Judges: WRITTEN BY: Don Stenberg, Attorney General Dale A. Comer, Assistant Attorney General
Filed Date: 3/5/2001
Status: Precedential
Modified Date: 7/5/2016
REQUESTED BY: Senator Mark Quandahl Nebraska State Legislature Senator D. Paul Hartnett Nebraska State Legislature
LB 101 is a legislative bill relating to metropolitan utilities districts in Nebraska. Among other things, the bill would allow a metropolitan utilities district to treat members of its board of directors as employees of the district for purposes of participation in various health insurance programs. The pertinent portions of the bill specifically amend Neb. Rev. Stat. §
Members of the board of directors [of a metropolitan utilities district] may be considered employees of the district for purposes of participation in medical and dental plans of insurance offered to regular employees. The dollar amount of any health insurance premiums paid from the funds of the district for the benefit of a member of the board of directors may be in addition to the amount of compensation authorized to be paid to such director pursuant to this section.
You have both asked similar questions regarding the constitutionality of LB 101 under art.
Art.
The Legislature shall never grant any extra compensation to any public officer, agent or servant after the services have been rendered . . . nor shall the compensation of any public officer, including any officer whose compensation is fixed by the Legislature, be increased or diminished during his term of office except that, when there are members elected or appointed to the Legislature or officers elected or appointed to a court, board, or commission having more than one member and the terms of one or more members commence and end at different times, the compensation of all members of the Legislature or of such court, board, or commission may be increased or diminished at the beginning of the full term of any member thereof.
Art. III, § 19 apparently applies to the activities of local governmental subdivisions. See Shepoka v. Knopik,
As with all insurance matters, there is much uncertainty about the premiums charged, the myriad of plan offerings, benefits provided, availability of coverage and necessity of coverage. I feel that it is very likely that an increase or diminishment of all of these factors would occur during the term of office of a member of [a metropolitan utilities] board of directors. This would make it not only possible, but also probable, that members would not be receiving equal compensation for their service.
You then pose three questions to us regarding LB 101 which we will consider separately below.
Question 1. Does the inclusion of a section allowing members to be considered employees of a district for purposes of participation in medical and dental plans of insurance, and which, in addition allows health insurance premiums to be paid from district funds violate the Nebraska Constitution? (Article III, section 19)
There is nothing on the face of art.
It appears to us that the threshold question with respect to your first inquiry is whether health and dental insurance coverages along with premiums for those coverages can be considered as "compensation" which is included within the restrictions of art. III, § 19 in addition to the obvious compensation made up of an officer's salary. The answer to that question is not entirely clear.
The term "compensation" is not defined in the Nebraska Constitution, and we are aware of no Nebraska cases which define that term directly in the context of art. III, § 19. Authority from other jurisdictions also offers little assistance, since there are cases which indicate both that health insurance is and health insurance is not "compensation" for purposes of state constitutional provisions which prohibit increasing or decreasing an officer's compensation during his or her term of office.Compare Caldwell County Fiscal Court v. Paris,
In the face of such uncertainty, we believe that it is useful to consider the intent of the framers of the constitutional provision at issue. Our supreme court has indicated that the Nebraska Constitution is to be interpreted with reference to the established laws, usages, and customs of the country at the time of its adoption, and historical facts in connection with a constitutional amendment may be used to interpret the meaning of that amendment. Duggan v. Beermann,
The provision in the Nebraska Constitution dealing with increasing or decreasing the compensation of public officers during their term of office has been in the Nebraska Constitution since at least 1875. Nebraska Constitution of 1875, art. III, § 16. It was amended as a result of the state Constitutional Convention in 1919-1920 to apply to any public officer including those officers whose compensation is fixed by the Legislature, and the discussions and events of that constitutional convention are instructive.
The amendment to the Nebraska Constitution at issue was brought before the convention as Proposal No. 71. During debate on the proposal, one of the delegates stated:
The purpose of these amendments to the Constitution is to extend that prohibition in the former Constitution to other officers than Constitutional officers. That is the only change that has been made. The courts have decided in this matter that this Constitutional provision only applied so far as public officers were concerned to Constitutional officers. That has been known by all those who have been in the Legislature for years, that the county officers and other officers whose salary is being fixed from time to time by the Legislature have formed in this state a very close connection. Prior to the convening of every Legislature for practically the last fifteen years these men have met in Lincoln, or some other central place in the state, and have delegated to certain members authority to appear before the Legislature as a lobby, their object being since they are elected to try and get the Legislature to raise their salaries. This works out in this way: It does not give them all an equal opportunity along this line. Those who have the best lobby here and who, perhaps, are the least worthy of a raise in salary are the ones who get their salary raised. Others, perhaps, who ought to have their salaries raised, fail because they do not have a sufficient lobby, or do not have the right members of the Legislature upon their side. I say it is a straight business proposition that when a man is elected to office, while his salary, perhaps, should be raised, yet I think that that man is not the man to say his salary should be increased. I think the Legislature should be relieved of a lobby here year after year with no other purpose except to get the Legislature to continually raise these salaries.
Proceedings of the Nebraska Constitutional Convention, 1919-1920, p. 2199 (Remarks of Mr. Byrum) (emphasis added). In addition, when the constitution was presented to the people of Nebraska after the constitutional convention in 1919-1920, an Address to the People was prepared by the convention which explained the various changes proposed for the state constitution. The purpose for the changes in the section that ultimately became art. III, § 19 was explained as follows:
Amended Section 16, submitted as No. 10 on the ballot, extends the provision of the old section so that the Legislature shall never grant any extra compensation to any public officer, agent or servant after the services have been rendered, nor to any contractor after the contract has been entered into, including any officer whose compensation is fixed by the Legislature. The purpose of this amendment is to prevent the increase of the salary of a public official during his term of office and to prevent or discourage lobbying in favor of increase of salary.
Proceedings of the Nebraska Constitutional Convention, 1919-1920, p. 2842 (emphasis added).
As a result, the focus of the Constitutional Convention in 1919-1920 with respect to art. III, § 19, was the salaries of public officers, and that is what was presented to the people of the state when they voted on and approved that constitutional amendment. For that reason, we believe that "compensation," as it is used in art. III, § 19, refers to the salaries of public officers, and not to additional benefits such as health and dental insurance or the premiums for such items which are normally separate and apart from an officer's salary.
Our conclusion with respect to the meaning of "compensation" in art. III, § 19 and the nature of health insurance benefits is also consistent with the purposes underlying that constitutional provision. Art. III, § 19 ". . . was designed to protect the individual officer against legislative oppression, and further, to curb the activities of public officers in lobbying to induce the Legislature to increase salaries." Ramsey v. GageCounty,
We would point out, however, that our conclusion regarding the nature of "compensation" under art. III, § 19 might be somewhat different if changes in health insurance benefits or premium changes were directed against or to one particular officer or group of officers for obvious retaliatory reasons or to increase the salaries of those individuals alone. In CaldwellCounty Fiscal Court v. Paris,
It should be understood that we are not holding that the payment of a "fringe benefit" to a public official can never amount to "compensation" under the constitution. If, for example, some scheme were devised to raise the salary of a particular official through the subterfuge of paying certain benefits for him not uniformly available to similarly situated officials, that scheme would not likely pass constitutional muster.
Id. at 955. We believe that similar reasoning applies to health insurance benefits under art. III, § 19.
We are aware of the fact that the Nebraska Supreme Court has indicated that pensions for public employees are a form of compensation under art. III, § 19. Wilson v. Marsh,
The benefit of the retirement system awarded to a member thereof who renders services under the act creating the system after its enactment is not a grant of extra compensation after the services are rendered which the Constitution condemns because the increase in pay is granted immediately and from the date of the grant is being currently earned.
(Original emphasis deleted and additional emphasis added). Similarly, in the Wilson case the court quoted State ex rel. Senav. Trujillo,
Finally, we would take note of our Opinion No. 246, dated August 2, 1976, in which we concluded that a county board could not change the health insurance provided to an elected county official during his term of office from family coverage to single coverage based upon art. III, § 19. 1975-76 Rep. Att'y Gen. 353 (Opinion No. 246, dated August 2, 1976). That opinion did not discuss the Constitutional Convention of 1919-1920 or any other relevant authorities pertaining to art. III, § 19, and to the extent that it conflicts with this opinion, we believe that it is incorrect.
In sum, it seems to us that health and dental insurance coverages and premiums paid for those benefits are not "compensation" subject to the strictures of art.
Question 2. If all members of a board do not uniformly participate in medical and dental plans of insurance, would that violate any provisions of the Nebraska Constitution, including the equal protection clause?
The equal protection provisions of the state and federal constitutions generally prohibit improper disparate treatment or improper classifications of people who are otherwise similarly situated. As a result, the initial inquiry in any equal protection analysis focuses on whether there is a classification involved in government action where one individual is treated differently than others in the same situation. Gramercy HillEnterprises v. State of Nebraska,
We are not entirely sure what classifications of board members are at issue in your second question, since it appears to us that all members of a metropolitan utilities district board would be offered the same opportunities for health insurance and dental coverages under LB 101, and any differences in participation would result from the individual choices of the directors involved. However, to the extent that there are classifications inherent in that bill which might be subject to equal protection challenge, "[t]he general rule is that legislation is presumed to be valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest." Robotham v. State,
In the present instance, we are not aware of any suspect classifications or fundamental rights implicated by LB 101. Therefore, courts reviewing an equal protection challenge to that statute would ask only if a rational relationship exists between a legitimate state interest and the means selected by the Legislature in LB 101 to achieve that end. Schindler v.Department of Motor Vehicles,
Question 3. What would be the proper course of action for a board to take if it has paid unequal compensation to its directors?
We have frequently stated, over time, that we will limit our opinions for members of the Legislature to instances where the questions posed to us involve a legislative purpose growing out of pending or proposed legislation. Op. Att'y Gen. No 157 (December 24, 1985). Under that standard, we are uncertain what legislative purpose is implicated in your third question. Moreover, metropolitan utilities districts and other governmental subdivision boards are represented by their own counsel who presumably would be in a much better position to advise those boards as to the proper course of action if they paid unequal compensation to their directors than this office. In any event, it appears to us that your final question is, in great degree, mooted by our response to your Question No. 1. For those reasons, we will not respond further to your third question.
The dollar amount of any health insurance premiums paid from the funds of the district for the benefit of a member of the board of directors may be in addition to the amount of compensation authorized to be paid to such director pursuant to this section.
You have three additional questions in light of that amendment.
Question 1. Does the "dollar amount of health insurance premiums paid from district funds" constitute "compensation" to the director for purposes of ARTICLE III, Section 19 of the State Constitution?
For the reasons discussed at length above, we believe that health insurance benefits along with any premiums paid for those benefits which are separate and apart from an officer's salary are generally not "compensation" for purposes of art.
Question 2. If it is "compensation," would annual (those occurring mid-term) increases or decreases in premium charges or changes in the benefits provided (such as a higher deductible, a loss of coverage on certain conditions, or an expansion of coverage for others, etc.) constitute unlawful increases or diminishments in compensation in contravention of ARTICLE III, Section 19?
Since we have determined that, in our view, the dollar amount of health insurance premiums paid from metropolitan utilities district funds for a director of that district apart from the director's salary does not constitute "compensation" to the director, we need not respond further to this question.
Question 3. Would the answers to questions #1 and #2 be different (a) if the dollar amount of the health premiums were paid by a deduction of the dollar cost of the premium from the salary of a participating board member, with all directors paid the same basic salary, but those participating in the health insurance program actually receiving less (a smaller check) because of the premium deduction or (b) if the full salary was paid all directors and individual directors wishing to participate in the health insurance program were permitted to purchase "into" the employee health insurance program with their own funds?
As discussed above, it is our view that the term "compensation" in art.
Sincerely yours,
DON STENBERG Attorney GeneralDale A. Comer Assistant Attorney General
cc. Patrick O"Donnell Clerk of the Legislature
Approved by:
________________________________ Attorney General
Opinion by the Justices , 249 Ala. 88 ( 1947 )
Wilson v. Marsh , 162 Neb. 237 ( 1956 )
Ramsey v. County of Gage , 153 Neb. 24 ( 1950 )
Robotham Ex Rel. Robotham v. State , 241 Neb. 379 ( 1992 )
Halpin v. NEB. STATE PATROLMEN'S RET. SYSTEM , 211 Neb. 892 ( 1982 )
Gossman v. State Employees Retirement System , 177 Neb. 326 ( 1964 )
Dwyer v. OMAHA-DOUGLAS PUBLIC BUILDING COM'N , 188 Neb. 30 ( 1972 )
Duggan v. Beermann , 249 Neb. 411 ( 1996 )
Gramercy Hill Enterprises v. State , 255 Neb. 717 ( 1998 )
Schindler v. Department of Motor Vehicles , 256 Neb. 782 ( 1999 )
State v. Trujillo , 46 N.M. 361 ( 1942 )