Sec. 26, art. IV of the Wisconsin constitution states:
"Extra compensation; salary change. Section 26. The legislature shall never grant any extra compensation to any public officer, agent, servant, or contractor, after the services
Sec. 42.535, Stats., provides that every qualified retired teacher "shall be paid an additional $1 per month for each year of teaching experience" and it designates such payments as an "additional benefit" and an "additional annuity." The benefits and annuities to which these are additional are those provided by other sections of ch. 42, Stats. By sec. 42.42 every contract of employment as a teacher made after July 8, 1921, is subject to the provisions of the State Retirement Law (secs. 42.20 to 42.54), which confers specific benefits. Thereby such retirement benefits become part of the teaching contract and are consideration for the teachers' services; that is, compensation for them. Hence, "additional benefits" and "additional annuities" at first glance appear quite plainly to be additional compensation. Just as clearly, additional compensation is extra compensation;—that is, compensation outside of that previously agreed upon. Sec. 42.535 grants such benefits to certain teachers who retired before June 30, 1951. The new section became effective July 19, 1951. It is apparent, therefore, that this extra compensation is not granted until after the teaching contracts had not only been entered into but the teachers' services had been performed and the teacher had ceased to serve. If it be true, then, that the additional benefits and annuities form extra compensation, which was not granted until after the contracts were entered into or until the services had been rendered, the prohibition of sec. 26, art. IV, Const., renders the legislation void.
The petitioner submits, however, that this legislation is of a sort not forbidden by the constitution, for several reasons, which are not necessarily consistent with each other but any one of which will serve to sustain the legislation. First, he says, benefits provided by sec. 42.535, Stats., are
The petitioner then suggests that the additional benefits need not be regarded as compensation at all and are not payments made upon any contract, but on the contrary they are gratuities given former teachers by a sympathetic state, genuinely concerned over their economic plight, for the purpose of encouraging third persons to enter the profession and those now in it to stay in. A number of questions present themselves affecting this hypothesis. We find no declaration by the legislature that it had any such purpose in mind nor is there anything in the legislation to indicate that the economic plight of persons who are eligible for the benefits under the petitioner's interpretation of eligibility differs from that of
The petitioner also relies on State ex rel. Atwood v. Johnson (1919), 170 Wis. 251, 176 N. W. 224, in which the constitutionality of the Soldiers' Educational Bonus Law was upheld. Petitioner submits that benefits paid in gratitude for past services to the state are for a proper public purpose,— an encouragement to others to go and do likewise,—and do not constitute extra compensation within the contemplation of sec. 26, art. IV, Const. He reinforces this argument by Brodhead v. Milwaukee (1865), 19 Wis. *624, in which expenditure of public funds as bounties to induce men to volunteer for military service was upheld. The benefits in the Brodhead Case, supra, as in the Dudgeon Case, supra, and as absent in the case at bar, were payable to those who were serving and to those who would serve in the future but, in another respect, we regard both the Atwood and the Brodhead Cases, supra, as having a common element which distinguishes them from all others, to wit: That the beneficiaries performed military service in time of war. That, alone, is of such paramount public importance that men may be, and are, conscripted to serve, often at the sacrifice of their lives. The difference between the service of the soldier, whether conscript or volunteer, and that of the civilian public servant is so great that it becomes a difference in kind, historically recognized, not merely one of degree. Precedents approving as constitutional pensions or bonuses for veterans do not carry over as authority for like rewards to civilians.
The petitioner also submits that the "extra compensation" provision of the constitution does not apply to the present transaction because a new contract has been entered into, or an old one modified, whereby, in return for the repayment of moneys previously withdrawn, plus $100, the state now contracts
The funds into which Wisconsin teachers' salary deductions are paid is the retirement deposit fund, to which the state also makes a contribution determined by law. This is comparable to the single fund which, in Illinois, receives all contributions and makes all disbursements. The retirement deposit fund is unable, even without the demands of sec. 42.535, Stats., to meet the drafts upon it and the assets of the contingent fund must be drawn upon. This is a fund set up as a sort of shock absorber and out of which the annuities are paid. Into this fund each year the state pays an amount calculated according to the present value of the fund's liabilities. The state gets the money to make payments to the contingent fund from the general fund, into which all income-tax collections go, including the proceeds of the teachers'
The petitioner suggests that the legislation may be sustained as a contract, with no involvements concerning past services or extra compensation, because the state is agreeing to provide a new annuity for a new consideration,—the payment of $100 into the general fund. It appears to us that if the factor of past services and compensation therefor is withdrawn, we have nothing left but a group of people in whom
The petitioner further submits that the statesmen who drew sec. 26, art. IV, Const., did not have retirement systems in mind and we would pervert their intent if we applied that Article to a retirement or bonus plan for state employees. He argues that it was contracts for other purposes which the constitution intended to circumscribe. We cannot agree with the reasoning or the conclusion. Conceding that retirement plans, as distinguished from pensions, were not, in 1848, customary ways of spreading the employees' compensation over a greater number of years, the framers were well aware that public servants, including teachers, were employed for compensation accepted or agreed upon by express or implied contract and that an agreement to render personal service for a consideration is a contract equally with one for the furnishing of materials or accomplishing some specific result. They knew the meaning of every word in the Article and the meanings have not changed with the passage of time. "Services," "contracts," and "compensation" are not new terms or new concepts. The language of the Article admits of no doubt that it was the intent of the draftsmen who prepared it and the electors who adopted it that, when a person rendered public service for compensation agreed upon, his right to compensation depended upon and was limited by his agreement. "The exact measure of his right is determined
It has not escaped the attention of the court that a decision sustaining an increase of benefits for already retired teachers would clear the way for legislation increasing benefits for all public employees, including judges, granted by the legislature from time to time after their retirement, and such a decision would be consonant with the selfish interests of the court. Nevertheless, as we read sec. 26, art. IV, Const., this would involve an exception to a clear and unmistakable command. If exceptions are to be made, they should not come from the legislature or the court but from those whose proper function it is to amend the constitution. When the people determined that the times required state participation in the construction of highways, airports, veterans' housing, and the preservation and development of forests, they adopted amendments to the constitution excepting these interests from the terms of sec. 10, art. VIII, which forbade the state to engage in works of internal improvement. If, now, to underwrite certain contracts against the effects of inflation is deemed, by the people, to be desirable, or if they consider that the cause of public service requires power in the legislature to grant bonuses, apart from compensation, to retired public servants, the road to amending the constitution is well traveled, and in such an amendment guides and limits to legislative and judicial authority can be set in such wise
With regret that we are not persuaded by petitioner's arguments and authorities, we conclude that the effect of sec. 42.535, Stats., is to grant extra compensation to public servants after the services are rendered and to public contractors after the contracts are entered into, in violation of sec. 26, art. IV of the state constitution. We find it unnecessary to our decision to determine whether there is unconstitutional discrimination in limiting the benefits of sec. 42.535, Stats., to those teachers who had retired before June 30, 1951, and who, on that date, were either actually receiving retirement benefits or had applied for them. For the same reason we need not explore the question of whether or not the obligation to pay additional benefits would create a state debt in violation of sec. 4, art. VIII, Const. Sec. 42.535, Stats., conflicts with sec. 26, art. IV, Const. We must, therefore, hold it void.
We wish to express our appreciation to all counsel for unusually able and informative briefs and argument.
By the Court.—Alternative writ of mandamus quashed. Petition for a peremptory writ of mandamus denied.
CURRIE, J. (dissenting).
This court in State ex rel. Dudgeon v. Levitan (1923), 181 Wis. 326, 193 N. W. 499, held that the provisions of the Teachers' Retirement Act, which provided for granting past-service credits in computing the pension of a teacher still in service at the time of the enactment of the act, was not a grant of extra compensation for services already rendered by such teacher, contrary to sec. 26, art. IV of the Wisconsin constitution. Twenty-nine years have now elapsed since that decision, during which period we have not only witnessed a great growth in retirement systems for both public servants and employees in private industry, but we have seen how inflation has intervened
In my opinion the time has come when this court should take one further forward step in the direction in which the decision in State ex rel. Dudgeon v. Levitan, supra, pointed, and declare that sec. 26, art. IV of the constitution, has no application to pension or annuity benefit pay to retired public servants pursuant to a genuine retirement system embodying an otherwise valid statute or ordinance serving a public purpose.
To hold, as the majority opinion does, that the state is powerless to increase retirement benefits to retired public servants in an attempt to restore the adequacy of such benefits seriously impaired by inflation, is to place all retirement systems for public servants in a strait jacket, thus rendering it impossible that such retirement benefits shall serve the original purpose intended.
The framers of our state constitution never intended sec. 26, art. IV, Const., to apply to retirement benefits paid to retired public servants under a validly enacted retirement system whereby such benefits might be paid over a long period of time, after all service to the state or municipality has ended. The provisions of sec. 26, art. IV, were included in the 1846 constitution (sec. 5, art. VI thereof), which constitution was rejected by the electors on other grounds, and when the 1848 constitutional convention met, the same provisions were inserted in the new 1848 constitution without debate. At the time of the writing of our state constitution, there was no retirement plan in effect for the employees of any state or municipality in the nation. According to an article entitled "Retirement Systems and Morale in Public
What evils did the framers seek to prevent by the language employed in sec. 26, art. IV, Const.?
Following the 1846 state constitutional convention, and while such constitution was before the electors of the state for consideration prior to the date set for the election to ratify or reject the same, the Racine Advocate ran a series of articles explaining the various provisions of the constitution. In article No. 6 of the series, published March 3, 1847 ("The Struggle over Ratification 1846-1847" by M. M. Quaife, at page 480), appeared an exposition of the provisions of the 1846 constitution which is the exact counterpart of sec. 26, art. IV of the 1848 constitution, in which article it was stated:
"We will now point out some of the most important restrictions of the powers of the legislature. By this article it is provided that `the legislature shall never grant extra compensation to any public officer, agent, servant, or contractor after the service shall have been rendered or the contract entered into.' A vast reform as all who understand anything of all the corrupt and corrupting influences and maneuvers of extra allowances will at once comprehend. A vast reform, indeed, full of the deep philosophy of the Lord's prayer as applicable to legislators in their official as in their personal relations—lead us not into temptation.' This one section, full of purifying reform against an abuse which besets
A number of constitutions of other states contain provisions very similar in wording to sec. 26, art. IV of the Wisconsin constitution. See "Federal and State Constitutions of the United States" by Frederic Jesup Stimson, p. 208, sec. 214, and footnote 4. In checking the journals and recorded debates of the constitutional conventions of these other states which have adopted like provisions against prohibiting extra compensation after the contract or service has been performed, one finds practically no recorded discussions of the reasons underlying the adoption of such provisions. One notable exception is that of the constitutional convention of Utah held in 1895. In the "Official Report of the Proceedings and Debates of the Utah Convention," pages 890 to 894, the following enlightening debate took place with respect to inserting such a provision in the Utah constitution:
"Mr. Richards. Mr. Chairman, I move that section 4 be added to the legislative article. I desire to say, Mr. Chairman, to the gentlemen of the committee that this section does not in my opinion partake of a partisan character, and perhaps there may be gentlemen enough on this floor, who would be willing to support it. The object of this will be clear to gentlemen who will stop and consider it for a moment. It is to prevent people who are in power in any department of the state occupying public positions from letting contracts, at low figures and then afterwards increasing the amount of compensation in this way: A man who is a favorite with a county court or a city council or with any other public officer, who might have it in his power to let public contracts, might come in and underbid all bona fide bidders for this work and get the contract, with the understanding afterwards that if the work cost him more, he would be reimbursed by the county or by the city as the case might be. This is an evil that has occurred a great many
"Mr. Button. I would like to ask a question. Under this clause, last year, when the governor ordered the deputy sheriffs out here when the commonweal army came through, could the sheriff collect pay for those deputies he swore in under this clause?
"Mr. Richards. I think so; I do not think this has any reference to that at all. There was service that he was performing that he would be entitled to pay for; but this is intended to cover a case where a person has undertaken to do a certain thing, either as a public officer, in the performance of his public duty, or as a contractor, under contract; he has undertaken to do a certain thing, and do it for a certain sum. Now, this is intended to prevent the granting of any additional sum afterwards, and the reason for it is just as stated in the illustration I made. If men would always bid honestly they would probably all get a fair compensation for their work.
"Mr. Button. So far as that goes, I think it is right.
"Mr. Richards. Why should not the same thing apply to a public officer? For example, should the county court or city council appoint a man to perform a certain public duty—that is, the office is created by ordinance or by statute, the duties of the office are defined, the man is elected or appointed to
From the foregoing quotations from the March 3, 1847, Racine Advocate, and the debates of the Utah convention, it appears that the evil, which the provision of sec. 26, art. IV, Const., was aimed to prevent, was that of a type of corruption which resulted from some favored contractor making a low bid for some public work in connivance with the governing body or legislature of the municipality or state for whom the work was to be undertaken, and then having extra compensation thereafter voted to such contractor. Along the same line it was felt to be morally wrong for a man to accept an elective or appointive political office at a certain fixed salary and then, thereafter, either during the term of office or after the service had been rendered, to have extra salary voted. It was felt that a public officer stood in a parallel position with a public contractor, and having contracted to perform a certain service for a fixed sum, he should be bound by his contract.
In Gubler v. Utah State Teachers' Retirement Board (1948), 113 Utah. 188, 192 Pac. (2d) 580, the Utah court upheld a prior-service-credit provision of its Teachers' Retirement Act against a claim that it violated a provision of the Utah constitution similar in wording to sec. 26, art. IV of our constitution. In the concurring opinion by Mr. Justice WOLFE in that case he declared (p. 204):
"I concur. I might add that I do not think that article VI, section 30 of the constitution of Utah was intended to prevent retirement plans for public officers or employees. While its language is broad, its intent was to prevent the acceptance of a low bid from a favored contractor and a subsequent
Annuities and pensions paid under a public retirement system are so far removed from the type of compensation which the framers of the constitution had in mind in barring public officers from receiving after their terms of office had expired that the provisions of sec. 26, art. IV of the constitution should not be construed to apply to such benefits or to an increase in the same.
The majority opinion declares there is no distinction between the case where a legislature attempts to vote additional compensation to some public officeholder, such as a governor or judge, after the expiration of his term of office in gratitude for the service rendered, and the present case of increasing the retirement benefits of a teacher after her retirement. A careful analysis of the two cases will disclose that they are poles apart. In the former case, the public officer is similar to the contractor who has agreed to perform a public contract for a definite price, as the officer has agreed that so long as he serves in the current term of such office he is to receive as his remuneration therefor the established salary of such office applicable to such term. Any additional money voted to him after such term is intended to further compensate him for such past services and therefore is directly in conflict with sec. 26, art. IV of the constitution. On the other hand, increasing retirement benefits under a validly established public retirement system to a retired public servant, such as the teachers in this case, is not done for the purpose of granting additional compensation for the past services performed, but to make adequate the retirement
There is one further marked point of distinction between the two cases. In the case of the public officer who finds that he cannot adequately live on the salary of his office due to inflation occurring during his term, or other causes, he has the privilege of resigning and accepting other better paid employment. Not so the retired teacher! Her retirement benefits are intended to provide for her during her declining years, and in many cases she has no option then available to her to seek other employment because her earning power is already gone as a result of the infirmities of advancing age. Such a teacher may have given forty or fifty years of life to devoted public service, and have been persuaded to stay in the teaching profession under the inducement that her retirement benefits would adequately provide for her old age when she was no longer able to work, only to now find that inflation has in reality cut the true value of such retirement pay in half. The legislature recognized the moral responsibility of the state to remedy the situation and enacted the statute now under consideration, but the majority opinion, oblivious to the fact that the increased retirement benefits so voted were not intended as compensation for past services, but instead were for the purpose of making the teachers' retirement benefits adequate so that the system would accomplish its original objective of the retirement system, declares the act void.
The objective of our teachers' retirement system was eloquently stated by Mr. Justice OWEN in his opinion in State ex rel. Dudgeon v. Levitan, supra (p. 330):
"As a phase of that broader social philosophy which has come to demand that an employee who has given the services of a lifetime to an employer be provided for in his old age,
Mr. Justice OWEN further flatly stated in his opinion in State ex rel. Dudgeon v. Levitan, supra (p. 343):
"As we view it, the annuity based on past service is not intended to be, or operate as, compensation for past service. It was rather intended to be, and in fact is, an inducement to the seasoned and experienced teacher to remain in the service and give the public the benefit of his experience."
The majority opinion in the instant case denies that increasing benefits of teachers already retired can be an effective means to induce other teachers still in service to remain in the teaching profession, and states that the proper way to induce teachers still in service to remain in the profession is to increase their own retirement benefits. Teachers, as well as citizens in all other walks of life, are today keenly aware of the problems imposed by our present inflation. It is difficult to believe that the present statute, if permitted to be carried out, whereby the state recognizes its moral responsibility to protect retired teachers from the adverse effect on their retirement pay caused by inroads of inflation, would not have some beneficial effect to induce teachers to stay in the profession. On the other hand, can it be doubted that the effect of the majority decision in this case will not be to adversely affect teachers remaining in the profession as the result of their realizing that the state is powerless to do anything to protect their retirement benefits from inflation once their status is changed by their own retirement? In
In conclusion, to summarize the arguments previously advanced herein, it is my opinion that the act before us does not violate the provisions of sec. 26, art. IV of the constitution because:
(1) The framers of the constitution could never have intended such provision to apply to retirement benefits being paid to a public servant after he retires from public service.
(2) The increasing of retirement benefits to retired teachers was not voted as additional compensation for services already rendered, but to make their retirement pay adequate which had been rendered inadequate by inflation, thus insuring that the original objective of the Teachers' Retirement Act would be carried out.
(3) Strongest reasons of sound public policy require that sec. 26, art. IV, Const., be construed as having no application to retirement benefits paid to retired public servants pursuant to a genuine retirement system validly enacted for public purposes.
I am authorized to state that Mr. Justice FAIRCHILD joins in this dissent.