The Attorney General issued an opinion regarding whether a school district may provide an annual sum to its school board members to purchase individual whole life insurance in lieu of medical benefits the board members would otherwise receive, specifically where the superintendent receives an annual cash allowance in lieu of medical benefits. The Attorney General opined that this is not permissible. First, the Attorney General analyzed the Government Code scheme that regulates the provision of health and welfare benefits to officers and employees of local agencies. Government Code section 53201 authorizes school district boards to provide health and welfare benefits to their officers and employees, including the board members themselves.

Government Code section 53202.3 requires that all plans, policies or documents used to provide health and welfare benefits provide for benefits for large numbers of employees. Whereas the Attorney General had previously concluded that for the purposes of these statutes, "health and welfare benefit" included group whole life insurance made available to a large number of employees, it concluded that the term does not include individual whole life insurance. Specifically, the Attorney General concluded that the plain language of Section 53202.3 clearly excludes individual policies of whole life insurance from the health and welfare benefit policies and plans that may be provided to local agency officers and employees because they must provide benefits for large numbers of employees.

The Attorney General considered the argument that Government Code section 53028.5, subdivision (b) expands the school board's discretion to provide benefits for its members by providing that notwithstanding any other law, the health and welfare benefits of a school board member shall be no greater than that received by non-safety employees of that public agency, and in the case of agencies with different benefit structures, the benefits of the school board members shall not be greater than the most generous schedule of benefits received by any category of non-safety employees. The argument is that in this case, purchasing the proposed individual whole life insurance policy for each board member satisfies Section 53028.5 because the premium would not exceed the payments the superintendent (a "category" of one) receives in lieu of health and welfare benefits.

The Attorney General, however, found that Section 53028.5 should be read together with Section 53202.3, and both should be read to limit the discretion that local board members have in providing health and welfare benefits for themselves. Section 53202.3 limits their discretion in relation to the scope of intended beneficiaries—i.e. the policy or plan that they approve for themselves "shall provide benefits for large numbers of employees." Section 53208.5 limits their discretion in relation to the scope of intended benefits—i.e. their own benefits "shall not be greater than the most generous schedule of benefits being received by any category of non-safety employees."

Therefore, even if a school district's employment contract with its superintendent provides an annual cash allowance in lieu of medical benefits, the district may not spend an equivalent sum for each board member as the premium for an individual whole life insurance policy in lieu of medical benefits.

Office of the Attorney General Opinion No. 14-901; ___ Ops.Cal.Atty.Gen. ____ (May 6, 2016).