REQUESTED BY: Roy E. Gardner, Director, State Department of Personnel. 1. If a state employee is already receiving federal retirement benefits, but is not eligible for retirement under the stat's retirement system, may he, upon termination of state employment receive one-fourth of his accumulated sick leave, pursuant to section 81-1325, R.R.S. 1943?
2. If an employee has an option to join the state retirement system, but he elects not to do so, does he ever become `eligible for retirement,' as contemplated by section81-1325, and therefore entitled to one-fourth of his accumulated sick leave?
1. Yes.
2. No.
1. Section 81-1320, R.R.S. 1943, provides a schedule of sick leave for state employees. Section 81-1323 provides that unused sick leave may be accumulated for not more than 1,440 hours. Section 81-1325 provides:
"Each employee who is eligible for retirement under any existing state or federal retirement system shall, upon termination of his employment with the state by reason of retirement or voluntary resignation in lieu of retirement, be entitled to a one-time payment of one-fourth of his accumulated unused sick leave, with the rate of payment based upon his regular pay at the time of termination or retirement. Upon the death of an employee his beneficiary shall be paid one-fourth of his accumulated unused sick leave, with the rate of payment based upon his regular pay at the date of his death."
You state that there are a number of state employees who are already receiving federal retirement benefits (e.g., a military pension), but are not eligible for retirement under the state employees retirement system. Your question is whether such employees, upon termination of service, are eligible for a payment of one-fourth of their accumulated sick leave.
Section 81-1325 obviously contemplates that the employee might not be eligible for retirement under the state system, since it made provision for eligibility under a federal system, which provision would be pure surplusage if eligibility under the state system was required. The only question, then, is whether a person who, at the time of termination of state employment, is already receiving benefits under a federal retirement system is `eligible' for retirement under the federal system.
We conclude that it would be an unreasonable construction to hold that he could not have started drawing his federal benefits at the time of termination. No logical reason occurs to us to justify drawing a distinction between an employee whose federal retirement was to start contemporaneously with the termination of his state employment, and one whose federal retirement benefits have started before that time. We believe the employee can reasonably be said to be `eligible for retirement' from the time he starts drawing federal retirement benefits until his death. He therefore qualifies under section 81-1325.
2. You also ask whether an employee who has an option to become a member of the state retirement system, but elects not to do so, can qualify for his accumulated sick leave as provided by section 81-1325 upon termination of service. We conclude that he cannot, assuming he is not eligible for retirement under a federal system.
Section 84-1301, R.R.S. 1943, provides that a person appointed by the Governor may elect not to become a member of the system. Let us assume such a person elects not to become a member of the state retirement system, but serves enough years so that he would otherwise become a member, and attains such an age that he could have retired and drawn benefits, had he become a member. No reasonable construction of the statutes would hold that a non-member of the system, who has paid no contributions to the system, could ever become `eligible for retirement' under that system. If he is not eligible for retirement under a federal system, he does not qualify for the payment provided for by section 81-1325.
Of course, were he to die while a state employee, his beneficiary would be entitled to one-fourth his accumulated unused sick leave, since such payment is not conditioned upon eligibility for retirement.