Analysis: Appellate court supports Budget Repair Law’s mandatory increases

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When Eau Claire County required most of its employees to chip in more for retirement contributions and health care premiums, Sheriff Ronald Cramer and Treasurer Larry Lokken wanted the boosted deductions stopped.

In an opinion issued April 16 in Ronald D. Cramer v. Eau Claire County, 2012 AP 1796, the Wisconsin Court of Appeals decided that the state’s 2011 Budget Repair Law allowed Eau Claire County to make the increased deductions.

The Wisconsin statute that prohibits counties from altering an official’s compensation during their term of office “did not bar the county from requiring increases in contributions to financial benefits,” said the court.

“The plain meaning of salary is fixed compensation for a set duration of time, not take-home pay,” the court explained, finding that boosting Cramer and Lokken’s required contributions did not alter their salary or compensation.

A little more than two years ago, the state Legislature passed a modified budget repair bill, which in part compels local government employees to pay a set formula of their own share of contributions to their Wisconsin retirement system account, and also raised employee contributions to health care premiums.

The additional mandatory payments were supposed to give state and local government additional cost savings by bolstering the financial health of the Wisconsin Retirement System, and further shifting a growing portion of medical care expenses onto employees.

Counsel for Cramer objected to the deductions and sued the county, claiming that the new law conflicted with Wis. Stat. 59.22(1), which prevents officials’ compensation from being changed during their term of office.

At a joint summary judgment hearing, Circuit Judge Steven Cray found that the new law did run afoul of Wis. Stat. 59.22(1), and granted summary judgment to Cramer – awarding damages to repay the contested health and retirement account contributions.

Eau Claire County appealed, asserting that the plain language of the Budget Repair Law did not conflict with Wis. Stat. 59.22(1), and that “compensation” as reasonably defined within both statutes did not include fringe benefits.

Counsel for Eau Claire County further asserted that the trial court‘s holding was contrary to existing law, contrary to the purpose of the statute and legislative intent, as well as incompatible with reasonable rules of statutory construction.

Cramer’s attorney responded that the trial court had substantial reason to find that the Budget Repair Act was contrary to Wis. Stat.59.22(1).

First, according to Cramer’s counsel, use of the word “total” in the first sentence of the statute suggests that basic “compensation” is being modified or expanded, to include fringe benefits.

In the lower court decision, Cray had in part relied upon the inclusion of the word “total” to suggest that “total compensation” included contributions to retirement accounts and health premium payments.

The appeals court disagreed, pointing out that there were interpretations of the phrase “total compensation” that need not include fringe benefits within the context of compensation.

“’Total’ can be given effect by construing it to include salary and fees,” the court wrote.

Additionally, counsel for Cramer argued that use of the word “compensation” to mean straight salary, excluding benefits, would indicate that “compensation” and “salary” are the same thing.

This may be true, the court indicated, but it is not unusual for two different words in a statute to have the same meaning.

Even if the court found that compensation equates with salary, counsel for Cramer argued that the additional Eau Claire County deductions for retirement and for health care premiums reduced his take-home pay, which is prohibited by statute.

“The County Board cannot set precise take-home pay for elected officials,” noted the court, “much less in advance of knowing who will be elected to the position.”

The court further highlighted the fact that many deductions were beyond the county’s control, including those affected by the officials’ family size, their voluntary retirement contribution, and state and federal withholding choices.

To further guide its decision, the court ultimately found what was not included in the Budget Repair bill as telling as what was included.

“If the legislature had intended to alter the ordinary meaning of “salary” in Wis. Stat. 59.22, as part of the Budget Repair bill,” the court reasoned, “it would have done so.”