It doesn’t take long for a person in education to learn about one aspect of the Arizona Constitution—the prohibition against making a “gift of public funds.” What is less well known, and sometimes even more on point, is the “Extra Compensation Clause” of the Arizona Constitution, found in Article IV, Part 2, Sec. 17. While the “gift of public funds” clause is used for everything from preventing a city from providing a $97.4 million tax incentive package to a private developer in return for reserved city parking spaces to preventing teachers from having bagels and coffee at an in-service training unless a “snacks are a fringe benefit” clause is written into their contracts.

Sometimes savings in the budget frees up extra funds and school boards decide to increase salaries for the superintendent, teachers, principals, and/or classified term contract employees during the term of the contract. While this seems like a lovely idea, the school attorney will probably put an end to the plan unless the employees in question do some additional work in order to “earn” the additional pay. Usually when this happens, people assume that the additional pay creates a “gift” in violation of the Gift Clause. This belief is why the Extra Compensation Clause is the “Rodney Dangerfield” of the Arizona Constitution. Even though the Extra Compensation Clause is more appropriately used to explain why, absent a contract provision existing when a contract was initially signed, an employee’s salary cannot be increased or decreased during the contract term, people tend to ignore it in favor of the rock star Gift Clause. The Extra Compensation Clause just “can’t get no respect.”

The Extra Compensation Clause states, in pertinent part, ““The legislature shall never grant any extra compensation to any public officer, agent, servant or contractor, after the services shall have been rendered or the contract entered into, nor shall the compensation of any public officer … be increased or diminished during his term of office….” As far back as 1919, the Courts found that this clause was necessary since “[u]nless the power to change salaries of public officers during their term was taken from the legislature, much of the valuable time of that body would be consumed in either trying to appease the appetite of importunate constituents for increase of compensation, or to gratify the spleen or grudge of others….”

To avoid violating the Extra Compensation Clause, the contract itself can be written to create a potential for an increase up to a set amount, if certain conditions occur (the “money fairy clause”) or the potential for a decrease to a certain set amount if certain other conditions occur (the “money troll clause”). These provisions essentially create a range of salary that can exist for the employee and, during the contract year if the conditions are met, an increase can be made up to the earlier agreed upon top range. Conversely, if the other set of conditions occur, a salary cut can also be made, down to the agreed upon bottom of the range. Another option is to create additional duties not covered in the contract which the employee must perform in return for the employee receiving the additional pay. The extra duties cannot be too minimal in comparison to the benefit received by the District in return. Absent those options, however, a contracted employee for a public entity in Arizona cannot receive additional pay for performing the same job during the term of the contract.
So the next time you read an Attorney General Opinion that states, “[I]f a district teacher agrees to perform his duties at the salary rate specified in his written contract, the district may not pay the teacher an additional amount for the same services. Payment for services which a teacher is already legally obligated to perform would constitute a gift in violation of the Gift Clause,” you can shake your head and say, ‘Uh, no, that would be in violation of the Extra Compensation Clause.” The Extra Compensation Clause thanks you.

Click the link to see a PowerPoint presentation on Contract Considerations for School Boards

 

[1] Art. 9, Sec. 7 of the Arizona Constitution.

[2] Turken v. Gordon, 223 Ariz. 342, 224 P.3d 158 (2010), “When the government payment is grossly disproportionate to what is received in return, the payment violates the Gift Clause.”

[3] Op. Atty. Gen. I10-003 (R09-040)

[4] County of Greenlee v. Laine, 20 Ariz. 296, 180 P. 151 (1919)

[5] Op. Atty. Gen I83-065

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding No Respect, or other Education Law matters, please feel free to contact Candyce B. Pardee at  800.863.6718, log on to udallshumway.com,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona with a branch office in Yuma, Arizona, and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.