Loftus v. Arizona State University Public Safety Personnel Retirement System Local Board (5/10/2011)

May 6, 2011

Arizona Court of Appeals Division One Holds That Wages Earned By Member of Public Safety Personnel Retirement System May Only Contribute To the Member’s Pension If The Wages Are Related To the Member’s Regular Assignment To Hazardous Duty.

The Public Safety Personnel Retirement System is a state-sponsored pension plan for public safety employees, and ASU joined the System on behalf of its campus security officers.  Loftus, a full-time police officer for ASU, also taught part-time.  Like all members of the System, a percentage of Loftus’s pay was deducted as a contribution toward the pension.  Loftus wanted his income from both jobs to count as part of the compensation used for contributions but the System’s board took the position that the teaching pay was “not System-eligible compensation.”  The superior court affirmed the decision.

A split panel of the Court of Appeals affirmed.  The statutes governing the System direct participating employers – like ASU – to deduct a pension contribution from each member’s “compensation.”  A.R.S. § 38-842(12) defines “compensation” to mean “base salary” plus other types of pay.  “Base salary” means the amount “regularly paid for personal services rendered to an employer.”  Id.  Moreover, the System’s governing statutes defined who could be a “member” and who was a “System employer.”  Among other things, a member is a “full-time employee” who is “regularly assigned to hazardous duty.”  A.R.S. § 38-842(31)(a)-(c).  ASU is a “System employer” because it participated in the System “on behalf of an eligible group of public safety personnel.”  A.R.S. § 38-842(28)(d).

After surveying the statutory scheme, the Court held that Loftus’s pension contributions could only come from the compensation earned from the work that made him a System-eligible “member” – a “full-time employee” who is “regularly assigned to hazardous duty.”  Thus, because teaching is not “hazardous duty,” the pay Loftus received for his non-police work was not “System-eligible compensation.”  Although the statutory language was susceptible to more than one interpretation, the legislative history indicated that the purpose was to provide pension benefits related to hazardous-duty work.

In dissent, Judge Gemmill reasoned that although one had to be “regularly assigned to hazardous duty” to be a System member, nothing in the statute limited System-eligible compensation to “income from specific tasks or jobs that are hazardous.”  Thus, because Loftus was a qualifying member, all of his ASU “compensation” should have been included.  Looking to the statutory definition of “compensation,” the teaching pay qualified because it was money Loftus was “regularly paid . . . for personal services.”  In Judge Gemmill’s view, the statutory language answered the issue and it was, therefore, inappropriate to inquire into other indicators of legislative intent, such as legislative history.

Judge Norris authored the opinion in which Judge Orozco concurred; Judge Gemmill concurred in part and dissented in part.