CopyCited 11 times | Published | Florida 1st District Court of Appeal | 1989 WL 15937
...in such a manner as to maximize protection of pension trust funds. For example, Sections
175.171,
175.181,
175.191 and
175.231, Florida Statutes, upon which these proposed rules are based in part, establish minimum standards which clarify and define Section
175.351(1), and are thereby applicable to both chapter and local law funds......
...s. Section 175.321 stated that "sections
175.101-175.121 and
175.131-175.151 shall be applicable in relation to all municipalities which now have or hereafter establish a municipal firefighters pension trust fund or a pension fund for firefighters." Section
175.351 stated in relevant part that in order for municipalities having their own pension plans for firefighters "to participate in the distribution of tax funds established in ss....
...on the investment of fund assets. It specifically stated in paragraph (1)(b)4.b. that, "This paragraph shall apply to all boards of trustees and participants" and then set forth specific means whereby trustees of local law plans created pursuant to section 175.351 could "vary the investment procedures herein" within certain limitations....
...ans and local law plans to employ independent counsel, expressly stating, "This section shall specifically apply to all funds receiving state moneys pursuant to this chapter." Even more significantly, section 20, chapter 86-41, substantially amended section
175.351, which set forth the minimum standards and procedures applicable to local law plans, but said nothing about making the minimum standards and procedures contained in other sections of chapter 175 pertaining to chapter plans applicable to such local law plans with but one exception: sections
175.351(15) and
175.351(16) expressly provided that section
175.061 would be applicable to local law plans in the described circumstances....
...We hold this rule invalid as exceeding delegated legislative authority. Rule 4-54.029(2) Rule 4-54.029(2) states: The Department of Insurance is responsible for determining that a municipality is in compliance with the applicable requirements of Chapter 175 and Section
175.351, Florida Statutes, prior to distribution of Chapter 175 tax revenues. If *861 in the opinion of the Department of Insurance the information supplied by a municipality pursuant to Section
175.261 or
175.351(12) is inadequate for the Department to perform an actuarial valuation, or review an actuarial valuation, to determine the financial condition of the fund, or to otherwise determine whether a municipality is in compliance with the requirements of Chapter 175 or Section
175.351, the Department shall withhold distribution of Chapter 175 tax revenues to the municipality until adequate information is furnished and may request that an independent audit be performed by a Certified Public Accountant selected by the Department. The expense of any such audit shall be borne by the Department. This rule was promulgated to implement, among others, sections
175.261, 175.321, and
175.351....
...d public accountant. Primarily, the City argues that section
175.261 is applicable only to chapter plans and contains provisions that require the trustees of such plans to file an independent audit with the Department each year. The City argues that section
175.351, being expressly applicable to local law plans, is the governing section because it requires the trustees of local law plans to submit certain information to the Department as a condition to receiving a share of the state funds for th...
...rent year, including among other things, "A certified statement by an enrolled actuary showing the results of the latest triennial valuation of the plan and a copy of the detailed worksheets showing the computations used in arriving at the results." Section
175.351, the City says, contemplates that the actuarial valuation will be performed by an actuary other than the Department and requires that information be supplied to the Department for review only to permit the Department to insure that the City has complied with this statutory provision by having the valuation performed by others as required. The City argues emphatically that neither section
175.261 nor
175.351 authorizes the Department to determine the adequacy of the actuarial valuations submitted and to perform a new valuation, or to require an independent audit by a certified public accountant selected by the Department, as the challenged rule provides....
...questing adjustments or a section
120.57 hearing in the case of disputes with the Trustees. Thus, the City argues, the Department is authorized by the statute to withhold state moneys only if, in the Department's opinion, the information required by section
175.351(9-12) has not been provided to the Department. The Department argues that it and the Department of Administration have dual responsibility with respect to the required audits and actuarial valuations, and that section
175.351(12) does require the Department to review and approve such actuarial information before paying out state moneys....
...Section
112.63(4), Florida Statutes. However, the Department of Administration's authority is supplemental and not exclusive. Section
112.62, Florida Statutes. The Department of Insurance clearly is *862 authorized to insure compliance with subsections 1 through 12 of Section
175.351, pursuant to subsection 13, and this includes the requirement of actuarial soundness found in subsections 9 and 10....
...it needs to complete an actuarial valuation of each fund." It is apparent that the Legislature intended that the Department review the financial condition and actuarial soundness of both chapter and local law funds. To interpret Sections
175.261 and
175.351 otherwise would be to render them meaningless, and statutes should be construed in a manner that avoids a meaningless result....
...The Department admits that section was not applicable to local law plans prior to 1986 (see rule 4-54.045 at p. 859, supra). The 1986 amendments did not specify that this section should apply to local law plans. Thus, it continues to apply only to chapter plans, while section 175.351 sets forth the reporting requirements for local law plans. Nothing stated in section 175.351 requires both the Department of Insurance and the Department of Administration to perform evaluations of the actuarial soundness of local law plans. We agree with the City's argument that as long as the actuarial information supplied to the Department facially shows that the City has complied with the requirements of section 175.351 and other expressly applicable statutes by having the actuarial valuation made by an appropriate actuary, the Department has no further responsibility to pass judgment on the substance of that valuation. For this reason, the Department's proposed rule exceeds the statutory authority found in section 175.351....
...The City argues that the proposed rule improperly applies section
175.171 to local law plans because it contradicts, first, the express provisions in section 175.321 defining which sections of chapter 175 are applicable to local law plans and, second, the explicit provision in section
175.351(6) allowing local law plans to incorporate death or survivor benefits "as the municipalities wish" so long as such benefits do not exceed the stated limitations....
...on the conclusion that such section would be meaningless unless made applicable to the local law plan, stating that the chapter 175 provision for chapter plans "does not provide for specific death benefits" while local law plans may so provide under section 175.351(6)....
...ovisions in its plans for disability retirement are significantly different from the requirements in section
175.191 and that application of that section to its plans would have a significant adverse financial impact on its plans. It points out that section
175.351(6) specifically authorizes local law plans to incorporate disability benefits as they wish, and that section
175.191 does not contain any reference to local law plans. Thus, the City and the League argue, section
175.191 was unlawfully applied to local law plans by this rule under the Department's impermissible construction of section
175.021. The Department argues that section
175.351 provides that all local law plans must provide both retirement and disability income for firefighters, and since section
175.191 provides minimum standards for line-of-duty and non-line-of-duty disability, the proposed rule is reasonably related to the legislative purpose and is not arbitrary and capricious....
...The Department admits that section
175.191 was not applicable to local law plans prior to 1986 (see rule 4-54.045 at p. 859, supra). Nothing stated in chapter 175 as amended in 1986 expressly indicates that the minimum standards set forth in section
175.191 should be applicable to local law plans. On the contrary, section
175.351 expressly requires local law plans to provide for disability income as well as retirement income, but does not expressly make section
175.191 applicable to local law plans in respect to minimum benefits....
...e, respectively, to chapter plans and to local law plans. Chapter plans have been required to report to the Department of Insurance in accordance with section
175.261. Local law plans have been required to report to the Department in accordance with section
175.351. Section
175.351(12) contains extensive but specific requirements for local law plans reporting to the Department, including: an independent audit by a certified public accountant of the financial condition of the plan, a certified statement of invest...
...ality or other source to the plan for the most recent, as well as the current, fiscal year. The City points out that the most significant difference between the reporting requirements for chapter plans under section
175.261 and local law plans under
175.351 is that chapter plans have to provide sufficient information to allow the Department to perform its own actuarial review, while local law plans have to provide a completed actuarial valuation made by others. The City contends that the Department is seeking, by this proposed rule, to exercise authority to perform actuarial valuations and to withhold tax moneys from local law plans if, in its opinion, the information provided under section
175.351 is insufficient for the Department itself to perform an actuarial valuation. The Department, it is argued, thereby invalidly attempts to apply section
175.261 to local law plans in direct conflict with section
175.351, which does not give the department such authority....
...33 to local law plans despite the fact that nothing in chapter 175 preempts municipalities from legislating in regard to the designation of beneficiaries. The City points out that the anti-discrimination provision in section
175.333 is also found in section
175.351(7), which is expressly made applicable to local law plans....
...d that the proposed rule is, therefore, invalid as exceeding delegated legislative authority. Rules 4-54.048 and 4-54.049 Rule 4-54.048 is entitled "Municipalities Having Their Own Plans for Firefighters" and recites that it is intended to implement section 175.351. This proposed rule contains some eleven separate provisions regulating local law plans administered pursuant to section 175.351....
...*868 We agree with appellants, for the reasons set forth above in respect to the invalidity of proposed rule 4.54.029(2) (at pp. 860-862) and proposed rule 4-54.041 (at pp. 865-866), that paragraph (3) of rule 4-54.048 exceeds the authority delegated under section 175.351 regarding the scope of the Department's power to review the triennial actuarial valuations each local law plan is required to submit to the Department pursuant to that section. We hold this paragraph of the rule invalid as presently phrased. Paragraph (5) of proposed rule 4-54.048 defines the term "extra benefits" as used in section 175.351(13) [11] to mean "benefits in addition to or greater than those provided to other municipal employees" and excludes therefrom the term "early retirement at a reduced pension." The City argues that this paragraph is invalid because it...
...or the benefit of firemen" and is thus arbitrary and capricious. The City also challenges paragraph (7) of the proposed rule, which defines the meaning of the phrase "as approved by a majority of firefighters of the municipality affected" as used in section 175.351(13), as being an arbitrary and capricious attempt to rewrite that section contrary to the meaning of the statute....
...While the statute (see footnote 11 at p. 868, supra) obviously can be interpreted to allow extra benefits to be determined in terms of what is paid to other municipal employees where the plan involved covers such other employees as well as firefighters, we find nothing in section 175.351 or any other provision in chapter 175 to suggest that the measurement of benefits, whether "extra" or minimum, should be made in terms of what is paid to other municipal employees. Hence, we find no authority for the Department to limit the meaning of that term to a comparison of such benefits. Nothing in the record suggests that it would be impermissible under section 175.351(13) for a municipality, as an inducement for early retirement, to provide an actuarially measurable increase in early retirement benefits over the amount paid upon normal retirement to be funded by the income referred to in that section....
...the Department contends, we express no opinion on the validity or effectiveness of that rule. In respect to paragraph (7) of proposed rule 4-54.048, the hearing officer, based on the testimony of appellants' witness, Dr. John Fenstermaker, construed section 175.351(13) as follows: [T]he phrase "approved by a majority of the firefighters" ......
...[10] These paragraphs of the proposed rule read: (3) If a Local Law Fund is part of a general pension plan for other municipal employees, in order to participate in the distribution of Chapter 175 tax revenues the entire plan must be actuarially sound and must satisfy all requirements of Section 175.351 together with all other applicable provisions of Chapters 175 and 112, Florida Statutes, including but not limited to the requirement that municipal contributions sufficient to fund the normal cost and the 40 year amortization amount must be paid annually on a current basis. * * * * * * (5) The term "extra benefits" as used in Section 175.351(13), Florida Statutes, means benefits in addition to or greater than those provided to other municipal employees....
...Early retirement at a reduced pension is not an "extra benefit" within the intent of the statute. (6) The provisions of Section
175.361, Florida Statutes, shall apply to all retirement plans receiving monies under Chapter 175, including all Local Law Plans. (7) Subsection
175.351(13) uses the phrase "as approved by a majority of firefighters of the municipality affected" on two separate occasions....
