Page 5                  (JC-0302)
    SUMMARY
    State employees have no vested right in the method of
    calculating compensation for vacation benefits that pre-dated the
    amendment of section 661.063 of the Government Code by the 75th
    Legislature.   Accordingly, such amendment abrogates no vested
    rights, and does not violate article I, section 10 of the United States
    Constitution or article I, section 16 of the Texas Constitution.
    ANDY TAYLOR
    First Assistant Attorney General
    CLARK KENT ERVIN
    Deputy Attorney General - General Counsel
    SUSAN D. GUSKY
    Chair, Opinion Committee
    James E. Tourtelott
    Assistant Attorney General - Opinion Committee
    

Document Info

Docket Number: JC-302

Judges: John Cornyn

Filed Date: 7/2/2000

Precedential Status: Precedential

Modified Date: 2/18/2017