AGO 1994 No. 11 - Aug 8 1994
SCHOOLS-SCHOOL EMPLOYEES-SALARY AND BENEFITS-HEALTH CARE AUTHORITY-RETIRED PUBLIC EMPLOYEES-COLLECTIVE BARGAINING- Relation of subsidy paid under RCW 28A.400.400 to reduce health insurance premiums for retired employees to salary and compensation limitations imposed by RCW 28A.400.200
1. The Legislature has authorized, but has not required, that the payments to be made to the Health Care Authority under RCW 28A.400.400 to reduce health insurance premiums for retired school employees be made from certain funds appropriated in the budget for insurance benefits for current school employees.
2. Money paid to the Health Care Authority for health care benefits for retired school employees should be disregarded in calculating the amounts paid by a school district for salary and benefits for current employees for purposes of applying the compensation limitations established pursuant to RCW 28A.400.200.
3. A school district has discretion to make the payments to the Health Care Authority required by RCW 28A.400.400 out of the appropriation for employee insurance benefits, or out of other funds; therefore, the exercise of that discretion affects the wages and working conditions of current employees and is a lawful subject for collective bargaining between the employees and the district.
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August 8, 1994
State Senator, District 23
401-B Legislative Building, MS 40423
Olympia, WA 98504-0423
State Senator, District 34
200 John A. Cherberg Building, MS 40478
Olympia, WA 98504-0478
Cite as: AGO 1994 No. 11
Dear Senator Sheldon and Senator Talmadge:
By letters previously acknowledged, you requested our opinion on questions involving RCW 28A.400.400 which relates to health care insurance for retirees of school districts and educational service districts. Because your questions are closely related, we have chosen to combine our response in one opinion.
We paraphrase Senator Sheldon's and Senator Talmadge's questions, respectively, as follows:
1. Does the subsidy which must be paid to the Health Care Authority under RCW 28A.400.400 to reduce health insurance premiums for retired school employees affect the insurance benefits allocation for the purposes of determining compliance with the limitation on salaries and compensation imposed by RCW 28A.400.200?
2. May the source of the subsidy be a subject of collective bargaining between school districts and employees?
We respond to Question 1 in the negative and to Question 2 in the affirmative.
The questions you have posed must be analyzed against the backdrop of the salary and compensation scheme for Washington's public school employees. We begin our analysis there.
The state Legislature annually allocates funds for salaries and insurance benefits for certificated instructional staff of the state's public schools. See RCW 28A.150.410. The annual allocation for insurance benefits is derived from a calculation based on formula-generated staff units. See Laws of 1993, 1st Sp. Sess., ch. 24, §§ 502(5), 504, pp. 2953, 2957. Insurance benefits allocated from general fund appropriations were calculated at $317.79 per month for each certificated staff unit for the 1993-94 school year. The allocation increases to $350.25 per month for the 1994-95 school year. Id. at § 504(1), (2), p. 2957.
Limitations on salaries and compensation for certificated instructional staff are imposed by RCW 28A.400.200. Salaries are limited by the statewide salary allocation schedule in the budget appropriations act. See RCW 28A.400.200(3)(a). Fringe benefit contributions are included as salary only to the extent they exceed the current insurance benefits allocation. RCW 28A.400.200(3)(b). Of note, the recent state health care reform law, the Health Services Act of 1993, amended the salary compliance statute to exclude from fringe benefits the employer contributions for health benefits in excess of the insurance benefits allocation. The amended language also provides that such excess health benefits may not be paid from state funds. RCW 28A.400.200(3)(b); Laws of 1993, ch. 492, § 225(3)(b), p. 2093. As a result of this amendment, employer contributions for excess health benefits are not limited by the salary cap.
In 1993, the Legislature added RCW 28A.400.400 to the salary and compensation scheme. Laws of 1993, ch. 386, § 13, p. 1550. This new section requires school districts to remit funds to the Health Care Authority to subsidize health insurance for retired and disabled school employees. The amount of the subsidy is tied to the number of active employees in a district. Between October 1993 and September 1994, school districts must remit $10 each month of the school year for each full-time employee and a prorated amount for part-time employees. RCW 28A.400.400(1)(a).
Beginning in October 1994, the subsidy is derived from a formula based on the insurance benefits allocation for active employees. School districts must remit "an amount equal to four and seven-tenths percent multiplied by the insurance benefit allocation rate in the appropriations act for a certificated or classified staff, for each month of the school year". RCW 28A.400.400(1)(b)(i). A prorated amount for part-time employees is based on the same formula. RCW 28A.400.400(1)(b)(ii). The Legislature reserved the right to increase or decrease this percentage in the future. RCW 28A.400.400(2).
Does the subsidy which must be paid to the Health Care Authority under RCW 28A.400.400 to reduce health insurance premiums for retired school employees affect the insurance benefits allocation for the purposes of determining compliance with the limitation on salaries and compensation imposed by RCW 28A.400.200?
We believe that this question raises two issues: (1) whether the Legislature has required that the subsidy be paid from the insurance benefits allocation established in the budget appropriations act; and (2) whether the subsidy, regardless of its source, operates to reduce the insurance benefits allocation received by active employees, thus triggering the cap on salaries for active employees at a lower level.
Case law provides that a "court cannot read into a statute that which it may believe the legislature has omitted, be it an intentional or an inadvertent omission". State v. Taylor, 97 Wn.2d 724, 728, 649 P.2d 633 (1982), quoting Jenkins v. Bellingham Municipal Court, 95 Wn.2d 574, 579, 627 P.2d 1316 (1981). TheTaylor court reiterated the rule stated inMcKay v. Department of Labor & Indus., 180 Wash. 191, 194, 39 P.2d 997 (1934), that "[i]n construing a statute, it is safer always not to add to, or subtract from, the language of the statute unless imperatively required to make it a rational statute". Taylor, 97 Wn.2d at 728.
Applying these rules of statutory construction, we observe that RCW 28A.400.400 does not prescribe the source of the subsidy it creates. Nor does it provide that payment of the subsidy by school districts, from whatever source, should have the effect of reducing the insurance benefits allocation for active employees for the purpose of the salary limitation statute. In fact, RCW 28A.400.400 does not relate the $10 subsidy to be paid during the 1993-94 school year to the insurance benefits allocation in any way. In future years, the subsidy is related to the allocation for the sole purpose of determining the subsidy amount.
RCW 28A.400.400 simply creates a subsidy for retired school employees and directs how it is to be calculated. We believe the lack of a provision in the statute specifying the source of funding for the subsidy in effect authorizes districts to determine the source at the local level. The statute is rational without such a provision, and we believe a court would be reluctant to interpret the statute to specify a source of the subsidy, be it the insurance benefits allocation or any other source.
Similarly, we do not believe the statute should be interpreted as requiring a reduction in the insurance benefits allocation received by active employees. A reduction of the allocation would result in a concomitant reduction in allowable fringe benefits under the salary limitation statute, see RCW 28A.400.200(3)(b), effectively reducing the overall compensation which may be paid to active employees. Such an interpretation would read significant language into RCW 28A.400.400 and is unnecessary to make it a rational statute.
It also seems illogical to us that the money for the subsidy would necessarily come out of funds earmarked for active employees, or impact the limitation on their salaries, given that the subsidy was created for the benefit of retired school employees. Nothing in RCW 28A.400.400 suggests this outcome.
In reaching our conclusion, we are mindful of the language employed by the Legislature in the preamble to Substitute House Bill (SHB) 1784, the bill in which RCW 28A.400.400 was enacted. The Legislature stated its intent in establishing the subsidy in part as follows:
It is the legislature's intent to increase access to health insurance for retired and disabled school employees and also to improve equity between state employees and school employees by providing for the reduction of health insurance premiums charged to retired school employees through a subsidy charged against health insurance allocations for active employees.
Laws of 1993, ch. 386, § 1, p. 1542 (emphasis added).
It might be argued that "charged against" equates to "deducted from", evidencing legislative intent that the subsidy be paid from the insurance allocation. However, we believe it would be an improper use of a preamble to add or infer a legislative mandate that is not apparent from the purview of the statute itself. The courts have stated:
A preamble is not without its uses. It is not to be entirely rejected where the statute is ambiguous, although it will not be resorted to to create a doubt or misunderstanding which otherwise does not exist. Where there is a doubt, it will be given its place as a component part of the act.
Belgarde v. Brooks, 19 Wn. App. 571, 575, 576 P.2d 447 (1978), quoting Huntworth v. Tanner, 87 Wash. 670, 676-77, 152 P. 523 (1915). Concerning RCW 28A.400.400, the unspecified source of the subsidy does not create a doubt or misunderstanding about the statutory mandate, which is that a subsidy must be remitted to the Health Care Authority.
We are also mindful of legislative intent evidenced in the 1993 Final Legislative Report on SHB 1784. A background discussion in the report indicates that a subsidy for retired state employees, on which SHB 1784 appears to have been modeled, is funded by the Legislature when it appropriates money for insurance for active state employees. The report states in part as follows:
The latest data available shows that in fiscal year 1992, $13.72 of the $289.95 per month premium appropriated for active employees actually went to help retirees — 4.7 percent of the total.
1993 Final Legislative Report, 53rd Legislature (1993), at 157 (Substitute House Bill 1784).
The report indicates that the premium appropriated for active state employees is the same as the premium appropriated for school employees. In SHB 1784, the Legislature achieved equity between retired state employees and retired school employees by requiring the same percentage of the insurance benefits allocation applied to help retired state employees to be applied to help retired school employees. Thus, beginning in 1994, an amount equal to 4.7 percent of the active school employees' insurance benefits allocation shall be devoted to retired school employees.
However, the 1993 Final Legislative Report does not itself state the source from which the subsidy for retired school employees was intended. The most that can be inferred from the report is that the Legislature applied the same percentage against the school employees' insurance benefits allocation as it observed was taken from active state employees' monthly insurance premium.
In summary, we do not believe that the insurance benefits allocation is affected by the subsidy. In creating the subsidy, the Legislature did not require that it be paid from the allocation for active employees, or that it reduce the allocation for the purposes of the salary limitation statute.
May the source of the subsidy be a subject of collective bargaining between school districts and employees?
It is apparent to us that the Legislature has not required that the subsidy for retired school employees be paid from any specific source. Conversely, neither has it prohibited payment from any specific source. However, we believe that the subsidy, if paid from the insurance benefits allocation for active employees, would logically reduce the allocation received by active employees by the amount of the subsidy. As a result, the source of the subsidy can directly affect the wages of active employees.
The certificated instructional staff of our public schools have the right to organize and bargain collectively regarding wages, hours, and terms and conditions of employment. RCW 41.59.020, .060. By leaving the source of the subsidy unspecified, the Legislature has effectively placed the matter on the table for collective bargaining between district employers and employees.
The subsidy which must be paid to the Health Care Authority under RCW 28A.400.400 to reduce health insurance premiums for retired school employees does not affect the insurance benefits allocation for the purposes of determining compliance with the limitation on salaries and compensation imposed by RCW 28A.400.200. The subsidy is neither required to be paid from the allocation nor does it operate to reduce the allocation established by the Legislature in the budget act. Which funds the subsidy is paid from is a proper matter for collective bargaining between district employers and employees.
We hope that this opinion will be of assistance to you.
Very truly yours,
CHRISTINE O. GREGOIRE
Assistant Attorney General