Untitled Texas Attorney General Opinion ( 1971 )

Honorable Everett L. Anschutz Opinion No. M-979
Executive Secretary
Employees Retirement System Re: Whether Presidential Execu-
of Texas tive Order No. 11615, dated
Capitol Station August 15, 1971, freezing
Austin, Texas 78711 prices, wages, etc., prohi-
bits implementation of S. B.
531, 62nd Leg., R.S., 1971,
as it related to benefits and
funding increases paid from
and into the trust funds ad-
ministered by the State Em-
ployees Retirement System
Dear Mr. Anschutz: of Texas.
We acknowledge receipt of your opinion request in which you ask
the following questions:
“1. Senate Bill 531, 62nd Legislature, Regular
Session, provides for an increase in all retirement an-
nuities, effective September 1, 1971, for persons pre-
viously retired and those whb will; retire thereafter.
Does this Presidential Executive Order prohibit the im-
plementation of these increases?
“2. We conclude from your Opinion M-919 that
the amount available for participation in insurance pre-
miums for retirees is related to the availability of funds
for payment of such premiums for active employees.
Such premiums for retired employees are made part of
the benefit increases provided in Senate Bill 531, 62nd
Legislature, Regular Session. Does the Presidential
Order prohibit the payment of such premiums?
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Honorable Everett L. Anschutz, page 2 (M-979)
“3. Senate Bill 531, 62nd Legislature, Regular
Session, provides that both the employee contribution
and the State matching rate under the Retirement Act
shall be increased to 6 percent of compensation effective
September 1, 1971. (The current rate is 5 percent. )
Does this Presidential Executive Order prohibit imple-
mentation of the 6 percent contribution and matching rate?
“4. Senate Bill 531, 62nd Legislature, Regular
Session, provides that certain previous State service
which had been waived or with respect to which contribu-
tions had been refunded may be established only upon
payment of a 5 percent penalty interest from date of
waiver or refund. (The current penalty interest rate is
2 l/2 percent. ) Does this Presidential Executive Order
prohibit implementation of the 5 percent penalty interest
rate? ”
While it is the policy of this office not to pass upon questions
arising under the federal law, particularly in the absence of a ruling
or interpretation by the federal agency charged with its administration
and enforcement, yet in this instance you have secured a federal ruling
and interpretation by the agency concerned and you now await only the
opinion of this office advising you as to whether in our opinion you may
properly act in accordance therewith. You have furnished us with a copy
of your request for a ruling from the Office of Emergency Preparedness
and also a copy of the letter ruling addressed to you under date of Octo-
ber 12, 1971, from the Executive Office of the President, Office of
Emergency Preparedness, Washington, D. C., from which we quote in
part as follows:
“Paragraph 501(d) of Economic Stabilization
Circular No. 2 provides:
‘Previously planned increases in pension
benefits for those retired before the freeze or
those about to retire are allowed, but unplanned
increases are not allowed. For example, a
scheduled increase in pensions which is planned
for October 15 may also receive this increase. ’
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Honorable Everett L. Anschuts, page 3 (M-979)
“Therefore, it appears from the information
provided that the retirement annuity increases pro-
vided for in Senate Bill 531 may be paid both to those
who retired before the freeze and those about to re-
tire during the freeze.
“Paragraph 502(e) of Economic Stabilization
Circular No. 3 provides:
‘An increase in an employer’s contribu-
tion can be made to a pension fund to finance
a benefit increase which was granted and be-
came effective before August 15. ’
“Paragraph 504(l) of Economic Stabilization
Circular No. 15 provides:
‘An employer may increase contributions
to a pension fund during the freeze, if that in-
crease is used to fund benefit increases that
were effective or declared prior to August 15.
This is true regardless of when increased bene-
fits are to go into effect. Employers may not
increase pension contributions to finance bene-
fit increases announced during the freeze.
‘Employers may p:ay increased benefits
schedules to go into effect during the freeze to
all retired employees eligible to receive the in-
crease, including employees who retire during
the freeze. However, after August 15, employers
may not make new benefits increases to go into
effect during the freeze. ’
“In line with the above guidance from the Cost of
Living Council, it appears that the freeze does not pre-
clude the payment of increased contributions of the type
you inquired about.
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Honorable Everett L. Anschutz, page 4 (M-979)
“In response to your last question interest
rates are not covered by the freeze. However, the
President has requested that in the spirit of the freeze,
they not be increased. I’
We published Attorney General Opinion No. M-942 (1971), in
which we concluded that President Nixon’s recent Executive Order pro-
vided for stabilization of prices, rents, wages and salaries was valid
and applicable to the State of Texas. Executive Orders are held to have
the force and effect of statutes enacted by Congress. Farkas v. Texas
Instruments, 375 F.2d 629, 632, cert. den., 389 U.S. 977 (C.A. 5th,
1967. ) Likewise, the federal regulations and rulings of the federal agencies
charged with enforcement of the law will be followed by our courts unless
clearly wrong. 42 Am: Jur. 392, Statutes, Sec. 78, pp. 398-400, Sec. 79.
Your questions arise out of the definition in Paragraph 501(B) of
the Wage and Salary Guidelines which states:
“For purposes of the regulation, wage, salary,
or other form of compensation includes all forms of
remuneration to an employee by an employer for per-
sonal services including, but not limited to, premium
overtime rate payments, night shift, year-end, and
other bonus payments, incentive payments, commis-
sions, vacation and holiday payments, employer con-
tributions to or payments of insurance or welfare bene-
fits or pension funds or annuities; and payments in
kind. (Underlining for emphasis. )
The definition set forth in Paragraph 501(B), as interpreted and
clarified by the issuance of Economic Stabilization Circular No. ‘s 2, 3,
and 15 quoted above, is applicable to Senate Bill ,531, 62nd Legislature,
Regular Session, 1971, and we agree with such ruling or interpretation
as above set out. You are advised, therefore, that all four of your questions
should be answered in the negative and that all provisions of Senate Bill 531
related to your questions may be fully implemented on and after the effective
dates prescribed therein.
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Honorable Everett L. Anschuts, page 5 (M-979)
SUMMARY
The provisions of Senate Bill 531, 62nd Legislature,
Regular Session, 1971, as they relate to the benefits and
funding increases paid from and into the trust funds ad-
ministered by the State Employees Retirement System of
Texas constitute a “Previously planned increases in pension
benefits . ” within the meaning of Economic Stabilization
Circulars No. ‘s 2, 3, and 15, and therefore, Senate Bill
531 may be fully implemented on and after the effective dates
prescribed therein.
The increase in retirement annuities for retirees
both before and after September 1, 1971, may be allowed,
and the payment of insurance premiums for retired em-
ployees is not prohibited. The Presidential Freeze Order
does not prohibit state payment of the six percent contri-
bution and matching rate under the Retirement Act nor im-
plementation of the five percent penalty interest rate in-
crease as to those claiming prior state service previously
waived or for which contributions had been refunded.
ey General of Texas
Prepared by Kerns Taylor
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
W. E. Allen, Acting Chairman
Rex White
James McCoy
Ray McGregor
John Banks
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Honorable Everett L. Anschutz, page 6 (M-979)
SAM MCDANIEL
Staff Legal Assistant
ALFRED WALKER .’
Executive Assistant
NOLA WHITE
First Assistant
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