COMPENSATION ‑- SCHOOL DISTRICTS ‑- TEACHERS ‑- INCENTIVE PAYMENTS
1. In order to be lawful, "incentive payments" made to certificated school district personnel under the authority of RCW 28A.58.0951(4) must be related to some identifiable, measurable "incentive" defined in a district policy or contract and amounting to more than the performance of duties and functions defined by statute as "basic education".
2. A school district must retain documentation of eligibility for payments made under RCW 28A.58.0951(4), but the exact form of the documentation depends on the nature of the payments and the policy choices of the State Auditor under RCW 43.09.200.
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July 21, 1989
Honorable Robert V. Graham
Legislative Building, AS-21
Olympia, WA 98504-0421
Cite as: AGO 1989 No. 15
Dear Mr. Graham:
By letter previously acknowledged, you requested our opinion on two questions, which we paraphrase as follows:
1. May school districts, under the authority of RCW 28A.58.0951(4), make across-the‑board incentive payments to certificated personnel where the "incentive" is continued service to the district rather than the performance of additional work or some other measurable consideration?
2. Must a school district retain documentation of eligibility for payments made under RCW 28A.58.0951(4)?
We answer your questions in the manner set forth in our analysis.
[[Orig. Op. Page 2]]
May school districts, under the authority of RCW 28A.58.0951(4), make across-the‑board incentive payments to certificated personnel where the "incentive" is continued service to the district rather than the performance of additional work or some other measurable consideration?
Your questions involve legislation enacted to place a lid on teachers' salaries. Such legislation was first enacted in 1981 and was commonly known as the "school district salary and compensation limitation law". Laws of 1981, ch. 16, § 2, p. 87.1/
The rationale for adopting the salary lid bill was to deal with the problem of unanticipated increases in costs to the State. House Journal, 43d Legislature (1981), at 163.
In 1985, the Legislature authorized school districts to exceed the salary lid by entering into separate contracts with certificated instructional or classified staff for additional days or additional duties. Laws of 1985, ch. 349, § 7, p. 1199. This 1985 legislation, codified as RCW 28A.58.093, read as follows:
School boards may by separate contract with certificated instructional and classified staff provide supplemental compensation for additional days or additional duties as set forth in the bargaining agreement or agreements as negotiated between the district and the respective bargaining representatives, if the district does not incur obligations for the supplements beyond the current school year and if such supplements do not cause the state to incur any present or future funding obligations. Additional days for certificated instructional staff and classified staff shall be those days beyond their respective work year. Such separate contracts shall be subject to the collective bargaining provisions of chapter 41.59 and 41.56 RCW. Such supplemental compensation shall not be [[Orig. Op. Page 3]] deemed an increase in salary or compensation for purposes of RCW 28A.58.095. Separate contracts shall be subject to the provision of RCW 28A.67.074, shall not exceed one year, and if not renewed shall not constitute adverse change in accordance with RCW 28A.58.450 through RCW 28A.58.515.
In 1987, the Legislature passed Reengrossed Second Substitute House Bill 455, legislation concerning school financing.2/
RCW 28A.58.093 and [28A.58.]095 were repealed and replaced with RCW 28A.58.0951. Laws of 1987, 1st Ex. Sess., ch. 2, §§ 205, 211, pp. 2492, 2496. This 1987 legislation sought to establish a modern school financing system for compensation of school staff. Laws of 1987, 1st Ex. Sess., ch. 2, § 1, p. 2482. The Legislature adopted a statewide salary allocation schedule for certificated instructional staff which sought to equalize the districts.
The provision in question, RCW 28A.58.0951(4), states:
Salaries and benefits for certificated instructional staff may exceed the limitations in subsection (3) of this section only by separate contract for additional time, additional responsibilities, or incentives. Supplemental contracts shall not cause the state to incur any present or future funding obligation. Supplemental contracts shall be subject to the collective bargaining provisions of chapter 41.59 RCW and the provisions of RCW 28A.67.074, shall not exceed one year, and if not renewed shall not constitute adverse change in accordance with RCW 28A.58.450 through 28A.58.515. No district may enter into a supplemental contract under this subsection for the provision of services which are a part of the basic education program required by Article IX, section 3 of the state Constitution.
RCW 28A.58.0951(3) provides for the salary limitation on basic education certificated instructional staff. The average salary cannot exceed the district's average basic education certificated instructional staff salary used for the state basic [[Orig. Op. Page 4]] education allocations. RCW 28A.58.0951(3).3/
RCW 28A.58.0951(4) authorizes school districts to exceed this limitation by entering into separate or supplemental contracts for additional time, additional responsibilities, or incentives.4/
However, the final sentence of RCW 28A.58.0951(4) prohibits school districts from entering into supplemental contracts for services which are a part of the basic education program required by article 9, section 3 of the state constitution.5/
The Legislature defined the components of the state basic education program in The Washington Basic Education Act of 1977. Laws of 1977, 1st Ex. Sess., ch. 359. These program requirements vary depending on the grade level, and include reading, language arts, mathematics, social studies, science, music, art, health, and physical education. See RCW 28A.58.754.
Your question arose from a specific collective bargaining agreement which provided for an across-the‑board incentive payment called an "excellence recognition stipend". The materials provided indicated that the parties may have intended this "stipend" as an incentive for performing additional responsibilities, such as attending graduation ceremonies, leadership camps, fundraisers, concerts, and other school district activities occurring outside the classroom and outside regular school time. However, the contract in question did not require any of the certificated personnel to perform any specific additional responsibilities, but rather entitled all certificated instructional personnel (except those with less than one year of experience) to receive the stipend.
With this type of collective bargaining agreement as a background, you have asked whether continued service to the district is sufficient "incentive" to justify supplemental payments under RCW 28A.58.0951(4). We conclude that the answer depends on whether the particular supplemental contract in [[Orig. Op. Page 5]] question relates the payments to some tangible, identifiable "incentive" for enhanced performance.
RCW 28A.58.0951(4) provides for three possible bases to exceed the salary limitations. "Incentives" are specifically mentioned and constitute an independent basis. As such, they are intended to compensate an individual for something other than additional time or additional responsibilities. When possible, effect should be given to every word, clause, and sentence of a statute, and no part should be deemed inoperative or superfluous unless the result of obvious mistake or error. Hanson v. Tacoma, 105 Wn.2d 865, 871, 719 P.2d 104 (1986).
We thus consider what is meant by the term "incentive". The word is not defined by the statute. Absent a statutory definition, the words of a statute should be accorded their usual and ordinary meaning. Pacific First Fed. Sav. & Loan Ass'n v. State, 92 Wn.2d 402, 598 P.2d 387 (1979). "Incentive" ordinarily means "serving to encourage, rouse, or move to action . . . designed to enhance or improve production." Webster's Third New International Dictionary 1141 (1981).
A typical individual teacher contract obligates the teacher to perform described services to the school district for a stated period of time, normally one year. If a supplemental contract merely identifies "continued service" as the basis for an "incentive stipend", the district is merely offering a salary supplement to any teacher who agrees to fulfill his or her basic contract responsibilities. It is difficult to see how such a program could be "designed to enhance or improve production". Indeed, one could regard such a program as a disincentive for "excellence" in that it rewards mediocre or poor performance equally with excellent performance, however defined.
The statute in question undoubtedly is broad and leaves districts with discretion to determine what are appropriate subjects for incentive payments. We will not here attempt to define all the possibilities, but a district must at least be able to identify a logical connection between an incentive stipend paid pursuant to the statute and some form of enhanced production or performance. This is particularly true in light of the final sentence of RCW 28A.58.0951(4), which indicates that the Legislature did not intend that "incentive payments" cover basic education program services. Because some certificated personnel provide "basic education services" and some do not, an across-the‑board "stipend" with no identifiable consideration for the additional "incentive payment" would seem to reward at least some certificated personnel for providing "basic education services".
[[Orig. Op. Page 6]]
There may well be forms of "excellence recognition stipends" which meet the statutory requirements. The statute allows districts broad latitude in determining the criteria for "excellence recognition" and the type of "incentive stipend" designed to inspire good performance. Beyond these general comments, we would have to review particular contract provisions on a case‑by-case basis.
Must a school district retain documentation of eligibility for payments made under RCW 28A.58.0951(4)?
School districts in Washington are considered to be municipal or quasi-municipal corporations. RCW 28A.58.010;Noe v. Edmonds Sch. Dist. 15, 83 Wn.2d 97, 515 P.2d 821 (1973). As such they are covered by the provisions in RCW 43.09.190 through 43.09.285 regarding municipal corporations.
Under RCW 43.09.200, the State Auditor is required to formulate, prescribe, and install a uniform system of accounting and reporting for every public institution. This system must exhibit accounts and detailed statements of funds collected, received, and expended for account of the public. The accounts must show the documents kept or required to be kept which are necessary to isolate and prove the validity of every transaction. RCW 43.09.200.
Although the State Auditor may prescribe accounting requirements, the appropriate documentation depends on the particular transaction involved. RCW 28A.58.0951(4) itself does not require any particular type of documentation to be eligible for additional compensation. Thus, the issue is not whether documentation is required, but rather what type of documentation is needed to establish the validity of the payment.
Such documentation would necessarily vary from case to case depending upon the specific statutory basis relied upon for the additional compensation and the meaning of the contract provisions regarding this payment. RCW 28A.58.0951(4) requires the supplemental contracts to be subject to collective bargaining. Thus, to some extent, the parties may establish their own documentation requirements. However, such documentation must be sufficient to establish the validity of the payment. See RCW 43.09.200. Your office has considerable discretion to determine what might be sufficient documentation by [[Orig. Op. Page 7]] prescribing an appropriate accounting and reporting system as contemplated by RCW 43.09.200.
We trust that the foregoing will be of assistance to you.
Very truly yours,
KENNETH O. EIKENBERRY
Assistant Attorney General
*** FOOTNOTES ***
1/Codified as RCW 28A.58.095 and repealed by Laws of 1987, 1st Ex. Sess., ch. 2, § 211, p. 2496. RCW 28A.58.095 provided that the maximum salary and compensation levels at which school district employees were to be paid were governed by the amounts and percentages set forth in the biennial operating appropriations act in effect at the time of payment.
2/Laws of 1987, 1st Ex. Sess., ch. 2.
3/This subsection preserves the general concept of the salary lid established in RCW 28A.58.095.
4/This subsection preserves the general concept of permissible exceptions to the salary lid established in RCW 28A.58.093.
5/Article 9, section 3 of the state constitution does not require a program of basic education. Instead, it provides for the sources of revenue to fund basic education required by sections 1 and 2 of article 9.