Opinion ID: 1690853
Heading Depth: 1
Heading Rank: 3

Heading: The Constitutional and Statutory Defenses.

Text: The parties all acknowledge that, under Iowa Code section 20.22(12), an arbitrator's decision on impasse items shall be deemed to be the collective bargaining agreement between the parties. They also recognize Iowa Code section 20.22(13) which provides that [t]he determination of the panel of arbitrators shall be ... final and binding..., and that either party may sue to enforce it under Iowa Code sections 20.17(5) and 20.23. We have for many years held that the State is bound by contracts it enters. Kersten Co. v. Department of Social Servs., 207 N.W.2d 117, 122 (Iowa 1973) (State, by entering into a contract, agrees to be answerable for its breach and waives its immunity from suit to that extent.). We previously recognized the binding contractual nature of arbitration under the Iowa public employment relations Act (Iowa Code chapter 20) in Iowa State Education Association v. PERB, 369 N.W.2d 793, 797 (Iowa 1985). The State nevertheless contends it is not bound because arbitration determinations are subordinate to the appropriation process. Because of the governor's successful item veto, the argument goes, there has been no lawfully completed appropriation to fund the disputed wage increases. As mentioned, the State anchors the argument in part in statutes it considers at odds with the enforcement of arbitration awards. The statutes include Iowa Code sections 8.30 (availability of appropriation), 8.38 (prohibits expenditure of funds in excess of appropriation), 8.39 (governs use and transfer of appropriations), 8.43 (salary adjustment fund), 12.5 (treasurer to pay from treasury only upon warrants of director of revenue and finance), 20.7 (public employer rights, including the right to maintain efficient government and administer budget), and 421.44 (obligations for reciprocal interstate tax enforcement). The State also thinks three of our Constitution's most elemental prescripts are inimical to its contractual liability, and that the statute proclaiming liability must yield to the Constitution. The trial court decision to the contrary is thought to violate the Constitution's appropriation clause, [3] its doctrine of separation of powers and its prohibition against undue delegation of duties. [4] The three constitutional arguments, which are closely interrelated, are presented from the perspective of the governor's responsibilities regarding the state budget [5] and corresponding authority to participate [6] with the legislature in the appropriation process. [7] The appropriation clause challenge centers on language in article III, section 24 that the creation of any legally binding entitlement must be by an appropriation made by law. The State believes that its power to withhold appropriations must be read into every state contract. The State bolsters its position by pointing out that the legislature declined a proposal to enact a standing appropriation to fund arbitration awards. 1974 House Journal 782. The separation of powers claim, under article III, section 1, is grounded in the belief that the spending of public money cannot be delegated to arbitrators or members of the judiciary. This is because the power to appropriate public funds rests exclusively with the General Assembly and the governor. The claim of improper delegation proceeds in the belief that the provisions for arbitration in chapter 20 lack adequate standards or safeguards to prevent arbitrary or illegal action. The unions have a number of responses to the State's contentions. They point out that the governor's right to participate in the appropriation process, including his item veto power, though great, is subject to limited judicial review. Welden, 229 N.W.2d at 715. We think the standards and guidelines are adequate under the tests set out in Farrell v. State Board of Regents, 179 N.W.2d 533, 540 (Iowa 1970) (quoting Spurbeck v. Statton, 252 Iowa 279, 286, 106 N.W.2d 660, 664 (1960)), where we pointed out: It is now well established, The legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. See also Warren County v. Judges of the Fifth Judicial Dist., 243 N.W.2d 894, 898 (Iowa 1976). The arbitrators must select the offer thought to be most just. Supporting public policy is stated in Iowa Code section 20.1. Factors for consideration are set forth in section 20.22(9). Adequate procedure is specified. Under Maquoketa Valley Community School District, 279 N.W.2d at 512, judicial review is available as to the formation of the award. Judicial review concerning enforcement of the award also is available under sections 20.17(5) and 20.22(3).