93-007163RU Rancy F. Snyder vs. Division Of Retirement Status: Closed DOAH Final Order on Monday, March 14, 1994.

Summary: No standing to bring rule challenge where Petitioner is not affected by the rule.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RANCY F. SNYDER, )

)

Petitioner, )

)

vs. ) CASE NO. 93-7163RU

)

DEPARTMENT OF MANAGEMENT SERVICES, )

DIVISION OF RETIREMENT, )

)

Respondent. )

___________________________________)

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, Claude B. Arrington, held a formal hearing in the

above-styled case on January 28, 1994, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Rancy F. Snyder, pro se

1318 Northwest 11th Place

Fort Lauderdale, Florida 33311

For Respondent: Larry D. Scott, Esquire

Assistant Division Attorney

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

STATEMENT OF THE ISSUES

The issues raised by the petition filed in this proceeding, as amended, is

whether the Respondent's Memorandum No. 82-73 is a rule and an invalid exercise

of delegated legislative authority. To reach those issues, it must be

determined whether Petitioner has standing to bring this action.

PRELIMINARY STATEMENT

On January 4, 1994, Petitioner filed a "Petition" alleging that Memorandum

No. 82-73 issued by the Respondent is an unpromulgated rule that is an invalid

exercise of delegated legislative authority. On January 10, 1994, Petitioner

filed a "Motion for Summary Final Order", which was denied. On January 19,

1994, Respondent filed a "Motion to Dismiss", which was denied. Respondent

filed an answer to the petition which raised as an affirmative defense the

alleged failure of the Petitioner to assert his standing to bring this rule

challenge. On January 28, 1994, immediately prior to the start of the formal

hearing, the Petitioner filed, without objection from Respondent, an "Amendment

to Petition". This "Amendment to Petition" was accepted by the undersigned.

At the formal hearing, Petitioner testified on his own behalf and presented

the additional testimony of Lawrence J. Gibney, the actuary for the State

Retirement System. Respondent presented the additional testimony of Sarabeth

Snuggs, the Chief of Respondent's Bureau of Enrollment and Contributions.

Petitioner presented five exhibits, three of which were accepted into evidence

and two of which were rejected. In addition, a copy of the Florida Retirement

System Handbook was accepted as a Hearing Officer exhibit. Official recognition

was taken of Rule 60S-2.006(2), Florida Administrative Code.

No transcript of the proceedings has been filed. At the request of the

parties, the time for filing post-hearing submissions was set for more than ten

days following the hearing. Consequently, the parties waived the requirement

that a recommended order be rendered within thirty days after the close of the

hearing. Rule 60Q-2.031, Florida Administrative Code. Rulings on the parties'

proposed findings of fact may be found in the Appendix to this Recommended

Order.

FINDINGS OF FACT

1. Petitioner is an employee of Broward County, Florida. Broward County

is an employer in the Florida Retirement System. As a result of his employment

with Broward County, Petitioner is a member of the Florida Retirement System

(FRS).

2. The Division of Retirement is the administrative agency for the FRS.

3. The FRS is a trust that is qualified under Section 401(a) of the

Internal Revenue Code as a defined benefit plan.

4. The FRS is noncontributory for individual members. Contributions are

made by participating FRS employers.

5. Respondent's Bureau of Enrollment and Contributions receives reports of

contributions and service credit from the various participating FRS employers.

The Bureau of Enrollment and Contributions reviews the information reported to

determine if the reporting employer is paying the correct amount of

contributions and reporting the correct service credit for the individual

members of the FRS. The information provided to the Bureau of Enrollment and

Contributions does not include the day-to-day employment responsibilities of the

individual members of the FRS.

6. The leave status of an individual member of the FRS is irrelevant to

the actuarial soundness of the FRS Trust Fund if the employing agency reports

the individual member as one of its employees and the employing agency pays its

contributions into the FRS Trust Fund for the individual.

7. On February 18, 1981, Respondent issued Memorandum No. 81-40, on the

subject of "Membership in the Florida Retirement System for Employees on Leaves

of Absence", which provides, in pertinent part, as follows:

Recently, a question arose as to the Florida Retirement

System (FRS) status of employees who are granted leaves

of absence to work with the employers who are not

members of the Florida Retirement System. The specific

inquiry was whether an FRS employer may continue to

report such an employee on its payroll with the current

employer reimbursing the FRS employer for all expenses

including retirement contributions. The answer to this

question may be found in Section 121.021(10) and (11),

Florida Statutes.

As stated in Section 121.021(11), Florida Statutes,

"officer or employee" for retirement purposes is

defined as "... any person receiving salary payments

for work performed in a regularly established position

and, if employed by a city or special district,

employed in a covered group." Section 121.021(10)

defines "employer" as, "... any agency, branch,

department, institution, university, institution of

higher education, or board of the state, or any county

agency, branch department, board, district school

board, or special district of the state, or any city of

the state which participates in the system for the

benefit of its employees."

Unless the employer with whom the employee is working

during the leave of absence from the FRS employer

satisfies the definition of "employer" in Section

121.021(10), Florida Statutes, and unless the employee

is performing work in a regularly established position

as specified in Section 121.021(11), Florida Statutes,

it would be improper (not lawful) for the FRS employer

to continue to report the employee on the monthly

payroll submitted to the Division of Retirement.

Nothwithstanding the foregoing, such employee may still

receive retirement credit for the period of the leave

of absence. Under the provisions of Section 121.121,

Florida Statutes, ("Future Service to Include Leaves of

Absence") and FRS Rule 22B-2.06 ("Credit for Leaves of

Absence after November 30, 1970"), the employee may

purchase retirement credit for the period of the leave

of absence, provided the conditions stated in the

retirement law are satisfied. Also, nothing in the

retirement law would prohibit or in any way prevent the

non-FRS employer with whom the employee is working

while on leave of absence from his job with the FRS

employer from compensating or reimbursing the employee

for the cost of purchasing as creditable service the

period of the leave of absence upon his or her return

to covered employment with the FRS employer. . . .

8. On October 13, 1982, Memorandum No. 82-73, addressed to all Florida

District School Boards, was issued by Respondent as an "Addendum to Memorandum

No. 81-40 Regarding Florida Retirement System (FRS) Membership for Employees

During Leaves-of-Absences". Memorandum No. 82-73 contains the alleged

unpromulgated rule1 that is being challenged by Petitioner, and provides, in

pertinent part, as follows:

Memorandum No. 81-40 dated February 18, 1981 . . . was

issued in response to an inquiry as to whether an FRS

employer may continue to report an employee for

retirement who is granted a leave-of-absence to work

for a non-FRS employer. In that case, the FRS employer

was being reimbursed for the employee's salary expenses

by the non-FRS employer. Our advice was that it would

be improper to continue reporting such person for

retirement credit since the employee was not performing

work in a regularly established position. However, we

did point out that such leave-of-absence could be

claimed later as creditable service by the employee

under certain conditions.

Upon reflection, it appears that our earlier advice was

not entirely correct. Therefore, the following new

instructions are issued to supersede those contained in

Memorandum No. 81-40:

Anytime an employee of an FRS agency is granted a

leave-or-absence and is continued in pay status by the

FRS agency and is reported by that agency for wages on

the IRS W-2 Form, the employee shall continue to be

reported for retirement credit while on the leave-of-

absence with pay, even if the employee's salary

expenses are reimbursed to the FRS agency by the non-

FRS entity. See FRS Rule 22B-2.06(2), F.A.C. . . .

9. Rule 22B-2.06(2), Florida Administrative Code, now numbered Rule 60S-

2.006(2), Florida Administrative Code, provides, in pertinent part, as follows:

(2) If a member (an individual member of FRS) is

granted a leave of absence with full pay at the rate he

was being paid prior to the leave of absence, and the

compensation received during such period is paid in

accordance with 60S-1.004(a) or (b), the member shall

not be considered on leave of absence for retirement

purposes and the contributions required by Section

(sic) 60S-3.003 shall continue to be made and he shall

continue to receive full retirement credit for the

period he is on leave of absence pay.

10. Rule 60S-2.006(2), Florida Administrative Code, is not being

challenged in this proceeding.

11. Petitioner is a vested member of the FRS with over 17 years of

creditable service. Petitioner paid to the FRS the sum of $2,746.57, on

February 27, 1990, in order to purchase credit for four years of military

service.

12. Petitioner failed to establish that the policy reflected by Memorandum

82-73 will affect any recognizable interest that he might have. There will be

no actuarial impact on the FRS and no diminution in value of the FRS as a result

of this policy. Although Petitioner asserts that the policy may result in a

disqualification of the FRS plan by the Internal Revenue Service, he presented

no evidence, other than his speculation, in support of that assertion.

13. The policy statement contained in Memorandum 82-73 was addressed to

all Florida District School Boards and it is not specifically incorporated in

the FRS Handbook that is made available to members of the FRS. From those

facts, Petitioner concludes that the FRS breached a fiduciary duty it had to its

members by failing to notify all members of the policy. Even if Petitioner's

conclusion is accepted, Petitioner failed to establish that this alleged breach

of a fiduciary duty affected any recognizable interest that he might have.

CONCLUSIONS OF LAW

14. The Division of Administrative Hearings has jurisdiction of the

parties to and the subject matter of this proceeding. Sections 120.535, 120.56,

and 120.57(1), Florida Statutes.

15. The term "invalid exercise of delegated legislative authority" and the

term "rule" are defined by Section 120.52(8) and (16), Florida Statutes,

respectively.

16. Section 120.535, Florida Statutes, provides, in pertinent part:

(1) Rulemaking is not a matter of agency discretion.

Each agency statement defined as a rule under s.

120.52(16) shall be adopted by the rulemaking procedure

provided by s. 120.54 as soon as feasible and

practicable. . . .

(2)(a) Any person substantially affected by an agency

statement may seek an administrative determination that

the statement violates subsection (1).

17. Section 120.56(1), Florida Statutes, provides, in pertinent part, as

follows:

(1) Any person substantially affected by a rule may

seek an administrative determination of the invalidity

of the rule on the ground that the rule is an invalid

exercise of delegated legislative authority.

18. In this proceeding, it is not necessary to reach the issues of whether

the statement contained in Memorandum 82-73 meets the statutory definition of a

rule or whether the statement is an invalid exercise of delegated legislative

authority because the Petitioner does not have the standing to bring this

action. Petitioner has not established that he has been affected by Memorandum

82-73 in any manner.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is

ORDERED that the subject rule challenge be, and the same hereby is, DENIED.

DONE AND ORDERED this 14th day of March 1994 in Tallahassee, Leon County,

Florida.

___________________________________

CLAUDE B. ARRINGTON

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 14th day of March 1994.

ENDNOTE

1/ The portion of the memorandum that constitutes the alleged unpromulgated

rule has been underlined for empahasis.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-7163RU

The following rulings are made on the proposed findings of fact submitted

by the Petitioner:

1. The proposed findings of fact in paragraph 1 are addressed as

preliminary matters, but are rejected as being unnecessary as findings of fact.

2. The proposed findings of fact in paragraphs 2, 3, 4, 5, and 6 are

adopted in material part by the Final Order.

3. The proposed findings of fact in paragraphs 7, 8, 9, 10, and 11 are

rejected as being the recitation of testimony. These proposed findings are

unnecessary to the conclusions reached.

The proposed findings of fact submitted by the Respondent are adopted in

material part by the Final Order.

COPIES FURNISHED:

Rancy F. Snyder

1318 Northwest 11th Place

Fort Lauderdale, Florida 33311

Larry D. Scott, Esquire

Assistant Division Attorney

Cedars Executive Center

Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

A. J. McMullian, III, Director

Division of Retirement

Cedars Executive Center

2639 North Monroe Street

Tallahassee, Florida 32399-1560

Paul A. Rowell, General Counsel

Department of Management Services

312 Knight Building

2737 Centerview Drive

Tallahassee, Florida 32399-0950

William H. Lindner, Secretary

Department of Management Services

Knight Building, Suite 307

Koger Executive Center

2737 Centerview Drive

Tallahassee, Florida 32399-0950

Liz Cloud, Chief

Bureau of Administrative Code

The Elliot Building

Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial

review pursuant to Section 120.68, Florida Statutes. Review proceedings are

governed by the Florida Rules of Appellate Procedure. Such proceedings are

commenced by filing one copy of a Notice of Appeal with the Agency Clerk of the

Division of Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First District, or

with the District Court of Appeal in the appellate district where the party

resides. The Notice of Appeal must be filed within 30 days of rendition of the

order to be reviewed.