DISTRICTS ‑- SCHOOL ‑- EMPLOYEES ‑- APPROPRIATION FOR SCHOOL DISTRICT AVERAGE COMPENSATION INCREASES

DISTRICTS ‑- SCHOOL ‑- EMPLOYEES ‑- APPROPRIATION FOR SCHOOL DISTRICT AVERAGE COMPENSATION INCREASES

(1) For the purposes of § 96(1), chapter 339, Laws of 1977, 1st Ex Sess., a school district's average compensation level for the 1976-77 school year is to be computed on the basis of the compensation which was actually provided by the district to its employees during that school year.

(2) In determining the extent of funding to which a given school district is entitled under either subparagraph (a) or (b) of § 96(1), chapter 339, Laws of 1977, 1st Ex Sess., the district's actual average compensation level for the 1977-78 school year is not required to be taken into account.

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                                                                   May 25, 1978

Honorable Gordon Walgren
State Senator, 23rd District
245 Fourth Street Building
Bremerton, Washington 98310

                                                                                                                 Cite as:  AGO 1978 No. 19

Dear Sir:

            By letter previously acknowledged you have requested our opinion regarding the funding of compensation increases for school district employees pursuant to subsection (1) of § 96, chapter 339, Laws of 1977, 1st Ex Sess.  We divide and paraphrase your question as follows:

            (1) For the purposes of § 96(1), chapter 339, Laws of 1977, 1st Ex Sess., is a school district's average compensation level for the 1976-77 school year to be computed on the basis of the compensation which was actually provided by the district to its employees during that school year?

             [[Orig. Op. Page 2]]

            (2) Assuming an affirmative answer to question (1), is a given school district's actual average compensation level for the 1977-78 school year required to be taken into account in determining the extent of funding to which the district is entitled under either subparagraph (a) or (b) of § 96(1), supra?

            (3) To the extent that it is a relevant factor (in response to question (2)), is a school district's 1977-78 compensation level properly to be measured against (a) its actual 1976-77 compensation level for the same class of employees or (b) a hypothetical 1976-77 compensation level which would have been the actual compensation level within the particular district only if the same personnel had been employed during the 1976-77 school year as are employed for the 1977-78 school year?

            We answer question (1) in the affirmative, question (2) in the negative and question (3) as indicated in the following analysis.

                                                                     ANALYSIS

            I.  Introduction:

            By its enactment of § 96, chapter 339, Laws of 1977, 1st Ex Sess., the legislature made an appropriation of $670,100,000 to the state Superintendent of Public Instruction for the support of public education within the common schools during the 1977-79 biennium.  Your concern is with the proper interpretation and implementation of subsection (1) of this section which reads, in full, as follows:

            "(1) of the appropriation contained in this section the superintendent is hereby authorized to distribute up to $33,000,000 for compensation including benefit increases for certificated and classified staff in the common schools starting September 1, 1977.  For the purpose of distributing these funds, the superintendent of public instruction shall  [[Orig. Op. Page 3]] determine the state maximum school district average compensation level including benefits for certificated staff for the 1976-77 school year and the state maximum school district average compensation level including benefits for classified staff for the 1976-77 school year.

            "Such state maximum compensation levels including benefits increased by four percent shall be the 'maximum control levels' for certificated and classified staff for the purposes of this section.

            "For the purpose of distributing these funds for the 1977-78 school year, each school district shall receive average compensation level including benefit increases for certificated and classified staff respectively as follows:

            "(a) Those school districts whose district average compensation level including benefits is above the state average compensation level including benefits for 1976-77, shall receive a six percent increase above the 1976-77 average compensation level including benefits:  PROVIDED, That no district shall receive an increase which would raise average compensation levels including benefits above the 'maximum control level' so defined.

            "(b) Those school districts whose district average compensation level including benefits is below the state average compensation level including benefits for 1976-77, shall receive a nine percent increase above the 1976-77 average compensation levels up to an amount not to exceed six percent above the state average compensation level including benefits for 1976-77."

            Bearing this statutory language in mind,1/ we begin with the following critical observation:  If, in a given  [[Orig. Op. Page 4]] school district, exactly the same personnel are employed for the 1977-78 school year as were employed by the same district during 1976-77, implementation of § 96(1), supra, would be simple.  That district's actual 1976-77 compensation level would first be computed, and then compared with the 1976-77 statewide average, in order to determine whether the district was to receive "6%" funds under subparagraph (a) or "9%" funds under subparagraph (b).  Then, in turn, those funds would be distributed and, so long as the 1977-78 compensation average for the subject district was either 6% or 9% (as the case may be) above its 1976-77 average, it would readily be concluded that the appropriation had been properly utilized.  Let us briefly demonstrate this by the first of several illustrative examples which we will use and refer to throughout the remainder of this opinion.

                        EXAMPLE 1

            Assume that in 1976-77, a certain school district had five employees and that their annual compensation2/ was $8,000, $9,000, $10,000, $11,000 and $12,000 respectively.  Their total compensation would be $50,000 and the average compensation would be $10,000.  Assume next that all five of these employees returned to the district in 1977-78 and, from funds received under § 96(1)(a), each was given a 6% compensation increase‑-  [[Orig. Op. Page 5]] to $8,480, $9,540, $10,600, $11,660 and $12,720 respectively.  As a result, their total compensation would be $53,000 and the average would be $10,600 or $600 (6%) above the district's 1976-77 average.

            The problem, however, is that in most school districts within our state there are, in fact, significant staff changes between school years.  Experienced teachers or other personnel retire and new people are employed‑-often at lower, entry level, salaries.  Or, perhaps, a reduction-in-force program is instituted and those retiring, high seniority, employees are not replaced at all.  Or, thirdly, it is possible in a given case that the same reduction-in-force policy may have been instituted by laying off the district's younger, and lower paid, teachers or other employees with less seniority.  And finally, at the other end of the spectrum, there exists the possibility of an increase in the district's staffing level, over and above that which existed during 1976-77, through the employment either of additional experienced (and higher paid) employees or of additional entry-level (lower paid) personnel.  As we will next illustrate by two further examples, each of these "staffing mix" changes will affect a district's 1977-78 versus 1976-77 comparative compensation averages even in the absence of any pay increases, per se.

                        EXAMPLE 2

            Here we will assume that in 1977-78 no salary increase was given but an additional employee was added at the bottom of the salary schedule, i.e., at $8,000.  Total compensation would now be $58,000 ($50,000 from Example 1, plus $8,000) and the average would be $9,667, a decrease of $333 (or 3.3%) from the 1976-77 average compensation of $10,000.  This decrease, however, would be attributable solely to the change in staffing mix and not to a decrease in any employee's actual compensation.

                        EXAMPLE 3

            Assume again that in 1977-78 no salary increase is given, just as in Example 2, but that the employee at the bottom of the salary schedule (i.e., the $8,000 employee) is neither rehired nor replaced.  Total compensation would be $42,000 ($50,000 from Example 1 minus $8,000) and average compensation would be $10,500, or 5% above the district's 1976-77 average, even though no returning employees received any raise in pay.

             [[Orig. Op. Page 6]]

            To complicate matters even further we next observe, however, that in reality both the staffing mix and the salary schedule of a typical school district will change from one year to another.  Accordingly, a change in the average compensation level will ordinarily reflect both of these occurrences‑-but without in any way indicating the extent to which this change in the average compensation level is attributable to one or the other.  By measuring the effect of both factors, in combination, the change in average compensation level measures neither separately.  Two additional examples will illustrate this point.

                        EXAMPLE 4

            Assume in 1977-78 the same change in the staffing mix as in Example 2 (i.e., an addition of one employee at the bottom of the salary schedule) and assume, further, the same increase in the salary schedule as in Example 1 (i.e., a 6% increase for all employees).  Total compensation would then be $61,480 ($58,000 from Example 2 times 106%).  The average compensation would be $10,247 and the increase in average compensation would be $247‑-or approximately 2.5%.

                        EXAMPLE 5

            Assume that in 1977-78 there is the same change in the staffing mix as in Example 3 (i.e., the employee at the bottom of the salary schedule is not rehired or replaced) and assume, further, the same salary increase as in Example 1 (i.e., a 6% increase for all employees).  Total compensation would then be $44,520 ($53,000 from Example 1 minus $8,480) and the average compensation would be $11,130.  The increase in average compensation would be $1,130 or 11.13%.

            Note, also, that in Example 4 the effect of the salary increase on the change in average compensation is partially nullified by reason of the change in staffing mix.  In Example 5, on the other hand, the effect of the salary increase is accentuated by reason of the change in staffing mix.  And in both examples the change in average compensation,by itself, tells us nothing about the amount of any salary increase.  It expresses only an effect, without telling us anything about the cause.  Moreover, this is likewise true of Examples 1, 2 and 3 as well.  Compare, especially, Examples 1 and 3.

             [[Orig. Op. Page 7]]

            II.  Consideration of Questions Presented:

            We may now turn to the questions raised by your opinion request.  Before addressing each of them individually, however, let us further highlight the problem by assuming, for purposes of discussion, an affirmative answer to both question (1) and question (2) which, here repeated for ease of reference, we have above paraphrased as follows:

            (1) For the purposes of § 96(1), chapter 339, Laws of 1977, 1st Ex Sess., is a school district's average compensation level for the 1976-77 school year to be computed on the basis of the compensation which was actually provided by the district to its employees during that school year?

            (2) Assuming an affirmative answer to question (1), is a given school district's actual average compensation level for the 1977-78 school year required to be taken into account in determining the extent of funding to which the district is entitled under either subparagraph (a) or (b) of § 96(1), supra?

            Let us also assume, now, that the statewide average annual compensation level (including benefits) for 1976-77, as determined by the Superintendent of Public Instruction, was $9,800.  As a consequence, based upon an affirmative answer to question (1),supra, the school district described in Example 2, above, with a 1976-77 average compensation level of $10,000, is determined to be a "6%" rather than a "9%" district.  Accordingly, it receives state funds under § 96(1)(a), supra, rather than under § 96(1)(b).  But then, even though the district fully utilizes those funds to provide 6% compensation increases for all of its 1977-78 employees (as in Example 4, above) its resulting 1977-78 compensation average is only 2.5% above its 1976-77 average ($10,247 as opposed to $10,000) because it now has one additional employee at the bottom of the salary schedule.3/   Query:  Has this district somehow misused the § 96(1) money which it received from the state and should it therefore be required either to return part of it (i.e., the difference between  [[Orig. Op. Page 8]] that necessary to fund a 6% and a 2.5% pay increase) or further to increase the compensation of its 1977-78 employees, with whatever other funds may be available, in order to keep the full amount?  An affirmative answer to question (2), supra, coupled with an affirmative answer to question (1) would seem to necessitate one or the other of those results even though the district did, in fact, apply the funds in question to provide its 1977-78 employees with what was, in as to them, a full 6% increase.

            As we view the situation there are four possible ways, in the abstract, to respond to this dilemma which, of course, is wholly a result of the staff mix phenomena.  They are:

            (1) Nevertheless to answer both question (1) and question (2) in the affirmative, as above hypothecated, even though such an interpretation would require some districts, in effect, to grant their employees artificial additional pay increases in order to qualify, fully, for their allotted share of either the 6% of the 9% monies appropriated by § 96(1), supra;

            (2) To answer question (1) in the negative and thereby use what we might call a "let's pretend" scheme in determining a given school district's 1976-77 average compensation level;i.e., let's pretend that the district's 1976-77 staffing mix was the same as its actual 1977-78 staffing mix‑-in which case the 2.5% becomes a 6% instead and thereby fully reflects what was actually done.  Note, however, that under the above assumed facts this would not only "solve" the immediate problem by permitting the district's actual 1977-78 compensation average to be compared with a hypothetical 1976-77 average but it would, in addition, cause the districts described in Examples 2 and 4, above, to become "9%" districts under § 96(1)(b) instead of "6%" districts under § 96(1)(a).4/

             (3) As a variation on the foregoing, to answer both question (1) and question (2) in the affirmative but then to say, as postulated by question (3), supra, that a district's resulting 1977-78 compensation level (after being increased with § 96(1) funds) is to be measured not against its actual  [[Orig. Op. Page 9]] 1976-77 compensation level for the same class of employees but, instead, against a hypothetical 1976-77 compensation level (here, however, utilized for this limited purpose only)5/

            ". . . which would have been the actual compensation level within the particular district only if the same personnel had been employed during the 1976-77 school year as are employed for the 1977-78 school year."

            (4) Lastly, again to answer question (1) in the affirmative but then respond to question (2) in the negative‑-meaning that the district's actual 1977-78 compensation average, after fully utilizing its allotted § 96(1) funds, would simply be irrelevant in terms of its entitlement to those funds.

            Our choice, for the reasons which we will now indicate as we take up your three questions separately, is alternative (4).

            Question (1):

            Giving full effect to the language used by the legislature in § 96(1),supra, we can find no basis for anything other than an affirmative answer to this initial question.  In both subparagraphs (a) and (b) the reference is to ". . . the 1976-77 average compensation level. . . ."  Moreover, any question as to whether this phraseology refers both to the state and individual district average compensation levels appears to us to be answered by the later terminology of § 97(1)(i) of the same appropriation act which, in allocating further funds for school support during the 1978-79 school year, provides that:

            "(i) For the purposes of this subsection each district's 1977-78 average compensation levels including benefits shall mean such district's 1976-77 average compensation including benefits increased pursuant to section 96(1) of this act.  'Maximum control levels' shall mean the 'maximum control levels' established in section 96(1) of the act increased by four percent:"  (Emphasis supplied)

             [[Orig. Op. Page 10]]

            Also to be noted is the fact that there are actually three different "average compensation" levels referred to in § 96(1); i.e., the individual district level, the state average level and, finally, the "state maximum school district compensation level" which, increased by 4%, constitutes the "maximum control level" for 1977-78.  Clearly, the latter two average compensation levels are those actually in existence for 1976-77 and it therefore seems inconceivable that the legislature had anything else in mind when it referred, in that same subsection, to the average compensation levels of the individual school districts.

            Lastly, the mere fact that a contrary (i.e., negative) answer to question (1) would afford one basis for solving the dilemma posed by different staff mixes in the two school years involved is not, in our opinion, sufficient to support such an answer as a matter of statutory construction‑-particularly when, as we will next explain in response to question (2), a more plausible solution to the same dilemma can be found in a negative answer to that further question.

            Question (2):

            Your second question, once again repeated for ease of reference, is as follows:

            Assuming an affirmative answer to question (1), is a given school district's actual average compensation level for the 1977-78 school year required to be taken into account in determining the extent of funding to which the district is entitled under either subparagraph (a) or (b) of § 96(1), supra?

            Or, to state the question more pointedly, using the example of a school district which has been determined to be a "6%" district under our answer to question (1), must this district's 1977-78 average compensation level exceed its 1976-77 average compensation level by at least 6%, regardless of any staff changes, in order for it to be deemed eligible to receive, and keep, a full share of state funds under the allocation formula of the subject legislative enactment?

            Notwithstanding the above illustrated consequences of an affirmative answer to this question a suggested justification for just such an answer may be found in the very first portion of § 96 which reads as follows:

             [[Orig. Op. Page 11]]

            "The appropriation contained in this section shall be subject to the following conditions and limitations:

            "(1) Of the appropriation contained in this section the superintendent is hereby authorized to distribute up to $33,000,000 for compensation including benefit increases for certificated and classified staff in the common schools starting September 1, 1977. . . ."

            The argument posed is that the purpose of the $33,000,000 appropriation is clearly for specified "compensation . . . increases," and that this purpose thus constitutes a limitation or condition upon the appropriation itself.  Accord, Wash. Const., Article VIII, § 4 (Amendment 11) which reads as follows:

            "No moneys shall ever be paid out of the treasury of this state, or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; nor unless such payment be made within one calendar month after the end of the next ensuing fiscal biennium, and every such law making a new appropriation, or continuing or reviving an appropriation, shall distinctly specify the sum appropriated, and the object to which it is to be applied, and it shall not be sufficient for such law to refer to any other law to fix such sum."6/

             The problem with this approach, however, has already been pointed out.  The difference between a given school district's actual 1976-77 average compensation level and its actual 1977-78 average compensation level may conceivably reflect pay raises actually given to employees‑-and that alone‑- but more likely it will not.  All depends on what happens to the staffing mix in 1977-78.  Thus, in Example 4, above, every 1977-78 employee of the hypothetical district there described received a 6% salary increase yet the average compensation level rose by only 2.47%.  The district would, therefore, receive only $247 per employee from the state appropriation even though it in fact gave an average compensation increase of $580  [[Orig. Op. Page 12]] to each employee (i.e., $9,667 x 106% = $10,247 ‑ $9,667 = $580).  But perhaps of even greater significance, at least from the standpoint of Article VIII, § 4 (Amendment 11),supra, is the case postulated by Example 3 where, solely as a result of terminating (without replacing) one employee at the bottom of the salary schedule, the district's average compensation level went from $10,000 in 1976-77 to $10,500 in 1977-78.  Yet under the suggested approach the district in this case would receive $500 per employee without having to grant any pay raises at all.  In short, while we agree that the last above‑quoted language of § 96 must be read in the light of the constitution as also quoted above, and effect must be given to both, the suggested alternative approach gives no assurance that this would thereby accomplished.

            Further, an affirmative answer to the second question would have another anomalous result.  Again, as shown by Example 4, it would penalize those districts which, by reason of a change in staffing mix, lower their annual average compensation level in 1977-78 from what it would otherwise be.  And conversely, as shown by Example 3, it would reward those which, by a change in staffing mix, increase their average compensation level from what it would otherwise be in 1977-78.  Stated otherwise, this "solution" would attribute to the legislature an intent to control, at least indirectly, school district decisions over staffing mix.  In the absence of language clearly compelling such a result, however, we find it difficult to attribute to the legislature an intent to make such an intrusion into "local control."

            It is, as you know, a cardinal rule of statutory construction that no reading should be given to a statute which leads to gross injustice or absurdity.  Wilson v. Lund, 74 Wn.2d 945, 947, 447 P.2d 718 (1968).  But how, in the face of the opening language of § 96, supra, which we have last above quoted can such results here be avoided;i.e., how may a negative answer to question (2) instead be sustained?  The simple answer, in our judgment, is to read on‑-to the opening language of the critical third paragraph of § 96(1) which reads as follows:

            For the purpose ofdistributing these funds for the 1977-78 school year, each school district shall receive average compensation level including benefit increases for certificated and classified staff respectively as follows: . . ."  (Emphasis supplied)

             [[Orig. Op. Page 13]]

            Section 96(1), in short, constitutes solely a method of distributing a portion of the earmarked $33,000,000 to each school district.  It is exclusively a distribution formula and is not intended further to operate as a control or even an influence over local school district decisions as to staffing mix.7/

             That this is so is further evidenced by two other related segments of the statute.  Section 97(1), to which we have already briefly referred in answering question (1), above, covers the allocation of further state funds for the support of school districts during the 1978-79 school year and, as earlier quoted, subparagraph (e)(i) reads as follows:

            "For the purposes of this subsection each district's 1977-78 average compensation levels including benefits shall mean such district's 1976-77 average compensation including benefits increased pursuant to section 96(1) of this act. . . ."  (Emphasis supplied)

            Then, in turn, subparagraph (e)(iii) provides that:

            "Compensation including benefits for those school districts whose 1977-78 average certificated compensation level including benefits is below the 1977-78 state average compensation level including benefits will be calculated by utilizing the 1977-78 district average compensation level including benefits increased by nine percent up to an amount not to exceed a six percent for any school district above the state average:  PROVIDED, That for such districts the superintendent of public instruction shall utilize, pursuant to the provisions of section 4, chapter     (SHB 1086), Laws of 1977 1st Ex. Sess., the actual 1977-78 compensation level including benefits for the purpose of calculating the entitlement for compensation including benefits increases as provided for in this subsection.8/

             [[Orig. Op. Page 14]]

            What both of these parts of § 97(1) demonstrate, it seems to us, is that the 1977-78 compensation level for school districts is, except under certain limited circumstances, a hypothetical rather than an actual figure.  Yet if question (2) was here answered in the affirmative, this 1977-78 average compensation level "increased pursuant to section 96(1)" would always be the actual level.9/

             For these reasons, then, our answer to question (2) is in the negative.  Although a school district's status as either a 6% or 9% district for the purposes of § 96(1),supra, is to be determined on the basis of its actual 1976-77 average compensation level,10/ once that determination is made the rest is simply distribution.  Therefore, a district's actual average compensation level for the 1977-78 school year is irrelevant‑-meaning, in the words of the question, that it is not required to be taken into account ". . . in determining the extent of funding to which the district is entitled under either subparagraph (a) or (b) of § 96(1), supra."  What is relevant, instead, is (in brief summary) the following:

            (1) A district's actual 1976-77 compensation level‑-

            (a) As above indicated, for the purpose of determining its status as a 6% or 9% district; and

            (b) For the additional purpose of fixing the base amount per employee to be paid to a given district (e.g., in Example 1, above, 6% of $10,000 OR $600 per employee).

            (2) The total number of classified or certificated staff employed by the district for the 1977-78 school year‑-by which (1)(b), above is to be multiplied (e.g., in Example 1, above, five employees, for a total of $3,000); and

             [[Orig. Op. Page 15]]

            (3) The actualtotal amount expended, or contracted to be expended, by the district for increased compensation during the 1977-78 school year for each class of employees.11/

            Question (3):

            This disposition of the first two questions, of course, renders the further consideration of question (3) unnecessary.  Suffice it to say, however, that if we were to reach this question we would be no more able to sustain the use of a hypothetical 1976-77 school district average compensation level for the limited purpose therein indicated than we could for the broader purposes implicit in question (1) as considered earlier in this opinion.

            We trust that the foregoing will be of some assistance to you.

Very truly yours,