November 15, 2002
Unofficial Opinion 2002-8
- To
- Representative, District 141
- Re
- Hospital authorities are subject to the gratuities clause of the Georgia Constitution but nonetheless may offer a prospective employee a signing bonus if the authority receives a substantial benefit in exchange for the signing bonus. However, a hospital authority may not assume payment of a prospective employees educational loan without explicit statutory authority to do so.
You have asked for my opinion on a number of questions related to the ability of a hospital authority to offer new nurses signing bonuses or to pay educational expenses for prospective nurses, including the assumption of existing school loans. I will address your questions seriatim.
1. Are hospital authorities subject to the gratuities clause of the Georgia Constitution?
Public authorities are legislatively created governmental entities possessing some, but not all, of the attributes of sovereignty. While authorities are not restricted by the Constitution’s debt limitations, they are instrumentalities of the state subject to the Constitution. McLucas v. State Bridge Bldg. Auth., 210 Ga. 1, 6 (1953). For a more general discussion of the nature of hospital authorities as instrumentalities of the state, see Cox Enterprises, Inc. v. Carroll City/County Hosp. Auth., 247 Ga. 39, 43-46 (1981).1 In that the gratuities prohibition deprives the General Assembly of the power to grant or to authorize any donation or gratuity and authorities are created by the General Assembly for governmental purposes, authorities are subject to the prohibition against gratuities. GA. CONST. Art. III, Sec. VI, Par. VI(a); see also 1995 Op. Att'y Gen. 95-22 (Georgia Housing and Finance Authority); 1983 Op. Att'y Gen. U83-7 (development authorities). I find nothing in the Georgia Constitution or the Hospital Authorities Law, O.C.G.A. §§ 31-7-70 through –96, to distinguish a hospital authority from other public authorities relative to the applicability of the gratuities clause. What is more, the statutory determination that hospital authorities are to “exercise public and essential governmental functions” recognizes the public status of hospital authorities and seems to indicate that they are subject to the gratuities clause. O.C.G.A. § 31-7-75. Even were it not so, as public fiduciaries members of an authority must receive commensurate return for the disposition of its assets. Malcolm v. Webb, 211 Ga. 449 (1955).
2. If hospital authorities are subject to the gratuities clause, is the gratuities clause violated by the payment of a “signing bonus” since the nurse (or other in-demand health care worker) would be foregoing other opportunities by working for a particular hospital authority?
The constitutional clause prohibiting a gratuity provides as follows:
Except as otherwise provided in the Constitution, (1) the General Assembly shall not have the power to grant any donation or gratuity or to forgive any debt or obligation owing to the public, and (2) the General Assembly shall not grant or authorize extra compensation to any public officer, agent, or contractor after the service has been rendered or the contract entered into.
GA. CONST. Art. III, Sec. VI, Par. VI(a).
Generally, the prohibition against a gratuity is satisfied if the governmental entity receives a substantial benefit as the result of the grant or use of its assets. Garden Club of Georgia, Inc. v. Shackelford, 274 Ga. 653, 654 (2002); Smith v. Board of Comm’rs, 244 Ga. 133, 140 (1979); see 1998 Op. Att'y Gen. 98-16 and citations therein. Consistent with the substantial benefits analysis, it is well established that benefits for public employees, if authorized by law, are a special instance of contractual consideration that provides a substantial benefit to the governmental entity. See Swann v. Board of Trustees, 257 Ga. 450 (1987). In order to avoid the constitutional prohibition on gratuities and extra compensation for services rendered, the consideration must be prospective, i.e., the governmental entity must identify the substantial benefit and the consideration therefor prior to formation of the contract. See, e.g., 1998 Op. Att'y Gen. U98-14 (employee suggestion programs do not violate gratuities clause). Therefore, a hospital authority may offer a prospective employee a signing bonus if (1) a signing bonus is authorized by law and (2) the authority receives a substantial benefit in exchange for the signing bonus.
Unlike private entities, hospital authorities are statutory creatures and have only those powers expressly, or by necessary implication, conferred upon them by law. Bryant v. Employees Retirement Sys., 216 Ga. App. 737, 738 (1995); 1995 Op. Att'y Gen. 95-29; 1993 Op. Att'y Gen. 93-21. They may only contract, therefore, to perform those activities for which they already have constitutional or statutory authority. 1995 Op. Att'y Gen. 95-22. Hospital authorities have a general statutory authority to hire employees, which necessarily embraces the implied power to establish employee compensation packages, including signing bonuses. O.C.G.A. § 31-7-75(18). I am not aware of any statute or regulation, such as the state’s merit system law, controlling a hospital authority’s personnel policies. For this reason, 1989 Op. Att’y Gen. 89-10 does not control the answer to your question. Hospital authorities may establish their own personnel policies, including setting conditions pursuant to which signing bonuses may be paid.
A signing bonus may constitute a substantial benefit to the hospital authority if it is a part of the consideration used to induce a prospective employee to accept employment. At the same time, the constitutional prohibition on gratuities mandates that a hospital authority assure that it receives the benefit of its bargain. For example, the cost of training new employees is a recognized employer cost and, hence, a reduced turnover rate benefits the employer. An employee’s contractual agreement to be available for public employment for a period of time is one way to avoid a gratuity. 1998 Op. Att'y Gen. 98-16. Therefore, a hospital authority may offer a prospective employee a signing bonus if the hospital authority receives a substantial benefit in exchange for the signing bonus.
3. Is the general financial assistance language contained in O.C.G.A. § 31-7-75(25) broad enough to allow hospital authorities the latitude to assume the school loans of incoming nurses (or other in-demand health care workers)?
As noted above, the constitutional prohibition on the granting of a gratuity expressly excepts those gratuities otherwise permitted under the Constitution. Educational assistance is one such exception as the Constitution provides in pertinent part as follows:
Pursuant to laws now or hereafter enacted by the General Assembly, public funds may be expended for any of the following purposes: . . . .
(4) To provide grants, scholarships, loans, or other assistance to public employees for educational purposes.
(5) To provide for the purchase of loans made to students for educational purposes who have completed a program of study in a field in which critical shortages exist and for cancellation of repayment of such loans, interest, and charges thereon.
GA. CONST. Art. VIII, Sec. VII, Par. I(a). This constitutional provision is not self-executing. Consequently, a hospital authority may purchase the school loans of a prospective employee only if such an undertaking falls within the parameters of duly enacted legislation. The Hospital Authorities Law includes one educational assistance provision. A hospital authority is empowered “[t]o provide financial assistance to individuals for the purpose of obtaining educational training in nursing or another health care field if such individuals are employed by, or are on an authorized leave of absence from, such authority or have committed to be employed by such authority upon completion of such educational training.” O.C.G.A. § 31-7-75(25). The validity of the proposed loan assumption program thus depends upon the application of the rules of statutory construction.
The General Assembly is presumed to enact all statutes with full knowledge of the existing condition of the law and the statutes are to be construed in connection and in harmony with the existing law, including the Georgia Constitution. Wigley v. Hambrick, 193 Ga. App. 903, 905 (1989); 1991 Op. Att'y Gen. 91-8 (citing Poteat v. Butler, 231 Ga. 187, 188 (1973)). All words must be given their ordinary and everyday meaning and statutes must be read according to the natural and most obvious import of the language. O.C.G.A. § 1-3-1(b); Crews v. Roger Wahl, C.P.A., P.C., 238 Ga. App. 892, 896 (1999). Construing the Hospital Authorities Law in conjunction with the aforementioned constitutional provisions, it is clear that the General Assembly included the educational assistance provision pursuant to its authority to provide for educational assistance to public employees, not its authority to authorize the purchase of educational loans. The plain meaning of the statutory language anticipates the program is to be limited to current and committed future employees and authorizes only the provision of financial assistance, not the assumption of an educational loan. Consequently, further legislation is required before a hospital authority can assume the educational loan of a prospective employee. Any legislation must also address the constitutional requirement that a loan assumption program is permitted only for those fields of study in which critical shortages exist.
4. Is the specific authority granted in O.C.G.A. § 31-7-75(21) (granting hospital authorities “any and all powers . . . possessed by private corporations performing functions . . .”) broad enough to allow hospital authorities to use any reasonable means (including signing bonuses and the assumption of loans) to recruit and retain qualified health care workers?
Under the subject statute, a hospital authority does not have the unlimited powers possessed by private companies despite the language of O.C.G.A. § 31-7-75(21). Its powers remain limited to those expressly or by necessary implication granted to it. Bryant v. Employees Retirement Sys., 216 Ga. App. 737, 738 (1995); Bentley v. State Bd. of Med. Exam’rs, 152 Ga. 836, 838 (1922); 2001 Op. Att'y Gen. 01-8; 1995 Op. Att'y Gen. 95-29. A general grant of power cannot overcome the constitutional constraint that the General Assembly enact legislation authorizing the expenditure of public funds for the purchase of educational loans. To conclude otherwise would obliterate the constitutional requirement.
CONCLUSION
It is my unofficial opinion that hospital authorities are subject to the gratuities clause of the Georgia Constitution. Nonetheless, a hospital authority may offer a prospective employee a signing bonus if the authority receives a substantial benefit in exchange for the signing bonus. However, a hospital authority may not assume payment of a prospective employee’s educational loan without explicit statutory authority to do so.
Prepared by:
EMILY P. HITCHCOCK
Assistant Attorney General
1 1969 Op. Att'y Gen. 69-9, referred to in your letter, stands only for the proposition that public authorities do not have the authority to levy taxes.