Musselman v. Governor

Riley, J.

(concurring in part and dissenting in part). The dispositive issue presented in this case is the proper method for funding health care benefits in the Michigan Public School Employees Retirement System. The majority finds that this Court does not have the power to grant plaintiffs mandamus even though the Governor’s failure to prefund these benefits violates Const 1963, art 9, §24. Although I agree with the majority’s result that plaintiffs will not be able to recover, I disagree with its reasoning. Const 1963, art 9, §24 requires that only financial benefits be prefunded. It is my belief that health care benefits do not equal financial benefits. This belief is based on my conclusion that health care benefits simply do not fall under the definitional umbrella of financial benefits. Consequently, I conclude that the Governor did not violate the constitution by failing to prefund these health care benefits and for this reason I believe that plaintiffs should be denied relief.

*525I

The key to determining whether Governor Engler violated the constitution through his actions turns on how one defines a financial benefit. Const 1963, art 9, § 24 provides in relevant part:

The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.
Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.

Through this provision, the constitution establishes a contractual obligation requiring the state to fund financial benefits in a given year as they arise. If the aforementioned health benefits are financial benefits, then they have to be funded and the Governor’s acts preventing such funding were unconstitutional. However, if these health benefits do not fall under the penumbra of financial benefits, then they are not constitutionally dedicated and the Governor’s failure to prefund them is not unconstitutional, provided that he had the power to cut the budget in this manner.

The majority maintains that health benefits are equal to financial benefits and begins by viewing the issue from the perspective of the employee. The majority argues that for the employee these health benefits may not represent cash in hand but they do have a definite cash value. "Although health insurance is not cash that retirants may spend as they wish, employees receive health insurance in lieu of additional compensation, and *526they would have to purchase insurance if it were not provided to them.” Ante, p 511.

The majority concludes that examining this issue through the eyes of the employee will not answer the question whether health benefits are equal to financial benefits. "This analysis tends to show that retirement health care benefits are financial benefits, but the fact that it does not yield a conclusive answer indicates that this point of view is likely the wrong one.” Id.

Thus, the majority concludes that the issue should be viewed from the government’s perspective and arrives at the conclusion that financial benefits are equal to health benefits. "Instead, the proper perspective from which to interpret the term 'financial benefits’ seems to be that of the government.” Id. The majority carefully examines the history behind this provision and concludes that the reason for its existence is to protect the pension fund. "Therefore, because the purpose of the provision is to prevent governmental units from amassing bills for pension payments that they do not have money to pay, we hold that the term 'financial benefits’ must include retirement health care benefits.” Id., p 513.

The majority’s ultimate conclusion, however, misses the mark because when interpreting the language of the constitution, unambiguous terms are given their plain meaning.

The constitution, although drawn up by a convention, derives no vitality from its framers, but depends for its force entirely upon the popular vote. Being designed for the popular judgment, and owing its existence to the popular approval, its language must receive such a construction as is most consistent with plain, common sense .... [People ex rel Twitchell v Blodgett, 13 Mich 127, 141 (1865).]

*527The normal usage of the word "financial”1 connotes money and "money”2 connotes some form of hard currency that can be "spent.”

The financial world shares a similar interpretation of this term. In an article appearing in the National Mortgage News on January 14, 1991, a definition of a financial instrument appeared that is directly relevant. In this article, a proposal by the Financial Accounting Standards Board, which creates guidelines for general accounting principles, was discussed. Specifically, the proposal required "financial institutions to report the current value of all 'financial instruments’ in their portfolios.” "FASB Opts for Current Value Reports,” National Mortgage News, January 14, 1991, p 8. Moreover, it is interesting to note that "[t]he fasb proposal excludes pension benefits, leases, insurance policies and similar items from its definition of financial instruments.” Id. at 9 (emphasis added). Hence, if the fasb does not consider pension benefits and insurance policies to fall under the definition of a financial instrument, it is not a large leap to conclude that health insurance benefits included in a pension plan are not financial instruments and hence are not financial benefits.

This conclusion by the fasb, although not con*528trolling, sheds a great deal of light on the proper interpretation of the term "financial benefit.” However, even more illuminating is the case of Port Huron Area School Dist v Port Huron Ed Ass'n 120 Mich App 112, 116; 327 NW2d 413 (1982). In that case, the Court of Appeals interpreted the term "financial resource” as including funds, assets, and expected revenues. "We hold that the term 'financial resources’ means the funds-assets, expected revenues, etc. — available for expenditure by the [district] in a given year.” The reference in this definition to funds, assets, and expected revenues once again demonstrates that the term "financial” is understood to involve actual money. Consequently, it is difficult to find that a health benefit is a financial benefit.

This conclusion finds further support in the fact that even money does not always equal a financial benefit. In Jurva v Attorney General, 419 Mich 209, 224; 351 NW2d 813 (1984), this Court found that cash payments as an incentive for early retirement did not constitute financial benefits. "We find, therefore, that early retirement incentives are not 'financial benefits arising on account of service rendered’ and that Const 1963, art 9, § 24 is inapplicable.”

While the majority does attempt to substantiate its. conclusion that health benefits are equal to financial benefits by looking to the intent of the framers of the provision, such an examination is improper because, as stated by Justice Cooley in Blodgett, "the light to be derived from an examination of the proceedings of constitutional conventions, on questions of constitutional construction, is commonly vague and inconclusive, and not to be allowed, in any case, to control the meaning of unambiguous terms.” Id. at 166. He further stated:

*529If, however, by an examination of these proceedings, we had succeeded in ascertaining definitely the intent of the convention, we might still be far from the intent of the people in adopting their work. That intent should be gathered from the words embraced by the instrument as adopted, if those words are free from doubt. The people, in passing upon it, looked only to the clauses as they then stood, without troubling themselves with the considerations, or the accidental circumstances, that may have brought them to their present form. [Id. at 166-167.]

Justice Cooley then concluded that if the constitution expresses a natural meaning which, upon

the first impression . . . strike[s] the mind on reading the clause . . . then further examination, with a view to find some other and more subtle meaning, ought to be made with extreme caution, lest we deceive ourselves into disregarding the plain and obvious sense for some other, which only ingenuity discovers and suggests. [Id. at 167.]

Because the term "financial” has a commonly understood meaning, there is no need to look to the framers’ intent behind the provision. Thus, I believe that the majority’s analysis regarding the purpose behind the provision is improper.

Furthermore, it is questionable whether the framers even intended that financial benefits equal health benefits. The legislative history indicates that the term originally recommended for this provision by the advisory committee was "benefit,” which has a broad connotation.

The committee recommends that the following be included in the constitution:
Sec. a. The accrued financial benefits of each pension plan and retirement system of the state *530and its political subdivisions shall be a contractual obligation thereof, which shall not be diminished or impaired thereby.
All such benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be usable for financing unfunded accrued liabilities. [1 Official Record, Constitutional Convention 1961, p 770. Emphasis added.]

However, in the final draft, the framers limited the term "benefit” by adding the word "financial.”

Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities. [Const 1963, art 9, § 24. Emphasis added.]

Hence, the problem with the majority’s conclusion is that the framers’ creation specifically classifies the type of benefit protected as financial. The framers had every opportunity to use the broader solitary term "benefit” when it was recommended in that form, but chose not to do so. This fact leads to the inevitable conclusion that the framers actually intended to limit the definitional umbrella of "benefit” by narrowing it with the use of the term "financial.” In fact, when the vote was taken on April 19, 1962, the proposal that included the term "financial benefit” was overwhelmingly approved with 117 yeas and only 1 nay. 2 Official Record, Constitutional Convention 1961, p 2659. Consequently, even if we look at the legislative history behind the provision, we come to the realization that the framers wanted a narrower meaning for the term "benefit.”

This conclusion makes perfect sense in light of the principle of ejusdem generis, a rule of statu*531tory construction that is applied where there are general terms modified by more specific terms.

"The rule 'accomplishes the purpose of giving effect to both the particular and the general words, by treating the particular words as indicating the class, and the general words as extending the provisions of the statute to everything embraced in that class, though not specifically named by the particular words.’
"The resolution of this conflict by allowing the specific words to identify the class and by restricting the meaning of general words to things within the class is justified on the ground that had the legislature intended the general words to be used in their unrestricted sense, it would have made no mention of the particular words.” [Belanger v Warren Bd of Ed, 432 Mich 575, 583-584; 443 NW2d 372 (1989), quoting 2A Sands, Sutherland Statutory Construction (4th ed), § 47.17, p 166.]

This rule of interpretation is directly applicable in this case because the rules for interpreting statutes are essentially the same as the rules for interpreting the constitution. See Tucker v Ferguson, 89 US (22 Wall) 527; 22 L Ed 805 (1874). The specific word chosen, "financial,” identifies the class restricting the meaning of the general word "benefit” to that class, "financial benefits.” If the framers had wanted the term "benefit” to be used in a broad sense, they would not have used the term "financial” to limit it. Here the framers had a chance to limit the term to only "benefit,” and actually made that recommendation, but, in the end, the limiting term "financial” appeared. Consequently, because a court "should not, without clear and cogent reason to the contrary, give a statute a construction the legislature itself plainly refused to give,” People v Adamowski, 340 Mich 422, 429; 65 NW2d 753 (1954), it only makes sense that we *532should not extend to the term "benefit” a broader meaning that the framers clearly rejected.

ii

THE GOVERNOR’S BUDGET CUTTING POWERS UNDER CONST 1963, ART 5, § 20

Under Const 1963, art 5, § 20, the Governor is allowed to "reduce expenditures authorized by appropriations whenever it appears that actual revenues for a fiscal period will fall below the revenue estimates on which appropriations for that period were based.” This provision obviously grants to the Governor vast budget cutting powers. Michigan Ass’n of Cos v Dep’t of Management & Budget, 418 Mich 667, 684; 345 NW2d 584 (1984). However, it is true that "[t]he governor may not reduce expenditures of the legislative and judicial branches or from funds constitutionally dedicated for specific purposes.” Const 1963, art 5, § 20. The majority concludes that because health benefits are equal to financial benefits, they are constitutionally dedicated and cannot be cut by the Governor. "Our conclusion is simply that health care benefits are 'financial benefits’ within the meaning of Const 1963, art 9, § 24, and consequently fall within the obligation that the defendants acknowledge.” Ante, p 519. The majority’s conclusion, however, as stated earlier, is incorrect. Health benefits are not equal to financial benefits; consequently, they are not constitutionally dedicated under Const 1963, art 9, § 24 and can be cut through the Governor’s " budget-cutting powers granted to him by Const 1963, art 5, § 20.

hi

CONCLUSION

The result reached by the majority is the correct *533one. The defendants should prevail, but not for the reasons articulated by the majority. Financial benefits simply do not include health benefits for purposes of Const 1963, art 9, § 24. As a result, these funds were not constitutionally dedicated under Const 1963, art 9, § 24 and could be cut by the Governor’s budget-cutting powers granted to him under Const 1963, art 5, § 20. The defendants did not violate the constitution and should prevail. Because of my resolution of this issue, it is unnecessary to address the mandamus issue.

Levin, J., concurred with Riley, J. Weaver, J., took no part in the decision of this case.

1. pertaining to monetary receipts and expenditures; pertaining or relating to money matters; pecuniary. 2. of or pertaining to those commonly engaged in dealing with money and credit. . . . [Random House Webster’s College Dictionary.]

1. any circulating medium of exchange, including coins, paper money, and demand deposits. 2. paper money. 3. gold, silver or other metal in pieces of convenient form stamped by public authority and issued as a medium of exchange and measure of value. 4. any article or substance used as a medium of exchange, means of payment, or measure of wealth, as checks on demand deposit. 5. a particular form or denomination of currency. See table at currency .... [Random House Webster’s College Dictionary.]