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Eide v. Frohmiller, State Auditor

Supreme Court of Arizona

April 3, 1950

EIDE et al.
v.
FROHMILLER, State Auditor

Judgment affirmed.

Fred O. Wilson, Atty. Gen. and Richard C. Briney, Asst. Atty. Gen., for appellants.

Ana Frohmiller, in pro. per.

Phelps, Justice. La Prade, C. J., and Udall, Stanford and De Concini, JJ., concur.

OPINION

Phelps, Justice.

Page 727

[70 Ariz. 129] There was submitted to the voters at the general election of November, 1948, an initiative measure known as the Public Employees' Retirement Act of 1948, A.C.A.1939, § 12-801 et seq. which was adopted by a majority of the voters and was proclaimed to be a law by the Governor of the state on November 22nd of that year. The law has for its purpose two objectives, (1) an improvement of the quality of service rendered by public employees by inducing them to remain in the service continuously over a long period of years; and (2) in consideration thereof to provide a reasonable degree of security for them when they become incapacitated by reason of old age or other physical or mental disability. In order to accomplish this it provides for contributions both by the employees and the state for the creation of a retirement fund to be held in trust by a board of trustees who are charged with the duty of the administration of the fund including the payment of all benefits and costs of administration of the act. The material portions of the act here involved are largely found in sections 23 and 24 thereof, A.C.A.1939, §§ 12-823, 12-824, which we quote verbatim:

Section 23. Beginning on the effective date, each employee who is a member of the system shall contribute five per cent of compensation earned and accruing on and after said date. This contribution shall be made in the form of a deduction from compensation and shall be made notwithstanding that the compensation paid in cash to such employee shall be reduced thereby below the minimum prescribed by law. Every employee who is a member of the fund shall be deemed to consent and agree to deductions made from his compensation and provided for in this act, and shall receipt in full for salary or compensation, and payment to said employee of compensation less said deduction shall constitute a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by such employee during the period covered by such payment except as to the benefits provided for under this act.

"Members shall be permitted to make additional contributions to the fund above the five per cent (5%) rate to increase that part of the retirement benefit provided from accumulated contributions. These additional contributions shall be made in multiples of one-half of one per cent up to a total rate of ten per cent (10%) of compensation for both regular and additional contributions. Any change in the rate of contribution under this provision shall take effect as of the beginning of a fiscal year, and any such rate of additional contribution selected by a member shall remain in force for a period of not less than one (1) year."

[70 Ariz. 130] "Section 24. Contributions by the state shall be made to meet the requirements of this act and shall consist of annual contributions to the fund of such amounts which, together with contributions made by members and regular interest accretions, will be sufficient to meet the cost of the various annuities and benefits to employees of the state, and the cost of administration, in accordance with the provisions of this act.

"The amounts to be contributed by the state for retirement benefits shall be on an actuarially funded basis covering all service of the employees including service prior to the effective date and service subsequent thereto, in accordance with the determinations of the board upon the recommendations of the actuary. Contributions by the state for death benefits, disability benefits and for administration expenses shall represent the current requirements for these purposes, as determined by the board based upon the experience of the fund.

Page 728

"There is hereby appropriated annually to the fund from funds of the state not otherwise appropriated, an amount necessary to carry out the provisions of this act. The amount required by the provisions of this act shall be included in each biennial appropriation, and the annual sum so appropriated shall be paid to the board of trustees in the month of July, 1949, and in the month of July of each year thereafter, which sums shall become a part of the fund herein created immediately upon payment thereof.

"Contributions made by the employer under the provisions of this act shall not be considered as a part of the employee's compensation notwithstanding ...


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