Can a Tennessee city councilmember who is also a state employee retire from state employment, draw TCRS benefits, and stay on the city council?

Subject

Opinion No. 12-43, City Councilmember's Receipt of TCRS Benefits While Holding Office, March 29, 2012

Plain-English summary

A Dickson, Tennessee city councilmember had two state-affiliated jobs and two TCRS (Tennessee Consolidated Retirement System) memberships running at the same time. One was through his state employment. The other was through his seat on the Dickson city council, which the city had elected to make TCRS-covered under Tenn. Code Ann. § 8-35-226 and the city's private act charter. He wanted to retire from his state job, start collecting TCRS retirement benefits, and stay on the council.

The AG said no, across five different angles:

1. He could not collect TCRS while still in the council seat, because the council seat itself was a TCRS-covered position. Tenn. Code Ann. § 8-36-804 prohibits credit accrual during a period when retirement allowance is being received.

2. He could not remain on the council and draw benefits, period. Same reason.

3. He could not "opt out" of TCRS now. Once a council member elected to participate, Tenn. Code Ann. § 8-35-123 made that election irrevocable.

4. He could not refuse his council salary to dodge the conflict. Tennessee law requires public officials to accept the compensation set by law. Carmichael v. Hamby, 217 S.W.2d 934 (Tenn. 1948); Carter v. Jett, 370 S.W.2d 576 (Tenn. Ct. App. 1963).

5. If he tried to run again after retiring, the § 8-36-818 exception (allowing retired state members to serve on city councils without losing benefits) didn't apply, because that exception required the retirement benefits to be based on positions other than the § 8-35-226(a) council seat. His benefits were partly based on the council service, so the exception was unavailable.

The combined result was a hard "no" to every variation of the plan. The councilmember had to choose: keep the council seat or collect the retirement.

Currency note

This opinion was issued in 2012. 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.

Historical background and statutory framework

TCRS membership for city councilmembers

Tenn. Code Ann. § 8-35-226(a) allowed city councilmembers to be eligible for TCRS membership at the option of the city's chief legislative body. The city of Dickson had exercised that option through its charter, making council service TCRS-covered.

Tenn. Code Ann. § 8-35-123 made an election to participate in TCRS irrevocable: "For any person participating in the Tennessee consolidated retirement system pursuant to §§ 8-35-101, 8-35-103, 8-35-115, 8-35-116, 8-35-122, and 8-35-226, or as a state judge, county judge, county official, commissioner, county chair or attorney general whose membership in the retirement system is optional, and who thereafter elects to become a member, such election is irrevocable."

The "can't draw and accrue at the same time" rule

Tenn. Code Ann. § 8-36-804: "No member shall be entitled to establish retirement credit for any period during which the member received a retirement allowance."

Tenn. Code Ann. § 8-36-801(a): "[A]ny retired member of the Tennessee consolidated retirement system, or of any superseded system, or of any local retirement fund established pursuant to chapter 35, part 3 of this title who accepts employment in a position covered by the Tennessee consolidated retirement system shall, as a condition of such employment, cease to draw the member's retirement allowance during the period of the employment."

Tenn. Code Ann. § 8-36-203: an effective retirement date "follows the date of the member's separation from service." Termination of employment is a condition precedent to receiving benefits.

The § 8-36-818 narrow exception

Tenn. Code Ann. § 8-36-818 carved out a narrow exception: "Any retired member of the Tennessee consolidated retirement system or of any superseded system administered by the state of Tennessee may accept employment in a position covered under § 8-35-226(a) without loss or suspension of retirement benefits; provided, that: (1) Such retirement benefits are based on service and salary rendered in a position other than a position covered under § 8-35-226(a); and (2) The retired member shall not be eligible to accrue additional retirement benefits as a result of such employment."

The exception required: retire from state work; take a § 8-35-226(a) position (e.g., a city council seat); and have retirement benefits based on service other than the council seat. The Dickson councilmember failed condition (1) because his benefits would have been based partly on his council service.

The refusal-of-salary argument

Question 4 asked whether the councilmember could simply refuse his $X council salary, eliminating his TCRS membership through that seat. The AG said no. Tennessee law treats refusal of statutory compensation as improper. Carmichael v. Hamby, 217 S.W.2d 934, 938 (Tenn. 1948), warned that agreeing to less than the authorized salary "may be seen as a form of bribery of the electorate." Carter v. Jett, 370 S.W.2d 576, 582 (Tenn. Ct. App. 1963), restated: "where compensation of public official is established by law, he cannot accept less." Op. Tenn. Att'y Gen. 89-51 (Apr. 10, 1989) had reached the same conclusion in the context of a general sessions judge who tried to waive salary to draw retirement.

The 2005 AG opinion on circuit court clerk

The AG cited Op. Tenn. Att'y Gen. 05-187 (Dec. 28, 2005), which had addressed a retired state police officer or state wildlife officer (a Group 2 member) serving as a circuit court clerk. That had been allowed under a now-repealed § 8-36-809 exception (repealed by 2005 Tenn. Pub. Acts 203, § 6). The Dickson councilmember was not a retired state police officer or wildlife officer, so that exception couldn't help him.

Re-election after retirement

If the councilmember retired (somehow) and then tried to be re-elected, the § 8-36-818 analysis governed. Because his benefits would be based in part on prior council service (a § 8-35-226(a) position), he failed the exception's first condition. Re-election would mean his retirement benefits got suspended during the new council service period.

Common questions

Could the councilmember just decline TCRS coverage going forward?

No. The opt-in election was irrevocable under § 8-35-123. Once a councilmember had elected to participate in TCRS, they were in for the duration.

What if the city changed its mind and stopped offering TCRS to the council?

The opinion does not address whether the city could stop offering TCRS to council positions going forward. That would be a city-charter or council-resolution question, but it probably could not retroactively undo the individual's existing TCRS membership.

Did the AG say anything about resigning the council seat?

The implication of the analysis is that resigning the council seat would solve the problem. The benefits would still have been based partly on council service, but if the member was no longer in a TCRS-covered position, they could draw benefits. The opinion does not spell this out, but resignation would have lifted the simultaneous-contribution-and-collection bar.

The councilmember asked about declining salary. Why was that not an answer?

The AG's reading was that refusing statutory compensation was unlawful, citing Carmichael v. Hamby. The court treated it as improper for a public official to accept less than the law specified. The compensation triggered TCRS contributions; the councilmember could not unilaterally turn that off by waiving pay.

Was the 5-year cooling-off period a factor here?

No. The opinion doesn't reference any cooling-off rule. The reason for the bar was not that re-employment came too soon after retirement; it was that the council seat was always a TCRS-covered position, and the benefits were partly attributable to council service. The chronology was largely irrelevant.

What's the practical takeaway for someone in this situation?

If you have two TCRS-covered positions, you can only draw benefits once you have actually left a TCRS-covered position. If both positions go into the benefit calculation, no narrow re-employment exception saves you. The cleanest solution: resign one of the positions and have the retirement benefit calculated based on the other.

Citations

• Tenn. Code Ann. § 8-35-123 (irrevocable election)
• Tenn. Code Ann. § 8-35-226 (optional TCRS membership for elected members of city council)
• Tenn. Code Ann. § 8-36-203 (effective date of retirement)
• Tenn. Code Ann. § 8-36-801(a) (cease drawing benefits during TCRS-covered employment)
• Tenn. Code Ann. § 8-36-804 (no credit accrual during benefit receipt)
• Tenn. Code Ann. § 8-36-818 (exception for retired state members accepting council positions)
• Tenn. Const. art. VI, § 7 (judicial compensation)
• Carmichael v. Hamby, 217 S.W.2d 934 (Tenn. 1948)
• Carter v. Jett, 370 S.W.2d 576 (Tenn. Ct. App. 1963)
• Op. Tenn. Att'y Gen. 89-51 (Apr. 10, 1989)
• Op. Tenn. Att'y Gen. 04-15 (Feb. 5, 2004)
• Op. Tenn. Att'y Gen. 05-187 (Dec. 28, 2005)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2012/op12-043.pdf

Original opinion text

March 29, 2012
Opinion No. 12-43
City Councilmember's Receipt of TCRS Benefits While Holding Office

QUESTIONS

1. Can a city councilmember who participates in the Tennessee Consolidated Retirement System (TCRS) as a result of that position as well as his employment by the State retire from his State employment position, receive TCRS benefits, and continue to hold his elected office as city councilmember?

2. Can this councilmember remain on the city council and still receive retirement payments from TCRS?

3. Can this councilmember now elect to "opt out" of TCRS participation as a member of the city council in order to receive benefits from TCRS for his retirement from his State employment position?

4. Can this councilmember decline or otherwise refuse to collect his salary for his elected position and remain on the city council while continuing to receive TCRS benefits?

5. After retiring from State service, can this councilmember be a candidate for election and if elected be eligible to continue receiving retirement benefits from TCRS?

OPINIONS

1. No, the city councilmember cannot receive TCRS benefits while continuing to hold a position on the city council, through which he participates in TCRS.

2. No, the city councilmember cannot remain in a position in which he participates in TCRS and at the same time receive retirement payments from TCRS.

3. No, the city councilmember cannot now elect to "opt out" of TCRS. Once a city councilmember elects to participate in TCRS, that election is irrevocable. See Tenn. Code Ann. § 8-35-123.

4. No, the city councilmember cannot decline or otherwise refuse to collect his salary for his elected position. The rule in Tennessee is that if a public official is entitled to a specified compensation by law, this compensation may not be refused.

5. No, if the city councilmember is re-elected to the city council, he will be ineligible to receive TCRS benefits because his benefits are based on service and salary rendered as a city councilmember as well as service and salary rendered as a State employee. See Tenn. Code Ann. § 8-36-818.

ANALYSIS

1. The requestor has provided the following background information in relation to the questions posed. Under the city of Dickson's private act charter, section 2.01(e) and Tenn. Code Ann. § 8-35-226, Dickson city councilmembers participate in TCRS. City councilmembers are paid a percentage (17.5%) of the county mayor's salary pursuant to the city charter. A city councilmember is retiring from a State employment position in which he also participates in TCRS. The State employment position from which he is retiring is not a position as a State police officer or a State wildlife officer.

The provisions controlling the receipt of TCRS benefits are currently codified at Tenn. Code Ann. §§ 8-36-101 to -823. Termination of employment is a condition precedent to the receipt of TCRS benefits. Tenn. Code Ann. § 8-36-203 provides that "[a]ny member eligible to retire may set the effective date of the member's retirement at any date within one hundred fifty (150) days before or after the date that the member's application is filed with the board; provided, that such effective date of retirement follows the date of the member's separation from service." (emphasis added). Generally, an individual is prohibited from being a contributing member of TCRS and receiving benefits from TCRS at the same time. Tenn. Code Ann. § 8-36-804 provides that "[n]o member shall be entitled to establish retirement credit for any period during which the member received a retirement allowance." Retired members of TCRS who return to work in a position covered by TCRS cannot receive TCRS benefits during the period of re-employment, unless an exception applies. Tenn. Code Ann. § 8-36-801(a) provides as follows:

Except as provided in this part, any retired member of the Tennessee consolidated retirement system, or of any superseded system, or of any local retirement fund established pursuant to chapter 35, part 3 of this title who accepts employment in a position covered by the Tennessee consolidated retirement system shall, as a condition of such employment, cease to draw the member's retirement allowance during the period of the employment.

Tenn. Code Ann. § 8-36-818 currently contains an exception that applies to retired State employees who return to work as a city councilmember after retiring from State service. That statute provides as follows:

Any retired member of the Tennessee consolidated retirement system or of any superseded system administered by the state of Tennessee may accept employment in a position covered under § 8-35-226(a) without loss or suspension of retirement benefits; provided, that:

(1) Such retirement benefits are based on service and salary rendered in a position other than a position covered under § 8-35-226(a); and

(2) The retired member shall not be eligible to accrue additional retirement benefits as a result of such employment.

Tenn. Code Ann. § 8-36-818.

In the instant situation, the individual described seeks to retire from a State employment position, receive TCRS benefits, and continue to hold elected office as a city councilmember. The statutes governing TCRS do not permit this individual to receive TCRS benefits while continuing to serve on the city council, given that he participates in TCRS as a result of his employment on the city council. The individual described plans to terminate his employment with the State, but he plans to continue to hold his position on the city council in which he also participates in TCRS. Members of TCRS cannot receive TCRS benefits while simultaneously accruing additional TCRS benefits as a result of employment in a position that is covered by TCRS. Because the individual described participates in TCRS as a result of his employment on the city council, he cannot receive TCRS benefits while continuing to hold that position.

The provisions regarding reemployment after retirement support this conclusion. Under Tenn. Code Ann. § 8-36-801(a), a retired member of TCRS who accepts employment in a position covered by TCRS "shall, as a condition of such employment, cease to draw the member's retirement allowance during the period of the employment." Under Tenn. Code Ann. § 8-36-818, a retired member of TCRS can serve as a city councilmember without a loss or suspension of retirement benefits, provided that his or her retirement benefits are based on service and salary rendered in a position other than a position covered under Tenn. Code Ann. § 8-35-226(a). The individual described cannot return to work as a city councilmember after retirement without a suspension of benefits because his benefits are based on his service and salary as a city councilmember (a position covered under Tenn. Code Ann. § 8-35-226(a)) as well as his service and salary as a State employee. To qualify for the exception under Tenn. Code Ann. § 8-36-818, a retired member of TCRS must have earned his retirement benefits solely as a result of State service.

This conclusion is consistent with prior opinions in which this Office has been asked to interpret the provisions of TCRS in situations where an employee either retires from State service or wishes to retire from State service but then at some point seeks to re-enter or continue in a position covered by TCRS. Previously, this Office addressed whether a general sessions judge may refuse the compensation established by law for that office and begin drawing retirement benefits instead. We concluded that if the judge attempted to waive his salary, that attempt would violate Art. VI, § 7 of the Tennessee Constitution, which provides that judges "shall . . . receive a compensation for their services." Op. Tenn. Att'y Gen. 89-51, at 3 (Apr. 10, 1989). We also determined that Tenn. Code Ann. §§ 8-36-203 and -801(a) prohibited the judge from retaining his position without pay in order to receive retirement benefits. We explained that "termination of employment is a condition precedent to the receipt of retirement benefit"; therefore, "a member of the retirement system may not continue in his employment and retire at the same time." Id. at 4.

This Office has also previously addressed the effect of Tenn. Code Ann. § 8-36-801 in determining whether a person elected to county office as a circuit court clerk could serve in that capacity and still receive benefits as a retired Group 2 member of TCRS. We explained that "[t]wo issues must be addressed by any retiree wishing to continue receiving his or her benefits during reemployment: first, whether the new position is 'covered by the TCRS' and, second, whether there is an exception that applies to that person." Op. Tenn. Att'y Gen. 05-187, at 1 (Dec. 28, 2005). We concluded that a retired State police officer or State wildlife officer could serve as a circuit court clerk and continue to receive retirement benefits from TCRS under an exception contained in a prior version of Tenn. Code Ann. § 8-36-809 that was repealed by 2005 Tenn. Pub. Acts 203, § 6. Id. at 2-3. The individual described in the instant question is not a retired State police officer or State wildlife officer, and no other exception applies.

2. The analysis of question 1, above, is determinative of question 2 as well. The city councilmember cannot receive benefits from TCRS while retaining his position on the city council in which he contributes to TCRS.

3. Tenn. Code Ann. § 8-35-123 provides that "[f]or any person participating in the Tennessee consolidated retirement system pursuant to §§ 8-35-101, 8-35-103, 8-35-115, 8-35-116, 8-35-122, and 8-35-226, or as a state judge, county judge, county official, commissioner, county chair or attorney general whose membership in the retirement system is optional, and who thereafter elects to become a member, such election is irrevocable." (emphasis added). The city councilmember in question participates in TCRS pursuant to Tenn. Code Ann. § 8-35-226, which provides that elected members of a city council "shall be eligible for membership in the Tennessee consolidated retirement system at the option of the chief legislative body of the city." Tenn. Code Ann. § 8-35-226(a). Once the election to participate in TCRS has been made, that election is irrevocable under Tenn. Code Ann. § 8-35-123. Accordingly, the city councilmember cannot "opt out" of TCRS in order to receive TCRS benefits while retaining his position on the city council.

4. The general rule in Tennessee is that when the compensation of a public official is established by law, he or she cannot accept a lesser amount. See Carmichael v. Hamby, 217 S.W.2d 934, 938 (Tenn. 1948) (agreeing to a lower salary than authorized may be seen as a form of bribery of the electorate); Carter v. Jett, 370 S.W.2d 576, 582 (Tenn. Ct. App. 1963) (where compensation of public official is established by law, he cannot accept less); Op. Tenn. Att'y Gen. 04-15 (Feb. 5, 2004); Op. Tenn. Att'y Gen. 89-51 (Apr. 10, 1989). Therefore, the city councilmember cannot refuse the compensation established by law for that position in order to receive TCRS benefits while retaining his position on the city council.

5. Tenn. Code Ann. § 8-36-801(a) provides that retired members of TCRS shall cease receiving retirement benefits during a subsequent period of employment in a position that is covered by TCRS, unless an exception applies. Tenn. Code Ann. § 8-36-818 provides an exception for retired members of TCRS who later accept employment in a position covered under Tenn. Code Ann. § 8-35-226(a), provided that their retirement benefits are not based on service and salary rendered in a position covered under § 8-35-226(a). The city councilmember's retirement benefits are based in part on service and salary rendered as a city councilmember, which is a position covered under Tenn. Code Ann. § 8-35-226(a). Therefore, if he is reelected to the city council, he will be ineligible for the exception provided by Tenn. Code Ann. § 8-36-818, and his retirement benefits will be suspended during any period of re-employment on the city council.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

R. MITCHELL PORCELLO
Assistant Attorney General

Requested by:
The Honorable David Shepard
State Representative
34 Legislative Plaza
Nashville, Tennessee 37243