AGO Opinion 97026
Constitutionality of Legislative Bill 532 Providing for Adjusted Supplemental Retirement Benefits
DATE: April 29, 1997
SUBJECT: Constitutionality of Legislative Bill 532 Providing for Adjusted Supplemental Retirement Benefits
REQUESTED BY: Senators LaVon Crosby and Elaine Stuhr Nebraska
WRITTEN BY: Don Stenberg, Attorney General
Fredrick F. Neid, Assistant Attorney General
You have requested that the Attorney General address two
issues relating to the constitutionality of Legislative Bill 532.
The provisions of LB 532, for the most part, establish a
supplemental retirement benefit for certain retired members of the
School Retirement System and the Retirement System for Class V
School Districts based on years of creditable service.
It is FIRST inquired:
[D]oes LB 532 as written violate Article III, Section 18
of the Nebraska Constitution, i.e. whether it violates
the prohibition against special legislation.
In summary, the provisions of LB 532 establish minimum levels
of retirement benefits for retired members of the school retirement
systems having twenty or more years of creditable service at the
effective date of the legislative act. Section 2 of the Bill
establishes a two hundred fifty dollar minimum for retirees with
twenty years of service. The minimum benefit level is increased in
fifty dollar increments for each year of additional service beyond
twenty years to twenty-five years or more of creditable service.
A retiree having twenty-five or more years of service would receive
a minimal retirement benefit of five hundred dollars.
Neb. Const. art. III, § 18 provides in pertinent part:
The Legislature shall not pass local or special laws in
any of the following cases, that is to say: . . . .
Granting to any corporation, association, or individual
any special or exclusive privileges, immunity, or
franchise whatever. . . . In all other cases where a
general law can be made applicable, no special law shall
A legislative act constitutes special legislation under art. III,
§ 18 if it (1) creates an arbitrary and unreasonable method of
classification or (2) creates a permanently closed class. See,
City of Ralston v. Balka, 247 Neb. 773, 530 N.W.2d 594 (1995);
Henry v.Rockey, 246 Neb. 398, 518 N.W.2d 658 (1994). Thus, the
first inquiry focuses on whether the provisions of the legislative
act in question create an arbitrary and unreasonable method of
classification. In viewing classification issues, the Nebraska
Supreme Court has stated:
A legislative classification, in order to be valid, must
be based upon some reason of public policy, some
substantial difference of situation or circumstance, that
would naturally suggest the justice or expediency of
diverse legislation with respect to objects to be
classified. Classifications for the purpose of
legislation must be real and not elusive. They cannot be
based on distinctions without a substantial
difference. . . .
Classification is proper if the special class has some
reasonable distinction from other subjects of like
general character, which distinction bears some
reasonable relationship to the legitimate objectives and
purposes of the legislation The question is always
whether the things or persons classified by the act form
by themselves a proper and legitimate class with
reference to the purpose of the act.
Haman v. March, 237 Neb. 699, 711, 467 N.W.2d 836, 846 (1991)
(quoting State ex rel. Douglas v. Marsh, 207 Neb. 598, 300 N.W.2d
181 (1980). (emphasis added).
Review of LB 532 reflects that the purpose of the act is to
provide a supplemental pension benefit for the class of retirees
with twenty or more years of creditable service if current benefit
amounts are below certain dollar amounts. We believe the
classification(s) is reasonable in view of the fact that the
Legislature is accorded broad discretion as to conditions of public
employment and as to the requirements, classifications,
contributions to and benefits conferred by a retirement act. See
Gossman v. State Employees Retirement System, 177 Neb. 326, 129
N.W.2d 97 (1964).
The second inquiry is whether the legislative act creates a
permanently closed class. We believe the classes of retirees
established under section 2 of the Bill constitute permanent closed
classes and therefore unconstitutional special legislation. The
classes are closed in the sense that only retirees having twenty or
more years of creditable service "as of the effective date of this
act" comprise membership of the classification as of its effective
date and leave no room for any increase in its membership. It has
been long held by the Nebraska Supreme Court that:
The rule appears to be settled by an almost unbroken line
of decisions that a classification which limits the
application of the law to a present condition, and leaves
no room or opportunity for an increase in the numbers of
the class by future growth or development, is special,
and a violation of the constitution above quoted . . . .
Haman at 716, 467 N.W.2d at 848, [citing City of Scottsbluff v.
Tiemann, 185 Neb. 256, 262, 175 N.W.2d 74, 79 (1970) (quoting State
v. Kelso, 92 Neb. 628, 139 N.W.2d 226 (1912)].
Accordingly, it is our opinion that LB 532 is constitutionally
suspect as special legislation in violation of Neb. Const. art.
III, § 18.
The SECOND issue you present is:
[D]oes LB 532 as written violate Article III,
Section 19 of the Nebraska Constitution, i.e. whether it
constitutes the granting of extra compensation to a
public servant after the service has been rendered and is
not in the form of a cost of living adjustment to a
Generally, the granting of a retirement or pension benefit in
instances where no part of the service was rendered subsequent to
the enactment of the law is a gratuity in violation of Neb. Const.
art. III, § 19. Retired City Civilian Employees Club v. City of
Omaha Employees Ret. Sys., 199 Neb. 507, 260 N.W.2d 472 (1977);
Gossman v. State Employees Retirement System. However, adjustments
to retirement benefits of public employees to reflect cost of
living changes are permissible. Neb. Const. art. III, § 19 in
relevant part states:
The Legislature shall never grant any extra compensation
to any public officer, agent or servant after the
services have been rendered. . . except that retirement
benefits of retired public officers and employees may be
adjusted to reflect changes in the cost of living and
wage levels that have occurred subsequent to the date of
retirement, . . . .
Due to this express exception, adjustments to retirement
benefits are not violative of the constitutional provision to the
extent the adjustments are based on changes in the cost of living
and wage levels that have subsequently occurred. The difficulty
with the adjustments provisions of the Bill is that it cannot be
determined from its provisions whether the adjustments are based on
widely accepted cost of living index or other indices. Section 1
of the Bill characterizes the adjustments "to reflect changes that
have occurred subsequent to the date of retirement for each person
who is retired." However, the provisions of the Bill do not define
the term cost of living or expressly base adjustment amounts to a
specific cost of living index. We have previously concluded that
"the percentage of increase implemented would necessarily be based
on a cost of living index." See Op. Att'y Gen. 93020 (1993).
A fundamental canon of statutory construction is that, unless
otherwise defined, words will be interpreted as taking their plain,
or ordinary and popular meaning. Southern Nebraska Rural Public
Power Dist. v. Nebraska Elec. Generation and Transmission Co-op,
Inc., 249 Neb. 913, 546 N.W.2d 315 (1996); Baker's Supermarkets,
Inc. v. State Dept of Agriculture, 248 Neb. 894, 540 N.W.2d 574
In the absence of statutory definition or established common
law meaning, the plain and ordinary meaning of "cost of living" is
"the cost of purchasing those goods and services which are included
in an accepted level of consumption." Webster's Third New
International Dictionary 515. Based on this popular definition,
federal courts have interpreted the phrase, cost of living, as
having this ordinary meaning and that it is properly measured by
the Consumer Price Index. Harris v. Sullivan, 968 F.2d 263 (2nd
Cir. 1992) (further citing other federal case authorities).
Section 2 of the Bill establishes minimum levels of retirement
benefit amounts on a graduated scale from two hundred fifty dollars
a month for retirees with twenty years of service to five hundred
dollars each month for retirees with twenty-five or more years of
service. It does not appear or at least cannot be readily
determined whether the incremental increases are based on increases
that have occurred in the cost of living and wage levels as
measured by a consumer price index. The adjustment would be
gratuitous in the absence of any showing that the adjustment
amounts are tied to a cost of living index. For this reason, it is
our opinion that the adjustment provisions of LB 532 are
constitutionally suspect as violative of Neb. Const. art. III,
Since we have concluded that the cost of living adjustment
provisions of LB 532 are violative of art. III, § 19, it is not
necessary to engage in a lengthy discussion of the related issue
whether the specific authorization for cost of living adjustments
of art. III § 19 supersedes the special laws prohibition of art.
III, § 18. This issue arises because the cost of living adjustment
provisions of art. III, § 19 were added by 1972 Neb. Laws, LB 1414,
§ 1 after adoption of the provisions of art. III, § 18. However,
we point out that we do not perceive any conflict between these
constitutional provisions. The provisions of §§ 18 and 19 are not
conflictive since cost of living adjustments for retired public
employees may be accomplished without the creation of permanent
The Nebraska Supreme Court has opined:
A state constitution is the supreme written will of the
people of a state regarding the framework for their
government and is subject only to the limitations found
in the federal Constitution. (citation omitted). The
state Constitution, as amended, must be read as a whole.
(citation omitted). A constitutional amendment becomes
an integral part of the instrument and must be construed
and harmonized, if possible, with all other provisions so
as to give effect to every section and clause as well as
to the whole instrument. (citations omitted). If
inconsistent, a constitutional amendment prevails over a
provision in the original instrument; but a court will
find distinct constitutional provisions repugnant to each
other only when they relate to the same subject, are
adopted for the same purpose, and are incapable of
enforcement without substantial conflict.
Jaksha v. State, 241 Neb. 106, 110-11, 486 N.W.2d 858, 863 (1992)
(quoting other authorities) (emphasis added).
The amendment of art. III, § 19 authorizing cost of living
adjustments for retired public employees may be harmonized with the
provisions of art. III, § 18 prohibiting special legislation. That
is to say, provisions for cost of living adjustments for public
employees may be legislatively enacted without the creation of
permanent closed classes proscribed by art. III, § 18. Thus, the
constitutional provisions may be applied without conflict.
Fredrick F. Neid
Assistant Attorney General