In Minnesota, can a school district agree through collective bargaining to pay a teacher's health insurance premiums and retirement contributions while the teacher is on an extended leave of absence, or reimburse the teacher for those costs?

Plain-English summary

Independent School District No. 279 was in contract negotiations with its teachers in early 2002. The teachers' exclusive representative had proposed contract language that would require the District to pay both the teacher's and the employer's contributions to the Teachers' Retirement Association during any extended leave of absence under Minn. Stat. § 122A.46, plus pay the teacher's single and group health insurance throughout the extended leave. The teachers also wanted to make sure they kept their TRA service credit during the leave.

The District's attorneys at Knutson, Flynn & Deans asked the AG three questions: can the district agree to pay the insurance and the teacher's pension contribution, can the district reimburse the teacher for those costs instead of paying them directly, and can the district pay a "cash incentive" to a teacher who takes extended leave at the teacher's own expense.

The AG answered no to all three.

The reasoning starts from a textbook principle of Minnesota local-government law: school districts and other local governments are "creatures of statute" with only those powers the legislature expressly grants or that are necessarily implied (Welsh v. City of Orono, 1984; Minn. Stat. § 123B.02, subd. 1). When the legislature has specifically authorized a particular activity and prescribed the conditions for it, action in excess of those conditions is implicitly precluded (Country Joe v. City of Eagan; Lilly v. City of Minneapolis).

The legislature did exactly that in § 122A.46. The statute authorizes school districts to grant unpaid extended leaves of absence to teachers and lays out the conditions. Subdivision 9 says a teacher on extended leave keeps the same health, accident, medical, surgical, and hospital coverage "if the teacher requests the coverage" and either (a) reimburses the district for the full amount of the premium within one month after the district pays it, or (b) pays the district (for self-insured plans) the amount the school board determines for the chosen coverage. The teacher carries the cost.

On retirement, Minn. Stat. § 354.094 lets a teacher on extended leave keep accruing TRA service credit, provided "the member and the employing board make the required employer contribution in any proportion they may agree upon." Critical clause: "the member and the employing board." The teacher must pay the employee contribution; the district and teacher can split the employer contribution. Subdivision 3 makes the consequence sharp: if the employee contribution is not paid, the teacher "shall be deemed to cease to render teaching services" for retirement-system purposes, and may not pay any contributions in subsequent years of the leave.

So the statutory framework allocates the cost specifically: teacher pays the insurance premium, teacher pays the employee retirement contribution, district may share the employer retirement contribution. The District could not bargain around those allocations because the legislature had drawn the line where it was.

The reimbursement question got the same answer: "It is axiomatic that one cannot accomplish indirectly something that may not be done directly under the law" (citing State Bank of Boyd v. Hatch and State v. Palmer). Paying the teacher back for the insurance premium or retirement contribution accomplishes indirectly what § 122A.46 prohibits directly.

The cash-incentive question got a three-part no. First, the legislature had not authorized a cash incentive for extended leave, unlike the express cash incentive authority for early retirement under Minn. Stat. § 122A.48. Second, to the extent the "cash incentive" was just another way to reimburse for insurance/retirement, the indirect-equals-direct rule applied. Third, the payment could not be considered authorized as salary because the teacher was not providing teaching services during the leave, and § 122A.46 explicitly says extended leave is "without salary."

The bottom-line: districts that wanted to fund teacher insurance and pension contributions during extended leave needed legislative authorization, not just contract negotiations.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The teacher extended leave statute (Minn. Stat. § 122A.46) and the TRA service credit statute (Minn. Stat. § 354.094) have been revisited by the legislature since 2002. The general principle (school districts are creatures of statute with only statutorily authorized powers) remains good law, but any specific bargaining proposal should be analyzed under the current statutes.

Historical context: what the AG concluded

The opinion answered three questions in sequence and used essentially the same reasoning for all three.

Question 1: May a school district agree, through a collective bargaining agreement, to pay both the employee and employer TRA contributions and to pay the teacher's single and group health insurance while the teacher is on extended leave?

No. The opinion built on five points.

First, school districts are "creatures of statute" with only expressly granted or necessarily implied powers (Minn. Stat. § 123B.02, subd. 1; Welsh v. City of Orono). Prior AG opinion 166-b-4 (Jan. 24, 1989) had applied this principle to teacher compensation issues (district could provide housing but not housing allowance).

Second, when the legislature has specifically authorized a local-government activity and prescribed the conditions for it, action in excess of those conditions is implicitly precluded. Country Joe v. City of Eagan, 560 N.W.2d 681, 684 (Minn. 1997), illustrated the principle for road improvements (no implied authority to use other funding mechanisms where the legislature has specified one). Lilly v. City of Minneapolis applied it to city employee insurance benefits (no authority for city to provide insurance benefits beyond those authorized by statute).

Third, Minn. Stat. § 122A.46, subd. 9 sets the conditions for insurance continuation during extended leave: the teacher keeps coverage if the teacher requests it and "either (a) reimburses the district for the full amount of the premium necessary to maintain the coverage within one month following the district's payment of the premium, or (b) if the district is wholly or partially self-insured, pays the district, according to a schedule agreed upon by the teacher and the school board, an amount determined by the school board to be the amount that would be charged for the coverage chosen by the teacher if the school board purchased all health, accident, medical, surgical and hospitalization coverage for its teachers from an insurer." The teacher pays. The district cannot.

Fourth, Minn. Stat. § 354.094, subd. 1 sets the conditions for TRA service credit during extended leave: the member "may pay employee contributions and receive allowable service credit ... provided that the member and the employing board make the required employer contribution in any proportion they may agree upon." The teacher must pay the employee contribution. The district and teacher may agree on division of the employer contribution.

Fifth, subdivision 3 of § 354.094 provides the consequence: if employee contributions are not paid or the employer contribution is not paid, the teacher "shall be deemed to cease to render teaching services" for retirement-system purposes for that year and may not pay contributions in subsequent leave years.

The structure of the statute is unmistakable: the legislature decided how the costs are allocated. The teacher pays the employee contribution and the insurance premium. The district and teacher can split the employer contribution. A collective bargaining agreement cannot override the statute.

Question 2: May a school district agree to reimburse a teacher for the teacher's TRA contribution or insurance premium?

No. "It is axiomatic that one cannot accomplish indirectly something that may not be done directly under the law" (citing State Bank of Boyd v. Hatch, 384 N.W.2d 550, 556 (Minn. Ct. App. 1986); State v. Palmer, 358 N.W.2d 737, 739 (Minn. Ct. App. 1984)). Reimbursing the teacher for the insurance premium and retirement contribution is functionally the same as paying those amounts directly. The means doesn't change the result.

Question 3: May a school district agree to pay a cash incentive to a teacher who takes extended leave at the teacher's own expense?

No, for three reasons. First, the legislature has not authorized a cash incentive for extended leave; it has expressly authorized cash incentives for early retirement (Minn. Stat. § 122A.48), so the omission for extended leave is meaningful (the expressio unius principle, though not named in the opinion). Second, to the extent the "cash incentive" is just another reimbursement mechanism, it fails for the same reason Question 2 fails. Third, the payment cannot be characterized as salary because the teacher is not teaching, and § 122A.46 says extended leave is "without salary." A direct cash payment outside the salary framework would itself need statutory authorization that the legislature has not provided.

Common questions

Q: I'm a teachers' union rep. Our bargaining team wants the district to cover insurance and pension during extended leave. What can we negotiate?
A: Under the 2002 opinion, the contract cannot require the district to pay the teacher's insurance premium or the employee retirement contribution. It can address how to split the employer retirement contribution (§ 354.094, subd. 1 says the member and board may agree in "any proportion"). It can address procedural matters like timing of payment, billing arrangements, and notice. It cannot make the district the primary payor for what the statute assigns to the teacher. The AG opinion is from 2002; pull the current statutes before relying on it for a specific provision.

Q: We're a district. Can we just pay the insurance premium and let the teacher pay us back?
A: Section 122A.46, subd. 9 explicitly contemplates this for the insurance side. The teacher "reimburses the district for the full amount of the premium necessary to maintain the coverage within one month following the district's payment of the premium." The district can advance the premium to the carrier and then collect reimbursement from the teacher; the teacher still bears the cost. What the district cannot do is waive the reimbursement.

Q: What about a "leave stipend" or "transition payment" tied to the teacher's decision to take extended leave?
A: The 2002 opinion would view any such payment skeptically. If the payment functions as a reimbursement for insurance or retirement contributions, it fails under Question 2. If it functions as compensation for not teaching, it fails under Question 3 (extended leave is statutorily "without salary"). The only way to authorize such a payment is express legislative authorization, similar to § 122A.48 for early retirement incentives.

Q: Is this opinion still good law?
A: The general structural principle (school districts are creatures of statute) and the specific statutes (§§ 122A.46, 354.094, 122A.48) remain part of Minnesota's framework. The legislature has revisited the statutes since 2002, and specific subsections may have changed. Before relying on this opinion in any 2026 bargaining cycle, pull the current text of § 122A.46 (especially subd. 9) and § 354.094 to confirm the cost-allocation rules are still as the AG described them.

Q: Why is the legislature's allocation so strict?
A: The 2002 opinion does not address policy rationale. The statutory framework reflects a legislative judgment that extended leave is a benefit to the teacher (typically for graduate study, family reasons, public service, or similar pursuits) and that the cost of maintaining benefits during a period the teacher chooses not to teach should be borne by the teacher rather than charged to the school district's general fund. Whether that allocation is still the right one is a legislative question, not one for the AG or the bargaining table.

Q: What if the district just stops paying for the leave year entirely, no insurance and no retirement?
A: The teacher can decline both. Coverage continuation under § 122A.46, subd. 9 is at the teacher's request. Retirement service credit accrual under § 354.094 is also at the teacher's election. If the teacher does not pay, subdivision 3 says the teacher "shall be deemed to cease to render teaching services" for retirement purposes for that year. The teacher may not resume payment in later leave years either. That consequence makes the choice consequential.

Background and statutory framework

Minnesota teachers may take extended leaves of absence under Minn. Stat. § 122A.46. The statute permits leaves of one to five years, with reinstatement rights, for purposes that include further study, public service, and family responsibilities. The leave is "without salary."

The Teachers Retirement Association is governed by Minn. Stat. ch. 354. Section 354.094 specifically addresses how a teacher on extended leave can preserve TRA service credit during the leave. The allocation: teacher pays the employee contribution, employer contribution can be split between the teacher and the district by agreement.

Insurance continuation during extended leave is governed by § 122A.46, subd. 9. The teacher requests coverage and pays the premium (or reimburses the district within one month of premium payment).

The principle that school districts are creatures of statute is foundational Minnesota local-government law. It cuts both ways: it limits district authority to act without legislative authorization, and it also limits what districts can agree to in collective bargaining where the legislature has spoken.

Mike Hatch was AG in 2002. Kenneth E. Raschke, Jr. was the Assistant AG of record. The cross-references (Op. Atty. Gen. 159-b-12 and 161-b-14) link this opinion to the broader line of MN AG opinions on school district authority over teacher compensation and benefits.

Citations and references

Statutes:
- Minn. Stat. § 122A.46 (2000) (extended leaves of absence; subd. 9 on insurance continuation)
- Minn. Stat. § 122A.48 (2000) (early retirement incentives, by contrast with § 122A.46)
- Minn. Stat. § 123B.02, subd. 1 (school district general powers; creatures of statute)
- Minn. Stat. § 136F.43 (parallel extended-leave statute for state colleges and universities)
- Minn. Stat. § 354.094 (2000) (TRA service credit during extended leave; subds. 1 and 3)

Cases:
- Welsh v. City of Orono, 355 N.W.2d 117 (Minn. 1984) (local governments have only expressly granted or necessarily implied powers)
- Country Joe, Inc. v. City of Eagan, 560 N.W.2d 681, 684 (Minn. 1997) (where legislature has specifically provided a funding mechanism, no implied authority to use others)
- Lilly v. City of Minneapolis, 527 N.W.2d 107 (Minn. Ct. App. 1995) (no authority for city to provide insurance benefits beyond those authorized by statute)
- State Bank of Boyd v. Hatch, 384 N.W.2d 550, 556 (Minn. Ct. App. 1986) (may not challenge commissioner's acts indirectly)
- State v. Palmer, 358 N.W.2d 737, 739 (Minn. Ct. App. 1984) (county may not indirectly challenge state obligations)

Prior AG opinions referenced:
- Op. Atty. Gen. 166-b-4, January 24, 1989 (district authorized to provide housing but not housing allowance)
- Op. Atty. Gen. 159-b-12 (cross-reference)
- Op. Atty. Gen. 161-b-14 (cross-reference)

Source

• Landing page: https://www.ag.state.mn.us/Office/Opinions/
• Original PDF: https://www.ag.state.mn.us/Office/Opinions/174-20020329.pdf

Original opinion text

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

TEACHERS: COMPENSATION: SCHOOL: Districts not authorized to pay for teachers' insurance and retirement contribution while on extended leave. Minn. Stat. §§ 122A.46, 354.094 (2000).

174
(Cr. Ref. 159-b-12, 161-b-14)
March 29, 2002

Mr. Stephen M. Knutson
Ms. Michelle D. Kenney
KNUTSON, FLYNN & DEANS
Attorneys for Independent School Dist. No. 279
1155 Centre Pointe Drive, Suite 10
Mendota Heights, Minnesota 55120

Dear Mr. Knutson and Ms. Kenney:

Thank you for your letter dated February 27, 2002 concerning benefits for teachers on extended leaves of absence. In that letter you present the facts described below.

FACTS

In Minnesota, a school district's authority to grant an extended leave of absence to a teacher is governed by Minn. Stat. § 122A.46. Independent School District No. 279 is presently involved in contract negotiations with its teachers. The teachers' exclusive representative has proposed the inclusion of a provision in the collective bargaining agreement regarding an extended leave of absence as provided for in Minn. Stat. § 122A.46. More specifically, the teachers' exclusive representative has proposed language which would require the School District to pay both the teacher and the employer contributions to the Teachers' Retirement Association ("TRA") during the period of the extended leave under Minn. Stat. § 122A.46, as well as providing employer-paid single and group health insurance to the teacher throughout the extended leave. The teachers also want to ensure that they receive service credit from the TRA during the period of the leave as provided for in Minn. Stat. § 122A.46 and Minn. Stat. § 354.094.

Based on these facts, you ask the questions set forth below.

QUESTION 1

May a school district agree, through a collective bargaining agreement, to pay both the teacher and the employer contributions to the Teachers' Retirement Association as well as providing employer-paid single group health insurance while the teacher is on an extended leave of absence under Minn. Stat. § 122A.46?

OPINION

We answer your question in the negative.

First, as creatures of statute, local governments, including school districts, have only those powers expressly granted by the legislature and those necessarily implied to enable exercise of the express powers. See, e.g., Minn. Stat. § 123B.02, subd. 1; Welsh v. City of Orono, 355 N.W.2d 117 (Minn. 1984). This principle has been applied to questions involving the authority of school districts to provide compensation to employees. See, e.g., Op. Atty. Gen. 166-b-4, January 24, 1989 (District authorized to provide housing but not housing allowance).

Second, where the legislature has specifically authorized a particular local government activity and prescribed the conditions of its undertaking, action in excess of the prescribed limitations is implicitly precluded. Id. See, e.g., Country Joe, Inc. vs. City of Eagan, 560 N.W.2d, 681, 684 (Minn. 1997) (Where legislature has specifically provided funding mechanism for road improvements, there can be no implied authority to use others). Lilly v. City of Minneapolis, 527 N.W.2d 107 (Minn. Ct. App. 1995) (no authority for city to provide employee insurance benefits beyond those authorized by statute). As you have pointed out, Minn. Stat. § 122A.46 (2000) specifically provides for the granting of unpaid extended leaves of absence for teachers and specifies in substantial detail, the terms and conditions of such leave. Subdivision 9 addresses insurance benefits:

A teacher on an extended leave of absence shall receive all of the health, accident, medical, surgical and hospitalization insurance or benefits, for both the teacher and the teacher's dependents, for which the teacher would otherwise be eligible if not on an extended leave. A teacher shall receive the coverage if such coverage is available from the school district's insurer, if the teacher requests the coverage, and if the teacher either (a) reimburses the district for the full amount of the premium necessary to maintain the coverage within one month following the district's payment of the premium, or (b) if the district is wholly or partially self-insured, pays the district, according to a schedule agreed upon by the teacher and the school board, an amount determined by the school board to be the amount that would be charged for the coverage chosen by the teacher if the school board purchased all health, accident, medical, surgical and hospitalization coverage for its teachers from an insurer.

Id. (Emphasis added.)

Minn. Stat. § 354.094, addresses the ability of a teacher on extended leave under section 122A.46, to accrue service credit for that leave time. That section also discusses contributions to retirement programs. Specifically, that section provides in part:

Subdivision 1. Service credit contributions. Upon granting any extended leave of absence under section 122A.46 or 136F.43, the employing unit granting the leave must certify the leave to the association on a form specified by the executive director. A member granted an extended leave of absence under section 122A.46 or 136F.43 may pay employee contributions and receive allowable service credit toward annuities and other benefits under this chapter, for each year of the leave, provided that the member and the employing board make the required employer contribution in any proportion they may agree upon, during the period of the leave. . . .

Subd. 3. Effect of nonpayment. A member on extended, leave of absence pursuant to section 122A.46 or 136F.43 who does not pay employee contributions or whose employer contribution is not paid into the fund in any year shall be deemed to cease to render teaching services beginning in that year for purposes of this chapter and may not pay employee or employer contributions into the fund in any subsequent year of the leave. Nonpayment of contributions into the fund shall not affect the rights or obligations of the member or the member's employer under section 122A.46 or 136F.43.

Thus, in authorizing the granting of extended leave, the legislature in section 122A.46 and 354.094 has specified that continuation of employee insurance coverage and retirement service credit is conditional upon employee payment of the insurance costs and at least the employee's contribution to the retirement account. The teachers and the board may, however, agree on division of payment of the employer's contribution.

Based on the express language of the above-referenced statutes, it is our opinion that the district may not eliminate the requirement that the employee pay the cost of health insurance and the employee's retirement contribution, in order to receive those benefits while on extended leave under section 122A.46.

QUESTION 2

If the answer to Question 1 is "no," may a school district agree to reimburse a teacher who is granted an extended leave of absence under Minn. Stat. § 122A.46 for amounts the teacher pays for the teacher's contribution to the Teachers' Retirement Association and/or for premium payments to remain in the school district's group health insurance plan during the period of the extended leave of absence?

OPINION

We answer the question in the negative for the same reasons discussed in response to Question 1. Our determination that the district is not authorized to pay for the employee's insurance or employee retirement contribution, is not affected by the means of payment chosen by the district, whether directly to the insurance carrier and retirement association, or indirectly by reimbursing the teacher for the same amount. It is axiomatic that one cannot accomplish indirectly something that may not be done directly under the law. See, e.g., State Bank of Boyd v. Hatch, 384 N.W.2d 550, 556 (Minn. Ct. App. 1986) (May not challenge commissioner's acts indirectly where direct attack is precluded); State v. Palmer, 358 N.W.2d 737, 739 (Minn. Ct. App. 1984) (County may not indirectly challenge obligations to state).

QUESTION 3

If the answer to Question 1 is "no," may a school district agree to pay a teacher a cash incentive to take an extended leave of absence under Minn. Stat. § 122A.46, where the teacher pays the teacher contribution to the Teachers' Retirement Association and the premium for single group health insurance through the school district during the period of the extended leave of absence?

OPINION

We answer this question as well in the negative.

First, the legislature has not authorized the offer of any cash incentive to induce teachers to take extended leave as it has in the case of early retirement. Cf. Minn. Stat. § 122A.48 (2000).

Second, To the extent that the proposed "cash incentive" is merely another means to reimburse the teacher for the personal costs of insurance and retirement contributions, the reasoning is the same as that discussed in response to Question 2.

Third, such payment cannot be considered authorized as salary. As described, the payment would not be provided in exchange for teaching services, but as an inducement to stop teaching temporarily. Furthermore, section 122A.46 states that extended leave granted thereunder is to be "without salary." Accordingly, in order for a school district to pay monetary compensation to induce a leave under Minn. Stat. § 122A.46, the school district would need to amend Minn. Stat. § 122A.46.

Very truly yours,

MIKE HATCH
Attorney General
State of Minnesota

KENNETH E. RASCHKE, JR
Assistant Attorney General
(651) 297-1141 (Voice)

AG: 559512, v. 01