Procedural Posture

Petitioners teachers association, individual public school teachers, teachers’ retirement board, and individual board members sought an original peremptory writ of mandate directing respondent state controller (California) to transfer funds from the General Fund to the Teachers’ Retirement Fund for underfunded prior years.

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Overview

In 1979 Cal. Stat. 282, the legislature modified the method of state funding of the Teachers’ Retirement Fund and required respondent state controller to transfer funds into it on a monthly basis with the amounts to be determined under Cal. Educ. Code §§ 23401 and 23402. For four years, the budgetary appropriation was for a reduced amount in lieu of the statutory appropriation. The court issued a peremptory writ of mandate requested by petitioners teachers association, individual public school teachers, teachers’ retirement board, and individual board members and directed respondent to transfer the full statutory amount without the budgetary limitations. The court held that Cal. Educ. Code §§ 23401 et seq. implied an intent to grant private rights of contract with the state’s teachers and that when the promise to permanently fund the pension was accepted by the teachers by initial or continued employment, a contract was formed. The court found that the legislature had not retained power to modify the payment amounts and the underfunding was an impermissible impairment of a contractual funding obligation under both U.S. Const. art. I, § 10 and Cal. Const. art. I, § 9.

Outcome

The court issued an original peremptory writ of mandate directing respondent state controller to transfer funds from the General Fund to the Teachers’ Retirement Fund for underfunded prior years because an implied right of contract existed and the reduction of funds was an impermissible impairment of contract under both the U.S. and California constitutions.