Appeal from the Order of the Board of Claims in case of Albert A. Watrel v. Commonwealth of Pennsylvania, Department of Education, Docket No. 565.
Betty F. Perry, Killian & Gephart, for petitioner.
Maura A. Johnston, Deputy Attorney General, with her, Marybeth S. Christiansen and Allen C. Warshaw, Deputy Attorneys General, and LeRoy S. Zimmerman, Attorney General, for respondent.
Judges Craig and Colins and Senior Judge Blatt, sitting as a panel of three. Opinion by Judge Craig. Judge Colins dissents. Judge Williams, Jr. did not participate in the decision in this case.
Albert A. Watrel appeals from a decision of the Board of Claims, which denied his breach-of-contract claim against the Pennsylvania Department of Education. We must determine whether DOE could, as part of a settlement agreement, validly bind the Pennsylvania State Employees' Retirement Board (SERB) to accept a contribution from Watrel, and whether SERB could legally accept such a contribution.
Watrel had been the president of Slippery Rock State College, and a member of the State Employees' Retirement System, from 1968 until the governor dismissed him June 11, 1976. After negotiations, Watrel and DOE executed a "Settlement Agreement and Mutual Release" in which Watrel relinquished all claims against the Commonwealth arising from his dismissal, and the Commonwealth, in addition to other provisions, agreed to provide Watrel a one-year sabbatical
and, if Watrel found employment elsewhere, "to accept contributions for retirement purposes through the state college system to permit [him] to become vested in the State Employees' Retirement System." The acting secretary of DOE signed the settlement agreement "for the Commonwealth of Pennsylvania."
The State Employees' Retirement Code requires an employee to participate for ten years in order to become "vested" and therefore entitled to an annuity. 71 Pa. C.S. § 5309.
After securing employment in North Dakota, Watrel tendered payment to DOE for the purchase of his tenth year in the retirement system.*fn1 DOE forwarded the check to SERB, with the request that Watrel be permitted to purchase his final year of credit; SERB, however, rejected that request as "not being in conformity with law."
Under the Retirement Code, a former state employee cannot purchase pension credit for non-state service performed after his separation from state employment.*fn2
In an action before the Board of Claims, Watrel sought recovery, on a breach-of-contract theory, of the amount he would have received as an annuity if SERB had accepted his payment and permitted his pension to vest. The Board of Claims concluded that the settlement was a valid contract and that DOE had fulfilled its obligation when it received Watrel's check and ...