Office of the Attorney General
State of California
Opinion No. 16-301
April 4, 2019
THE HONORABLE JOHN M. W. MOORLACH
MEMBER OF THE SENATE
THE HONORABLE JOHN M. W. MOORLACH MEMBER OF THE SENATE has requested an opinion on the following question:
May a California water district make employer-paid retirement plan or pension contributions on behalf of its governing board members (?directors?), where such plans or pensions are otherwise authorized by the district’s enabling statutes, without violating Water Code sections 20201 or 20202 regarding the compensation that water districts may pay to their directors?
CONCLUSION
A California water district may make employer-paid retirement plan or pension contributions on behalf of its directors, where such plans or pensions are otherwise authorized by the district’s enabling statutes, without violating Water Code sections 20201 or 20202 regarding the compensation that water districts may pay to their directors.
ANALYSIS
In this opinion, we consider whether California water districts may lawfully make contributions to their directors’ retirement plans or pensions. We conclude that they may.
?There are hundreds of water special districts in California, with a great diversity of purposes, governance structures, and financing mechanisms. Some districts are responsible for one type of specific duty, while others provide a wide range of public services. Some are governed by a county board of supervisors or city council while others have their governing boards directly elected by the public.?1
Water districts can be created either by forming under a general water district act, or by a special act of the Legislature.2?General acts prescribe the duties, responsibilities, and powers of the given type of district (water supply, sanitation, flood control, etc.), and they apply to all districts of that type throughout the state. On the other hand, a special act’s provisions apply only to the particular district that is the subject of the act.
Compensation for water district directors is specified by the enabling statute applicable to the district. Most enabling statutes provide for a director stipend of $100 per day for each day’s attendance at a meeting.3?But some provide for stipends of less than $100 per day;4?some allow no compensation;5?some permit the board to set a ?just and reasonable? compensation;6?and some provide for salaries or a combination of stipends and salaries.7
We are informed that the Internal Revenue Service deems directors of water district governing boards to be ?employees,? and that director compensation is therefore subject to Social Security taxation unless the directors are members of a public retirement system.8?Although water districts may (and do) contract with the California Public Employees Retirement System (CalPERS),9?members of part-time governing boards such as water district boards are specifically excluded from membership in CalPERS if they were elected to office on or after July 1, 1994.10?However, for purposes of the Social Security tax laws, a qualifying ?public retirement system? could be an agency-provided plan such as a 457(b) plan or a 401(a) plan11?(hereafter referred to collectively as an alternative retirement plan or ?ARP?), if that plan provides for a contribution to the employee’s account of at least 7.5 percent of the employee’s compensation?part of which contribution may be provided by the employer.12
Many enabling statutes also authorize water districts to establish and contribute to retirement plans or pensions for officers and employees,13?and we are told that some water districts have established ARPs and are making contributions to those plans for the benefit of their governing board members in order to satisfy the 7.5 percent requirement mentioned above.
In this opinion, we analyze the proposition that two statutes in the Water Code (sections 20201 and 20202) generally forbid water district employer contributions, by limiting director compensation to a stipend of $100 per meeting (except as it may be periodically increased by an ordinance subject to voter referendum). We conclude that sections 20201 and 20202 do not restrict the scope of compensation available to district directors. Instead, we believe that the statutes’ purpose is to empower water districts that pay directors a minimal daily stipend to increase the stipend level without need of further legislation.
Our analysis starts with an examination of the statutes at issue. In pertinent part, Water Code section 20201 provides:
Notwithstanding any other provision of law, the governing board of any water district14?may, by ordinance adopted pursuant to this chapter, provide compensation to members of the governing board, unless any compensation is prohibited by its principal act, in an amount not to exceed one hundred dollars ($100) per day for each day’s attendance at meetings of the board, or for each day’s service rendered as a member of the board by request of the board, and may, by ordinance adopted pursuant to this chapter, in accordance with Section 20202, increase the compensation received by members of the governing board above the amount of one hundred dollars ($100) per day.
It is the intent of the Legislature that any future increase in compensation received by members of the governing board of a water district be authorized by an ordinance adopted pursuant to this chapter and not by act of the Legislature.15
Water Code section 20202, in turn, provides:
In any ordinance adopted pursuant to this chapter to increase the amount of compensation which may be received by members of the governing board of a water district above the amount of one hundred dollars ($100) per day, the increase may not exceed an amount equal to 5 percent, for each calendar year following the operative date of the last adjustment, of the compensation which is received when the ordinance is adopted.
No ordinance adopted pursuant to this chapter shall authorize compensation for more than a total of 10 days in any calendar month.16
Section 20201 begins with sweeping words of supersession: ?Notwithstanding any other provision of law.?17?At first blush, then, section 20201 could be read to sweepingly supplant the myriad enabling statutes that provide for water district director compensation. Under such a reading, for example, section 20201 would seem to divest many water districts of their otherwise authorized discretion to set a ?just and reasonable? compensation, or to provide for monthly salaries, despite specific statutory authority for some districts to do so.
But we must read sections 20201 and 20202 ?with reference to the entire scheme of law of which they are part, so that the whole may be harmonized and retain effectiveness.?18?We may not lightly infer sweeping implied repeals. An implied repeal of a statute is generally disfavored, and we will not construe section 20201 impliedly to repeal other statutes unless it is clear that this was the Legislature’s intent.19?And even the introductory phrase, ?Notwithstanding any other provision of law,??without any other indicia of legislative intent, is not necessarily determinative of supersession.20
We may look to legislative history to discern the Legislature’s intent here.21?In it, we find that sections 20201 and 20202 were not intended to impose a strict limit on director compensation. Rather, the statutes were intended to supplement, not supplant, the enabling statutes, and to allow water districts to increase daily stipends without additional legislative authorization.
Before these sections were enacted, those water districts whose enabling statutes tied director compensation to a limited daily stipend had no administrative mechanism for increasing the stipend. Yet the Legislature was hesitant to be making stipend-adjustment decisions for special districts, seeing this as a matter more appropriately left to local control. Accordingly, in the early 1980s, ?[t]ired of successive bills, the Legislature allowed water districts to increase their board members’ stipends above $100 a meeting, provided that a governing board boosted its pay by referendable ordinance.?22
In 1984 the Legislature enacted Senate Bill 1370, the first of two bills to address the problem. Legislative Counsel’s Digest explained:
Under existing law, various water district acts contain limitations on the amount of compensation which may be received by each member of the governing board of a water district organized under the act.
This bill would authorize the governing board of any water district … which is authorized under its principal act to [receive] compensation in the amount of $100 or more per day to increase, by ordinance, the amount of that compensation, subject to prescribed limitations, and subject to a prescribed right of the voters of the district to petition for a referendum of the ordinance.23
As enacted, SB 1370 empowered water districts paying a stipend of $100 or more per day to increase the stipend, subject to referendum.24?In 1988, sections 20201 and 20202 were amended by Assembly Bill 3088 to read as they do today.25?Again, the intent of the measure was to expand the law’s coverage, this time to include all water districts authorized to pay directors?any?amount of compensation.26
The historical materials show that sections 20201 and 20202 are designed to relieve the Legislature from endlessly revisiting the issue of daily stipends, and to empower water districts to increase stipends in an incremental and accountable manner. We find nothing to suggest an intent to generally preempt water district enabling statutes in the area of director compensation.27?More particularly, nothing in the legislative history suggests that the Legislature intended by sections 20201 and 20202 to nullify authorizations in water district enabling statutes that permit retirement contributions for the benefit of directors.
We conclude that sections 20201 and 20202 do not preclude a California water district from contributing to retirement plans or pensions on behalf of its directors, where such plans or pensions are otherwise authorized by the district’s enabling statutes.28
Xavier Becerra
Attorney General
Manuel M. Medeiros
Deputy Attorney General