Does Maryland have to pay higher social security contributions when a school system reclassifies a whole category of jobs to a higher pay grade?

Plain-English summary

The Secretary of Budget and Fiscal Planning asked the Attorney General whether Section 9 of Maryland's 1991 Budget Reconciliation Act stopped the State from paying increased social security contributions caused by reclassifying a county school system's administrative and classified employees. Under the Education Article, the State normally shared the employer's social security contribution for "eligible positions" in local school systems, but facing serious fiscal problems, the General Assembly had frozen the State's obligation for fiscal year 1992 to the fiscal year 1991 wage base, carving out only four exceptions: net additional positions, and performance, longevity, or individual salary increases for an employee.

The Attorney General concluded that a categorical reclassification, where an entire class of positions is reassigned to a different, better-paying classification, did not fit any of those four exceptions. Performance, longevity, and individual increases, the opinion reasoned, all depend on facts about a specific employee's own work history or characteristics, while a classification study reassigns a whole category of jobs based on the duties of the position itself, not the traits of the people who happen to hold it. Because Washington County's pending reclassification study fell into that categorical bucket, the opinion concluded the State could not pick up the resulting increase in social security contributions; the increased employer cost would fall on the county instead.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Section 9 of the Budget Reconciliation Act discussed here applied "for fiscal year 1992 only," so it was already a temporary, one-year measure at the time of this opinion; verify the current text of the Education Article's social security cost-sharing provisions and any subsequent budget legislation before relying on any specific rule described here.

Common questions

Did Maryland normally help pay social security costs for local school system employees? Yes. Under ED §5-202(d), the opinion explained that for "eligible positions" the State paid the employer's social security contribution up to a set rate, with the county responsible for the remainder due under federal law.

Why couldn't the State keep paying its share after a reclassification study? Because Section 9 of the 1991 Budget Reconciliation Act froze the State's social security obligation to the fiscal year 1991 wage base for fiscal year 1992, allowing increases only for net additional positions or for performance, longevity, or individual salary increases tied to a specific employee, none of which the opinion found applicable to an across-the-board reclassification of a job category.

What's the difference between a "reclassification" and an "individual" salary increase under this rule? The opinion explained that an individual, performance, or longevity increase turns on facts about the particular employee, such as how long they've served or how they've performed, while a reclassification reassigns an entire category of positions to a different classification and pay grade based on the duties of the position itself, regardless of who holds it.

Background and statutory framework

Under §5-202(d) of the Education Article, the State shared responsibility with local school systems for the employer's share of social security contributions for employees in "eligible positions," with the State paying up to a capped percentage and the county covering the rest. Facing fiscal pressure, the General Assembly enacted Section 9 of the Budget Reconciliation Act (Chapter 470, House Bill 206, Laws of Maryland 1991), which for fiscal year 1992 only froze the State's social security payment obligation to the fiscal year 1991 wage base, barring increased State contributions except for net additional positions or performance, longevity, or individual salary increases for a specific employee. The opinion applied ordinary rules of statutory construction, citing Mustafa v. State for the principle that unambiguous statutory language consistent with the law's purpose should be given its ordinary meaning, to conclude that a categorical reclassification (defined under Article 64A, §1(16) as reassigning a position from one class to another that better reflects its duties, with the pay grade decision under Article 64A, §27(a)(1)(ii) based on the position rather than the individual) fell outside all four statutory exceptions.

Citations and references

Statutes:

• §5-202(d) of the Education Article, the State/county social security cost-sharing formula for eligible school positions
• ED §5-202(d)(1)(i), defining "eligible position"
• ED §5-202(d)(1)(ii), directing further regulatory detail on "eligible position"
• ED §23-403(c), the parallel social security cost-sharing rule for county public library system positions
• Section 9 of the Budget Reconciliation Act, Chapter 470 (House Bill 206) of the Laws of Maryland 1991, freezing the State's fiscal year 1992 social security contribution obligation to the fiscal year 1991 wage base
• Article 64A, §1(16) of the Maryland Code, defining "reclassification" as reassignment of a position to a class that better reflects its duties
• Article 64A, §27(a)(1)(ii), governing the pay-grade determination for a reclassified position

Cases:

• Mustafa v. State, 323 Md. 65, 73, 591 A.2d 481 (1991), on giving unambiguous statutory language its ordinary meaning when consistent with the statute's purpose

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1991/Volume76_1991.pdf (this opinion appears at printed pages 68-71 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Budgetary Administration - Education - Public Schools - State May Not Make Increased Social Security Contributions Resulting From Reclassification of Groups of Employees

August 20, 1991

The Honorable Charles L. Benton
Secretary of Budget & Fiscal Planning

You have requested our opinion on the applicability of Section 9 of the Budget Reconciliation Act, Chapter 470 (House Bill 206) of the Laws of Maryland 1991. Specifically, you ask whether this provision prohibits the State from making additional social security contributions resulting from the reclassification of a county school system's administrative and classified employees.

For the reasons stated below, we conclude that Section 9 prohibits the State from making increased social security contributions resulting from the reclassification of any group of school employees.1

I

Background

The Washington County public school system has been conducting a reclassification study of administrative and classified employees. Although we are not familiar with the details of the study, we assume that it will result in the redefinition of some classifications and the categorical reassignment of employees from their present classifications to the redefined classifications. The school system, in turn, could then assign different pay grades to the redefined classifications, giving salary increases to the reclassified employees. The school system would incur a corresponding increase in the employer's share of the social security payroll tax.

One element of State financial assistance to local school systems deals with the social security contributions that an employer must make. Under §5-202(d) of the Education Article ("ED" Article), the State picks up the local school system's social security costs for "eligible positions":2

(2) For fiscal year 1981, and each fiscal year thereafter, the employer social security contributions for any eligible position shall be shared by each county and the State as provided in paragraphs (3) and (4) of this subsection.

(3) For each employee who holds an eligible position the State shall pay the then applicable employer social security contribution rate, not to exceed 6.13 percent of that part of the salary paid included within the social security wage base as defined in federal law.

(4) For each employee who holds an eligible position, the county shall pay the difference between the contribution paid by the State under paragraph (3) of this subsection and the total employer contribution that is due under federal law.

See also ED §23-403(c) (State payment of social security contributions for eligible positions in a county public library system).

However, as part of an effort to deal with the State's serious fiscal problems, Section 9 of the Budget Reconciliation Act limits the State's obligation to pay social security contributions:

[Notwithstanding any other provision of State law, for fiscal year 1992 only, the State shall pay the social security contributions based on the wage base for fiscal year 1991, and shall not make social security contributions on any increases resulting from any adjustment to the fiscal year 1991 wage base other than social security contributions associated with the net additional positions, and any performance, longevity, or individual salary increase for an employee of any board of education, library board of trustees, or community college board of trustees.

II

Analysis

The Court of Appeals recently reiterated its view that the goal of statutory construction "is to ascertain and effectuate the intention of the legislature. Our focus is, therefore, centered upon the statute's purpose or policy. Where statutory language is unambiguous, and clearly consistent with the statute's apparent purpose, the words will be accorded their ordinary significance." Mustafa v. State, 323 Md. 65, 73, 591 A.2d 481 (1991) (citations omitted). In the case of Section 9, the statutory language is unambiguous, and we have no basis for thinking that the General Assembly intended an outcome other than that conveyed by the words that it used in the law.

Section 9 directs that a particular calculation be made, of the "wage base for fiscal year 1991." It establishes the general rule that the State is prohibited from making social security contributions "on any increases resulting from any adjustment to the fiscal year 1991 wage base ....”3 It then itemizes four exceptions to the general rule: additional positions, a performance salary increase for an employee, a longevity salary increase for an employee, and an individual salary increase for an employee. If none of the exceptions applies to an increase to the wage base, the State may not pay the social security contributions associated with that increase. Thus, the State may pay increased social security contributions resulting from a reclassification only if the reclassification is a "performance, longevity, or individual salary increase for an employee ...."

"Performance" increases and "longevity" increases can only be understood by reference to a particular employee's performance and length of service. Likewise, an "individual" increase is necessarily linked to the characteristics of the particular person holding the job.

A reclassification of an entire category of positions, by contrast, does not focus on the particular attributes of the individuals holding the positions in question. A reclassification is the reassignment of a position from one class to another when the latter more appropriately reflects the duties of the position. See Article 64A, §1(16) of the Maryland Code. A separate determination must then be made about the appropriate pay grade for the classification to which the position has been reassigned. Again, the decision about a potential increase in pay is based on factors unrelated to the particular employees involved. See Article 64A, §27(a)(1)(ii).

The goal of Section 9 is to ensure that the State will not bear extra social security costs associated with categorical pay increases, whether of a school system's entire work force or subsets of it. If a raise cannot be explained by reference to the facts about a particular employee, as distinct from the fact that the employee happens to hold a particular position, then the State is not to pay the increased social security contribution necessitated by the raise.4

III

Conclusion

In summary, it is our opinion that Section 9 of the Budget Reconciliation Act precludes State payment of increased social security contributions attributable to the reclassification of a category of positions.

J. Joseph Curran, Jr.
Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice

1
Thus, we concur with the conclusion previously reached on this issue by Assistant Attorney General Valerie V. Cloutier, Counsel for the State Department of Education. See letter to former State Superintendent of Schools Joseph L. Shilling at 3 (May 7, 1991).

2
The term "eligible position" is defined in ED §5-202(d)(1)(i). The Maryland State Retirement Agency is to provide further details about the meaning of "eligible position" in a regulation. See ED §5-202(d)(1)(ii).

3
According to the pertinent legislative history, the intent is that the State "not pay any social security contributions which result from a general increase in salaries above FY 1991 levels for employees of boards of education, libraries, or community colleges." Budget and Taxation Committee, Amendments to House Bill 206, at 4.

4
We need not here consider Section 9's applicability to a reclassification initiated by an individual employee and focused distinctly on that employee's activities.