By statute, Arizona has enacted a retirement system for state employees. A.R.S. §§ 38-711 to -794. Employees become eligible for retirement based on their age and years of service.
An employee became eligible for retirement in 2005, and she terminated her employment. But she did not apply for retirement benefits until 2016. In her application, she sought benefits for each year since 2005—when she became eligible for retirement. The State, however, asserted that she was entitled to benefits only for years starting in 2016—when she submitted her application. The administrative agency, trial court, and court of appeals all sided with the State.
The Supreme Court affirmed that, under the State’s retirement system, employees are not entitled to receive benefits until after they submit a retirement application. This is because the plain text of A.R.S. § 38-757(A) states that employees may retire and receive benefits “[a]fter application.”
Other parts of the retirement system confirm this reading. For example, submitting the retirement application is necessary for calculating benefits because the application supplies information about the employee’s benefit preferences, health care, and beneficiaries. Also, two statutory sections expressly allow for retroactive payment of benefits in certain situations, and neither applies here.
Because the employee was not entitled to receive benefits before submitting her retirement application, the constitutional prohibition against diminishing or impairing public retirement system benefits does not apply. Ariz. Const. art. 29, § 1(D).
Nor does A.R.S. § 38-764(A) help the employee. That statute states that the date of an employee’s retirement “shall not be earlier than” (1) termination of employment, (2) receipt of the retirement application, or (3) a certain other date specified by the employee. This means that the date of retirement must be after each of these dates, not merely after one of them.
Justice Montgomery authored the unanimous opinion.
Posted by: Josh Whitaker