2006 AG Opinion medical benefits F
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. Rob McKenna •
ATTORNEY GENERAL OF WASHINGTON
1125 Washington Street SE • PO Box 40100• Olympia WA 98504-0100
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MEMORANDUM •
DATE: June 12, 2006
TO: Stacia Hollar, Deputy of Legal Affairs
State Auditors Office -
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• MIS 40021 . .
FROM: Cindy Evans,AssistantAttome •General
Government Compliance&Enforcement Division
M/S 40100
SUBJECT: Mid-term increases in cost of medical benefits provided to city council.
members
ISSUE: C_.
Whether an increase in the cost of medical benefits during a city council iember's term, even
though the level of the benefits remains constant, would constitute a prohibited increase in
compensation. .
SHORT ANSWER:
An increase in the cost to the city of a city council member's medical benefits•is an increase.in
compensation..A city is not permitted to pay an increase in the cost of niedical'benefits during a- • .
city council member's term, even though the level of the benefits remains constant.
. BACKGROUND: . • .
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Use of the terms compensation and salary
The terms "compensation"and"salary" are used in the municipal statutes and the Washington
constitution. These terms are not generally considered to be synonymous. As this office has
stated in previous opinions, "salary"is a narrower term than"compensation."
' "Salary"is generally defined as a fixed or stated amount paid regularly or •
periodically to a person for his official or professional services or his regular work.
It is generallyconsidered a specific form of compensation, although not all forms of
.compensation are considered salary
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ATTORNEY GENERAL OF WASHINGTON
June 12, 2006
Page 2
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AGO.1988 No. 29;at 4(citations omitted).
"Compensation"is remuneration in whatever form it may be given,whether it be salaries,wages, or
benefits. AGO. 1988 No. 29, at 5 (citing State ex rel. Funke v.Board of Comm'rs,48 Wash.461,
465-66, 93 P. 920(1908);AGO 53-55 NO.355(health and welfare plan provided to elected•officials
constitutes "compensation"). Since medical benefits are considered One aspect of"compensation,"
any municipal entity given the power to"fix compensation"for their elected officials,has the
implied authority to provide medical benefits to its elected officials.t
Authority to provide medical benefits
. Code, first and second class, commission, and unclassified eities,2 and towns are not given the
express authority to provide medical benefits to their elected officers. Since the councils of •
code, first and second-class, and commission cities are given the authority to fix their own
compensation they have the implied authority to provide medical benefits to themselves. Towns
are the only Municipality where it appears that the authority to provide medical benefits to •
council members has not been given. Entity authority to"fix compensation" or salary is set out
below:
Code cities. RCW 35A.12.070 gives mayor-council plans of government the authority to fix
• compensation by ordinance, and states in part:
•• • The salaries of the mayor and the councilmen shall be fixed by ordinance and may be
revised from time to time by ordinance, but any increase in the compensation attaching to
• an office shall not be applicable to the term then being served by the incumbent if such.
incumbent is a member of the city legislative body fixing his own compensation or as
mayor in a mayor-council code city casts a tie-breaking vote relating to such ordinance[.]
RCW 35A.13.040 gives the same authority to council-manager plans of government.
First class cities. Under RCW 35.22205, the coinpensation of the mayor and elected officials of
first class cities is fixed by ordinance. The statute states:
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• • i"It is a general and undisputed proposition of law that a municipal corporation possess and can exercise
the following powers,and no others:First,those granted in express words;second,those necessarily or fairly •
implied in or incident t6 the powers expressIy granted;third,those essential to the declared objects and purposes of
the corporation,,-not simply convenient but indispensable." State,Ex Rel. Winsor v.Mayor and Common Conn.of
the City of Ballard,10 Wash.4,7,38 P.761 (1894).
2 Unclassified cities are not addressed in this memorandum. Chapter 35,30 RCW does not give ail •
') unclassified city counsel the authority to fix compensation of council members•and a review of a city's charter
• l would be required to determine if the city has the authority to"fix compensation"and thus provide medical benefits.
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ATTORNEY GENERAL OF WASHINGTON --
. June 12, 2006 • •
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The compensation and the time to be devoted to the performance of the duties of the
mayor and elected officials.of all cities of the first class shall be as fixed by ordinance of
said city irrespective of any city charter provisions.
Sebond class cities. The authority to fix compensation for council members is found in RCW
35.23.021,and states in part:
. .The city council by ordinance shall prescribe the duties and fix the compensation of
all'officers and employees[.] .
See also RCW 35.23.091,which states:
[E]ach city council member may be paid for attending council meetings an amount which
shall be fixed by ordinance and may be revised from time to time by ordinance,but any
increase.or reduction in the compensation attaching to an office shall not be applicable to
the term then being served by the incumbent.
Commission cities, While RCW 35.17.108 states that the mayor and commissioners fix their
own salaries. The last sentence of this statute states:
The power. and authority conferred by this section shall be construed as in
• addition and supplemental.to powers or authority conferred by any other law, and
nothing contained herein shall be construed as limiting any other powers or
authority, of any such city. •
• Towns. Under RCW 35.27.130, members of the town council may receive such salary as the
- council ntay fix by ordinance. Towns are given the explicit authority to provide town employees
.. with group insurance under RCW 35.27390, but no authority was found authorizing a town . .
council to provide medical benefits to themselves or to the mayor.
In summary, because medical benefits are considered part of compensation, a code; first and
. second class,or commission city has authority to provide medical benefits to elected city council-
members. Conversely,if it is determined that medical benefits are not compensation then a code,
first and sec.ond class, and commission cities do.not have the authority to provide themselves
medical benefits.3
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3 This is in contrast to the entities listed in RCW 41.04.190,which this office has previously advised does
• riot apply to cities; Except for port district commissioners,each entity listed has explicit statutory authority to
provide themselves medical benefits: RCW 28A.400.350(school board of directors),RCW 52.14.010(fire
.protection district commissioners),54.12.080(public utility district commissioners),RCW 57.08.100(water:sewer _.
district commissioners),70.44.050(public hospital district commissioners),RCW 87.03.160(irrigation district
directors). -
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ATTORNEY GENERAL.OF 'WASHINGTON
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June 12,2006
Page 4
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LEGAL ANALYSIS:
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Your question is whether an increase in the cost of medical benefits during a city council
member's term is a prohibited increase in compensation. Mid-term compensation increases •
for elected officials who fix their own compensation are prohibited by article 2; §25.of the
• Washington Constitution.4 In addition, as set forth above,there are similar statutory prohibitions
against mid-term increases for second'class.cities and code cities with mayor-council and
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,council manager plans of government. These prohibitions prevent elected officials from taking
actions that-increase their compensation,without providing voters the opportunity to decide if the
action taken by the officer is acceptable. City of Everett v. Johnson, 37 Wn.2d 505, 507,224
P.2d 617(1950). On the other hand,these provisions give candidates for office and the general
public stability and predictability as to the compensation of a public officer. Id.
It has been suggested that if the cost of a medical benefit plan increases,but the plan benefits .
remain the same,.there is no prohibited increase.in compensation. In my opinion, this conclusion
is•incorrect. I conclude* that for purposes of this gtiestion,•a medical benefit increase should be
measured by the amount paid by the city to pay for the council member to participate'in the plan;
and an increase in the amount paid by the city is not allowed mid-term.
This conclusion is consistent with Attorney General Opinions 1969 No. 2 and 1974'No. 9,which
both concluded'that a mid-term increase in.the amount of a county's payment toward an elected •
off'icial's medical coverage is prohibited. These opinions are consistent with the purpose of the
prohibition on mid-term compensation increases. .city council members determine their own
compensation. If a city council member does not have city provided medical benefits or health
insurance,the member might have no alternative but to pay for such insurance with personal fiords.
Obtaining medical benefits from the city is similar to receiving a compensation increase,because
the council member will not have to pay for the insurance with the member's own funds. Similarly, •
if the member currently receives medical benefits as part of his compensation,and the city pays for •
4 Article 2 §'25 states in part,"The legislature shall never grant any extra compensation.-.:nor shalt the
compensation of any public officer be increased or diminished during his term of office." This analysis is not
applicable to those elected officials who do not set their opn compensation or salary or whose salary is determined •
by the citizen's commission on salaries for-elected,officials. Article 30, § 1,Washington Constitution;RCW
43.03.310. _
5 Second class cities [A]ny increase or reduction in the compensation attaching to an office shall not be
applicable to the term then being served by the incumbent, RCW 35.23.091. •
Code city Mayor-Council-[A]ny increase in the compensation attaching to an office shall not be applicable to the
•term then being served by the incumbent if such incumbent is a-member of the city legislative body fixing his own • •
- ' compensation or as mayor in a mayor-council code city casts a tie-breaking vote relating to such ordinance[:]RCW
35A.12.070.- '
. Code city Council-Manager-[A]ny increase or reduction in the compensation attaching to an office shall not
• become effective until the expiration of the term them being served by the'incumbent;PROVIDED,That
compensation of council men may not be increased or diminished after their election nor may the compensation of
. ) the mayor be increased or diminished after the mayor has been chosen by the council.RCW 35A.13,040.
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ATTORNEY GENERAL.OF.WASHINGTON
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June 12,2006
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' any increase in the cost of such insurance,then the council member need not use personal funds to
pay for the cost increase, and again the cost savings to the member is similar to a compensation •
increase.
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Other considerations support the above conclusion as.the most'reasonable approach to resolving the
questions you have posed. As a matter of general practice,medical benefits are measured by their
cost. For example, the state Health Care Authority(HCA)develops medical benefit programs
for state employees;participating school district and educational service district ernployees;'and
county,municipal,or other political subdivisions that choose to participate. ROW 41.05.006(2)- .'
and.021. A monthly employer"premium contribution"is required for each employee. -RCW
41.05.050(3);WAC 482-08496(1). For public employees-and entities participating in these
HCA benefit programs,the benefit is measured by the cost paid by the entity on behalf of the
employee rather than by what coverage is provided by the benefit plan. If the benefit were
measured by the plan coverage, a municipal entity would likely not know the costs of the plan
when it is in the budget adoption process. By measuring the benefit by cost to the municipal
entity, that entity can accurately forecast the amount of money to budget,to•provide medical
benefits. •
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Furthermore, a system similar to the HCA's,in which'there is a pre-determined cost for the
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• • premium contribution for each employee,allows employers to offer a variety afi-Ian for a pre-
determined cast,thereby affording employees options to choose a plan that fits their personal
needs. For example,HCA currently offers eight medical'plans, each of which offers a basic'set
• of benefits with some variation for benefit enhancements or lints, employee preen iiums,and out-
ofpootcet expenses. -
The alternative of measuring medical benefits by plan coverage would not be workable..For •
example,when council members for the City of X were elected(year one of term)they were
provided medical benefits that included free"well baby"visits. In year two,the medical benefits` •
provider changed their benefits package and discontinued the free".well.baby"visits. -Article-?,
§25 prohibits both increases and decreases in compensation for elected officials_ Under this
scenario,the council members have just had their compensation decreased because the benefits
package no longer contains free well baby visits. A different example assumes the same set of •
- " facts but the medical benefits provider increased the-cost of co-pay visits; again,.because the
coverage has changed,if the benefit package was the measure of compensation,there would be a
prohibited decrease in compensation. Also,measuring benefits by plan coverage may impede a
city's budgetary process since it would be difficult for the City to forecast futurecosts for. • -
medical benefits. -
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ATTORNEY GENERAL OF WASHINGTON .
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• June 12,2006 • • -
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Page 6 . .
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CONCLUSION: •
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An increase in the cost to the city of a city ceuncif thernber's Medical henefi ts is an increase in .
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• • compensation. A city is not permitted to pay an increase in the cost of medical benefits during a
• city council rnenibees term,even though the level of the benefits'remains constant. 'Ws,
analysis represents my considered legal opiiii&i.only,and is not the'iiPiniOn of the Attorney •
General. • • - • - . ,
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cc: Lisa.Tagtuan,Local Government Support Team;SAO''
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