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[13] |
This is an appeal from an order of the Franklin Circuit Court reversing a ruling of the Kentucky Personnel Board and reinstating the decision of the hearing officer. Finding no error, we affirm.
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[14] |
The underlying facts of this action are not in dispute. Each of the individual appellants is a classified employee with status in the Office of the Attorney General (OAG). They are all classified as Legal Secretary, Senior, Grade 10, except Devon Brown, who is a Legal Secretary, Grade 9. On December 16, 1990, the Legal Secretary class was reevaluated and upgraded by the Commissioner of Personnel through a class grade change within the entire structure of state government. The OAG did not authorize pay increases to the Legal Secretary class as a result of this class grade change.
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[15] |
In August 1995, the OAG requested a five (5) percent increase adjustment for Jane C. Hosley, a Legal Secretary, Senior. (Hosley is not a party to this action). The basis of this request, which was approved by the Commissioner, was 101 Ky. Admin. Regs. [KAR] 2:036 § 3(8). Subsequently, the appellants learned of Ms. Hosley's increase through an open records request made in November 1995. Each of the appellants appealed to the Personnel Board, claiming that she suffered a continuing "penalization" for not receiving a similar increase. The appellants contend that the application of the pay increase to one (1) individual in the legal secretary class violated 101 KAR 2:036 § 3(7).
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[16] |
The claims were consolidated into one action, and an evidentiary hearing was held before a hearing officer with the Kentucky Personnel Board. The hearing officer found that the increase was proper, and recommended that the appeals be dismissed. The Personnel Board reversed, deleting several of the hearing officer's Conclusions of law and substituting its own. The Board found that the request for a pay increase for Hosley was a "circumvention" of the requirement that all increases be uniform within the agency. The Board concluded that § 3(7) prevailed over § 3(8).
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[17] |
The OAG filed an appeal to the Franklin Circuit Court, pursuant to KRS 18A.100 and KRS 13B.140. The circuit court reversed the Board and reinstated the findings made by the hearing officer. After discussing the appropriate standard of review, the lower court found the Board's finding was unsupported by the evidence. The circuit court concluded that § 3(7) did not modify or repeal § 3(8), and that the OAG followed the correct procedures under § 3(8) to give Hosley a pay adjustment. In response to the appellants' motion to reconsider, the circuit court stated, "Here, it is possible to conclude that § 3(7) is intended generally to require all persons within a class to receive the same salary adjustment upon receiving a pay grade increase, while construing § 3(8) to allow the appointing authority some discretion to grant specific pay increases to individual employees without regard for the entire class." This appeal followed.
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[18] |
The sole issue before this Court is which interpretation of the relevant regulations is correct. Although there are some factual questions, this matter is primarily an issue of law. The two (2) regulations at issue, 101 KAR 2:036 § 3(7) and 101 KAR 2:036 § 3(8), provide as follows: Section 3(7): Pay grade changes. An employee who is advanced to a higher pay grade through a class reevaluation and grade adjustment under Section 7 of this administrative regulation may receive a salary increase as outlined below except that after the salary increase the employee's salary shall not be below the minimum of the new pay grade:
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[19] |
(a) Five (5) percent uniformly applied within the agency; |
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[20] |
(b) Ten (10) percent uniformly applied within the agency; |
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[21] |
(c) A dollar amount determined by the Commissioner of Personnel uniformly applied in the class within the same agency. |
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[22] |
Section 3(8): Other salary adjustments. |
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[23] |
(a) An appointing authority, with the approval of the commissioner, may grant a salary adjustment to an employee who was eligible for but did not receive at least a five (5) percent salary advancement due to reallocation to a higher grade, implementation of a special entrance rate, class grade changes, effective on or after January 3, 1986 or completion of a promotional probationary period. In no case may the salary adjustment be more than five (5) percent nor be made retroactive to the original effective date but shall be made effective on the first of the month following approval of the commissioner.
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[24] |
As correctly stated by the trial court, both the circuit court's review and our review of this issue is limited. Where the legislature has designated an administrative agency to carry out a legislative policy by the exercise of discretionary judgment in a specialized field, the courts do not have the authority to review the agency decisions de novo. American Beauty Homes Corp. v. Louisville and Jefferson County Planning and Zoning Commission, 379 S.W.2d 450, 458 (1964). Judicial review of the administrative action is confined to a determination of whether the action taken was arbitrary. City of Louisville v. McDonald, Ky., 470 S.W.2d 173, 178 (1971). So long as the agency's decision is supported by substantial evidence of probative value, it is not arbitrary and must be accepted as binding by the appellate court. Starks v. Kentucky Health Facilities, Ky. App., 684 S.W.2d 5 (1984). Substantial evidence is defined as evidence of substance and relevant consequence, having the fitness to induce conviction in the minds of reasonable persons. O'Nan v. Ecklar Moore Express, Inc., Ky., 339 S.W.2d 466 (1960). In its role as a finder of fact, an administrative agency is afforded great latitude in its evaluation of the evidence heard and the credibility of witnesses, including its findings and Conclusions of fact. Kentucky State Racing Commission v. Fuller, Ky., 481 S.W.2d 298, 309 (1972). However, this Court is authorized to review issues of law on a de novo basis. Mill Street Church of Christ v. Hogan, Ky. App., 785 S.W.2d 263, 266 (1990).
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[25] |
The appellants argue that the Personnel Board correctly interpreted § 3(7) as controlling over § 3(8). They assert that § 3(7) requires that all salary increases within a classification be uniformly applied. Since a conflict exists between the provisions of § 3(7) and § 3(8), the appellees contend that § 3(7), being promulgated later in time, should control. Consequently, they argue that the decision of the circuit court was incorrect and should be set aside.
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[26] |
Upon a review of the entire record and the briefs and arguments of the parties, this Court finds the reasoning of the circuit court compelling, and this Court adopts the following portions of the circuit court's order of August 15, 1997: |
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[27] |
Whether the Respondents were penalized depends upon whether they had any "rights" in the salary increase given to Hosley. See KRS 18A.095(9) and 18A.005(17). Thus, we first determine the interrelationship of Section 3(7) and Section 3(8)(a), based on the evidence presented at hearing.
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[28] |
Petitioner claims that the Board's *fn1 finding that the OAG "circumvented" Section 3(7) is unsupported by any evidence in the record. We agree. The Board fails to cite any testimony, document, conversation or other evidence which gives a factual basis for his Conclusion. A review of the entire record likewise reveals no plausible basis for such a Conclusion. The closest argument to this effect was made by the Respondents, in citing Commissioner Clark's testimony on cross-examination. He agreed that if Section 3(8) were used independently of Section 3(7) to allow individual increases, it "could" result in a circumvention of Section 3(7)'s intent that all increases be uniform. However, there is no factual basis in the record for the allegation that the OAG intended to do so in this case.
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[29] |
Former Commissioner Clark testified that Section 3(7) had been amended to require that, in granting pay increases due to a change in pay grade or class, all employees would receive the raise and in the same amounts. This altered the former version which did not require all increases to be uniform. However, Clark also testified that, in his opinion, Section 3(8) was a separate and distinct entity from Section (3)(7), and that requiring the Commissioner's approval of an individual increase under Section 3(8) was an adequate safeguard to circumventing the requirements of Section 3(7). Thus, there is no proof in the record that the OAG had such an intent when granting Hosley an increase but not other Legal Secretaries.
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[30] |
In any event, the central question in this case is whether Section 3(7) somehow controls, conditions or overrides the provisions of Section 3(8), which clearly states that the agency may grant an increase to a single employee. We conclude, as a matter of law, that it
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