The Honorable Michael G. Ellis

Senate Organization Committee
210 South, State Capitol
Madison, Wisconsin 53702

Dear Senator Ellis:

  You request my opinion on the applicability of section 20.927, Stats., to health insurance plans provided for state and local government employes by the Group Insurance Board (GIB). Specifically, you question "whether the use of funds by the Group Insurance Board to contract with health maintenance organizations, and to provide a standard plan, that cover abortions is consistent with s. 20.927, Stats." [sic] It is my opinion that monies used to fund state employe insurance plans are not "state or local funds" and that, therefore, the GIB is not subject to the limitation of section 20.927 when establishing and contracting for state and local employe health insurance plans.

  Section 20.927 precludes the expenditure of state or local funds for performance of most abortions as follows:

  (1)   Except as provided under subs. (2) and (3), no funds of this state or of any county, city, village or town or of any subdivision or agency of this state or of any county, city, village or town and no federal funds passing through the state treasury shall be authorized for or paid to a physician or surgeon or a hospital, clinic or other medical facility for the performance of an abortion.

  (2)(a) This section does not apply to the performance by a physician of an abortion which is directly and medically necessary to save the life of the woman or in a case of sexual assault or incest, provided that prior thereto the physician signs a certification which so states, and provided that, in the case of sexual assault or incest the crime has been reported to the law enforcement authorities....
  (b)   This section does not apply to the performance by a physician of an abortion if, due to a medical
condition existing prior to the abortion, the physician determines that the abortion is directly and medically necessary to prevent grave, long-lasting physical health damage to the woman....
The same restriction is specifically set forth for counties at section 59.07(136) and for cities, villages and towns at section 66.04(1)(m).

  State statutes require the GIB to establish and offer to state employes at least one standard health insurance plan and one health maintenance organization or preferred provider plan. Sec. 40.51(6), Stats. GIB established insurance plans may also be used by local government units. Secs. 40.02(25)(b)9. [active non-state public employes] and 11. [retired non-state public employes].

  Current GIB guidelines which form the basis for contracts with health maintenance organizations and preferred providers that in turn insure state and local employes, provide coverage for "therapeutic abortions." "Therapeutic abortions" may be generally defined as, "induced abortions which have been performed to safeguard the health of the mother, to prevent the birth of a child of a rape victim, or to prevent the birth of a deformed child." 4C Gray, Roscoe N. and Louise J. Gordy, Attorneys' Textbook of Medicine, 311.01 (3rd ed. 1991). Section 20.927 of the statutes is more restrictive on the type of abortions permitted because it does not permit the use of state funds for therapeutic abortions "to prevent the birth of a deformed child." Therefore, if section 20.927 applies to the GIB's establishing government employe health insurance plans, then current GIB provisions for therapeutic abortions would be impermissible.

Monies Paid into Employe Trust Funds are Not State Funds

  The operative language of section 20.927 provides that "no funds of this state or of any county, city, village or town... shall be authorized for... the performance of an abortion." Proper statutory interpretation must turn on the meaning of "funds of this state [or local entity]." It has long been an accepted legal principle that "state funds" are not all monies passing through the state Legislature, but are of a more restricted and unique character. Importantly, for this discussion, monies appropriated by the Legislature to the Public Employe Trust Fund are not state funds because those monies have a specialized purpose:

The public employe trust fund is a public trust and shall be managed, administered, invested and otherwise dealt with solely for the purpose of ensuring the fulfillment at the lowest possible cost of the benefit commitments to
participants, as set forth in this chapter,
and shall not be used for any other purpose
.... All statutes relating to the fund shall be construed liberally in furtherance of the purposes set forth in this section.

Sec. 40.01(2), Stats. Sufficient monies to provide benefits under the public employe trust fund are appropriated by section 20.515(1)(r). It is these monies that are used to purchase government employe health insurance plans.

  There is a longstanding view in Wisconsin law that trust funds are to be treated differently than general revenue, and that the state has less power to regulate the use of trust funds. In
Attorney General ex rel. Blied v. Levitan
, 195 Wis. 561, 563, 219 N.W. 97 (1928), the court held that state officials could not interfere with the Annuity Board's exercise of its own business judgment in managing retirement funds, and in
State Teachers' Retirement Board v. Giessel
, 12 Wis. 2d 5, 11, 106 N.W.2d 301 (1960), the court refused to let the state charge a portion of its expenses for a study to the retirement fund even though the study's purpose was to improve the retirement system, because the trust money could be used only for the benefit of the retirees. The
court rejected the state's argument that retirees had no vested right in the fund until the money was credited to an individual's account.

  Past Attorney General opinions have recognized a distinction between trust funds and general revenue. In 1969, the Attorney General opined that the Wisconsin retirement fund was of a different character than the public fisc, and therefore surpluses generated by prudent or lucky investments could be distributed to annuitants without running afoul of the legal principle that public funds may not be used for private purposes. 58 Op. Att'y Gen. 43, 45 (1969). Similarly, a 1985 Opinion found that the State Claims Board lacked the authority to order payments from the public employe trust fund relying on statutory mandate that the fund be managed for the participants, and that participants own those benefits as a "contractual right." 74 Op. Att'y Gen. 193, 198 (1985).

  Additionally, the conclusion that there are legal distinctions between moneys passing through the state treasury is also found in
B.F. Sturtevant Co. v. Industrial Comm.
, 186 Wis. 10, 202 N.W. 324 (1925), where the court upheld a worker's compensation statute directing that death benefits owed to employes who lack dependents are paid into the state treasury earmarked for the benefit of worker's compensation claimants. "We are therefore of the opinion that the words 'public or trust money' as used in sec. 8, art. VIII, of the state constitution refer to public funds in which the general public has a beneficial interest and not to special funds held by the state treasurer as a mere depositor...."
, 186 Wis. at 21. Funds earmarked for a special purpose are thus not "state funds."

  These precedents mandate the conclusion that trust funds are different from general state funds, and that the state is limited in its ability to regulate the use of trust funds. Recently Dane County Circuit Court Judge Angela Bartell specifically found that public employe trust funds are not "state funds" because those funds have been irrevocably placed in trust for the benefit of state employes, and the state itself has given up any right to direct their use.
State Engineering Association v. Employe Trust Funds Board
, Dane County Case Nos. 88-CV-1070 and 88-CV-4062 (On appeal to the Court of Appeals, District IV, Case No. 94-0712). "State funds," according to the Bartell decision, are non-restricted funds that the Legislature may use for any legitimate state purpose, while "trust funds" have a much more restricted purpose.

  Thus, a statute that directs that "state or local funds" may not be used to procure abortions, does not prevent the GIB from establishing guidelines for insurance plans that will be purchased with "trust funds." Once appropriated to fulfil the state's obligations under the public employe trust fund, the state monies lose their character as state funds and the Legislature loses its ability to direct their use solely by means of the regulation of general purpose funds.

Trust Funds Pay for Insurance Coverage, and Cannot be

Considered the Direct Funding of Abortions.

  Section 20.927, prohibits the actual payment of state funds to a physician for an abortion not covered by one of the exceptions. By adopting guidelines requiring the provision of therapeutic abortions for qualifying health maintenance organizations or preferred providers, the GIB is not authorizing the direct use of state funds to pay for abortions, it is establishing guidelines for insurance coverage. Even if the monies appropriated to the trust fund for insurance purposes were considered to be state funds, they would lose that character once they have been used to purchase health insurance plans.

  Had the Legislature specifically intended for the GIB to be prohibited from providing for therapeutic abortions in insurance policies for state and local government employes, it could have done so by restricting the GIB's authority under chapter 40 of the statutes. However, the Legislature has not chosen to do so, and it has not chosen to do so even in light of the well-established rule of law that trust funds are not state funds. By adopting section 20.927, but ignoring the specific health insurance regulations, the Legislature did not indicate an intent to prohibit women who own or are covered under government health insurance plans from securing abortions provided under those plans.

  The purpose of the trust fund is to provide benefits to employes at the lowest possible cost, which is achieved through the managing of benefits as a group. If the monies paid into the trust fund were not specifically pooled in order to pay for group health insurance, under the statutory appropriation language, the funds would belong to the public employes. Indeed, the trust fund does not even pay for 100% of a given employe's health insurance costs because section 40.05(4)(a) requires that the employe "contribute" the balance of the required premium amounts after applying the employer's contribution. Employes holding health maintenance organization plans that cost more than the least expensive plan must pay additional sums for insurance coverage, and state employes in their first six months of employment must pay the full premiums if they elect coverage. It is clear that these insurance benefits belong to the government employes, and that, therefore, use of those benefits to procure abortions does not constitute the direct use of state funds for the expenditure.

  In 1978, the Governor of Wisconsin vetoed a proposed amendment that would have exempted employe insurance plans from section 20.927. See Senate Amendment 12 to 1977 Assembly Bill 321; Governor's Veto Messages, Journal of the Assembly, p. 3496 (March 8, 1978). While this history could be used to argue that the Legislature, by failing to override the Governor's veto, actually intended for section 20.927 to prohibit insurance plan coverage for abortions, to do so would give undo effect to legislative history where the plain meaning of the statute is not unclear in the first instance. Resort to legislative history will not be made if the language of the statute is not unclear.
In Interest of Jamie L.
, 172 Wis. 2d 218, 225, 493 N.W.2d 56 (1992). When the Legislature chose the term "state or local funds" for section 20.927, it did so with the knowledge that public employe trust funds were of a different character than state funds, that trust funds were irrevocably placed in trust for the benefit of government employes, and that its ability to regulate trust funds was limited. Moreover, the GIB has never been constrained in negotiating insurance packages, notwithstanding the veto of the proposed amendment, and an administrative agency's interpretation of a statute may be accorded deference.
Richland School Dist. v. DILHR
, 174 Wis. 2d 878, 890-91, 498 N.W.2d 826 (1993).


  Funds appropriated in trust for public employes are not "state funds," and, therefore, the Legislature may not restrict the use of those funds merely by statute governing the use of "state or local funds." Additionally, the use of trust funds to pay for part of the purchase of health insurance does not amount to the direct funding of abortions with state or local funds. For these reasons, the abortion restrictions of section 20.927, do not apply to the GIB's establishment of health insurance plans for covered employes, and the GIB may implement guidelines that provide for therapeutic abortions.


            James E. Doyle
            Attorney General



  Section 20.927, Stats., relating to expenditure of state and local funds for performance of an abortion, does not apply to health insurance plans provided for state and local government employes by the Group Insurance Board.