Lippman v. Board of Educ. of the Sewanhaka Cent. High School Dist.

• Decision Date: 26 November 1985
• Citation: 66 N.Y.2d 313,487 N.E.2d 897,496 N.Y.S.2d 987
• Parties: , 487 N.E.2d 897, 29 Ed. Law Rep. 723, 6 Employee Benefits Cas. 2599 In the Matter of Blossom LIPPMAN et al., Appellants, v. BOARD OF EDUCATION OF THE SEWANHAKA CENTRAL HIGH SCHOOL DISTRICT et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 987

496 N.Y.S.2d 987

66 N.Y.2d 313, 487 N.E.2d 897, 29 Ed.

Law Rep. 723,

6 Employee Benefits Cas. 2599

In the Matter of Blossom LIPPMAN et al., Appellants, v. BOARD OF EDUCATION OF THE SEWANHAKA CENTRAL HIGH SCHOOL DISTRICT et al., Respondents.

Court of Appeals of New York.

Nov. 26, 1985.

Harold G. Beyer, Jr., and Robert D. Clearfield, Albany, for appellants.

Douglas E. Libby, Bayside, for Bd. of Educ. of the Sewanhaka Central High School Dist., respondent.

Robert Abrams, Atty. Gen. (Robert Hermann, Peter H. Schiff and John Q. Driscoll, Albany, of counsel), for Edward V. Regan, amicus curiae.

Henry F. Sobota, Latham, for The New York State School Boards Ass'n, amicus curiae.

OPINION OF THE COURT

MEYER, Judge.

Health insurance benefits are not within the protection of article V, section 7 of the State Constitution, and on the facts of this case there was no contract, express or implied, by respondent Board of Education not to reduce its contribution to payment of health insurance premiums of retired employees and their dependents. There should, therefore, be an affirmance, without costs.

I

Article 11 of the Civil Service Law authorizes the establishme of a State health insurance plan and section 163 of that law authorizes the inclusion in the plan of employees and retired employees of, among others, school districts, electing to participate in the plan. Section 167(2) requires each participating employer to pay not less than 50% of the cost of premium or subscription charges for the coverage of such employees and 35% of the cost of coverage for their dependents, and provides that such an employer may elect to pay higher rates of contribution. Subdivision 3 of the section directs that any contribution required to be made by an employee or retired employee for his or her coverage or coverage of his or her dependents shall be deducted from salary payments or retirement allowance as the case may be.

In 1971 the Board of Education of Sewanhaka Central School District adopted a resolution directing payment by it of 100% of the health insurance premiums for its retired employees and 50% of the premiums for dependents of retirees. By resolution adopted in March 1983 and effective July 1, 1983, however, the Board reduced the district's contribution from 100% to 50% of premiums for retired employees and from 50% to 35% of premiums for dependents of retirees. The present article 78 proceeding was then begun by petitioner Lippman, a currently employed teacher eligible for retirement, and petitioners Vandenburgh and Woll, retired teachers formerly employed by the district. The proceeding sought rulings that the reduction in contributions was arbitrary and capricious and declaratory judgment that it is in violation of article V, section 7 of the State Constitution and of the vested contract rights of petitioners and others similarly situated. Special Term rejected petitioners' arbitrary and capricious contention as well as the Board's defense based upon Education Law § 3813, but held health benefits premiums payable with respect to employees who retired prior to the July 1, 1983 effective date of the Board's resolution reducing contributions to be protected by the Constitution. On appeal by the Board of Education to the Appellate Division, that court, noting that no part of the health insurance premium contributed by the school district came from the retirement system and that the reduction made by the 1983 resolution had no impact on how a retiree's pension is calculated and did not otherwise impair a retirement system benefit, modified Special Term's judgment and dismissed the proceeding as to all respondents. On petitioner's appeal to us they have abandoned, by failing to argue, their CPLR 7803(3) contention. We conclude that health insurance benefits are not within the protection of the constitutional provision and that there is no contractual impediment to reduction of the Board's contribution to health insurance premiums to the 50% and 35% levels called for by Civil Service Law § 167(2). We, therefore, affirm.

II

Article V, section 7 of the Constitution provides that "[a]fter July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired." That provision protects only the benefits of membership in a retirement system; other employment conditions, though they may be protected by statute, resolution or individual or collective bargaining agreement, are not within its coverage. That no more was intended is evident from the memorandum of the Constitutional Convention Committee which proposed the provision, which stated (2 Revised Record of 1938 New York State Constitutional Convention, at 1405): "It is a substantial factor in entering the permanent Civil Service of the government, State or local, 'career service' as some call it, that the employee can look forward to a pension or retirement allowance when his service is over. That reward or benefit is part of the compensation which he accepts in lieu of the greater rewards of private employment. The membership in a pension or retirement system is, therefore, substantially a contractual relationship when the member joins the system. The benefits which are the essence of that contract should not be diminished or impaired. That protection is given by this proposed amendment." (Emphasis supplied.) As that statement makes clear, more than an incidental relationship to the retirement system must be found before an employee benefit will be held to be within the area of action prohibited by the Constitution (Cook v. City of Binghamton, 48 N.Y.2d 323, 422 N.Y.S.2d 919, 398 N.E.2d 525; see, Majauskas v. Majauskas, 61 N.Y.2d 481, 474 N.Y.S.2d 699, 463 N.E.2d 15; Brown v. New York State Teachers Retirement Sys., 19 N.Y.2d 779, 279 N.Y.S.2d 532, 226 N.E.2d 319, affg. 25 A.D.2d 344, 269 N.Y.S.2d 649).

The cases which have held the constitutional provision violated all involved changes directly related to the retirement benefit--in Public Employees Fedn. v. Cuomo, 62 N.Y.2d 450, 478 N.Y.S.2d 588, 467 N.E.2d 236, to prevent change concerning refund of retirement contributions upon resignation through the device of limiting the duration of the statutory provision and then successively extending it; Kleinfeldt v. New York City Employees' Retirement Sys., 36 N.Y.2d 95, 101, 365 N.Y.S.2d 500, 324 N.E.2d 865, with respect to the rate of compensation part of the retirement formula (but with the recognition that "[t]his does not mean necessarily, and it should not be decided now, that no part of the formula, however trivial, or however within the contemplation of the ...