In the Matter of the MSRS General Employees Retirement Plan Retirement Benefit of Pamela S. Johnson.

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-1037

In the Matter of the MSRS General Employees Retirement Plan Retirement Benefit of
Pamela S. Johnson.

Filed April 26, 2021
Affirmed
Connolly, Judge

Minnesota State Retirement System
File No. 5100787289

Katherine L. MacKinnon, Nicolet Y. Lyon, Law Office of Katherine L. MacKinnon,
St. Paul, Minnesota (for relator Pamela S. Johnson)

Keith Ellison, Attorney General, Kathryn M. Woodruff, Assistant Attorney G eneral, St.
Paul, Minnesota (for respondent Minnesota State Retirement System)

Considered and deci ded by Connolly, Presiding Judge; Ross, Judge; and Jesson,
Judge.
NONPRECEDENTIAL OPINION
CONNOLLY, Judge
Relator challenges the decision of respondent Minnesota State Retirement System
that relator is not entitled to interest accrued on her combined service annuity under Minn.
Stat. § 356.30, subd. 1(c) (2020) because she returned to work in the public sector following
the initial termination of her employment. Because this decision is consistent with the
relevant statutes, we affirm.

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FACTS
The empl oyment history of r elator Pamela Johnson, R.N., inclu des six periods.
During two of these, January 1975 -June 1976 and March 1990 -August 1992, she earned
credit with the Public Employees Retirement Association (PERA); during three of them;
September 1993-January 1997, August 1997-March 2012, and July 2018-November 2018,
she earned credit with the Minnesota State Retirement System (MSRS). She worked for a
nongovernmental entity from 2012 until her position was terminated on March 31, 2018 .
The effective date of her retirement was November 29, 2018. She deferred both her PERA
and her MSRS benefits until retirement.
In January 2019, relator was informed that her monthly benefit would be about $200
less than she expected because, by taking a position with another MSRS entity after leaving
MSRS in March 2012, sh e lost the interest that began to accrue when she deferred her
MSRS benefit, i.e., the interest from March 2012 until her retirement in November 2018.
When she appealed to MSRS, its executive director told her that she was not eligible for
interest during that period because she did not terminate all public service until November
2018. She requested additional information and learned that her annuity could be
calculated by one of two methods, governed by two different statutes. The combined
service annuity (CSA), governed by Minn. Stat. § 356.3 0 (2020) did not include interest
and resulted in a total single-life annuity from both PERA and MSRS of $2,537.36, while
the coverage by more than one fund annuity (CBMTOF), governed by Minn. Stat.

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§ 356.311 (2020) did include interest and resulted in a total single -life annuity from both
PERA and MSRS of $2,435.47, or $101.89 less.1
Relator challenged the executive director’s decision, arguing that the CBMTOF
annuity should also include interest, which would have raised it by $257.13 to $2,794.49.
The executive director directed relator to participate in a fact-finding conference conducted
by an administrative -law judge (ALJ), as provided by Minn. Stat. § 356.96, subd. 7(b)
(2020). The parties agreed that no material facts were in dispute, stipulated to the facts and
documents in the case, and filed cross -motions seeking the ALJ’s re commendation for
summary disposition.
Following a hearing, the ALJ issued findings of fact, conclusions of law, and the
recommendation that relator’s appeal be denied, which were adopted by the MSRS board.
Relator sought and was granted certiorari review by this court. She argues that both the
relevant statutes and the doctrine of promissory estoppel entitle her to interest on her CSA
benefit.
DECISION
Standard of Review
An appellate court may reverse or modify an
administrative decision if substantial rights of the petitioners
have been prejudiced by administrative findings, inferences,
conclusions or decisions that are unsupported by substantial
evidence in view of the enti re record, or arbitrary and
capricious, but the court must also recognize the need for
exercising judicial restraint and for restricting judicial
functions to a narrow a rea of responsibility lest ( the court)

1 Although the statutes refer to interest as “augmentation,” this opinion will use the more
usual term “interest.”

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substitute its judgment for that of the agency. It must be guided
in its review by the principle that the agency’s conclusions are
not arbitrary and capricious so long as a rational connection
between the facts found and the choice made has been
articulated.
. . . .
. . . The agency decision-maker is presumed to have the
expertise necessary to decide technical matters within the
scope of the agency’s authority, and judicial deference, rooted
in the separation of powers doctrine , is extended to an agency
decision-maker in the interpretation of statutes that the agency
is charged with administering and enforcing. We defer to an
agency’s conclusions regarding conflicts in testimony, the
weight given to expert testimony and the inferences to be
drawn from testimony.

In re Excess Surplus Status of Blue C ross & Blue Shield of Minn. , 624 N.W.2d 264, 277 -
78 (Minn. 2001) (citations and quotations omitted). However, an appellate court “[retains]
the authority to review de novo errors of law which arise when an agency decision is based
upon the meaning of words in a statute.” In re Denial of Eller Media Co .’s Applications
for Outdoor Adver. Device Permits, 664 N.W.2d 1, 7 (Minn. 2003).
1. The MSRS denial of relator’s petition
As a retiree entitled to benefits under both PERA and MSRS, relator was entitled to
either CSA benefits under Minn. Stat. § 356.30, subd. 1(a) (2020) or CBMTOF benefits
under Minn. Stat. § 356.311. She was provided with, and does not dispute, the calculations
under both statutes in a letter from MSRS counsel on May 23, 2019.
Minn. Stat. § 356.30 provides that “the average salary used to calculate the annuity
for each formula plan must be based on the employee’s highest f ive successive years of
covered salary [(high-five salary)] during the entire service in covered plans.” Minn. Stat.
§ 356.30, subd. 1(b) (2) (2020). When relator terminated her MSRS employment on

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November 29, 2018, she had 18.5 years with MSRS, which was multiplied by the statutory
annuity multiplier with a result of 30.45%. Her high-five salary was $6,634.17, which was
multiplied first by 30.45% to result in $2,086.45 for her MSRS CSA annuity and then by
the appropriate length of service and statutory a nnuity multiplier to result in $450.91 for
her PERA CSA annuity. The sum of the two, both based on the high -five salary, was
$2,537.36.
The CSA statute also provides that, “[i]f a person eligible for an annuity . . . from
each covered plan terminates al l public service, the deferred annuity must be augmented
[i.e., interest must be paid on the annuity] from the date of termination until . . . the effective
date of retirement.” Id. at subd. 1(c). Because relator’s d ate of termination was
November 29, 2018, and the effective date of her retirement was December 1, 2018, no
interest accrued on her CSA benefit.
The CBMTOF option available to employees entitled to benefits under more than
one plan is governed by Minn. Stat. § 356.311:
(d) No portion of the service upon which the
retirement annuity from one retirement plan is based shall be
again used in the computation of a retirement annuity from
another plan. The annuity from each plan must be determined
under the laws applicable to that plan. . . .
(e) Any deferred annuity payable under this section
shall be subject to augmentation under the laws appl icable to
the deferred annuity.

Minn. Stat. § 356.311.
The first segment of relator’s MSRS service lasted 18 years and one month, which
was multiplied by the statutory multiplier for a result of 30.741%; this was multiplied by

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the high-five salary, and then by the interest for six years, seven months, or 1.139247, for
an annuity of $2,323.39. The second segment of her service lasted five months at a monthly
salary of $3,088.96. This was multiplied by the number of months of se rvice and a
statutory multiplier , then by a reduction factor, for an annuity of $20.91; thus the total
MSRS CBMTOF benefit was $2,353.58. The PERA CBMTOF annuity was $91.89, so the
total CBMTOF annuity, MSRS plus PERA, was $2,435.47, or $101.89 less than the total
CSA total annuity. Relator was accordingly given the CSA annuity.
She argues that, although her CSA benefit provides that interest is paid only “from
the date of termination . . . to the effective date of retirement,” she is entitled to the interest
provided in the CBMTOF annuity, which is paid “under the laws applicable to the deferred
annuity.” See Minn. Stat. § 356.311(e). The MSRS board chair observed, “[Relator]’s
appeal requests, in eff ect, that MSRS import the CBMTOF [interest] calculation into the
CSA statute. MSRS has no discretion or authority to do so. See, e.g., Minn. Stat. § 352.03,
subd. 4(3) [2018] (stating that the [MSRS] Board is required to transact the business of the
retirement system, subject to the limitations of law).”
Relator also argues that the phrase “terminates all p ublic service” in Minn. Stat.
§ 356.30, subd. 1(d)(1) (2020), could be interpreted to mean that she was entitled to interest
from the time she left public service in March 2012 until she returned to public service in
July 2018 because, “[d]uring that time, she ha[d], in fact, terminat[ed] all public service.”
But the phrase “terminated all public service” and the phrase “returned to public service”
are mutually exclusive: no one who has already terminated all public service can return to
it, and no one who returns to public service can previously have terminated it. Moreover,

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under relator’s interpretation, she would have c ontinued to earn interest on the retirement
benefit from her first MSRS employment at the same time she was accruing another
retirement benefit from her second employment.2
In effect, relator replaces “all” with “any”; she argues that she is entitled to interest
from the time she quit any public service until the effective date of her retirement. But this
court may neither incorporate a provision from one statute into another nor replace one
word in a statute with another: “[ T]he task of extending existing law falls to the supreme
court or the legislature, but it does not fall to this court.” Tereault v. Palmer, 413 N.W.2d
283, 286 (Minn. App. 1987), review denied (Minn. Dec. 18, 1987). Relator’s argument
that she is entitled to interest that accrued prior to the date she terminated all public service
is unpersuasive.
2. Promissory Estoppel
Relator also argues that promissory estoppel entitles her to the interest. However,

Minnesota courts have long held that estoppel cannot be
applied when doing so would cause an agency to act outside
the bounds of its authority. . . . [A]bsent a prohibition against
estoppel, states and municipalities would repeatedly find
themselves bound by the unauthorized acts of officers and
agents possessing only limited authority.
. . . .
. . . [T]he rule [is] that, regardless of the equities involved, a
government agency’s unauthorized act cannot be made
effective by estoppel.

2 Such a system would provide an incentive for employees to quit and resume work
repeatedly, in order to earn more benefits while accruing i nterest on those previously
earned.

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In re McGuire, 756 N.W.2d 517, 519 (Minn. App. 2008) (quotations and citations omitted).
If MSRS lacks authority to contravene the statute and pay appellant interest to which the
statute says she is not entitled, it cannot be estopped from denying that payment.
Moreover, an individual invoking equitable estoppel against the government must
show (1) wrongful conduct by an authorized government agent, (2) that the individual
reasonably relied on the wrongful conduct, (3) that the individual incurred a unique
expense in reliance on the wrongful conduct, and (4) that the balance of equities must weigh
in favor of estoppel. City of North Oaks v. Sarpal , 797 N.W.2d 18, 25 (Minn. 2011)
(reversing the determination that the elements of estoppel had been met and concluding
that the conduct in question was not wrongful but rather a simple mistake). A court
considering estoppel against the government “must first look for the government’s
wrongful conduct. Only if it is found to exist does the balancing begin.” Ridgewood Dev.
Co. v. State, 294 N.W.2d 288, 293 (Minn. 1980); see also Matter of Westling Mfg., Inc .,
442 N.W.2d 328, 333 (Minn. App. 1989) (quoted in Kmart Corp. v. County of Stearns, 710
N.W.2d 761, 771 (Minn. 2006) for the proposition that “this ‘wrongful conduct’ element
has since been interpreted to require some degree of malfeasance”), review denied (Minn.
Aug. 25, 1989).
The wrongful conduct relator alleges was a failure to warn her that she could lose
the interest by returning to work for an MSRS -covered entity. But this allegation is
inaccurate: relator was told in the MSRS annual statements of 2015, 2016, and 2017 that
“[y]our monthly benefit increases every year from termination from employment until you
begin collecting your benefit, regardless of age. Increases may not apply if you are

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currently employed in a position covered by a Minnes ota public retirement plan. ”
(Emphasis added). When relator met with an MSRS retirement counselor in September
2017, she did not mention the possibility of her return to MSRS-covered employment. The
counselor’s estimate of what relator would receive when she retired included the italicized
language quoted above as well as the following language: “This estimate is based on
current information. Changes to your work pattern or legislative actions could affect the
final monthly benefit amount. If you believe there is an error in this estimate, please notify
our office. We reserve the right to correct errors and prepare a new estimate.” (Emphasis
added).
Relator did not tell the MSRS counselor in September 2017 that she had any plan to
return to work for an MSRS entity, nor did she call or consult with MSRS before taking a
new government job in July 2018. MSRS did not wrongfully conceal f rom relator the
effect her 2018 job would have on her retirement pay. Relator has not shown the “wrongful
conduct” re quisite for asserting equitable estoppel against the government. While we
recognize that our decision means that relator will suffer a genuine financial hardship, we
are obligated to follow the law.
Affirmed.