City of Concord v. State

• Decision Date: 31 August 2012
• Docket Number: No. 2011–462.,2011–462.
• Citation: 53 A.3d 576,164 N.H. 130
• Parties: CITY OF CONCORD and another v. STATE of New Hampshire and another.
• Court: New Hampshire Supreme Court

164 N.H. 130

53 A.3d 576

CITY OF CONCORD and another

v.STATE of New Hampshire and another.

No. 2011–462.

Supreme Court of New Hampshire.

Argued: March 13, 2012.

Opinion Issued: Aug. 31, 2012.

As Modified on Reconsideration Sept. 28, 2012.

Orr & Reno, P.A., of Concord (Jeffrey C. Spear and James P. Bassett on the brief, and Mr. Bassett orally), for the petitioners.

Michael A. Delaney, attorney general (Richard W. Head, associate attorney general, and Matthew G. Mavrogeorge, assistant attorney general, on the brief, and Mr. Mavrogeorge orally), for the State.

Getman, Schulthess & Steere, P.A., of Manchester (Andrew R. Schulman on the brief and orally), for the New Hampshire Retirement System.

LYNN, J.

The petitioners, the City of Concord, the County of Belknap, and Mascenic Regional School District, appeal an order of the Superior Court (McNamara, J.) denying their motion for summary judgment and granting summary judgment in favor of the respondent, the State of New Hampshire. We affirm.

I

The pertinent facts are not in dispute. The New Hampshire Retirement System (NHRS) is a tax qualified pension trust for certain public employees. RSA 100–A:2 (2001). Under RSA chapter 100–A, police officers, teachers, and firefighters are required to be enrolled in NHRS. See RSA 100–A:3, I(a) (Supp.2010) (amended 2011) ("Any ... teacher, permanent policeman, or permanent fireman ... shall become a member of [NHRS] as a condition of employment ...."); see also RSA 100–A:1, VI–IX (Supp.2011) (defining the terms teacher, permanent policeman, and permanent fireman). Their employers, including local school districts, cities, and towns (local subdivisions), are required to contribute to the funding of retirement benefits for these employees. RSA 100–A:1, IV (Supp.2011); RSA 100–A:16, II (Supp.2010) (amended 2011).

RSA 100–A:16 (Supp.2010) (amended 2011) sets forth the method used to finance NHRS. On a biennial basis, an actuary, as directed by the board of trustees, prepares a valuation of NHRS's assets and liabilities, and determines the amount of funds needed to finance NHRS. RSA 100–A:16. The funds required for financing NHRS come from investment returns, see RSA 100–A:15, I, I-a (Supp.2010) (amended 2011), employee contributions, see RSA 100–A:16, I, and employer contributions, see RSA 100–A:16, II, III.

The employer contribution rate has two components: (1) the normal contribution, which is a percentage of each employee's earnable compensation; and (2) the accrued liability contribution, which is essentially the amount by which NHRS is underfunded. RSA 100–A:16, II, III. Pursuant to RSA 100–A:16, the local subdivisions and the State share the responsibility for the employer contributions. From 1977 until 2009, RSA 100–A:16, II(b), (c) required all local subdivisions to annually contribute 65% of the employer contribution requirements for these employees, and the State to annually contribute 35% of the employer contribution requirements. Compare Laws 1977, 528:2 with Laws 2009, 144:52. In 2009, the legislature amended RSA 100–A:16, II to alter the percentages of the contributions required to be provided by the employers and the State from a 65/ 35 local-state split to a 70/30 local-state split in fiscal year 2010, and a 75/25 local-state split in fiscal year 2011. Laws 2009, 144:52 (hereinafter, section 52).¹

The petitioners, on behalf of themselves and similarly situated municipalities, counties, and school districts, filed a petition for declaratory and injunctive relief, and damages in superior court, naming the State of New Hampshire and NHRS as respondents. The petition alleged that section 52 is an unfunded mandate that violates Part I, Article 28–a of the New Hampshire Constitution. Both the petitioners and the State moved for summary judgment. NHRS took no position on the constitutionality of section 52, but filed a separate motion for summary judgment, arguing that it was an improper party and that the New Hampshire Constitution and RSA 100–A:15, I, forbid it from using NHRS trust funds as the source of any monetary compensation to the petitioners. The trial court denied the petitioners' motion for summary judgment, granted the State's motion for summary judgment on the merits, and, accordingly, did not reach NHRS's motion. The petitioners appeal, arguing that the trial court erred in granting the State's motion for summary judgment, and maintaining that section 52 is an unconstitutional unfunded mandate.

II

In reviewing the trial court's rulings on cross-motions for summary judgment, "we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law." N.H. Assoc. of Counties v. State of N.H., 158 N.H. 284, 287–88, 965 A.2d 1012 (2009) (quotation omitted). The issue on appeal is whether section 52 is an unfunded mandate in violation of Part I, Article 28–a of the New Hampshire Constitution. Article 28–a provides:

The state shall not mandate or assign any new, expanded or modified programs or responsibilities to any political subdivision in such a way as to necessitate additional local expenditures by the political subdivision unless such programs or responsibilities are fully funded by the state or unless such programs or responsibilities are approved for funding by a vote of the local legislative body of the political subdivision.

N.H. CONST. pt. I, art. 28–a.

When required to interpret a provision of the constitution, we view the language used in light of the circumstances surrounding its formulation. N.H. Assoc. of Counties, 158 N.H. at 288, 965 A.2d 1012; N.H. Munic. Trust Workers' Comp. Fund v. Flynn, Comm'r, 133 N.H. 17, 21, 573 A.2d 439 (1990). We give the words in question the meaning they must be presumed to have had to the electorate when the vote was cast. N.H. Assoc. of Counties, 158 N.H. at 288, 965 A.2d 1012; Flynn, 133 N.H. at 21, 573 A.2d 439. In reviewing a constitutional challenge to a legislative act, we presume the act to be constitutional and will not declare it invalid except on inescapable grounds; that is, unless a clear and substantial conflict exists between the act and the constitution.

N.H. Assoc. of Counties, 158 N.H. at 288, 965 A.2d 1012.

III

Before proceeding to an analysis of the constitutionality of the altered state-local NHRS employer contribution percentages under the statute at issue, it will be helpful to review our prior jurisprudence construing Article 28–a. We have addressed Article 28–a in just six cases. We first interpreted it in Flynn, in which we considered whether a statutory amendment creating a "prima facie presumption that cancer disease in a firefighter ... is occupationally related" violated Article 28–a. Flynn, 133 N.H. at 20, 573 A.2d 439 (quotation omitted). Because it was our first decision addressing Article 28–a after its adoption in 1984, we "ascertain[ed] the meaning of [A]rticle 28–a [by examining] the language of the amendment itself." Id. at 22, 573 A.2d 439. "In particular, we focus[ed] on the phrase ‘any new, expanded or modified program or responsibility.’ " Id. We examined the definition of the term "responsibility" and determined that "the amendment was designed to prohibit the State from placing additional obligations on local government without either obtaining their consent or providing the necessary funding." Id. We also examined the statements of delegates to the constitutional convention and found that they supported our interpretation of the language. Id. at 21–26, 573 A.2d 439. We explained that the term "responsibility" is broader than the term "program" and is meant to "act as a sweeping prohibition against all State mandates that, for one reason or another, may not be categorized as a program." Id. at 23, 573 A.2d 439. Ultimately, we concluded that "the constitutionality of a particular State mandate under [A]rticle 28–a does not hinge solely on whether or not it may be categorized as a new, expanded or modified program, but also on whether or not the mandate imposes upon local government an additional fiscal obligation." Id.

We then examined the statute being challenged "to determine whether it impose[d] such an obligation." Id. The trial court found that due to the presumption created by the statute, some firefighters would prevail on claims based upon cancers that were not actually work-related. Id. at 24, 573 A.2d 439. The trial court determined that the local subdivisions would bear increased costs due to providing benefits to these firefighters who, as a result of the presumption, would qualify for benefits even though their cancer was not work-related, as well as increased costs incurred in conducting pre-employment medical examinations. Id. We found no indication that these findings were unsupported by the record and held that the statute at issue "impose[d] upon local government a new fiscal obligation." Id.

The defendant argued that Article 28–a permits the legislature to make procedural adjustments to pre-existing legislative schemes. Id. We rejected this argument, explaining that in light of the plain language and legislative history, "[f]or us to hold otherwise would require that we rewrite the constitution, creating limitations that are not clearly expressed by the language contained therein." Id. at 26, 573 A.2d 439. We noted that Article 28–a "was designed to provide a safety net to save cities and towns from the burden of coping with new financial responsibilities, not of their own creation, and to permit them a stronger grasp of their fiscal affairs," and held that the challenged statute was unconstitutional. Id. at 27, 573 A.2d 439.

Our next occasion to address Article 28–a was in Opinion of the Justices (Solid Waste Disposal), 135 N.H. 543, 608 A.2d 870 (1992), in which we interpreted Flynn to mean that "[i]nvoking [this] constitutional prohibition requires...