62 Op. Att'y Gen. 20 (1973)
 
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Wisconsin Attorney General Opinions

25 January 1973

Retirement Fund
Trust Funds
Public Administrators are public officials
and, therefore, includible as "employes"
under the Federal-State Social
Security coverage agreement.

Public administrators may be properly
excluded by act of the legislature
from future coverage under the Wisconsin
Retirement Fund and State Group Life
Insurance.

CLYDE M. SULLIVAN, Secretary,
Department of Employe Trust Funds

You request my opinion on a number of
questions concerning the effect of Chapter
310, Laws of 1971, on the statutes relating
to administration of the Wisconsin Retirement
Fund, Public Employes Social Security Fund
and the Municipal Group Life Insurance
Program.

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Under Section 253.25 of the Wisconsin
Statutes, prior to repeal and recreation
by Chapter 310, Laws of 1971, public
administrators were generally considered by
your Department to be county officials and
eligible for participation in the
above-stated benefit programs if they
met the other statutory criteria.

Chapter 310, however, established the status
of public administrators to be that of
independent contractors.

New subsection 253.25(4) as created in
Section 3 of Chapter 310 reads:

253.25(4)

   STATUS.

   The public administrator and acting
   public administrator, except when an
   assistant district attorney, shall be
   deemed independent contractors retained
   by the department of revenue and not
   employes of the county or state.

Your first question, and the basis therefor,
is stated in your letter as follows:

1.   In most counties (those having
   "absolute" Social Security coverage)
   virtually every "employe" is required
   to participate in the Federal Social
   Security program, regardless of the
   amount of time worked or the amount
   of compensation received.

   The Social Security Act defines
   "employe" to include all officers of a
   state or political subdivision.

   Thus if a public administrator is a
   public officer, we must question whether
   Section 253.25(4) is competent to set
   aside what is already a matter of
   statute and agreement between the State
   of Wisconsin and the Federal Department
   of Health, Education and Welfare.

   (The State, in such agreement, and under
   the statutes, has bound itself to all
   provisions of the Social Security Act
   and regulations adopted pursuant
   thereto.)

Coverage of state and local governments under
the Social Security Act is voluntary and
accomplished only by agreement of the State
of Wisconsin with the U.S. Secretary of
Health, Education and Welfare.

The State of Wisconsin, by agreement with the
federal government, contracts to buy social
security protection for the employes it
brings under the agreement.

42 U.S.C. Section 418.

The agreement between the state and U.S.
Secretary of Health, Education and Welfare
provides as to coverage:

   (4)(B) Services Covered.

   This agreement includes all services
   performed by individuals as employes of
   the State and as employes of those
   political subdivisions listed in the
   appendix attached hereto, except:

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The exceptions in the portion of paragraph
(4)(B) quoted above are not material in
light of paragraph 4 (B)(7), which reads:

   (7) Effective April 1, 1966, the only
   exclusions covering positions not under
   a retirement system (including any
   retirement system created by Chapter 155
   or Chapter 201 of the Wisconsin Laws of
   1937 as amended) which shall be in
   effect under this federal-state
   agreement shall be those exclusions
   which are mandatory under federal law
   (i.e., those provided in (B)2 through
   (B)5 of said agreement) and the
   exclusion provided by (B)6 of said
   agreement as amended by
   Modification No. 146.

   This provision is applicable to such
   positions of employes of the state and
   of all political subdivisions of the
   state already covered or hereafter
   to be covered under said agreement.

This section of the federal-state agreement
is implemented from the state end by
Section 40.41(5), Stats., which reads:

40.41(5)

   Effective April 1, 1966, with the
   exception of the exclusions under
   Subsection 40.41(10) the only exclusions
   covering positions not under a
   retirement system which shall be in
   effect under the state-federal agreement
   pursuant to action taken under
   Subsection 40.41(1) shall be those
   exclusions which are mandatory under
   federal regulations.

Municipalities, therefore, have authority
under Section 40.41(1), Stats., to elect
only "absolute coverage" of employes.

The only alternative coverage is that
required for all employes included under the
Wisconsin Retirement Fund under subsection
40.41(2) of Section 40.41. Section 40.41
reads in material part:

40.41 Coverage.

   40.41(1) Each public agency other than
   the state may determine to be included
   under OASDHI through the adoption of a
   resolution by the governing body thereof
   with respect to the coverage groups
   specified in such resolution, which
   shall also state the effective date of
   coverage.

   40.41(2) all participating
   municipalities which have acted pursuant
   to Section 41.05 to be included under
   the Wisconsin retirement fund are
   included when the participating
   employes thereof are eligible.

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As of August 1, 1971, 54 counties in
Wisconsin had taken action to provide
"absolute coverage" while the remaining
17 counties provided social security
coverage through participation in the
Wisconsin Retirement Fund.

(Milwaukee County is not a participating
employer in the Wisconsin Retirement Fund.)

By Section 3 of Chapter 310, Laws of 1971,
the legislature declared that public
administrators were thereafter to
be "deemed independent contractors."

Independent contractors are excluded from
coverage in the Wisconsin Retirement Fund
by Section 41.02(12)(e), Stats.

That such exclusion from the fund was clearly
intended by the legislature is apparent from
the following note to 1971 Senate Bill 471
which became Chapter 310, Laws of 1971:

   Subsection (4) is new.

   Its purpose is to clarify the status of
   the public administrator and acting
   public administrator as independent
   contractors retained by the department
   of revenue and not as government
   employes.

   They will thus not be subject to or
   qualify for such employe-connected
   obligations and programs as the
   following: withholding of state income
   tax, workmen's compensation, retirement
   fund programs and group health, accident
   or life insurance programs.

It is, therefore, my opinion that in those
counties, where participation in Social
Security is based solely upon participation
in the Wisconsin Retirement Fund, Chapter
310, Laws of 1971, has by ending the
participation of public administrators in the
Retirement Fund, effectively ended their
social security coverage as county employes.

The situation is different, however, in those
counties which have elected "absolute
coverage" of employes, for in these counties
all employes are covered (except mandatory
exclusions under the Social Security Act),
regardless of eligibility for the
retirement fund.

Chapter 310, Laws of 1971, establishes public
administrators as independent contractors.

The federal-state agreement at part (A)(2)
defines "employee" as:

   (2) The term "employee" means an
   employee as defined in section 210(k)
   of the Social Security Act and shall
   include an officer of the State or
   of a political subdivision thereof.

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While the determination of who is an officer
of a state or political subdivision is
determined under state law, the determination
of who is an "employee" is determined under
Federal law.

The Handbook for State Social Security
Administrators of the U.S. Department of
Health, Education and Welfare reads in
applicable part at Section 267:

   267. Definition of Employee.

   Who is an employee under the common-law
   rules or Federal Statutory definition is
   determined in accordance with the
   provisions of the Social Security Act
   and the applicable regulations.

Who is an officer of a State or political
subdivision and therefore an employee is
determined by the State law provisions.

   Under the Social Security Act,
   the term employee includes:

   (a)  An individual who, under the usual
        common-law rules applicable in
        determining an employer-employee
        relationship, has the status of an
        employee; and

   (b)  An individual who is an employee
        under the statutory definition in
        Section 210(j) of the Act.

These definitions include an officer of a
corporation as well as certain agent
drivers, salesmen, and homeworkers.

Generally, these definitions are not
applicable to State and local
governments; and

   (c)  An officer of a State or political
        subdivision.

For purposes of the federal-state agreement,
designation of public administrators
as "independent contractors" is not
sufficient to exclude them from coverage
if in fact they are "employees."

20 C.F.R. 404.1004(2) reads:

   (2)  If the relationship of employer and
        employee exists, the designation or
        description of the relationship by
        the parties as anything other than
        that of employer and employee is
        immaterial.

        Thus, if such relationship exists,
        it is of no consequence that the
        employee is designated as a
        partner, co-adventurer, agent,
        independent contractor, or the
        like."

The Social Security Commissioner was
requested by the State of Oklahoma to issue a
ruling on whether motor license agents
appointed by the Oklahoma Tax Commission,
pursuant to statutory authority, were state
employes.

The Oklahoma legislature enacted a law
specifically providing that "such agents be
self-employed independent contractors."

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The Commissioner held that such agents were
employes of the state notwithstanding the
state law designating them as independent
contractors.

The administrator stated at page 147 of such
ruling (SSR 68-23 C.B. 1968, p. 145):

   The statutory provisions cited above
   clearly indicate that motor license
   agents in Oklahoma are subject to the
   direction and control of the State
   through the Tax Commission, and that the
   Commission either exercises or reserves
   the right to exercise such direction and
   control by means of instructions issued
   to them.

   The agents are removable at the will of
   the Tax Commissioner; they are required
   to furnish and file bonds, and must
   perform all duties required of them by
   the Commission.

   Under the facts recited, motor license
   agents in Oklahoma, held employees of
   the State within the meaning of section
   210(j) of the Social Security Act.

   The fact that they are designated in the
   State law as self-employed independent
   contractors under the supervision of the
   State Tax Commission does not change
   this result.

More recently, the Commissioner was asked by
the State of Missouri for a ruling as to
whether fee-paid public administrators were
employes and, therefore, whether their income
therefrom constituted covered wages under the
applicable federal-state agreement.

S.S.R. 72-36.

The Commission held that the subject public
administrators were public officers and,
therefore, employes whose income constituted
covered wages. The Commissioner concluded his
ruling with these words:

   The provisions of the State's agreement,
   and the definitions contained therein,
   were not changed in any way by H.B. 635
   since the State would have no authority
   after entering into an agreement to
   later redefine its scope by unilateral
   action or in a manner which would
   contravene the definitions as set forth
   in the agreement.

It should be here noted that although the
legislature in Chapter 310, Laws of 1971,
declared public administrators to be
independent contractors and not employes, it
did not state therein that such
administrators were not public officials.

There is also a notable absence in the
explanatory note to Subsection (4),
previously quoted, of any reference
to social security deductions.

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The Handbook for State Social Security
Administrators of the U.S. Department of
Health, Education and Welfare provides the
following statement applicable to
determination of who is a public
officer, at Section 272:

   272. Public Officer. An officer of a
        State or political subdivision is
        an employee by statutory
        definition.

        Generally, the statutory authority
        establishing the position describes
        the occupant of a position as a
        public officer if, in fact, that is
        his status.

        Indicative of such status are
        provisions that the individual has
        tenure in his position and that he
        takes an oath of office.

        Generally, a public officer
        exercises some part of the
        sovereign power of the State or
        political subdivision.

        (A notary public and a juror
        perform the functions of a public
        office but are not public
        officers.)

The basis for determining whether an
individual is a public officer is
set forth in
Martin v. Smith (1941).
239 Wis. 314,
1 N.W.2d 163.

The court therein stated at page 332

   "to constitute a position of public
   employment a public office of a civil
   nature, it must be created by the
   constitution or through legislative act;
   must possess a delegation of a portion
   of the sovereign power of government to
   be exercised for the benefit of the
   public; must have some permanency and
   continuity, and not be only temporary or
   occasional; and its powers and duties
   must be derived from legislative
   authority and be performed independently
   and without the control of a superior
   power, other than the law, except in
   case of inferior officers specifically
   placed under the control of a superior
   officer or body, and be entered upon by
   taking an oath and giving an official
   bond, and be held by virtue of a
   commission or other written authority."

The position of public administrator as
created by legislative act requires taking
of the official oath and filing of a bond.

Section 3 of Chapter 310, Laws of 1971.

Public administrator is a permanent office
even though any individual holding such
office serves only

   "until his successor
   has been appointed."

See
Burton v. State Appeal Board (1968),
38 Wis.2d 294, 302,
156 N.W.2d 386.

Some of the duties of the public
administrator are set forth in the following
sections of the statutes created by Chapter
310, Laws of 1971:

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   72.23(2) INTEREST MAY BE WAIVED.

   The department, authorized public
   administrator or county court may waive
   interest on any additional tax arising
   from the discovery of property which was
   omitted in the original determination of
   tax.

   This subsection applies only where due
   diligence has been exercised in
   marshaling the assets.

   72.25 RELEASE OR TRANSFER OF LIEN.

   Until this tax is paid it is a lien upon
   the property transferred except:

   (1)  When the department or authorized
        public administrator is satisfied
        that collection of the tax will not
        be jeopardized, either may release
        this lien on all or part of real
        property.

        A duly executed release of the lien
        may be recorded with the register
        of deeds of the county in which the
        property is located.

        The recording fee shall be the same
        as for the recording of a mortgage
        satisfaction. . . .

   72.31 PUBLIC ADMINISTRATOR.

        (1) GENERAL DUTIES.

        The public administrator shall
        represent the department and shall:
        . . .

        (b) Appear for and act in behalf of
        the county and state with regard to
        the determination of tax. . .

        (3) AUTHORITY WHICH THE DEPARTMENT
            MAY DELEGATE; PROCEDURE.

        (a) Authority.

        A public administrator may grant
        closing certificates, lien waivers
        or both, in all no-tax cases.

        In its discretion the department
        may delegate this authority in tax
        cases where the total value of
        property transferred by reason of a
        death or in contemplation of death
        does not exceed $50,000.

The above duties involve an exercise of the
sovereign power of the state free from the
control of a superior power.

Public administrators are, therefore, public
officers under the guidelines of
Martin v. Smith, supra.

The question remains as to whether public
administrators are county or state officers
for social security purposes.

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In
State ex rel. Sheets v. Fay (1972),
54 Wis.2d 642, 649,
196 N.W.2d 651,
the court determined that family court
commissioners were county appointed officials
for Wisconsin retirement fund purposes.

Determinative of such status were the factors
cited in the following excerpt from page 649:

   A number of factors and specific
   statutory provisions go onto the scales
   in determining whether plaintiff is a
   county or state "employee" under the
   retirement fund act.

   To begin with, Section 247.13(1), Stats.
   provides the position or family court
   commissioner, formerly divorce counsel,
   is created "in each county of the state"
   and "for such county." The appointment
   is to be made annually by "the circuit
   and county judges in and for such
   county." However, the position "may be
   placed under a county civil service
   system by resolution of the county
   board." In counties having a population
   of less than 500,000, the county board
   ". . . shall by resolution provide an
   annual salary for the family court
   commissioner. . . ." (Section 247.17.)
   The county board ". . . may also by
   resolution prescribe such other duties
   to be performed by him not in conflict
   with his duties as family court
   commissioner." (Section 247.17.) Where
   the county board establishes the family
   court commissioner's salary, pays it,
   and may prescribe additional duties to
   be performed by him, and where the
   position is established in each county
   and "for such county," we find the proof
   overwhelmingly requiring a finding that
   the family court commissioner of Racine
   county was a county employee, rather
   than a state employee, under the
   retirement act and retirement act
   purposes.

Public administrators are appointed by "each
judge of a court having probate jurisdiction
under Section 856.01," invariably all county
courts. "In counties of over 200,000, an
assistant district attorney may be
appointed public administrator."

Section 253.25(1), Stats. (1971).

In the event of an assistant district
attorney so serving, the fees are
paid to the county.

Section 72.31(4)(c), Stats. (1971).

A county court may appoint an acting public
administrator for a specific case if the
public administrator is not available
or not qualified to act.

Section 253.25(2), Stats. (1971).

The public administrator represents both the
State Department of Revenue and the county.

Section 72.31(1)(b), Stats. (1971).

Fees are paid

   by the county treasurer out of
   inheritance tax funds in his possession
   upon order of the county court.

Section 72.31(4)(b), Stats. (1971).

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While public administrators are paid fees set
by the statutes, the county court may allow
additional fees in cases of unusual
difficulty.

There is in my opinion sufficient indication
that public administrators should be
considered county officers for purposes of
the Federal-State Social Security agreement.

Such appointed officials are appointed by and
serve at the pleasure of the county judges.

Section 253.25(1), Stats. (1971).

County judges are county officials.

State ex rel. Sachtjen v. Festge (1964),
25 Wis.2d 128,
130 N.W.2d 457.

While public administrators exercise some of
the sovereign powers of the state, they are
primarily local officers under the control
of the county judge.

Such public administrators are therefore
subject to social security deductions
under the Federal-State agreement
in the manner as county officers.

Secondly, you question whether a public
administrator

   in the exercise of his public
   responsibilities can be excluded
   from retirement participation.

The intent of the legislature to remove
public administrators from eligibility for
the retirement fund is clearly set forth in a
note to 1971 Senate Bill 471 which became
Chapter 310, Laws of 1971.

The note which follows Section 3
of such bill reads in part:

   They will thus not be subject to or
   qualify for such employe-connected
   obligations and programs as the
   following: . . . retirement fund
   programs and group health, accident or
   life insurance programs.

Whatever right public administrators formerly
under the Wisconsin Retirement Fund could
arguably have to maintenance of such
coverage, regardless of Section 253.25(4),
Stats. (1971), would be based upon the
prohibition against impairment of contract
of Section 12, Art. I of the
Wisconsin Constitution.

In
State Teachers' Retirement Board v.
Giessel (1960),
12 Wis.2d 5,
106 N.W.2d 301,
the court held that teachers had contractual
rights in the retirement system and,
therefore, the legislature could not use
earnings of the State Teachers' Retirement
System to pay a part of the cost of a study
of public employes retirement systems.

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The court said at pages 9 and 10:

   The nature of the state teachers'
   retirement system and the rights of the
   members thereof have been the subject of
   four prior decisions of this court:
   State ex rel. Dudgeon v. Levitan (1923),
   181 Wis. 326, 193 N.W. 499; State ex
   rel. O'Neil v. Blied (1925), 188 Wis.
   442, 206 N.W. 213; State ex rel.
   Stafford v. State Annuity & Investment
   Board (1935), 219 Wis. 31, 261 N.W. 718;
   State ex rel. Thomson v. Giessel (1952),
   262 Wis. 51, 53 N.W.2d 726.

   The result of these decisions is that
   the teachers have a contractual
   relationship with the state and
   a vested right in the state
   teachers' retirement system.

   The contractual right and vested
   interest of the teachers in the
   retirement system are not disputed by
   the appellant, but it is argued the
   right of the teachers is not such as
   would exclude payment of the charge for
   the governor's study commission out of
   the earnings of the state teachers'
   retirement fund.

   It is argued that the plaintiff board is
   required to pay out funds according to
   law and appropriations from the earnings
   of the fund have been made by law each
   year, and therefore there is no vested
   right in the gross earnings of the fund.

   We do not agree.

   The teacher's right, based on contract,
   extends to the retirement system.

   The earnings on investments, part of
   which represent contributions made by
   the teachers and part contributed by the
   state under the contract with them,
   constitute assets of the system.

   The reserve for contingencies set up by
   the board is a part of the system.

While I am aware of no case wherein the court
has had the occasion to rule on the question
of the contractual relationship of members of
the Wisconsin Retirement Fund, the essential
features of the teachers' fund are similar to
the degree that I consider the reasoning of
the Giessel case as quoted just above to be
persuasive in similar situations.

The Wisconsin Retirement Fund and the State
Teachers' Retirement System were both created
as joint contributory, money-purchase
systems.

In both cases the contributions by the
participants and municipalities are held
in trust for members of the funds.

Sections 41.02(1)(a) and 42.22 (5), Stats.

Most features essential to the subject
question are similar.

I conclude, therefore, that members of the
Wisconsin Retirement Fund have contractual
and vested rights in their fund as it exists
on the day of their retirement similar to
those which the court has determined to be
vested in teachers.

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This does not mean that the legislature is
without the power to delete persons presently
covered from future coverage in the Wisconsin
Retirement Fund and from group life insurance
by changing the position from that of public
officer or employe to that of independent
contractor or by specifically deleting a
group from coverage.

The former member of the funds is entitled to
whatever benefits were vested during the
period that the applicable legislation
required or permitted his participation.

These benefits based upon past service are
not taken from public administrators by
Chapter 310, Laws of 1971, although such
public administrators are precluded from
future participation in the funds.

I see no constitutional proscription which
precludes the legislature from removing the
public administrator group from the Wisconsin
Retirement Fund.

RWW:WMS

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