Attorney General's Opinion
Attorney General, Richard Blumenthal
January 5, 1990
The Honorable Richard J. Balducci
Speaker of the House of Representatives
State of Connecticut
Legislative Office Building, Room 4100
Hartford, CT 06106
Dear Mr. Speaker:
This is in response to your request for advice dated November 16, 1989 in which you ask "whether the unclassified employees of a board of trustees of any constituent unit of the state system of higher education who are members of ARP are actually subject to the dictates of this arbitration award, [on state employees retirement benefits] specifically Issue 17 ... which mandated that the members of the Alternate Retirement Program (ARP) be provided with Social Security coverage effective July 1, 1989." For the reasons set forth below, the answer to your question is that those employees who are in bargaining units represented in the arbitration which resulted in the award are subject to the award. Those employees not in such units are not subject to the award, but are required to be provided with similar coverage by the terms of the Social Security Act.
On September 13, 1989 this office issued an opinion in which we concluded that neither the Social Security Agreement between the State and the federal government nor the Connecticut General Statutes permit, authorize or allow ARP participants to be covered by Social Security. This opinion provides a history of Social Security coverage in the State, and the development of the Alternate Retirement Plan. --- Conn.Op.Atty.Gen. ---- (1989). On November 16, 1989, in a letter to the State Employees Retirement Commission, the Social Security Administration confirmed this office's opinion with respect to non-coverage of ARP participants.
For some time the state and a coalition representing all state employees who are members of collective bargaining units (State Employees' Bargaining Agent Coalition or SEBAC) have been involved in collective bargaining negotitations concerning changes to the state employees retirement system. These on-going negotiations were recognized by the General Assembly by the adoption of P.A. 86-411. SEBAC represented all of the designated state employee organizations. Those employee organizations were designated by the State Board of Labor Relations as exclusive representatives for the employees in the appropriate units. Such unit determinations are made without regard to whether the employees involved are within the classified or unclassified service. See Conn.Gen.Stat. § 5-275. Awards rendered pursuant to the provisions of Conn.Gen.Stat. § 5-276a are binding upon all employees in units represented by employee organizations that are parties to the arbitration. See Conn.Gen.Stat. § 5-276a. And, as in the case of unit determinations made pursuant to Conn.Gen.Stat. § 5-275, party status determinations for Conn.Gen.Stat. § 5-276a binding arbitration purposes are made without consideration of whether the employees in the arbitration are in the classified or unclassified service. As a result, the coverage of the award in question extends to all unclassified employees as well as all classified employees who are employees of a board of trustees of any constituent unit of the state system of higher education, who are ARP participants and were represented in the arbitration.
A host of issues were dealt with during the long course of these negotiations. Among them was Issue No. 17, referenced in your request for advice. The position of SEBAC on behalf of ARP participants who were members of collective bargaining units was that Social Security coverage should be extended to ARP participants. Because SEBAC and the State could not agree on Issue No. 17, it was submitted to binding arbitration, and the arbitrator chose the last best offer of SEBAC. On May 1, 1989 the arbitrator ruled that, "effective July 1, 1989, the members of the Alternate Retirement Program shall be provided with Social Security coverage." As is noted above, all ARP participants represented by designated employee organizations, whether classified or unclassified, are directly subject to and bound by this award, as is the State of Connecticut.
Your question concerns the scope of the coverage of the arbitrator's award on this issue, specifically as it applies to unclassified employees of the boards of trustees of the constituent units of the state system of higher education and the possible application of Conn.Gen.Stat. § 5-200(r) which authorizes the issuance of orders to, in effect, equalize employment and retirement benefits for collective bargaining and non-collective bargaining employees. As is noted above, the arbitrator's awards binds all ARP participants who are in any units represented by employee organizations who were parties to the arbitration by virtue of their participation in SEBAC. A remaining issue is what effect, if any, does the award have on ARP participants who are not in such units whether classified or unclassified, i.e., managerial, professional, and confidential employees. As will be discussed below, the provisions of the Social Security Act require that all ARP participants be treated as a single coverage group. Thus, while these individuals are not covered by or bound by the arbitrator's award, under the Act they must be permitted to participate in a referendum on Social Security coverage, to the same extent that those who are covered by and bound by the award are permitted to participate in a referendum on such coverage. The statutory provision you reference has no applicability in that the Social Security Act controls.
Section 218 of the Social Security Act (42 U.S.C. § 418) governs voluntary agreements for coverage of State and local employees. Subsection (c)(2) of that section states, "[i]n the case of each coverage group to which the agreement applies, the agreement must include all services ... performed by individuals as members of such group." Ordinarily, the term coverage group means all of the employees of a State or a political subdivision of a State. 42 U.S.C. § 418(b)(5). However, Sec. 218(d)(4) makes an exception to this rule for discrete retirement systems such as ARP. "For the purposes of subsection (c) of this section, the following employees shall be deemed to be a separate coverage group--(A) all employees in positions which were covered by the same retirement system on the date the agreement was made applicable to such system...." 42 U.S.C. § 418(d)(4). Since ARP is a "coverage group," and a coverage group must include all services performed by individuals as members of the group, by the terms of the Social Security Act all ARP employees must be covered by Social Security, subject to an exception which will be noted later.
Conn.Gen.Stat. § 5-155a(d) states: "The [state employees] retirement commission shall act as agent for the state in all matters relating to the Social Security agreement. The retirement commission may make regulations as to maintaining membership under Social Security or conduct referenda as appropriate to secure Social Security coverage for state employees to the extent permitted by Section 218 of the Social Security Act." Thus, the State Employees Retirement Commission will be the agency responsible for complying with and implementing the arbitrator's award on Issue No. 17. In that light, on October 29, 1989 the Commission wrote to the Commissioner of Social Security inquiring as to the means by which Social Security may be provided to ARP participants. That letter states that Section 218(d)(3) of the Act provides that Social Security coverage may be extended to service performed by employees in positions covered by a retirement system only if a referendum on coverage is conducted at which all eligible employees may vote and a majority of the eligible employees vote in favor of coverage. 42 U.S.C. § 418(d)(3).
An employee is considered an eligible employee under Sec. 218(d)(3) of the Act if "at the time such referendum was held, he was in a position covered by such retirement system and was a member of such system...." 42 U.S.C. § 418(d)(3).
Thus, the only way in which the State can comply with the arbitrator's award that collective bargaining members of ARP be provided with Social Security coverage is by conducting a referendum, and the Social Security Act requires that all members of ARP participate in that referendum whether they are in a collective bargaining unit or not. If that referendum is adopted, all present and future ARP members will be covered by Social Security as a "coverage group." If the referendum is defeated, no present or future ARP members will be covered by Social Security.
As noted earlier, there is an exception, or alternate approach, to the general rules concerning Social Security coverage for members of state retirement systems which have been set forth above.
Connecticut is one of twenty-one states specifically referenced in and permitted by the Social Security Act to conduct an alternate type of referendum. 42 U.S.C. § 418(d)(6)(C). This provision of the Act allows the division of a retirement system into two divisions or parts--one with, and one without Social Security coverage.1 Under this type of referendum, which is governed by Sec. 218(d)(7) of the Act, all ARP participants must be given the opportunity to be covered by Social Security, and the ARP system must be divided into two parts as a result of that referendum, consisting of those not desiring Social Security coverage (ARP--Part A), and those who do wish to be covered by Social Security (ARP--Part B). 42 U.S.C. 418(d)(6)(C). If this type of referendum is held, after the division of ARP into two systems all new employees who choose to be ARP participants would be required to be covered by Social Security. 42 U.S.C. § 418(d)(6)(C).2
In conclusion, the answer to your question is Yes. All ARP participants, whether classified or unclassified, who are in bargaining units represented by employee organizations which were parties to the arbitration, are covered by the arbitrator's award on Issue No. 17 mandating Social Security coverage for ARP participants. All ARP participants, whether classified or unclassified, who are not in such bargaining units are, nevertheless, part of the "coverage group" for purposes of the Social Security Act. The sole means by which the State can comply with the arbitrator's award is by extending Social Security coverage to the entire coverage group consisting of all ARP participants in accordance with the referenda requirements of the Act as set forth above.
If the State of Connecticut conducts a Sec. 218(d)(3) type of referendum, all present and future ARP participants will be bound by the results of that referendum, i.e., if the referendum is adopted, all current ARP participants, regardless of their vote, as well as all future ARP participants, will be covered under Social Security; if the referendum is defeated, all current and future ARP participants will not be covered by Social Security. 42 U.S.C. § 418(d)(3).
If the State of Connecticut conducts a Sec. 218(d)(7) type of referendum, then each current ARP participant will individually choose whether or not to receive Social Security coverage. All future ARP participants will be covered under Social Security. The ARP system will be divided into two divisions or parts under this type of referendum. 42 U.S.C. § 418(d)(7).
We would be remiss if, in presenting the two forms of referenda available, we did not make the following observation. The arbitrator's award is that "the members of the Alternative Retirement Program shall be provided with Social Security coverage." If the State chooses to conduct the individual choice type of referendum, an argument could be made that by giving the bargaining unit ARP members the option to not be covered by Social Security, the State violated the award which mandated such coverage. An argument can also be made that by giving ARP members the option, they were provided with such coverage, and the individual choice referendum therefore complies with the award. We recommend that if the State is inclined to conduct an individual choice type of referendum, it obtain beforehand an agreement from SEBAC that the referendum complies with the arbitrator's award.
Very truly yours,
CLARINE NARDI RIDDLE
Robert A. Whitehead
Assistant Attorney General
1 This type of referendum was employed by the State of Connecticut in the 1958 State Employees Retirement System (SERS) Social Security referendum resulting in SERS--Part A, without Social Security coverage, and SERS--Part B, with Social Security coverage.
2 There is a limited exception to this rule. An individual who participated in an individual choice type of referendum in another coverage group, and declined Social Security coverage, and subsequently is employed by the State and chooses to be an ARP participant, would be permitted to maintain his prior election of no Social Security coverage as a new state employee and join ARP Part A.