STATE OF MAINE MAINE LABOR RELATIONS BOARD Case No. 92-IR-01 Issued: July 13, 1992 ______________________________________ ) In Re: PETITION FOR INTERPRETIVE ) RULING OF MILLINOCKET SCHOOL ) INTERPRETIVE RULING COMMITTEE ) ______________________________________) On April 2, 1992, the Millinocket School Committee ("School Committee") filed a petition for interpretive ruling pursuant to Rule 7.09 of the Rules and Procedures of the Maine Labor Relations Board ("Board"). Specifically, "in order to determine its rights in this matter, and to provide guidance in connection with collective bargaining in the future," the School Commit- tee seeks a ruling as to whether the subject of school board payment of health insurance for retirees is an illegal or non-mandatory (permissive) subject of collective bargaining under section 965(1)(C) of the Municipal Public Employees Labor Relations Law ("MPELRL"), 26 M.R.S.A. 965(1)(C) (1988). It is the School Committee's position that the subject of payment of health insurance for retirees is permissive as a general matter, and that for school boards it is an illegal subject because school boards are without the statutory authority to agree to such payments. Since the Millinocket Education Association ("Association") is party to a collective bargaining agreement with the School Committee that contains a provision addressing health insurance benefits after retirement, the School Committee served a copy of its petition on the Association pursuant to Rule 7.09(A)(4) of the Board's Rules and Procedures; the Association filed a responsive memorandum taking the position that the subject of school board payment of health insurance for retirees is a mandatory subject.[fn]1 _________________________ 1 The Board posted the petition at its offices and provided a copy for posting to the Maine State Law and Legislative Library in accordance with Rule 7.09(B). However, no other memoranda were received. -1- Pursuant to Rule 7.09(C) of the Board's Rules and Procedures, both the School Committee and the Association requested a hearing on the petition. Said hearing was convened on Wednesday, May 20, 1992, before the Board's designated agent, staff attorney Judith A. Dorsey. Hugh G.E. McMahon, Esquire, represented the School Committee, and Shawn C. Keenan, Esquire, represented the Association. The parties were given full opportunity to examine and cross-examine witnesses, introduce documentary evidence, and make oral argument. The parties filed posthearing briefs and replies, the last of which was received on June 23, 1992.[fn]2 The Board completed deliber- ations on the matter on July 10, 1992. JURISDICTION The Millinocket School Committee is a government body within the meaning of Rule 7.09(A)(1) of the Board's Rules and Procedures. The Millinocket Teachers Association is an employee organization, within the meaning of Rule 7.09(E), for a bargaining unit of teachers employed by the Millinocket School Committee. The jurisdiction of the Board to issue an interpretive ruling lies in 26 M.R.S.A. 968(3) (1988). FINDINGS OF FACT Upon review of the entire record, the Board finds: 1. The School Committee and the Association are parties to a teachers' collective bargaining agreement ("1991-92 agreement") that expires on August 31, 1992. Article XVII of the 1991-92 agreement states: RETIREMENT A. The Committee shall pay retirees health insurance premium after retirement to the extent not paid by the State of Maine or the Maine State Retirement System and pay for accumulated sick leave upon retirement as follows: Eleven (11) days sick leave at the per diem rate plus an additional twelve (12) days if employee has accumu- _________________________ 2 The Association elected not to file a posthearing reply brief. -2- lated 200 days sick leave. These benefits to be appli- cable to employees who meet the qualifying length of service in the Millinocket School System. B. Qualifying length of service to be 20 years of service in the Millinocket School System. It is understood by the parties that during the period of this Agreement, the Committee may initiate proceedings with the Maine Labor Relations Board to seek a ruling as to whether this article contains any terms which are either not mandatorily negotiable or are illegal. In the event that it is finally determined by the MLRB, and if applicable reviewing court(s) having jurisdiction, that any provisions of this article are illegal, the parties shall act in accordance with Article VI. Nothing in the above prohibits continuation of such proceedings upon expiration of this Agree- ment if such proceedings have not been concluded. 2. Article VI of the 1991-92 agreement states: SAVINGS CLAUSE If any provision of this Agreement or any application there- of to any teacher or group of teachers is found contrary to law, then such provision or application will be valid and subsisting only to the extent permitted by law but all other provisions or applications will continue in full force and effect. In the event any provision of the Agreement is held to be invalid by a court decision, then the parties shall meet within ten (10) working days after such a decision to renegotiate such provision, unless mutual agreement is reached to renegotiate such a provision at a date to be determined by both parties. 3. The four prior collective bargaining agreements between the par- ties all include a provision that addresses retirement. In the 1983-85 agreement, Article XVII provides: A. Any teacher who retires with 25 years or more of service in the Millinocket School Department, shall be granted $1,000.00 additional salary during the last year worked. The Superinten- dent's Office shall be notified of the intent to retire on or before April 1 of the year prior to retirement. B. Insurance - Any teacher who retires with 25 or more years of service in the Millinocket School System shall be granted one- half (1/2) the premium cost of the medical insurance in effect at the time of retirement. -3- Article XVII of the 1985-87 agreement reads: A. Any teacher who retires with 25 or more years of service in the Millinocket School Department shall be granted $1,000.00 additional salary during the last year worked. The Committee further agrees to add an additional $1,000.00 to the last contract if the teacher has at least two hundred (200) sick leave days accumulated at the beginning of the last year of teaching in the school system. The Superintendent's Office shall be notified on or before April 1 prior to the year of retirement. B. Insurance - Any teacher who retires with 25 or more years of service in the Millinocket School System shall be granted full premium cost of the medical insurance in effect at the time of retirement. Article XVII of the 1987-89 agreement is identical to Article XVII of the 1985-87 agreement, except that the figure of $1,000.00 is increased to $1,500.00 in both places it appears. 4. At the time of the negotiations for the 1989-91 agreement, the Association informed the School Committee that the State was (and had been for some time) authorized to pay a percentage of the retired teacher's share of health insurance benefits provided through the Maine State Retirement System. Accordingly, in order to avoid unnecessary expense to the School Committee, the parties amended Article XVII to read as follows in the 1989-91 agreement: The Committee shall pay retirees health insurance premium after retirement to the extent not paid by the Maine State Retirement System and pay for accumulated sick leave upon retirement as follows: Eleven (11) days sick leave at the per diem rate plus an additional twelve (12) days if employee has accumulated 200 days sick leave. These benefits to be applicable to employees who meet the qualifying length of service in the Millinocket School System. Qualifying length of service to be: 25 years of service in the Millinocket School System during 1989-90 20 years of service in the Millinocket School System during 1990-91 -4- 5. The parties have stipulated that there are nine former teachers whose health insurance is currently being paid by the School Committee "under Article XVII of the 1991-92 Agreement." Retirement dates range from July 1, 1986, to September 1, 1991. 6. There are 17 former Millinocket School Department non-teacher employees whose health insurance is to some extent currently being paid by the School Committee. They include former school administrators, former custodians, and a former school nurse. Retirement dates for these former employees range from November 13, 1966, to September 1, 1991. 7. Administrators employed by the School Committee (principals, assistant principals and the director of school services) are not organized for the purposes of collective bargaining. The individual contract currently used for these administrators contains the following provision: The Administrative Team shall be provided the highest full coverage for hospital, surgical and major medical insurance. Any Team member who retires with ten (10) years of service in the Milli- nocket School Department, and qualifying for retirement status in the Maine State Retirement System, shall have the above insurance premiums, for hopital, surgical and major medical insurance paid for life. Said premiums shall be limited to no more than the couple plan. The full cost of the long-term disability insurance will be provided all members of the Administrative Team. 8. On August 8, 1991, the Town of Millinocket amended its written personnel policy, to reflect unwritten policy, as follows: IT IS HEREBY RESOLVED that Section A128-17 of the Personnel Policy is amended by adding subsection D as follows: SA 128-17. Benefits D. Employees, other than school department employees, who retire from Town service and qualify for retire- ment or disability benefits under the Maine State Retirement System shall continue as members of the Town's group hospitalization plan, at the Town's expense, to the same extent as current employees. The Town shall also pay for coverage for the former employee's spouse. This benefit shall apply to former union employees of the Town as well as non union employees. The Town reserves the right to change this benefit in the future as circumstances require. Any such changes shall apply only to employees hired after August 8, 1991. -5- . . . Note: This reflects past and current policy of the Town. It is not new and should be in writing in the Personnel Policy. DISCUSSION Motion to Dismiss As an initial matter, the Association requests that the petition for interpretive ruling be dismissed on the grounds that 1) it fails to estab- lish that a controversy or doubt has arisen regarding the applicability of a specific statute, Board order or rule, pursuant to Rule 7.09; and 2) an interpretive ruling would only be appropriate if and when a court decision affirms that Article XVII of the parties' 1991-92 agreement is illegal, resulting in renegotiation of that article of the Agreement pursuant to Article VI, Savings Clause. The School Committee's stated reason for filing the petition is that it is contemplating refusing to bargain over the issue of health insurance premiums for retirees during negotiations for a successor contract. It would be legally entitled to do so if the subject is either a permissive or an illegal subject of bargaining. It would not, if the subject is man- datory. We view the question of future bargaining responsibilities as pre- cisely the type of question contemplated by the Board's rule on requests for interpretive rulings -- a party may seek the advice of the Board before taking action that might result in the filing of a prohibited practice case. Accordingly, we reject the Association's first ground for requesting dismissal of the petition. The Association's second ground for seeking dismissal must also be rejected. In making this argument, the Association suggests that issuance of an interpretive ruling will interfere with its right to have the par- ties' collective bargaining agreement interpreted by an arbitrator under the grievance procedure. In response, we must point out first that our interpretive ruling is not binding. Therefore, if the Association at any time believes the contract is being violated, it is free to file a griev- ance under the parties' grievance procedure. Second, the question we are -6- being asked to address is not simply what Article XVII means, but rather, whether one of the subjects of that Article -- health insurance for teacher retirees -- is a mandatory, permissive or illegal subject of bargaining. The issue of the future obligation to bargain would not be reached by an arbitrator if the School Committee decided to stop paying health insurance premiums for anyone who has retired under the 1991-92 agreement, and the Association filed a grievance. The Association also suggests that Article XVII by its own terms does not require that that article be renegotiated unless the subject of health insurance for retirees is found to be an illegal subject of bargaining in a proceeding that is reviewable by the courts. Since an interpretive ruling is not reviewable, the Association argues, it is not appropriate for the Board to issue an interpretive ruling until the parties have completed renegotiations, if and when they are necessary. Although it is unclear what would be left for the Board to address at that point, the Board agrees as a general matter that making a finding on illegality of a contract provision, while the contract is still in effect, is not appropriate through the vehicle of an interpretive ruling. In the interest of peace and contract stability, the Board will normally decline, through an interpretive ruling, to involve itself in an attempt by one party to a contract to back out of a provision of that contract mid-term. In the matter before us we make an exception to this general policy for the following reason. Were we to find simply that the subject at issue is a permissive one under all circumstances, there would be no need to go further, since in order to legally refuse to bargain over this subject for a successor contract, the School Committee need only know that the subject is permissive. However, as we will explain, we find that in some circum- stances the subject is mandatory. More specifically, it appears to us that the retiree health insurance provision that the parties have negotiated addresses a mandatory subject for public employers in general. Our refusal to determine whether for school committees it is illegal -- for lack of statutory authority -- would put the employer in the awkward position of risking a prohibited practice charge if it doesn't bargain, and of bargain- ing over an illegal subject if it does. Since we find that it is not illegal, the Association's concern that an interpretive ruling of illegal- -7- ity is not reviewable by a court need not be addressed. Merits Retiree health insurance in general The School Committee asserts in its petition and supporting memorandum that as a general matter, the subject of payment of health insurance for retirees is permissive. In support of this position it cites Allied Chemical Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157 (1971). As the School Committee points out, the Court in that case found that retirees are not employees within the meaning of the collective bargaining obliga- tions of the National Labor Relations Act ("NLRA"), and that retirees' health insurance benefits do not "vitally" affect the terms and conditions of employment for employees. Consequently, the Court found, retirees' health insurance benefits are not a mandatory subject of bargaining under the NLRA. Although we are not bound by decisions rendered under the NLRA, "where the question is one of first impression, we will 'look for guidance to parallel federal law, found in the National Labor Relations Act and decisions thereunder' in reaching our conclusion." Teamsters Local Union 48 v. Eastport School Dept., No. 85-18,, slip op. at 5, 8 NPER ME-17003 (Me.L.R.B. Oct. 10, 1985), quoting Baker Bus Service v. Keith, 428 A.2d 55, 56 n.3 (Me. 1981). In response, the Association suggests that 1) to the extent that employer contributions for retirees' health insurance "may be described as a 'pension,'" they are a mandatory subject; and 2) even if these contribu- tions are characterized as insurance, the reference in the MPELRL (section 965(4)) to insurance makes it a negotiable (mandatory) subject; and 3) the benefit in question was negotiated not for retirees, but for members of the bargaining unit who will eventually become retirees. Finally, the Association questions the motive of the School Committee in filing its petition for an interpretive ruling, since the School Committee has made no move to discontinue this benefit for unorganized School Committee employees or to raise the issue with organized support personnel (whose contract pro- vides similar health insurance benefits and does not expire until 1993). The Association points out that the Town of Millinocket is paying the bene- fit to municipal retirees as well. -8- While it is true that insurance is a mandatory subject of bargaining under the MPELRL, it is the declared purpose of that statute to recognize the right of "public employees to . . . be represented by [labor] organiza- tions in collective bargaining for terms and conditions of employment." 26 M.R.S.A. 961 (1988) (emphasis added). Retirees are not "public employees" under section 962(6) of the MPELRL; consequently, employers subject to the MPELRL are not obligated to bargain over benefits for per- sons who have already retired from employment. That does not end the inquiry, however. Certainly the parties to a contract may, if they so choose, "agree to the accrual of rights during the term of an agreement and their realization after the agreement has expired." Nolde Bros. v. Local No. 358, Bakery & Confectionery Workers Union, 430 U.S. 243, 249 (1977) (regarding severance pay, a benefit realized when a company goes out of business and its employees are terminated), quoting John Wiley & Sons v. Livingston, 376 U.S. 543, 555 (1964) (concerning bene- fits such as severance pay and retirement pension). More specifically, they may agree to the accrual of rights during the term of an agreement and their realization upon or after retirement -- pensions, for instance, are clearly a mandatory subject of bargaining under the MPELRL if they are bargained for on behalf of employees -- persons who eventually will retire from employment, but have not yet done so. Thus, if an employer and a bargaining agent bargain over retiree health insurance so as to make it clear that they are doing so on behalf of (for the benefit of) bargaining unit members, Pittsburgh Plate Glass is inapplicable. In Pittsburgh Plate Glass, the union attempted to stop the employer from going directly to persons already retired and offering them pension options other than those they were entitled to under contracts negotiated while they were employees. As the Court pointed out, pensioners had no obligation to agree to any changes, and could pursue enforcement of their contracts with the employer in court, if necessary. Pittsburgh Plate Glass, 404 U.S. at 181, n.20. However, the union had no authority to pursue the matter on behalf of the pensioners, since as retirees, they were no longer represented by the union. Nevertheless, in so holding, the Court recognized that "[tlo be sure, the future retirement benefits of active workers are part and parcel of their overall compensation and hence a well- -9- established statutory subject of bargaining." Id. at 180. In the collective bargaining agreement presented to us by the School Committee, the article at issue appears to have been negotiated for and was meant to benefit members of the bargaining unit. First and foremost, the language of Article XVII itself makes that clear. It provides that the School Committee shall pay a portion of the health insurance premium after retirement, and only for "employees who meet the qualifying length of service in the Millinocket School System." [Emphasis added.] The quali- fying length of service is 20 years. Likewise, in previous contracts between the parties, Article XVII refers to teachers as the beneficiaries of the provision, if they meet requirements for qualifying length of ser- vice. There is no difference between the way the parties have structured this benefit, and the way that pension benefits normally are structured -- the contract requires an extended term of service as an employee of the employer. As with pension benefits, the health insurance benefit in the contract is a future retirement benefit negotiated for active workers, and not a benefit negotiated for persons who are already retired. In addition, Article XVII is very similar in nature to the health insurance provision in the individual contract utilized by the School Committee for administrative staff. That provision specifies that any administrator who retires with ten years of service with the Millinocket School Department and otherwise qualifies for retirement status with the Maine State Retirement System will have health insurance premiums paid for life. Since it appears in individual contracts of active workers, there can be no argument that this provision is for the benefit of persons already retired rather than for active workers. Finally, we wish to point out that the School Committee's reference to 26 M.R.S.A. 9 (1988), which allows bargaining agents in the private sector (and not the public sector) to negotiate on behalf of retired former employees with respect to pensions, retirement benefits and other benefits, is not helpful. We have found that the provision negotiated by the parties before us is not on behalf of or for the benefit of persons already retired, but rather on behalf of and for the benefit of current employees. Consequently, the omission of public sector bargaining agents from 26 -10- M.R.S.A. 9 is irrelevant to our inquiry. In sum, we find that the parties have negotiated over retiree health insurance in such a way as to make it, as a general matter, a mandatory subject under the MPELRL. Before we turn to the question of whether, for school boards, the subject is illegal, we wish to point out that the disagreement between the parties on this issue appears to arise at least in part from their failure to focus, in practice, on the employee/retiree distinction outlined above. The parties submitted a stipulation stating that there are nine former teachers whose health insurance is currently being paid by the School Committee "under Article XVII of the 1991-92 Agreement."[fn]3 This is so even though at least five of those teachers retired while previous contracts were in force.[fn]4 As a practical matter, the parties' reference to the 1991-92 agreement in connection with these retirees matters little to the retirees themselves, since under all of the contracts in force at the time they retired, health insurance premiums are paid either in full by the School Committee, or are paid by the School Committee to the extent that they are not paid for by the State. That may not be the case in the future, however. Teachers who retire under a particular contract, and who have met the time-in-service require- ments of Article XVII of that contract, upon retirement have "vested" bene- fits that cannot be unilaterally changed by the employer. Pittsburgh Plate Glass, 404 U.S. at 181, n.20. Certainly there is nothing to prevent the parties from negotiating to increase, decrease or even omit the retirement health insurance benefit, in future contracts, for persons not yet retired. However, those changes would not affect the benefits of persons who retired under previous contracts, unless the parties (with the permission of _________________________ 3 It was submitted to clarify the record on the issue of whether or not the School Committee had been providing health insurance to retired teachers even before the parties' first contract was negotiated in 1983. 4 The other four teachers retired on September 1, 1991, the date the 1991-92 agreement went into effect. Consequently, all nine may have actually retired under previous contracts. -11- affected retirees) so negotiated. Of course, neither party is required to negotiate over changes in benefits for persons already retired, since that is a permissive subject. Pittsburgh Plate Glass. Changes that are nego- tiated should be clearly designated as such in any written contract or other document. Retiree health insurance for teachers The School Committee asserts that for school boards, the subject of retiree health insurance is an illegal one, because school boards are not specifically authorized by statute to pay this benefit. In making this argument, the School Committee points to Churchill v. S.A.D. #49 Teachers Association, 380 A.2d 186 (Me. 1977), which states that: [P]ublic bodies or officers[] may exercise only that power which is conferred upon them by law. The source of that authority must be found in the enabling statute either expressly or by necessary inference as an incidence essential to the full exer- cise of the powers specifically granted. [Citations omitted.] Id. at 192.[fn]5 This statement by the Court is made in connection with its interpretation of the MPELRL. Since the MPELRL requires that parties confer and negotiate in good faith with respect to "wages, hours, working conditions and contract grievance arbitration," 26 M.R.S.A. 965(1)(C) (1988), and employee benefits, including future benefits for active workers, are almost universally considered to be mandatorily negotiable compensation, the issue appears at first blush to be resolved by our earlier determination that as a general matter payment of retiree health insurance, if negotiated on behalf of employees rather than persons already retired, is a mandatory subject. The School Committee argues, however, that since 20-A M.R.S.A. 1001(5) (Supp. 1991) specifies in detail what insurance premiums and other employee benefits school boards may pay, that statute both "defines and limits" the _________________________ 5 The School Committee cites several other cases as well, but all address the improper delegation of statutorily granted authority. Since we are not faced with that situation, those cases are irrelevant to our inquiry. -12- scope of school board authority in this area. While we find the School Committee's argument persuasive, we also find that the payments in question are in fact authorized by section 1001(5). Part A of section 1001(5) reads as follows: 5. Insurance premiums and employee benefits. They [school boards] may: A. Pay the premiums of life, health, dental, disability, accident, hospitalization, major medical and such other types of insurance as may be provided to employees and their families from time to time; In suggesting that this provision and its legislative history[fn]6 make it clear that health insurance payments for retirees are not authorized, the School Board overlooks Part D of section 1001(5), which the Legislature added to section 1001(5) in 1989. Part D states that school boards may: D. Provide such other employee benefits, directly or indirectly, to their employees as any school board determines from time to time, upon such terms and conditions and in such manner as the school board deter- mines, subject to the requirements of all applicable laws. Although Part A may arguably be interpreted not to include future retire- ment benefits for current employees, we do not find that to be the case for Part D, which appears to us to be a catch-all grant of authority to pay for whatever other employee benefits school boards may negotiate or otherwise provide. As the Association points out, the Statement of Fact contained in the original bill (L.D. 516) adding Part D to section 1001(5) supports this interpretation.[fn]7 The Statement of Fact states, in part: . . . In addition, because employee benefits is a changing area the law and because school boards should be in as flexible a _________________________ 6 Part A was expanded in 1989 to cover employees and their families and not just employees. P.L. 1989, c. 425. 7 Although Part D in L.D. 516 was somewhat shorter than the version that finally emerged as law, the intent in both is the same. The original Part D stated: D. Provide such other employee benefits to their employees as any school board determines from time to time. -13- position as possible to provide benefits in as efficient a form as possible, the bill authorizes school boards, at their discretion, to provide employees with such benefits as are customarily pro- vided by employers. Section 1 clarifies the types of insurance schools can pro- vide for their employees, authorizes the implementation of re- imbursement programs and confirms that school boards may provide their employees with such employee benefits as the board and the employees may agree upon from time to time. The School Committee suggests that the Statement of Fact is not useful, because it refers to benefits for employees and not benefits for retirees. However, since the benefit negotiated in the parties' 1991-92 agreement was negotiated on behalf of and for the benefit of current employees, and not on behalf of and for the benefit of persons who are already retired, we do not believe that 20-A M.R.S.A. 1001(5) bars the parties from negotiating a similar provision in successor contract negotiations. Finally, a suggestion to the parties is in order. The Association has questioned the motives of the School Committee in seeking this interpretive ruling, and the School Committee has responded that its interest is simply in moving toward resolution of a problem that the parties have been unable to resolve. As we said earlier, it appears to us that the problem is not what the law does or does not allow or require to be negotiated, but rather the failure of the parties to make the legal distinctions necessary to comply with the law. Once these distinctions are made, the parties should be able to accurately reflect their intentions in a written agreement. -14- Consequently, we urge the parties, in future negotiations, to be as clear as possible about what they are negotiating and on whose behalf. Dated at Augusta, Maine, this 13th day of July, 1992. MAINE LABOR RELATIONS BOARD /s/_____________________________ Peter T. Dawson Chair /s/_____________________________ Howard Reiche, Jr. Employer Representative /s/_____________________________ George W. Lambertson Employee Representative -15-