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Valde v. Employment Appeal Board

Court of Appeals of Iowa

September 13, 2017

MICHAEL PAUL VALDE, Plaintiff-Appellant,
v.
EMPLOYMENT APPEAL BOARD and IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Defendants-Appellees.

         Appeal from the Iowa District Court for Johnson County, Mitchell E. Turner, Judge.

         An Iowa Public Employees' Retirement System recipient appeals from an adverse benefits calculation. AFFIRMED.

          Michael Paul Valde, Coralville, pro se.

          Thomas J. Miller, Attorney General, and Lucas W. Dawson and David L.D. Faith II, Assistant Attorneys General, for appellees.

          Vogel, P.J., and Potterfield and Mullins, JJ.

          MULLINS, Judge.

         Michael Valde appeals from the district court's denial of his request for relief on judicial review. Valde asserts that his contract and property rights in his Iowa Public Employees' Retirement System (IPERS) public pension benefits were contravened in violation of the Iowa Constitution and the United States Constitution.

         I. Facts and Background

         The facts in this case are undisputed. Valde was employed with the State in an IPERS-covered position from 1977 through 1981, 1991 through 1996, and 1999 through most of 2002. Combining these periods, Valde had a total of thirteen-and-a-half years of IPERS-covered service. When Valde left IPERS-covered employment in 2002, he was not yet eligible to retire.

         In 2015, Valde filed an application for IPERS retirement benefits. IPERS sent Valde a letter of award notifying him of a monthly retirement benefit of $1, 667.49 based on a final average salary of $86, 752.27. IPERS used Valde's salary from 2000 through 2002 (the "calendar method") to calculate this figure. The calendar method was set out in the governing statute in 2015. Valde appealed to IPERS claiming the formula used was incorrect and that the agency should have used the average of his highest twelve consecutive quarters of service (the "quarter method") for a final average of salary of $89, 755.47. Valde claimed that he was entitled to the quarter method since a statute in effect in 2002-when he left IPERS-covered employment-arguably provided for such a formula. Valde claimed a constitutional property and contract interest in the 2002 level of benefits.

         In 2016, IPERS made a final agency determination in favor of the calendar method. The determination was based on two rationales. First, under Iowa Code chapter 97B (2016) and the surrounding administrative rules, IPERS was required to apply the law and formula in effect on the date of the member's retirement. These rules were all in place prior to 2002. Second, while the Iowa General Assembly enacted legislation in 2000 to implement the quarter method at a future date, that legislation was repealed before such a future date ever occurred. Therefore, the quarter method was never actually used in calculating awarded benefits.

         Valde appealed the final agency determination. A hearing on the matter occurred before an administrative law judge (ALJ). The ALJ entered a proposed decision in favor of IPERS. Valde appealed to the Employment Appeal Board, which adopted the proposed decision. Finally, Valde filed a petition for judicial review pursuant to Iowa Code section 17A.19 arguing IPERS violated his constitutionally protected contract and property rights. In January 2017, the district court denied the request for relief concluding there is "no property or contract right in a retirement payment system." Valde appeals.

         II. Standard of Review

         Typically, appeals from administrative decisions are reviewed for substantial evidence. See Titan Tire Corp. v. Emp't Appeal Bd., 641 N.W.2d 752, 754 (Iowa 2003). However, we review constitutional law challenges de novo. Adair Benev. Soc. v. State, 489 N.W.2d 1, 3 (Iowa 1992) ("Usually when fact questions in a contested case are involved, we apply the substantial evidence standard ...


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