INSURANCE ‑- GROUP INSURANCE ‑- PUBLIC EMPLOYEES ‑-STATE EMPLOYEES ‑- PAYMENT OF COSTS BY STATE
State departments may not pay out of public funds all or any part of the premium cost of group insurance coverage of their employees.
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October 19, 1953
Honorable E. W. Anderson
Washington Public Service Commission
Olympia, Washington Cite as: AGO 53-55 No. 150
This is in answer to your previously-acknowledged letter of September 24, 1953, requesting our consideration of the legality of a state agency paying, from public funds, all or part of the premium cost of group life and/or health and accident insurance on its employees.
The fundamental rule is that no public money may be expended except by authority of law. 42 Am.Jur. 744, section 42. The Washington Constitution, Amendment Eleven, provides that no money shall ever be paid out of the state treasury, or any of its funds, except in pursuance of an appropriation by law. Of course, it is not necessary that every particular item of expenditure be expressly authorized, but it is sufficient if a statute, by general language, appropriates money to a department of state government for a class of expenditures which is broad enough to include the particular item in question.
The question resolves itself to this: Is there any law which either expressly or by implication authorizes the expenditure of public funds directly to third persons for the purchase of group insurance coverage for public employees?
There is a statute expressly authorizing such expenditures by the Toll Bridge Authority. (See section 2, chapter 211, Laws of 1953.) To our knowledge, no other department of state government has such express statutory authority.
[[Orig. Op. Page 2]]
In considering whether state departments have the implied authority to make such expenditures, it is necessary to keep in mind two rules: (1) Public officials have only such power and authority as is expressly granted or necessarily implied from the powers clearly granted. 67 C.J.S. 365, section 102; (2) expenditures of public funds are always limited (a) by the fundamental rule that every use of public funds must be for public purposes; and (b) by the rule that all expenditures must be within the limits and purposes of the departmental appropriation.
The application of both rules can be considered simultaneously. Once it is determined whether or not the expenditures here in question were intended to be within the scope of the various appropriations, the question of the implied authority of the officers to make such expenditures is automatically resolved.
Appropriations are generally divided into two classes: (1) appropriations for maintenance and operations, and, (2) appropriations for salaries and wages. Expenditures for operations and maintenance have always been considered to be limited to such things as are necessarily incident to the performance of the duties required by law of the particular department concerned. They include such things as office furniture, stationery, necessary travel expenses of the departmental officials, etc. It is extremely doubtful that the payment by the state of the premiums here in question is necessary to the performance of the duties of any department. The fact is that all departments have operated since the creation of the state government without such authority. However desirable it may be that the state stand such expense, it cannot, by any stretch of the imagination, be considered necessary in the sense that the duties could not otherwise be performed. The conclusion is inevitable that the legislature intended to grant no such power by implication, merely by appropriating money to the various departments for maintenance and operations.
It is possible that such premium payments could fall within that class of appropriations designated as salaries and wages. InW. W. Cross & Company, Inc., v. National Labor Relations Board, 174 F. (2d) 875, the United States Circuit Court of Appeals, First Circuit, was considering whether or not an employer was required to bargain collectively with the employees' representative regarding an employer-paid group insurance program. The National Labor Relations Act requires that employers engage in collective bargaining upon matters relating to "rates of pay, wages, hours of employment, or other conditions of employment, * * *." The court held that the word "wages" comprehends emoluments resulting from employment in addition to or supplementary to actual rates of pay. It then interpreted the word to mean any direct or immediate economic benefits [[Orig. Op. Page 3]] flowing from the employment relationship, including the payment of premiums on a group insurance program. Consequently, the rule seems to be that the term "wages" as used in the National Labor Relations Act is broad enough to include the premium cost of a group insurance program.
Whether that word should be given the same meaning when used in our general appropriation act seems very doubtful. Appropriation acts have been passed by numerous legislative sessions in substantially the same form for a great many years. Prior to 1947, there was no indication that the legislature had ever contemplated either the inclusion or exclusion of premiums such as this within that term. However, in 1947, the legislature passed RCW 41.04.020 specifically providing a means for the direct payment of such premiums by payroll deductions at the request of the employees. Again in 1953, the legislature acted upon the same subject by passing chapter 260, Laws of 1953, amending RCW 41.04.030. This act makes such payroll deductions mandatory upon the various auditors where they are requested to do so by groups of twenty or more employees. In addition to these two statutes, chapter 211, Laws of 1953, referred to previously, was an act expressly authorizing payment of premiums such as this by one department. The passage of these three statutes is a clear indication that the legislature has been, at least for the past six years, conscious of the trend of public sentiment regarding group insurance coverage for public employees. It also seems clear that the legislature considered such premiums to be a personal obligation of the employees, and outside the scope of the term "wages" as used in the appropriation acts.
Apparently the time has now arrived when the custom has become more prevalent for the employer to pay the total cost of such plans. It seems inconceivable that the legislature could have been ignorant of this trend. This is particularly true since it enacted one bill in 1953 accomplishing, for one department, precisely what we are now asked to consider for the entire state government. Furthermore, the two general statutes upon the subject clearly contemplate that such premiums are to be paid by the employee and not by the state. The extent of the state's participation so far has been limited to making the payroll deductions. It may be, that in failing to provide for payment of such premiums by the state, the legislature has misjudged the extent to which this practice has developed. If this is true, the state government may well be behind private industry in this respect. However that may be, it seems perfectly clear to us that the legislature has dealt with the subject matter, and has declined to authorize the payment for such plan out of public funds.
We believe that the problem calls for the application of that very common rule of statutory construction that the express mention of one thing impliedly excludes others. (Expressio unius est exclusio alterius. SeeState v. Thompson, 38 Wn. (2d) 774 and authorities cited.)
[[Orig. Op. Page 4]]
In our opinion, no state department, except those possessing express statutory authority, may expend public funds to pay group insurance premiums for its employees.
We answer your question in the negative.
Very truly yours,
RALPH M. DAVIS
Assistant Attorney General