The North Carolina Court of Appeals has upheld a lower court's decision that dismissed a petition from Richard D. Lemaster, Jr. regarding his pension repurchase request. The ruling, issued on June 17, 2026, affects Lemaster and potentially other public employees who may seek to repurchase years of service in the Teachers’ and State Employees’ Retirement System (TSERS). This case highlights the complexities surrounding pension rights and the jurisdiction of administrative bodies.
Lemaster's case stems from his attempts to repurchase 7.3 years of creditable service in the TSERS after he withdrew from the system. The dispute centers on changes to the law regarding pension repurchases, which have evolved since Lemaster first joined the retirement system in 1996. The court's decision is significant as it clarifies the boundaries of jurisdiction for the Office of Administrative Hearings (OAH) in North Carolina.
Richard D. Lemaster, Jr. began his career as a teacher in 1996 and became a member of TSERS. After leaving his teaching position, he withdrew 7.3 years of service credit. He returned to teaching in 2011 and rejoined TSERS. In 2018, Lemaster expressed interest in repurchasing his years of service but was advised to wait until closer to retirement. The repurchase cost was calculated at $33,790.66 in 2018 and increased to $36,012.05 in 2019.
In 2021, significant changes were made to the repurchase formula by the North Carolina General Assembly. The previous formula was repealed, and a new one was put in place, limiting repurchase to a maximum of five years. When Lemaster sought a new calculation in 2023, he was informed that he could only repurchase five years of service at a cost of $51,660.83. After an unsuccessful review request, he filed a contested-case petition with the OAH in August 2024, seeking to challenge the decision.
The OAH dismissed Lemaster's petition, stating it lacked subject-matter jurisdiction over his claims. This decision was then affirmed by the Union County Superior Court, leading Lemaster to appeal to the Court of Appeals. The court's ruling focused on the jurisdictional limits of the OAH, emphasizing that it can only hear matters explicitly granted to it by the legislature.
The Court of Appeals, led by Judge Valerie Zachary, confirmed that the OAH does not have the authority to decide on constitutional issues, such as whether the repeal of the previous repurchase statute impaired Lemaster's contractual rights. The court stated, "The OAH has no authority to adjudicate constitutional challenges to statutes, the power of judicial review being reserved to the judicial branch." This ruling reinforces the separation of powers within North Carolina's government.
The impact of this ruling is significant for public employees in North Carolina who may wish to repurchase retirement service credits. By affirming the lower court's decision, the Court of Appeals has clarified that the OAH cannot entertain claims that involve constitutional interpretations. This decision may discourage similar petitions from individuals seeking to challenge administrative decisions based on past laws that have been repealed or amended.
Moving forward, this ruling may set a precedent for future cases involving pension disputes and administrative jurisdiction in North Carolina. It underscores the importance of understanding the current laws governing retirement systems and the limitations of administrative bodies in addressing claims related to those laws.
As for Lemaster, he has the option to appeal the Court of Appeals' decision to the North Carolina Supreme Court, although it is unclear if he will pursue this route. There may also be related cases pending that could further clarify the jurisdictional boundaries of the OAH and the rights of public employees regarding pension repurchases.