STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

July 13, 1972

Donald Barnhart
State Superintendent of Public Instruction
Pierre, S. D. 57501

OFFICIAL OPINION NO. 72-36

School boards authorized to purchase group disability and sickness insurance to supplement employees' wages.

Dear Dr. Barnhart:

You have asked for an official opinion on the following question:

Is a school board authorized to purchase group insurance to supplement the wages and salaries of their employees in case of disabling injury or disabling sickness to such employee?

SDCL 13-10-3 reads as follows:

Any school board shall have the power to enter into life and group health insurance contracts for the protection and benefit of its employees, and the immediate families of such employees, and to pay any part or all of the necessary premiums therefor.

In a decision of my predecessor, 1967-68 AGR 448, it was held that this enabling statute did not permit a school board to enter into a "wage protection" insurance plan as opposed to a "health" insurance plan.

The generally accepted rule regarding expenditures is found in court decisions of most states: "School districts' funds can be expended only for purposes authorized by statute either expressly or by necessary implications." Our Supreme Court has adopted the Doctrine of Strict Construction in Struch v. Board of Education (1914), 34 S. D. 169, 147 N.W. 779, and in Haas v. Independent School District (1943), 69 S.D. 303, 9 N.W. 2d 708.

The answer to your question then would depend upon whether wage protection insurance is a form of health insurance.

Our Legislature has defined "health insurance" in SDCL 58·9-3:

'Health insurance' is insurance of human beings against bodily injury, disablement, or death by accident or accidental means, or the expense thereof, or against disablement or expense resulting from sickness or childbirth, or against expenses incurred in prevention of sickness, or dental care, and every insurance appertaining thereto. Health insurance does not include Workmen's Compensation Insurance. (Emphasis added)

By reading the above statute, it can be fairly inferred that wage protection insurance can be classified as a form of health insurance. Therefore, the answer to your question is, YES.

The prior opinion, 1967-68 AGR 448, is hereby overruled as it failed to take into consideration SDCL 58-9-3.

Respectfully submitted,

Gordon Mydland
Attorney General