Did Maryland properly suspend Governor Harry Hughes's state pension while he served as Governor?

Plain-English summary

Former Governor Harry Hughes had been receiving a state pension from the Employees' Retirement System (ERS) based on his earlier years as a legislator and Secretary of Transportation. When he took office as Governor in January 1979, the Retirement Systems suspended that pension for the length of his term, reasoning that a state statute cuts off an ERS beneficiary's retirement allowance if the beneficiary is elected or appointed to another state office. Hughes argued he should have been treated like a retired state employee who becomes a judge, a group that keeps receiving ERS benefits while drawing a judicial salary. The Attorney General disagreed, concluding the suspension was proper: judges are expressly carved out of the ERS and placed in a separate Judges' Retirement Plan by name, but nothing in the statute similarly carves Governors out, so the general suspension rule applied to Hughes even though a special, separate pension formula exists for Governors under a different subsection.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why did Maryland stop paying former Governor Hughes's pension once he took office as Governor?
The opinion explained that Article 73B, §11(12) required an ERS beneficiary's retirement allowance to "cease" upon appointment or election to any state office whose salary is paid by the State, and the Retirement Systems applied that mandatory suspension rule to Hughes when he became Governor.

Didn't retired employees who become judges keep collecting their pension while also drawing a salary?
Yes, and the opinion acknowledged that distinction, but explained it existed because judges are expressly excluded from ERS membership and placed in a separate Judges' Retirement Plan by statute, so a judge's continued ERS pension isn't the same "double-dipping" scenario the suspension rule was designed to prevent. The opinion found no similar statutory language excluding Governors from the ERS.

Did the fact that Governors get their own special pension formula change the answer?
No. The opinion noted Governors are eligible for a distinct pension benefit under a separate subsection, but found nothing in that provision, or anywhere else in the statute, that removed Governors from ERS membership the way judges were removed, so the general suspension rule still governed.

Did it matter that Governor Hughes didn't make retirement contributions while he was Governor?
No. The opinion concluded that the suspension of a beneficiary's existing retirement allowance was mandatory regardless of whether that person separately chose to resume ERS contributions during the new office, since the statute treated resuming contributions and suspending the prior allowance as two distinct, independent consequences of taking office.

Background and statutory framework

Hughes had served 22 years in state government, including as a legislator and as Maryland's first Secretary of Transportation, before leaving state service and beginning to draw an ERS retirement allowance in 1977 under Article 73B, §11(12), a provision the opinion described as intended to give a special benefit to those who leave a tenured position to take on limited-tenure government service. That same provision states that if an ERS beneficiary is later appointed or elected to a state office, "his retirement allowance shall cease," language the opinion treated as mandatory rather than discretionary, citing the Court of Appeals' general rule that a legislature's use of directive language carries interpretive weight.

The opinion's core analysis compared how the statute treats judges versus Governors. The ERS's own definition of "employee" in §1(3) expressly excludes judges of the circuit courts, Court of Appeals, Court of Special Appeals, and District Courts, and judges instead belong to the separate Judges' Retirement Plan under §§55 to 63A; the Teachers' Retirement System under §§81 to 103 is another example of an expressly separate system. Because the statute nowhere similarly excludes Governors from ERS membership, even though §11(19) gives former Governors their own distinct pension formula (one third of the final term's salary, after at least one full term and age 55), the opinion concluded the General Assembly had not created a silent, separate "Governors' Pension System" the way it had expressly done for judges and teachers.

The opinion also addressed Hughes's argument that the suspension shouldn't apply because he wasn't contributing to the ERS during his governorship (Governors don't have to contribute to receive their §11(19) benefit). It read the statute as creating two independent consequences upon a beneficiary's election to office: the existing allowance is suspended, and separately, the person may elect to resume ERS membership and contributions. Declining to make contributions doesn't undo the suspension. The opinion tied this back to a broader anti-"double-dipping" policy against simultaneously drawing a state salary and a state retirement allowance, a policy it found reflected elsewhere in Article 73B (for example, the provision offsetting a retired teacher's pension upon reemployment), and concluded the General Assembly would have said so explicitly if it meant to let officials avoid the suspension simply by not re-contributing.

Citations and references

Statutes:

• Article 73B, §11(12)
• Article 73B, §1(3)
• Article 73B, §1(1)
• Article 73B, §11(19)
• Article 73B, §11(19)(b)
• Article 73B, §3(2)
• Article 73B, §14(1)
• Article 73B, §§55 to 63A
• Article 73B, §§81 to 103
• Article 73B, §158
• Article 73B, §86(9)

Cases:

• Hargrove v. Board of Trustees of Maryland Retirement System, 310 Md. 406, 424, 529 A.2d 1372 (1987)
• Ornstein v. Regan, 604 F.2d 212, 215 (2d Cir. 1979)
• Clark v. Tawes, 187 Md. 195, 200-01, 49 A.2d 463 (1946)
• Kaczorowski v. City of Baltimore, 309 Md. 505, 513, 525 A.2d 629 (1987)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

RETIREMENT SYSTEMS

Governors—Retirement Allowance Received by Governor Hughes at the Time of His Election Was Properly Suspended During His Term as Governor.

June 14, 1988

Mr Bennett H. Shaver
Executive Director
Maryland State Retirement
and Pension Systems

On behalf of former Governor Harry R. Hughes, you have requested an opinion on whether the Retirement Systems acted properly when the agency suspended the retirement allowance being received by Governor Hughes at the time of his election to the office of Governor.
For the reasons given below, we conclude that Governor Hughes's retirement allowance was properly suspended during his term as Governor.

                                I
     Suspension Of Governor's Retirement Allowance

Before being elected to the office of Governor, Harry Hughes had served the State for 22 years, first as a member of the General Assembly and later as the State's first Secretary of Transportation. After resigning his office and leaving State service, Mr. Hughes began receiving a retirement allowance from the Employees' Retirement System ("ERS") on June 1, 1977. Based on those years of service and the office he held, he received benefits under Article 73B, §11(12), which provides in pertinent part as follows:

    Notwithstanding anything to the contrary in this article, if any person, while being a member of the State Employee's Retirement System, has been or may hereinafter be appointed or elected to any State office, ... for a fixed or indefinite term and not be continued in office after serving in such position for a period of one (1) year, reappointed or reelected, provided that the termination of employment was involuntary, except for officials elected or appointed prior to July 22, 1981, as determined by the Secretary of Personnel, after the completion of sixteen years of creditable service, regardless of age, such member may elect, in lieu of the withdrawal of his accumulated contributions, to have such contributions paid to him in an annuity of an equivalent actuarial value, in which event he shall be paid a pension equal to the ordinary disability pension that would have been payable at such time had he been retired on an ordinary disability retirement ...

Article 73B, §11(12) is intended "to provide a special benefit to those who, while members of the Retirement System, have chosen to continue their service to the State in an untenured or, at best, a limited-tenured position, with little if any job security." 66 Opinions of the Attorney General 211, 214 (1981).
The payment of this retirement allowance to Governor Hughes was suspended in January 1979, upon his inauguration as Governor, and no further retirement benefits were paid to him during the time he served in that office. However, on February 1, 1987, Governor Hughes again began receiving retirement benefits, based on his years of service as Governor as well as his earlier service to the State.
The Retirement Systems suspended Governor Hughes's retirement allowance because it determined that the following language in Article 73B, §11(12) applied to him:

   Should [an ERS] beneficiary be appointed or elected to any office, the salary or compensation of which is paid by the State, his retirement allowance shall cease, and he may again become a member of the retirement system and shall contribute thereafter at the same rate he paid prior to his retirement. Any prior service credit on the basis of which his service was computed at the time of his retirement shall be restored to full force and effect, and in addition upon his subsequent retirement he shall be credited with all his service as a member, provided his pension upon such subsequent retirement shall not exceed the pension he was receiving prior to restoration plus such pension as may have accrued on account of his membership service after restoration.

Relying on the determination of the Retirement Systems, Governor Hughes did not dispute the suspension of payment of his retirement allowance, either at the time the suspension began or subsequently during his service as Governor. However, he has now questioned whether the suspension was proper.
Governor Hughes notes that State employees who retire and subsequently become judges have apparently been permitted to continue receiving retirement allowances from the ERS while receiving their judicial salaries. The office of judge is, of course, an appointive or elective office, "the salary or compensation of which is paid by the State." Governor Hughes argues that he should have been treated in the same way as a retired member of the ERS who becomes a judge, that is, his retirement allowance from prior service should have been continued during his service as Governor.

                                II
                    Propriety of Suspension

A. Constitutional Considerations
The pension provisions established for different groups of State employees need not be the same. Hargrove v. Board of Trustees of Maryland Retirement System, 310 Md. 406, 424, 529 A.2d 1372 (1987). There is "no constitutional requirement that retirement systems having disparate membership and organized under different statutes be operated under the same set of rules." Ornstein v. Regan, 604 F.2d 212, 215 (2d Cir. 1979). In our opinion, the State accordingly may make different retirement provisions for a retired member of the ERS who is elected Governor from those it makes for retired members of the ERS who are appointed or elected as judges. See Clark v. Tawes, 187 Md. 195, 200-01, 49 A.2d 463 (1946) (approving different treatment for retired appointed judges and retired elected judges).

B. Statutory Construction
For the purposes of the ERS provisions, the term "employee" is defined by §1(3) to "include any appointed or elected employee of the State ...." However, the term excludes ... any judge of the circuit courts, Court of Appeals of Maryland, Court of Special Appeals, and District Courts ... Because the term "retirement system" is defined by §1(1) to mean only the ERS, an ERS beneficiary who becomes a judge may not "again become a member of the retirement system," as provided in §11(12).
Judges instead become members of the Judges' Retirement Plan, under §§55 to 63A. Therefore, a judge's continued receipt of a retirement allowance from the ERS does not create a situation in which an employee is receiving a retirement allowance from a system in which he or she is simultaneously earning entitlement to additional retirement benefits to be paid in the future.
Governor Hughes suggests that he likewise could not be restored to membership in the ERS upon becoming Governor because he was then a member of a separate retirement system, one whose membership is restricted to Governors. Governor Hughes bases this contention on §11(19), under which former Governors are entitled to retirement benefits that are different from those available to other members of the ERS. Under §11(19)(b), "[a] person serving in the office of Governor after January 17, 1979, shall be eligible to receive a retirement allowance equal to one third the annual salary received during his last term of office, provided that the Governor has served at least one full term and has attained age 55."
However, nothing in §§1(3), 11(19), or elsewhere in Article 73B expressly withdraws Governors from membership in the ERS. By contrast, judges, for whom a special retirement system has been created, are explicitly excluded from the ERS by §1(3). Nor is there any clear inference to be drawn from §11(19) that the General Assembly intended to create a "Governors' Pension System" separate from the ERS. Yet, for judges and other separate systems, the General Assembly has clearly expressed precisely the intention to differentiate. See, e.g., §§55 to 63A (establishing Judges' Retirement Plan); §§81 to 103 (establishing Teachers' Retirement System). Cf. §158 (enumerating different retirement and pension systems). The smallest of the separately designated systems is the Judicial Plan, with 249 members. See 1 Budget for Fiscal Year 1989, at 391. Simply as a matter of administration, we doubt that the General Assembly would have created, without saying so expressly, a separate system with an active membership of one.
Moreover, the retirement benefits provided for Governors by §11(19) are paid by the ERS. Governor Hughes' receipt of benefits for his earlier service during his term in office therefore would have created a situation in which an employee was receiving benefits from a system in which he was simultaneously earning entitlement to receive additional benefits in the future. We believe that the pertinent restriction in §11(12) was intended to prevent that result.
Governor Hughes also suggests that the restrictive language in §11(12) is inapplicable to him because it conditions the suspension of payment of benefits to an ERS beneficiary on the beneficiary's making contributions to the ERS during his or her term as an appointed or elected official. Under §11(19), a Governor is entitled to retirement benefits without having made contributions to any retirement system during the Governor's term. However, in our view, the suspension of benefits under §11(12) during service as an appointed or elected official is mandatory, without regard to whether the official becomes a member of and makes contributions to the ERS.
Certainly, the language of the suspension provision is mandatory: Upon appointment or election to an office compensated by the State, an ERS beneficiary's "retirement allowance shall cease ...." The General Assembly's use of that language is of some significance in determining the provision's meaning and effect. Kaczorowski v. City of Baltimore, 309 Md. 505, 513, 525 A.2d 629 (1987).
To be sure, §11(12) also states that upon appointment or election the official "may again become a member of the retirement system and shall contribute thereafter at the same rate he paid prior to his retirement." Membership in the ERS is optional for appointed and elected officials under §3(2); under §14(1), each member of the ERS is ordinarily required to make contributions. In our view, then, the provisions of §11(12) regarding an official's restoration to ERS membership merely recognize the right of appointed or elected officials to become members of the ERS or not, as they choose, and the ordinarily concomitant duty to make contributions to the ERS. These provisions do not explicitly condition the suspension of retirement benefits on the official's making that election, and we do not believe that they were intended to have that effect. Upon an ERS beneficiary's appointment or election to office, two distinct events occur: the beneficiary's retirement allowance is suspended; and the official may elect to become a member of the ERS again by making the required contributions. If an official declines to contribute, that official does not thereby escape the suspension of retirement allowance.
Likewise, Governor Hughes did not contribute to the ERS during his tenure as Governor, because Governors need not contribute in order to gain the special benefits of §11(19). Nevertheless, his lack of contributions to the ERS during his terms did not negate the statutory command that "his retirement allowance shall cease" during his service as Governor.
The provision for suspension of retirement benefits is evidently designed to prevent "double-dipping," that is, the simultaneous receipt of retirement benefits and a salary from the State. That policy is similarly embodied in provisions regarding other retirement systems. See, e.g., §86(9) (offsetting or canceling retirement benefits of a retired teacher upon reemployment). As this office observed in connection with a provision that reduces a judge's pension under certain circumstances, "that policy is not uniquely applied to only one class of retirees. Rather, it is a policy similarly reflected in other statutes, applicable to other State retirees ...." 69 Opinions of the Attorney General 260, 267 (1984). In light of that firmly established policy, we think that the General Assembly would not have left it to the particular retiree under §11(12) to decide, through the decision about ERS contributions, whether he or she would be prevented from simultaneously receiving a salary for service as an appointed or elected official and a retirement allowance for previous service. At a minimum, we believe that, had it been the General Assembly's intent to allow double-dipping whenever a retiree under §11(12) did not contribute toward future benefits, it would have expressed that intent clearly and explicitly.
We recognize that the public policy against double-dipping is not served if an ERS beneficiary is appointed or elected as a judge and thereafter continues to receive a retirement allowance simultaneously with the judicial salary. However, it is a proper exercise of the General Assembly's judgment to determine the scope and applicability of that policy and the circumstances under which it may be overridden by other policy considerations. See Hargrove v. Board of Trustees of Maryland Retirement Systems, 310 Md. 406, 423-24, 529 A.2d 1372 (1987).

                               III
                          Conclusion

In summary, it is our opinion that the retirement allowance being received by former Governor Hughes at the time of his election to the office of Governor was properly suspended during his service in that office. The provisions of Article 73B, §11(12) that require suspension of a retirement allowance from the Employees' Retirement System upon the retiree's appointment or election to an office other than a judgeship applied to the Governor. The provisions' inapplicability to retirement beneficiaries who become judges does not require that the same treatment be accorded a retirement beneficiary who becomes Governor.

        J. Joseph Curran, Jr., Attorney General
        C.J. Messerschmidt, Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice