JARVIS v. CORY (1979)

In these consolidated petitions for mandamus, petitioners mount a multiple attack upon Chapter 192 of the Statutes of 1979 (Sen. Bill No. 91, hereinafter “S.B. 91”), a salary appropriation bill for designated state employees and retirees.¹ The pivotal attack tests S.B. 91 against article IV, section 17 of the California Constitution. Since, in our view, resolution of the issue thus framed is determinative of the proceedings, we shall confine our discussion to that attack.

Article IV, section 17, provides in pertinent part:

“The Legislature has no power to grant . . . extra compensation or extra allowance to a public officer, public employee, or contractor after service has been rendered or a contract has been entered into and performed in whole or in part . . . .”

S.B. 91 appropriates the sum of $207,669,500 from the state General Fund and certain special funds to provide the salary and benefit increases contested by petitioners. It is further provided that:

“SEC. 1.5. . . . The appropriation under this subdivision shall be allocated so that current employees on or after May 31, 1979, and academic year employees employed at the end of their current academic year . . . receive a lump sum payment to such employees to provide compensation equivalent to that which they would have otherwise received from October 1, 1978, through June 30, 1979, had they received a 7 percent salary increase on October 1, 1978. (Subd. (a)(2).)

“. . .

“The adjustments provided . . . are provided not as a retroactive salary increase, but for continued services rendered on or after the effective date of this act to the extent that any such services may be rendered. Recent events make these adjustments necessary to ensure the continued recruitment and retention of qualified and competent state employees.

“The lump sum provided . . . shall also be paid to those employees who retired between October 1, 1978, and May 31, 1979. . . .” (Subd. (b).)

We have concluded that S.B. 91 violates article IV, section 17 of the California Constitution and is an invalid legislative enactment in its entirety.

S.B. 91 went into effect on July 2, 1979, by a legislative override of the Governor's veto. (Senate Weekly History, August 31, 1979, p. 59.)² Subdivision (a) of Section 1.5 makes an appropriation for salary and benefit increases for state employees “covered” by specified items in the 1978 Budget Act. These employees are the “general” state civil service and exempt officers and employees, and the various categories of officers and employees of the University of California and the State Universities and Colleges. The listing of these categories of employees occupied several pages of the 1978 Budget Act. As we have seen, for salary increases for those employees who have been in employment status on or after May 31, 1979, the bill makes an appropriation, to be paid to them in a lump sum, of an amount “to provide compensation equivalent to that which they would have otherwise received from October 1, 1978, through June 30, 1979, had they received a 7 percent salary increase on October 1, 1978.” Also to be benefited by the lump sum payment are those employees “who retired between October 1, 1978 and May 31, 1979.” (Subd. (b).)

Petitioners contend that Section 1.5 of S.B. 91 violates the long-standing provision in the California Constitution now contained in article IV, section 17 thereof, which prohibits the Legislature from granting “extra compensation” to a public officer, employee or contractor “after service has been rendered or a contract has been entered into and performed in whole or in part.” The section has read substantially the same since its adoption at the constitutional convention in 1878-79, when it entered the Constitution as section 32 of article IV. (3 Debates and Proceedings of the Constitutional Convention 1878-79, p. 1513.) Its most recent enactment was at the election of November 8, 1966. Little or no debate on the measure seems to have been recorded upon its initial adoption, and we find no formal report on the section by the Committee on the Legislature. (See 2 Debates and Proceedings of the Constitutional Convention 1878-79, p. 821.)

Although the courts have not been silent on the meaning of article IV, section 17, none has been confronted with an appropriation of the exact nature of that which concerns us here. Petitioners point out that the cases fall into three general categories or classes, none of which “favor” S.B. 91. The opposition replies that the cases do favor S.B. 91 insofar as constitutionality is concerned. Our reading of the cases leads us to conclude that the cases are neither “favorable” nor “unfavorable” insofar as the issue of constitutionality of S.B. 91 is concerned; they are either distinguishable or inapposite.

It can be said that there are broadly three categories of cases. The first consists of those cases which uphold the “retroactive”³ payment of salaries which have been previously agreed upon but payment has been Delayed for some reason. (See, e. g., Sonoma County Organization of Public Employees v. County of Sonoma (1979) 23 Cal.3d 296, 152 Cal.Rptr. 903, 591 P.2d 1; Coan v. State of California (1974) 11 Cal.3d 286, 113 Cal.Rptr. 187, 520 P.2d 1003; United States v. State of California (Em.App.1974) 504 F.2d 750; State Trial Attorneys' Assn. v. State of California (1976) 63 Cal.App.3d 298, 133 Cal.Rptr. 737.)

The second category of cases includes those in which a salary rate is increased after services have commenced under a contract but the increase operates Prospectively only, or where there is a Vested right to overtime pay. (See, e. g., Johnston v. Rapp (1951) 103 Cal.App.2d 202, 229 P.2d 414; cf., Longshore v. County of Ventura (1979) 25 Cal.3d 14, 157 Cal.Rptr. 706, 598 P.2d 866.)⁴

The third category of cases comprises those in which a salary contract period ends, the employees work during the negotiating period in the absence of any contract, and in the final negotiated agreement the employees give up their demands for even higher wages and accept the negotiated wage scale. (See, e. g., San Joaquin County Employees' Assn., Inc. v. County of San Joaquin (1974) 39 Cal.App.3d 83, 113 Cal.Rptr. 912.)

None of the above patterns or categories of situations fits the instant case; we deal with a legislative enactment which is Sui generis. Petitioners are correct, however, in their contention that the cases do not Support constitutionality of S.B. 91.

We apply certain basic precepts of statutory construction involving challenges to constitutionality. All presumptions and intendments favor the validity of a statute and the burden is on petitioners to show clear, positive and unmistakable unconstitutionality. (In re Ricky H. (1970) 2 Cal.3d 513, 519, 86 Cal.Rptr. 76, 468 P.2d 204; Hutton v. Pasadena City Schools (1968) 261 Cal.App.2d 586, 593, 68 Cal.Rptr. 103.) We must adopt an interpretation which “consistent with the statutory language and purpose, eliminates doubts as to the provision's constitutionality.” (In re Kay (1970) 1 Cal.3d 930, 942, 83 Cal.Rptr. 686, 694, 464 P.2d 142, 150; see also In re Waters of Long Valley Creek Stream System (1979) 25 Cal.3d 339, 349, 158 Cal.Rptr. 350, 599 P.2d 656.) Within these rules, we have analyzed S.B. 91 with the view, if possible, “to effectuate the purpose of the law” (Select Base Materials v. Board of Equal. (1959) 51 Cal.2d 640, 645, 335 P.2d 672, 675), and find that the purpose of S.B. 91 is to grant extra compensation or extra allowance to public officers and employees after service has been rendered. Therefore, we cannot effectuate the expressed purpose of the statute in the face of article IV, section 17.

The purpose of S.B. 91 is first indicated by its title. It is “(a)n act making an appropriation in augmentation of Items 411, 414, 415, 417, 418, 422 and 424 of the Budget Act of 1978, relating to state employees, and to take effect immediately.” Examination of the Budget Act of 1978 (Stats.1978, ch. 359) discloses that each of the Items referred to is a salary item for a particular class or group of state employees. Thus we are made aware at the outset that S.B. 91 has to do with Salaries, a form of compensation or allowance. Perusal of the various sections of the body of the bill itself confirms this, of course, but it indicates something of greater significance as to exactly What the bill does with respect to salaries. It appropriates a sum of money for salary increases for current employees on or after May 31, 1979, and academic employees employed at the end of their current academic year, to be paid in a lump sum. The money is to be paid to those categories of employees “covered” by the 1978 Budget Items, and also to those employees who retired between October 1, 1978 and May 31, 1979.

By the specific terms of S.B. 91, the amount of the extra compensation is to be determined solely as a function of the length of already completed employment time between October 1, 1978 and June 30, 1979. The payments to be made are not in consideration of any bilateral contract or agreement to perform services in the future or in consideration of any unilateral contract or promise to perform a requested service in the future. Notwithstanding the bill's recital that the “adjustments” provided are “for continued services rendered on or after (July 2, 1979) to the extent any such services may be rendered,” S.B. 91 does not require any “current employee” or any “academic year employee” to do any service or to perform any act whatever in consideration of the lump sum payment. All that the employee need plead and prove is that he worked as a state employee between October 1, 1978 and June 30, 1979, and that he was either retired or employed by the state on or after May 31, 1979.

S.B. 91 was not filed with the Secretary of State until 8:00 p. m. on July 2, 1979. Thus no “current employee” performed any services on that date because of, in reliance upon, or before the bill's effectiveness. No work was Required on July 3, 1979 or thereafter, by the bill. If hypothetical employee A commenced work on July 2, 1979, he would receive no payment under the bill. If employee B had held his position since on or before October 1, 1978, he would get a lump sum payment based upon his work from October 1, 1978 through June 30, 1979. If employee C likewise commenced work on or before October 1, 1978 but retired sometime between that date and May 31, 1979, he also would receive a lump sum, but in a lesser amount than employee B, since employee C would not have as much past service during the critical period October 1, 1978 through June 30, 1979.

The above hypotheses illustrate the fact that S.B. 91 provides payment for Past services, or, in the words of article IV, section 17, “extra compensation . . . after service has been rendered” as to state employees in general. No basic difference exists as to “academic year” employees or the Chancellor of Community Colleges and Director of the Postsecondary Education Commission (for whom the same “adjustments” are provided in Section 1.5, subdivision (a)(2) of S.B. 91). It is common knowledge, of which we take judicial notice, that for all practical purposes an “academic year,” at the college level, absent special programs not identified in S.B. 91, ends in June, just as does the “school year” at the pre-college level. (See Ed. Code, ss 37200, 37250.)

With respect to retired employees, it is suggested that we look upon the “adjustments” as “retirement benefits,” thus taking the payments outside the ambit of the letter and spirit of article IV, section 17. This we cannot do, for in truth the retiree would, under the language of S.B. 91, receive his lump sum payment Not because he is retired, but because he performed past services between October 1, 1978 and June 30, 1979, just as is the case with the other categories of persons covered by the bill.

CSEA contends, however, that the bill escapes the bar of article IV, section 17 because, as “designed by CSEA and the author, Senator Alquist,” the payments are to be made for a proper purpose, i. e., “to provide an incentive for current state employees to continue their jobs and as a signal to prospective employees that the state is competitive with the private sector and other public employers.” Respondent Controller adds that the bill “was passed out of an express and urgent concern by the legislature over unexpected and critical salary lags experienced by state employees following ‘recent events (which) make these adjustments necessary.’ ” Those “recent events” are described as “a tumultuous series of occurrences which seriously threatened the stability of State employer-employee relations.” The attempted use of a “ proper purpose” or “public purpose” exception to escape the constitutional barrier is unavailing. Petitioners concede that the “public purpose” doctrine or exception is applicable to cases falling within the gift of public funds clause (Cal.Const., art. XVI, s 6; see Veterans' Welfare Board v. Riley (1922) 189 Cal. 159, 208 P. 678.) They correctly point out, however, that since the outset of the gift clause-public purpose doctrine, the Supreme Court has pointedly held that the existence of a public purpose does not constitute an exception or defense to the “extra compensation” prohibition of article IV, section 17. (Veterans' Welfare Board v. Riley, supra, at p. 169, 208 P. 678 (former art. IV, s 32, now art. IV, s 17); see also Gordon H. Ball, Inc. v. State of California ex rel. Dept. Pub. Wks. (1972) 26 Cal.App.3d 162, 171, 102 Cal.Rptr. 637; Lamb v. Board of Peace Officers, Etc. (1938) 29 Cal.App.2d 348, 350, 84; Mahon v. Board of Education of City of New York (1902) 171 N.Y. 263, 63 N.E. 1107, 1108.)

We have carefully considered, also, the case of Sonoma County Organization of Public Employees v. County of Sonoma, supra, 23 Cal.3d 296, 152 Cal.Rptr. 903, 591 P.2d 1, to which the Controller and CSEA look as a compelling precedent for upholding the validity of S.B. 91. In Sonoma, the Supreme Court found unconstitutional, as an impermissible impairment of contract in violation of both the state (Cal.Const., art. I, s 9) and federal Constitutions (U.S.Const., art. I, s 10), and as an interference with the rights of chartered cities and counties to determine the compensation of their employees (Cal.Const., art. XI, s 5, subd. (b)), the post-Proposition 13 conditions placed upon funds made available to local public agencies.⁵ Each of the respondent local entities had entered into a memorandum of agreement to pay its employees a wage increase for the 1978-79 fiscal year (a factor which is the placemark of the decision) and their governing boards by resolution or ordinance had ratified the agreements. Following the Legislature's provision in the 1978-79 budget of a 21/2% Increase for state employees and the Governor's veto of the increase, the local entities refused, until compelled by the Supreme Court decision, to authorize the increased wages called for in the agreements which they had previously ratified.

As we have seen, the Sonoma decision was based upon impairment of contract and the primacy of local charters vis-a-vis general state law. Although all employees represented by the petitioning organizations were covered by the memoranda of agreement as to wage increases for fiscal 1978-79, the Supreme Court did extend its decision to include those employees who had no contractual rights to an increase in wages. This portion of the decision was grounded upon equal treatment, based upon considerations of due process and equal protection. Our Supreme Court indicated no retreat from the long-standing adherence to the prohibition of article IV, section 17. (23 Cal.3d at p. 319, 152 Cal.Rptr. 903, 591 P.2d 1.) Although an implication can be read into Sonoma that state employees, like non-contract local public employees, may constitutionally receive “retroactive” pay, such implication cannot stand in the face of the precise holding in Sonoma, and the later expressed statement by our Supreme Court that the Constitution does not permit “retroactive” pay. (See Longshore v. County of Ventura, supra, 25 Cal.3d at pp. 22-23, 157 Cal.Rptr. 706, 598 P.2d 866.)

We are mindful of the decreasing purchasing power of the dollar and of the ravages of inflation upon all employees. However, we cannot avoid the plain language and meaning of either article IV, section 17 or S.B. 91. Both the constitution and the statutory language are clear, and the intent can be ascertained therefrom without ambiguity. We are thus left with no room for construction and interpretation. (See Stockton Sav. & Loan Bank v. Massanet (1941) 18 Cal.2d 200, 207, 114 P.2d 592; see also 45 Cal.Jur.2d, Statutes, s 121, pp. 629-630.) The two measures are irreconcilable. As Judge Cardozo said in a somewhat similar case: “We are not to ‘shut our minds' as judges to truths that ‘all others can see and understand.’ ” (McGovern v. City of New York (1923) 234 N.Y. 377, 392, 138 N.E. 26, 32, 25 A.L.R. 1442, 1449.)

Likewise, we are not unmindful of the expressed “intent” of the Legislature contained in subdivision (b) of Section 1.5 of S.B. 91, wherein it is stated that “(t)he adjustments (payments to employees) . . . are provided not as a retroactive salary increase, but for continued services rendered on or after the effective date of this act to the extent any such services may be rendered.” Even though article IV, section 17, does not use the term “retroactive,” but refers instead to “extra compensation . . . after service has been rendered,” it is patently clear that the quoted language chosen by the Legislature and inserted in S.B. 91 was intended to telegraph the message that “this bill is not in violation of Article IV, section 17, of the California Constitution.” With due respect to our co-equal branch of government, it is for the courts, in the final instance, and not the Legislature, to determine constitutionality. To approve this legislation would be to render impotent and nugatory that portion of article IV, section 17, which relates to public officers and employees, not only as to S.B. 91 but as to future legislation. This we cannot in justice do.

The petitions for peremptory writs of mandate are granted. Let a peremptory writ of mandate issue directing respondent Controller to refrain from paying any monies appropriated in Chapter 192 of the Statutes of 1979 (S.B. 91, section 1.5). The alternative writs of mandate heretofore issued in these matters are discharged. Respondent Controller is stayed from paying any monies under S.B. 91, pending finality of this decision, at which time the stay will terminate without further order of court. The motion for interest filed on behalf of CSEA is dismissed as moot.

FOOTNOTES

1.  California State Employees' Association (“CSEA”), named and appearing as “a proper party,” joins with respondent State Controller in opposition to the petitions.

2.  Section 1 of S.B. 91, parallel in its effect to Section 1.5, did not become operative. It was to become operative only if S.B. 91 took effect prior to July 1, 1979; only those portions denominated Section 1.5 through Section 3 became operative. (S.B. 91, Section 2.8, subdivisions (a) and (b).)

3.  On the one hand, the interested parties, in exhibits filed with this court and in numerous documents which we judicially notice, have at various times characterized the proposed additional compensation and benefits as “retroactive” payments. Contrariwise, the Legislature expressed its intent that “(t)he adjustments provided . . . are provided Not as a retroactive salary increase, But for continued services rendered on or after the effective date of this act To the extent any such services may be rendered.” (Sec. 1.5, subd. (b); emphasis added.) The semantical schism does not require resolution; the constitutional prohibition is addressed to “extra compensation” and “extra allowance,” after services and contracts have been performed, and it is the constitutional language by which S.B. 91 must be tested.

4.  In Longshore, a pleading case, the Supreme Court construed a series of county ordinances concerning compensation for overtime pay. Although the court reversed a judgment of dismissal adverse to deputy sheriffs in current service, upon the basis of a later ordinance, it affirmed the trial court's dismissal as to causes of action in which Longshore, a retired deputy, sought compensation for pre-1961 overtime, upon the basis that the county's salary ordinances in effect between 1955 and 1961 created no vested right to compensation for overtime served. In so doing, the court faced up squarely to article IV, section 17: “A public employee is entitled only to such compensation as is expressly and specifically provided by law. (Citations.) . . . The statutory compensation rights of public employees are strictly limited and cannot be altered or enlarged by conflicting agreements between the public agency and its employee. (Citations.)” (25 Cal.3d at pp. 22-23, 157 Cal.Rptr. at p. 710, 598 P.2d at p. 870.) Citing article IV, section 17 of the California Constitution (and article XI, s 10, subd. (a), in its application to local agencies), the court stated further: “(T)he employee's rights are set by the law applicable at the time compensable services are rendered. The Constitution forbids state or local enactments which retroactively grant compensation for work already performed. . . .” (Id., at p. 23, 157 Cal.Rptr. at p. 711, 598 P.2d at p. 871.)

5.  In general, the Government Code provisions purported to withhold state surplus funds and state loan funds from local agencies which provided a cost-of-living wage increase or salary increase in the 1978-79 fiscal year for local public agency employees and certain other recipients In excess of the cost-of-living salary increase provided for state employees. (Gov. Code, ss 16280, 16280.5.)

JANES, Associate Justice.

PUGLIA, P. J., and REYNOSO, J., concur.