This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

MUNICIPAL FUNDS -- Employee Benefit Accrued Liability Reserve Fund (use of for lump sum “retirement awards”)
PUBLIC OFFICERS AND EMPLOYEES -- Retirement Benefits (use of employee benefit accrued liability reserve fund for lump sum “retirement awards”)

GENERAL MUNICIPAL LAW §6-p: Monies is an employee benefit accrued liability reserve fund may not be used to finance lump sum “retirement awards”, which are calculated as prescribed percentages of the employees’ final year salaries and paid upon retirement to central school district employees under collective bargaining agreements.

You ask whether a central school district may use monies in an employee benefit accrued liability reserve fund to pay for lump sum “retirement awards” paid upon retirement to school district employees under collective bargaining agreements. The amounts of the “retirement awards” are calculated as prescribed percentages of the employees’ final year salaries.

Collective bargaining between public employers and public employees is provided for by article 14 of the Civil Service Law (§200 et seq.). It is well-established that, pursuant to this authority, an item may be included in a collective bargaining agreement, whether or not it involves a term or condition of employment subject to mandatory bargaining, unless there is a plain and clear prohibition against such inclusion in the State or Federal Constitution, a statute, decisional law or restrictive public policy (see, e.g., Board of Education v Assoc. Teachers of Huntington, 30 NY2d 122, 331 NYS2d 17; Board of Education v Yonkers Fed. of Teachers, 40 NY2d 268, 386 NYS2d 657). It is also well-established that a collective bargaining agreement may contain provision for a lump sum payment to qualifying employees upon retirement or other separation from service (Inc. Village of Lynbrook v PERB, 48 NY2d 398, 423 NYS2d 466; see also 2000 Opns St Comp No. 2000-4, p 10).

General Municipal Law §6-p authorizes the establishment of an employee benefit accrued liability reserve fund by municipal corporations, including central school districts. Section 6-p(2)(a) generally provides that expenditures from this reserve fund may be made for any accrued "employee benefit” payment due an employee upon termination of service. The term "employee benefits" is defined for this purpose as follows:

… the cash payment of the monetary value of accrued and accumulated but unused and unpaid sick leave, personal leave, holiday leave, vacation time, time allowances granted in lieu of overtime compensation and any other forms of payment for accrued but unliquidated time earned and payable to municipal employees upon termination of service … as authorized by ordinance, local law, or collective bargaining agreement … for which expenditures may be made pursuant to subdivision two of this section (General Municipal Law §6-p[1][b]).

Thus, in order to finance a benefit payable pursuant to a collective bargaining agreement from the fund, the benefit must constitute a cash payment of the monetary value of “accrued and accumulated but unused and unpaid” time earned. Here, the lump sum payment is calculated as a percentage of final year salary and is unrelated to the monetary value of any accumulated leave credit. As such, it does not fall within the definition of “employee benefits” under General Municipal Law §6-p and may not be financed from the fund.

In reaching this conclusion, we are aware that General Municipal Law §6-p(7)(a) provides that an expenditure may be made from the fund for the cash payment of the monetary value of “accumulated and unused sick leave ... and other forms of payment for accrued leave time and benefits due to a municipal employee upon termination of municipal employment” (emphasis added). We recognize that it could be argued that the phrase “and benefits” was intended to stand alone and relate to any benefit payable upon termination of employment, not just those that constitute cash payment for leave credits. Such a broad reading, however, is neither required nor warranted.

It is well-established that a statute is to be construed as a whole, with all parts read and construed together to determine the legislative intent (see, e.g., Bookhout v Levitt, 43 NY2d 612, 403 NYS2d 200; see, gen., McKinney’s Statutes §97). Moreover, if possible, all parts of a statute should be harmonized with each other and with the general intent of the statute (see, gen., McKinney’s Statutes, §98[a]). When use of a word is inconsistent with that intent, it should be rejected (see, gen., McKinney’s Statutes, §§98[b], 231).

Applying these principles here, to isolate and broadly read the words “and benefits” in section 6-p(7)(a) would be inconsistent with the rest of section 6-p, which clearly is limited to payments of the monetary value of leave credit. In particular, such a reading would be inconsistent with subdivision 2, which sets forth, as the purpose of the fund, the financing of an accrued “employee benefit”, a term expressly limited by subparagraph (b) of subdivision 1, to the monetary value of unused time earned.¹ It would be anomalous, in our view, to construe section 6-p as authorizing the creation of the fund for one purpose, and expenditures from the fund for another far broader purpose.

Moreover, such a broad reading runs counter to the legislative history of section 6-p, which indicates that the intent of the statute was to provide municipal corporations a mechanism to finance lump sum payments for the cash value of “accrued sick leave, vacation and holiday leave to employees who retire” (Sponsors’ Memorandum in Support of S. 6278/A. 9040 of 1996; Letter from Senator Hoblock to Michael C. Finnegan, Esq., Counsel to the Governor, July 15, 1996, regarding S. 6278; Letter from Assemblyman Canestrari to Michael C. Finnegan, Esq., Counsel to the Governor, July 11, 1996, regarding A. 9040; see also Budget Report on S. 6278 of 1996). There is nothing in the legislative history that would support a broader reading of the legislative purpose of section 6-p.

Accordingly, monies is an employee benefit accrued liability reserve fund may not be used to finance lump sum “retirement awards”, which are calculated as prescribed percentages of the employees’ final year salaries and paid upon retirement to central school district employees under collective bargaining agreements.

October 10, 2006

Mark L. Betz, Assistant Superintendent
Bedford Central School District

¹ Both subdivisions (7)(a) and (2) were part of the original enactment of General Municipal Law §6-p (L 1996, ch 518), which, to date, has not been amended.