                IN THE COURT OF APPEALS OF TENNESSEE

                                                      FILED
ALLAN COMBS, et al.,                 )   C/A NO. 03A01-9701-CV-00022
                                     )                  July 22, 1997
      Petitioners-Appellees,         )
                                     )                Cecil Crowson, Jr.
                                     )                Appellate C ourt Clerk
v.                                   )
                                     )
                                     )
BILLY J. STOKES, Commissioner        )   APPEAL AS OF RIGHT FROM THE
of the Tennessee Department of       )   SULLIVAN COUNTY CHANCERY COURT
Employment Security,                 )
                                     )
      Respondent-Appellee,           )
                                     )
and                                  )
                                     )
HOLSTON DEFENSE CORPORATION,         )
                                     )   HONORABLE RICHARD E. LADD,
      Respondent-Appellant.          )   CHANCELLOR



For Appellant                            For Appellees Combs, et al.

CHERIE S. ADAMS                          D. BRUCE SHINE
Wilson, Worley & Gamble, P.C.            DONALD F. MASON, JR.
Kingsport, Tennessee                     Shine & Mason
                                         Kingsport, Tennessee
EVERETT H. MECHEM
Holston Defense Corporation              For Appellee Stokes
Kingsport, Tennessee
                                         JOHN KNOX WALKUP
                                         Attorney General & Reporter

                                         SANDRA E. KEITH
                                         Office of the Attorney General
                                         Nashville, Tennessee




                             OPINION




REVERSED AND REMANDED                                            Susano, J.

                                 1
            This is an unemployment compensation case.   Holston

Defense Corporation (HDC) appeals the trial court’s determination

that 29 of its former employees (“the Petitioners”) are entitled

to receive full unemployment benefits with no offset for pension

benefits.    HDC raises one issue which presents the following

question for our review:



            Does T.C.A. § 50-7-303(a)(8)(1) require the
            offset of Petitioners’ pension funds against
            their unemployment compensation benefits,
            where petitioners elected to “roll over”
            their pension funds into individual
            retirement accounts?



Having determined that T.C.A. § 50-7-303(a)(8)(1) does require

the offset of company-funded pension benefits against a

claimant’s unemployment compensation under such circumstances, we

reverse.



                                  I



            The material facts are not in dispute.   In 1993, HDC

implemented a program to reduce its work force, in which it

offered all of its employees the opportunity to voluntarily

terminate their employment in exchange for various incentives.

HDC announced that if fewer than the required number of employees

opted for voluntary termination, some employees would be

terminated involuntarily.    Each of the Petitioners chose

voluntary termination.



            Upon termination of their employment, the Petitioners

received incentive pay and other benefits, including a choice

                                  2
between either a lifetime annuity payment or the distribution of

their accrued pension funds, which had been furnished entirely by

HDC.   If they elected a present distribution of those funds, as

opposed to an annuity, they had the further choice of a lump-sum

payment that they could do with as they pleased, or a “roll over”

of those funds into an individual retirement account (IRA).   Each

petitioner chose the latter option, primarily to avoid the tax

consequences of the former.



           The Petitioners subsequently applied to the Tennessee

Department of Employment Security (the Agency) for unemployment

compensation benefits.   The Agency’s subsequent award of benefits

to the petitioners was upheld by its Appeals Tribunal.    HDC then

appealed the Appeals Tribunal’s decision to the Agency’s Board of

Review, which held that, although the Petitioners were otherwise

eligible for unemployment compensation benefits, T.C.A. § 50-7-

303(a)(8)(1) required that those benefits be offset by the

prorated weekly amounts of their employer-funded pensions.    That

decision, however, was reversed by the trial court, which held

that the Petitioners were entitled to full unemployment

compensation without any deductions.



                                II



           The relevant Tennessee statute, T.C.A. § 50-7-303(a),

provides, in pertinent part:



           DISQUALIFYING EVENTS. A claimant shall be
           disqualified for benefits:

                         *       *        *

                                 3
           (8)(1) For any week with respect to which a
           claimant is receiving or is entitled to
           receive a pension... under a plan maintained
           or contributed to by a base period or
           chargeable employer as follows: The weekly
           benefit amount payable to such claimant for
           such week shall be reduced (but not below
           zero):

           (A) By the entire pro-rated weekly amount of
           the pension if one hundred percent (100%) of
           the contributions to the plan were provided
           by a base period or chargeable employer; and

           (B) By no part of the pension if any
           contributions to the plan were provided by
           such claimant.

                          *          *        *

           (5) For purposes of this subdivision (a)(8),
           an individual shall be deemed entitled to
           receive a pension if a determination has been
           made by appropriate officials of such
           individual’s vested right to a pension for
           any week in which such individual is entitled
           to receive benefits under this chapter;...



T.C.A. § 50-7-303(a).



            In order for a state to receive federal certification

and funding for its unemployment compensation program, it must

first meet certain minimum standards set forth in the Federal

Unemployment Tax Act (FUTA), 26 U.S.C.A. § 3301, et seq.         See

Watkins v. Cantrell, 736 F.2d 933, 937 (4th Cir. 1984); Cabais v.

Egger, 690 F.2d 234, 235-36 (D.C. Cir. 1982).       For example, the

FUTA requires that any pension funds received by a claimant be

offset against his or her unemployment compensation benefits.          26

U.S.C.A. § 3304(a)(15).       Tennessee’s corresponding offset

provision, quoted above, is broader than that of the federal

statute.   See T.C.A. § 50-7-303(a).      However, it has been widely

held that the FUTA establishes only the minimum requirements for


                                     4
the offset of pension benefits;       for instance, the Cabais court

stated:



            Section 3304(a)(15)... reflects only the
            minimum conditions under which deduction must
            be required by State law for certification
            under FUTA. Although a State may broaden the
            scope of its deduction of pension payments
            beyond the conditions in which deduction is
            required under the Federal law, it may not
            adopt less stringent conditions which fall
            short of the Federal requirement.



Cabais, 690 F.2d at 242-43.    See also Watkins, 736 F.2d at 939

(states can enact broader offset provisions than those mandated

by 26 U.S.C.A. § 3304(a)(15)); Bleau v. Hackett, 598 F.Supp. 727,

733 (U.S.D.C. R.I. 1984) (“... the Secretary of Labor has

consistently interpreted § 3304(a)(15) as setting only minimum

offset requirements.”)    We hold that T.C.A. § 50-7-303(a)(8)(1)

is not in conflict with the federal statute.



            We are required to employ the same standard of review

used by the trial court when it examined the Board of Review’s

decision.    Armstrong v. Neel, 725 S.W.2d 953, 955 n.1 (Tenn.App.

1986).    Under that standard, we may



            ...reverse, remand or modify the decision if
            the rights of the petitioner[s] have been
            prejudiced because the [trial court’s]
            findings, inferences, conclusions or
            decisions are:

            (A) In violation of constitutional or
            statutory provisions;

            (B) In excess of the statutory authority of
            the agency;

            (C) Made upon unlawful procedure;


                                  5
          (D) Arbitrary or capricious or characterized
          by abuse of discretion or clearly unwarranted
          exercise of discretion; or

          (E) Unsupported by evidence which is both
          substantial and material in the light of the
          entire record.



T.C.A. § 50-7-304(i)(2)(Supp. 1996).



                                III



          HDC and the Agency argue that the language of T.C.A. §

50-7-303(a)(8)(1) clearly requires that the Petitioners’

unemployment compensation be reduced by the prorated amount of

their pension funds.   They contend that the Petitioners fell

within the statute’s definition of entitlement to receive pension

funds, and that the legislature anticipated this type of delayed

receipt of pension benefits when it included the language

“receiving or... entitled to receive” in the statute.     T.C.A. §

50-7-303(a)(8)(1) (emphasis added).    HDC and the Agency point out

that the legislature provided no special exemption for any

particular disposition of pension funds made by a claimant

entitled to such funds.



          The Petititoners, on the other hand, argue that they

did not “receive” the pension benefits, but instead merely

transferred the funds while maintaining their “status quo”.     They

point to language in the Agency’s manual, which states that a

pension roll-over into an IRA is considered a “delay of pension,”

and that benefits may not be reduced where a claimant is merely

“eligible for” pension benefits (as opposed to “entitled to


                                 6
receive” them).    We find these contentions to be without merit.

In the first place, the Petitioners were entitled to their

pension benefits, when they elected to transfer them into IRAs.

Secondly, to the extent that the Agency manual contradicts the

clear language of the statute, it carries no authority, and the

statute must control.



            The Petitioners also cite various documents issued by

the United States Department of Labor to support their position.

One such document, entitled “Unemployment Insurance Program

Letter No. 22-87," draws a distinction, as does the Agency

manual, between “eligibility for” and “entitlement to” pension

benefits.    As previously noted, we believe that the Petitioners

were entitled to their pension benefits; this distinction,

therefore, is of no consequence under these circumstances.    The

document also refers to situations in which pension benefits,

having been deemed “constructively” received, are offset against

unemployment benefits, but are never actually received.    This

language does not apply to the facts of our case.    The benefits

were, in fact, received when they were rolled over into IRAs.



            The other Department of Labor documents cited by the

Petitioners include a letter to the Agency’s Commissioner and a

subsequent Unemployment Insurance Program Letter, each of which

indicate that a state is not required to offset, against

unemployment compensation, pension funds that are “rolled over”

into an IRA.    These documents, however, beg the question, for as

noted earlier, the FUTA sets forth only minimum conditions under

which a state must require such deductions.    States are free to


                                  7
require the offset of pension funds under much broader

circumstances -- including where such funds are “rolled over”

into an IRA -- than those mandated by the federal act.

Therefore, our statute’s mandatory deduction of pension payments

from a claimant’s unemployment benefits is not inconsistent with

the federal law.    Accordingly, we find the Petitioners’

contentions to be without merit.



          We are therefore left with a straightforward question

of statutory interpretation.    Where, as in this instance, the

subject statute is unambiguous, “we need only enforce the statute

as written.”     In re Conservatorship of Clayton, 914 S.W.2d 84, 90

(Tenn.App. 1995).     The statute clearly states that a claimant’s

benefits shall be reduced for any week in which he or she is

receiving or is entitled to receive a pension.     T.C.A. § 50-7-

303(a)(8)(1).     The Petitioners fell squarely within this

provision.     They were “entitled to receive” their pension

benefits when they made the decision to take a lump-sum

distribution rather than an annuity.     Furthermore, they, in

effect, received those funds when they were rolled over into

their own retirement accounts.     The Petitioners cannot circumvent

the statute by means of this voluntary choice; nor can they rely

upon a statutory exception that does not exist.     We therefore

hold, under the standard of T.C.A. § 50-7-304(i)(2)(A), that the

trial court’s decision is contrary to the offset provisions

contained in our statute.     Under the facts before us, T.C.A. §

50-7-303(a)(8)(1) does require the offset of Petitioners’ pension

funds against their unemployment compensation.




                                   8
          The judgment of the trial court is reversed and the

petitions dismissed at the petitioners’ cost.   Costs on appeal

are assessed against the Petitioners.   This case is remanded to

the trial court for the collection of costs on the proceedings

below, pursuant to applicable law.




                                     __________________________
                                     Charles D. Susano, Jr., J.



CONCUR:


_________________________
Houston M. Goddard, P.J.


_________________________
William H. Inman, Sr.J.




                                9
