Mower Bd. of Comm. v. Bd. of Trustees of P.E.R.A.

• Decision Date: 09 July 1965
• Docket Number: No. 39504,39504
• Citation: 136 N.W.2d 671,271 Minn. 505
• Parties: MOWER COUNTY BOARD OF COMMISSIONERS, and Mower County, Appellants, v. BOARD OF TRUSTEES OF the PUBLIC EMPLOYEES RETIREMENT ASSOCIATION, Respondent.
• Court: Minnesota Supreme Court

Page 671

136 N.W.2d 671

271 Minn. 505

MOWER COUNTY BOARD OF COMMISSIONERS, and Mower County, Appellants, v. BOARD OF TRUSTEES OF the PUBLIC EMPLOYEES RETIREMENT ASSOCIATION, Respondent.

No. 39504.

Supreme Court of Minnesota.

July 9, 1965.

Syllabus by the Court

A board of county commissioners has no standing to challenge by affirmative action the constitutionality of statutes under which county moneys are collected from taxes for the purpose of paying employer contributions to the public employees retirement fund when the purpose of such challenge is to prevent the county officer having custody from discharging the ministerial duty of remitting such moneys to the state fund, the administration of which is vested in the Public Employees Retirement Association.

Wallace C. Sieh, County Atty., Austin, for appellants.

Robert W. Mattson, Atty. Gen., William M. Serbine, Sp. Asst. Atty. Gen., St. Paul, for respondent.

ROGOSHESKE, Justice.

The Board of County Commissioners of Mower County sought a declaratory judgment declaring illegal certain claims for employer contributions made against the county by the Public Employees Retirement Association (PERA). PERA denied the illegality of its demands and counterclaimed for the amount due, $5,082.99. From a judgment in favor of PERA, the county appeals.

During the pendency of this action, the county auditor holds the amount claimed by PERA in a special fund. This fund consists of money collected by taxes levied upon certification by the PERA board of trustees, pursuant to Minn.St. 353.28, subds. 1 and 2. ¹ Under those provisions, the board of trustees certifies the amount of employer contributions due from each governmental subdivision and sends that determination to the county auditor, who is directed to forward the certification to the governmental subdivision. Each subdivision is directed to secure its employer contributions by the means provided in § 353.28, the primary means being a tax levy on property. This procedure was carried out by Mower County, except that it did not comply with the further statutory directive to pay its employer contributions to PERA. Instead, the county board held the taxes collected and brought this action for a declaratory judgment, asserting that the determination of employer contributions by the board of trustees had resulted in an unconstitutional application of the statutes.

The controversy, as it developed at trial, can be divided into two parts. The first concerns employer contributions which PERA certified to be due from the county for 3 fiscal years, 1956--57, 1957--58, and 1958--59, and an additional contribution due for amortizing the deficit in the state fund. The second part involves employer contributions to match amounts paid in by two employees of the county under so-called 'buy-back' provisions to cover periods during which they had made no contributions.

The background of the first part of the controversy is as follows: Included in the certifications of PERA for the 3 disputed years were matching employer contributions for employees who were employed by either the clerk of court or the register of deeds and who received all or part of their salaries from one or the other of those county officers. Some of the employees received a portion of their salaries from the county, but in no case did the county pay the entire salary of any employee. Each employee paid the employee contribution due on his total salary, regardless of its source. The clerk of court and the register of deeds, however, made no employer contributions on the salaries they paid. During the years in dispute the county did make employer contributions, but these were computed only on the percentages of salaries actually paid by the county.

PERA determined that the county was liable for employer contributions on salaries derived from the clerk's and register's fees under the authority of Minn.St.1961, § 353.60, subds. 1 and 2, as amended by L.1963, c. 641, §§ 32 and 33. ² This statute, as amended, provides that the governmental subdivision shall bear the cost of employer contributions based on salary derived from fees for a person employed by an officer of a governmental subdivision, and that such liability is both prospective and retrospective. The full import of this statute cannot be understood without inquiring into its history.

Prior to 1957, when employer contributions were not compulsory, the attorney general issued an opinion which held that an employee whose salary was derived from fees paid directly to a governmental officer was not a 'public employee' as defined in Minn.St.1953, § 353.01, subd. 2, and that therefore such an employee could not join the fund nor could the governmental subdivision make employer contributions for him. ³

In 1957, after employer contributions were made compulsory, ⁴ the county attorney asked the attorney general for an opinion on whether Mower County was compelled to make employer contributions based on salary derived directly from fees. Following the reasoning of his earlier opinion that such an employee was not a 'public employee,' the attorney general replied in the negative. It was apparently on this authority that the county board refused to pay employer contributions certified by PERA for fiscal year 1956 and the 2 following fiscal years.

In 1959, however, the legislature enacted Minn.St.1961, § 353.60, ⁵ which made governmental subdivisions liable for employer contributions based on salaries derived from fees. At the same time, the definition of 'public employee' was changed to include such officers and their employees. ⁶ After this amendment, Mower County commenced making employer contributions based on the entire salaries of employees deriving compensation in part or in full from independent fees. However, the board continued to deny liability for employer contributions for the 3 fiscal years beginning in 1956.

Then, in 1963, the legislature amended § 353.60 to make retroactive the liability of governmental subdivisions for employer contributions. One purpose of the amendment obvious was to make benefits equally available to all employees of governmental subdivisions without regard to the source of their compensation. Since benefits are increased only upon the basis of the number of years of contribution to the state fund, ⁷ the purpose of making the employer concomitantly liable was also to assure actuarial stability in the fund. Faced with this statute, the county board has argued that to compel it now to pay those contributions would be an unconstitutional payment of public money for a private purpose, contrary to Minn.Const. art. 9, § 1. ⁸ Its argument is grounded on the proposition that the county's payment for the ultimate benefit of the employees has no relationship to the employees' present service. In its view, the payment is a gratuity for past performance.

The second portion of the controversy differs factually from the first, but the position of the county board is the same. Pursuant to Minn.St. 353.36, two county employees paid employee contributions to cover periods during which they were employed by the county but were not members of PERA. The purpose of this provision is to permit employees to increase their allowable years of service so that they will be eligible for greater benefits upon retirement. ⁹ It permits them to obtain benefits equal to those payable to employees who contributed during service, although an employee who utilizes the 'buy-back' provisions must pay an increased sum. In order to maintain actuarial stability, the governmental subdivision must match the amount the employee pays. As it did with respect to retroactive employer contributions, the county board asserts that its matching of the employee's payment would be an unconstitutional payment of public money for a private purpose.

On PERA's motion for summary judgment, the trial court dismissed the county board's complaint and ordered judgment for PERA.

After studying the briefs and hearing oral arguments on the merits, we ordered the parties to submit additional briefs on the question whether the county board has standing to question the constitutionality of PERA's application of the law. The significance of that issue in a case of this kind should not be overlooked, and as we apprehended when additional briefs were requested, we are constrained to base our decision upon it. We note cases, however, in which numerous and diverse schemes for public employee retirement acts have been reviewed and which, almost without exception, have been upheld as constitutional. ¹⁰ The arguments advanced by the county are not dissimilar to contentions made in those cases. None of them persuades us that a different result would be likely in this case although the question of standing precludes a decision on the merits.

Our leading case on the subject of standing of public officers to challenge the constitutionality of statutes is State ex rel. Clinton Falls Nursery Co. v. County of Steele, 181 Minn. 427, 232 N.W. 737, 71 A.L.R. 1190. We were there presented with the question whether a county board, in mandamus proceedings, could question the constitutionality of the statute under which it was being compelled to act. We stated (181 Minn. 430, 232 N.W. 738, 71 A.L.R. 1193):

'* * * The better doctrine supported by the weight of authority is that an official so charged with the performance of a ministerial duty will not be allowed to question the constitutionality of such a law. This rule is based largely upon governmental policy. It rests upon the theory that the court should accept as final the acts of the legislature and discourage attacks upon them except where necessary to protect the private interests of the individual asserting invalidity and peculiarly and particularly affected thereby. Officials acting ministerially are not clothed with judicial authority. To permit them to refuse to perform their duty on the...