Griffin, J.
In this case we are asked to determine whether the phrase "weekly compensation rate” in § 352(1)1 of the Workers’ Disability Compensation Act,2 as amended, refers (1) to the amount of weekly compensation payable as the obligation of the employer under §351(1) to a disabled employee, or (2) to the total of such weekly compensation payable by the employer [429]*429plus the amount of "differential” benefits payable weekly by the Second Injury Fund under § 521(2),3 where an employee is totally and permanently disabled. We hold that the phrase refers only to the amount of the employer’s obligation, and thus we reverse the decision of the Court of Appeals.
i
Dennis Kincaid was injured on January 12, 1970, in the course of his employment with the Detroit Mutual Insurance Company. On December 31, 1975, a hearing referee found Kincaid to be totally and permanently disabled. In addition to compensation payable weekly as the obligation of his employer pursuant to § 351(1), it was determined that Kincaid was entitled to "differential” benefits payable weekly as the obligation of the Second Injury Fund pursuant to § 521(2). Both awards were affirmed by the Workers’ Compensation Appeal Board, and no appeal was taken.
As of January 1, 1982, Kincaid was receiving compensation from his employer in the amount of $80 a week, and a "differential” benefit from the Second Injury Fund in the amount of $86.67 a week. That was the effective date of § 352(1) which, as part of 1980 PA 357, established a new entitlement to "supplemental” benefits, intended as a cost-of-living adjustment for eligible employees with injury dates between September 1, 1965, and December 31,1979.
In accordance with an interpretation of § 352(1) issued through the Compensation Supplement Fund (CSF) by the Director of the Bureau of Workers’ Disability Compensation, Kincaid’s employer determined that Kincaid was not entitled to a [430]*430supplement. Section 352(1),4 as amended by 1982 PA 32, provides that "[t]he supplement shall be computed as a percentage of the weekly compensation rate” which the employee is receiving on January 1, 1982. Furthermore, § 352(5) provides that "the supplement [shall be] reduced by the amount of the differential payments” which the employee is receiving.
The parties agree that in calculating the amount of an employee’s "supplemental” benefit, the inflation factor to be applied under the statute in the case of this employee injured in the year 1970 is seventy-one percent (0.71). However, there is disagreement as to how the calculation should be made.
In accordance with the csf’s interpretation, the employer calculated Kincaid’s supplement by multiplying the amount of his weekly compensation payable by the employer ($80) by the inflation factor (0.71), which produced a preliminary supplement of $57 per week. However, when Kincaid’s weekly differential benefit of ($86.67) was then subtracted from $57, as required by § 352(5), the negative result indicated that Kincaid was not entitled to a supplement.
Kincaid filed a petition, contesting the interpretation. He argued that the inflation factor (0.71) should be applied to $166.67, the total of the weekly amount paid by his employer ($80) plus the differential benefit paid by the Second Injury Fund ($86.67). From that product, $118, he would then deduct $86.67, his differential benefit, resulting in a supplemental benefit of $31.33 per week. On the basis of Kincaid’s interpretation of the phrase "weekly compensation rate,” he would be entitled [431]*431to receive $80 from his employer, $86.67 from the Second Injury Fund, and $31.33 from the csf, or a total of $198 per week.5
In a decision mailed July 12, 1983, a hearing referee agreed with the plaintiff’s interpretation. However, upon appeal, the wcab reversed, stating:
[W]e . . . find it was the intent of the Legislature in enacting Section 352(1) that the calculation of supplemental benefits should be based exclusively upon the weekly compensation rate paid by the employer, in this case, and not the sum total of the weekly compensation rate plus the differential benefits paid by the Second Injury Fund. [Emphasis in original.]
Thereafter, the Court of Appeals reversed the decision of the wcab. 160 Mich App 580; 408 NW2d 820 (1987). We granted leave to appeal limited to the issue how the phrase "weekly compensation rate” in § 352(1) should be interpreted.
ii
The dispute in this appeal centers on the question: What was the purpose and intent of the Legislature when, by adopting 1982 PA 32, it modified the phrase, "basic compensation rate” as it had appeared in § 352(1) of 1980 PA 357, to read "weekly compensation rate”?
Plaintiff concedes that the phrase, "basic compensation rate,” in the earlier version had referred only to that compensation which is the obligation of the employer. However, he argues that by amending the phrase, the Legislature manifested [432]*432an intent to broaden its meaning so as to include the differential benefits he also received from the SIF.
On the other hand, the csf contends that several amendments of § 352(1) made by 1982 PA 32, including the modification of "basic compensation rate” to "weekly compensation rate” were adopted for clarification purposes only, and that there was no intent on the part of the Legislature to change the meaning of § 352(1) in any respect. The csf asserts that in the context of § 352(1) and the workers’ compensation act as a whole the phrase "weekly compensation rate” is restrictive rather than expansive.
Agreeing with the position of the plaintiff, the Court of Appeals held:
We hold that the differential benefits are not to be excluded from the calculation of the supplement, but are to be subtracted from the supplement after it has been calculated and before it is paid. We rely heavily on the amending language of § 352 which excluded the more narrow term "basic compensation” in favor of the broader term "weekly compensation.” We find that the statute evidences an intent to include differential benefits within the meaning of weekly compensation. [160 Mich App 586-587. Emphasis in original.]
As we said in In re Petition of State Hwy Comm, 383 Mich 709, 714-715; 178 NW2d 923 (1970):
The fundamental rule of construction of statutes is to ascertain and give effect to the intention of the Legislature; courts are bound, whenever possible, so to construe statutes as to give them validity and a reasonable construction; seeming inconsistencies in the various provisions of a statue should be reconciled, if possible, so as to arrive at a meaning which gives effect to all parts of the [433]*433statute; a construction leading to an absurd consequence should be avoided.
Since we find the phrase "weekly compensation rate” on its face to be ambiguous, it is appropriate that we look beyond the statute to its history and the circumstances surrounding its enactment. Lakehead Pipe Line Co, Inc v Dehn, 340 Mich 25; 64 NW2d 903 (1954).
hi
Enactment of § 352(1) which established the "supplement” to weekly compensation was not an isolated occurrence.
Free access — add to your briefcase to read the full text and ask questions with AI
Griffin, J.
In this case we are asked to determine whether the phrase "weekly compensation rate” in § 352(1)1 of the Workers’ Disability Compensation Act,2 as amended, refers (1) to the amount of weekly compensation payable as the obligation of the employer under §351(1) to a disabled employee, or (2) to the total of such weekly compensation payable by the employer [429]*429plus the amount of "differential” benefits payable weekly by the Second Injury Fund under § 521(2),3 where an employee is totally and permanently disabled. We hold that the phrase refers only to the amount of the employer’s obligation, and thus we reverse the decision of the Court of Appeals.
i
Dennis Kincaid was injured on January 12, 1970, in the course of his employment with the Detroit Mutual Insurance Company. On December 31, 1975, a hearing referee found Kincaid to be totally and permanently disabled. In addition to compensation payable weekly as the obligation of his employer pursuant to § 351(1), it was determined that Kincaid was entitled to "differential” benefits payable weekly as the obligation of the Second Injury Fund pursuant to § 521(2). Both awards were affirmed by the Workers’ Compensation Appeal Board, and no appeal was taken.
As of January 1, 1982, Kincaid was receiving compensation from his employer in the amount of $80 a week, and a "differential” benefit from the Second Injury Fund in the amount of $86.67 a week. That was the effective date of § 352(1) which, as part of 1980 PA 357, established a new entitlement to "supplemental” benefits, intended as a cost-of-living adjustment for eligible employees with injury dates between September 1, 1965, and December 31,1979.
In accordance with an interpretation of § 352(1) issued through the Compensation Supplement Fund (CSF) by the Director of the Bureau of Workers’ Disability Compensation, Kincaid’s employer determined that Kincaid was not entitled to a [430]*430supplement. Section 352(1),4 as amended by 1982 PA 32, provides that "[t]he supplement shall be computed as a percentage of the weekly compensation rate” which the employee is receiving on January 1, 1982. Furthermore, § 352(5) provides that "the supplement [shall be] reduced by the amount of the differential payments” which the employee is receiving.
The parties agree that in calculating the amount of an employee’s "supplemental” benefit, the inflation factor to be applied under the statute in the case of this employee injured in the year 1970 is seventy-one percent (0.71). However, there is disagreement as to how the calculation should be made.
In accordance with the csf’s interpretation, the employer calculated Kincaid’s supplement by multiplying the amount of his weekly compensation payable by the employer ($80) by the inflation factor (0.71), which produced a preliminary supplement of $57 per week. However, when Kincaid’s weekly differential benefit of ($86.67) was then subtracted from $57, as required by § 352(5), the negative result indicated that Kincaid was not entitled to a supplement.
Kincaid filed a petition, contesting the interpretation. He argued that the inflation factor (0.71) should be applied to $166.67, the total of the weekly amount paid by his employer ($80) plus the differential benefit paid by the Second Injury Fund ($86.67). From that product, $118, he would then deduct $86.67, his differential benefit, resulting in a supplemental benefit of $31.33 per week. On the basis of Kincaid’s interpretation of the phrase "weekly compensation rate,” he would be entitled [431]*431to receive $80 from his employer, $86.67 from the Second Injury Fund, and $31.33 from the csf, or a total of $198 per week.5
In a decision mailed July 12, 1983, a hearing referee agreed with the plaintiff’s interpretation. However, upon appeal, the wcab reversed, stating:
[W]e . . . find it was the intent of the Legislature in enacting Section 352(1) that the calculation of supplemental benefits should be based exclusively upon the weekly compensation rate paid by the employer, in this case, and not the sum total of the weekly compensation rate plus the differential benefits paid by the Second Injury Fund. [Emphasis in original.]
Thereafter, the Court of Appeals reversed the decision of the wcab. 160 Mich App 580; 408 NW2d 820 (1987). We granted leave to appeal limited to the issue how the phrase "weekly compensation rate” in § 352(1) should be interpreted.
ii
The dispute in this appeal centers on the question: What was the purpose and intent of the Legislature when, by adopting 1982 PA 32, it modified the phrase, "basic compensation rate” as it had appeared in § 352(1) of 1980 PA 357, to read "weekly compensation rate”?
Plaintiff concedes that the phrase, "basic compensation rate,” in the earlier version had referred only to that compensation which is the obligation of the employer. However, he argues that by amending the phrase, the Legislature manifested [432]*432an intent to broaden its meaning so as to include the differential benefits he also received from the SIF.
On the other hand, the csf contends that several amendments of § 352(1) made by 1982 PA 32, including the modification of "basic compensation rate” to "weekly compensation rate” were adopted for clarification purposes only, and that there was no intent on the part of the Legislature to change the meaning of § 352(1) in any respect. The csf asserts that in the context of § 352(1) and the workers’ compensation act as a whole the phrase "weekly compensation rate” is restrictive rather than expansive.
Agreeing with the position of the plaintiff, the Court of Appeals held:
We hold that the differential benefits are not to be excluded from the calculation of the supplement, but are to be subtracted from the supplement after it has been calculated and before it is paid. We rely heavily on the amending language of § 352 which excluded the more narrow term "basic compensation” in favor of the broader term "weekly compensation.” We find that the statute evidences an intent to include differential benefits within the meaning of weekly compensation. [160 Mich App 586-587. Emphasis in original.]
As we said in In re Petition of State Hwy Comm, 383 Mich 709, 714-715; 178 NW2d 923 (1970):
The fundamental rule of construction of statutes is to ascertain and give effect to the intention of the Legislature; courts are bound, whenever possible, so to construe statutes as to give them validity and a reasonable construction; seeming inconsistencies in the various provisions of a statue should be reconciled, if possible, so as to arrive at a meaning which gives effect to all parts of the [433]*433statute; a construction leading to an absurd consequence should be avoided.
Since we find the phrase "weekly compensation rate” on its face to be ambiguous, it is appropriate that we look beyond the statute to its history and the circumstances surrounding its enactment. Lakehead Pipe Line Co, Inc v Dehn, 340 Mich 25; 64 NW2d 903 (1954).
hi
Enactment of § 352(1) which established the "supplement” to weekly compensation was not an isolated occurrence. Rather, it was an integral part of a comprehensive effort to "reform” the workers’ compensation system in Michigan. In a report delivered in 1975 to Governor Milliken, a Governor’s Workmen’s Compensation Advisory Commission, chaired by Professor Theodore St. Antoine, reviewed a number of problems and abuses relating to the system. The report included the following:
Finally, there is the question of inflation. The continued erosion of the purchasing power of fixed benefits has made a mockery of prior efforts to maintain the dignity of the disabled worker. Even though fault need not be attributed to any part of the compensation system, the system has, nonetheless, failed to fulfill its promise to workers whose disabilities have continued from years ago to the present. So too, unless basic changes are enacted or unless inflation is miraculously halted, the system will fail to fulfill its promise to workers disabled today whose disabilities continue forward.
The magnitude of inflation in the future cannot be accurately forecast, but it is possible to identify potential sources of the additional funds to main[434]*434tain the purchasing power of benefits. The three most likely sources are the general ñmd, each particular carrier, or carriers in general. [Emphasis supplied.]
A study by Dr. H. Allan Hunt, referred to by the wcab in its opinion, included this historical perspective:
During inflationary times like the present, the passage of just a few years with double-digit inflation can have a devastating impact on the standard of living of a disabled worker. This concern is reflected in the following statement by William Marshall, President of the Michigan AFL-CIO, concerning the Michigan workers’ compensation system:
"Perhaps the most inequitable part of our present law insofar as benefits is [sic] concerned, is the lack of a cost-of-living provision for injured workers. In this age where inflation is a fact of life, our current law fixes benefits as of the date of injury and condemns the disabled to an erosion of their purchasing power and in the final result to welfare.”
Hunt, Inflation Protection for Workers’ Compensation Claimants in Michigan (Kalamazoo: W. E. Upjohn Institute for Employment Research 1981), P 1.
However, as the wcab opinion makes clear, the concern prior to 1980 PA 357 about the effects of inflation focused principally upon the plight of the long-term totally disabled who received no inflation adjustments, rather than the totally and permanently disabled who, since 1969, had been receiving a "differential” benefit as an inflation offset. As Dr. Hunt pointed out, by providing "differential” benefits to the totally and permanently disabled, Michigan was one of a few states then [435]*435providing any inflation relief to workers’ compensation recipients. However, Dr. Hunt concluded that this was not enough since "[t]he result is that a total of less than 1,500 of the roughly 25,000 cases in active payment status were receiving such inflation adjustment payments as of late 1979.” Hunt, supra, p 4.
On December 30, 1980, a breakthrough in the reform effort occurred when the Legislature passed, and the Governor signed 1980 PA 357, the first in a series of public acts which have revised the Workers’ Disability Compensation Act. The 1980 reform act addressed a number of problems and concerns; however, one of the most significant provisions was § 352(1) providing for the "supplemental” benefit.
The legislation also created the Compensation Supplement Fund, an agency of the State of Michigan funded by legislative appropriations,* 12***6 which bears the ultimate obligation for payment of the "supplemental” benefit. As the csf points out, this step represented a sharp change in public policy because prior thereto, from the inception of the system, the burden of financing workers’ compensation benefits had been placed by the Legislature [436]*436upon the employer or the industry which occasioned the employee’s injury. See Andrejwski v Wolverine Coal Co, 182 Mich 298; 148 NW 684 (1914). Accordingly, enactment of § 352(1) created for the first time a workers’ compensation benefit that is wholly funded through taxes paid by the public at large.
By contrast, it may be noted that while the Second Injury Fund is also a state agency, its obligation to pay "differential” benefits to totally and permanently disabled employees7 is funded through assessments against self-insured employers and workers’ compensation insurance carriers.8
In the light of that background, we now examine more closely the Legislature’s use of the words, "weekly compensation rate,” in the context of § 352(1) and in the workers’ compensation act as a whole.
IV
As amended by 1982 PA 32, § 352(1) provides:
Beginning January 1, 1982, an employee receiving or entitled to receive benefits equal to the maximum payable to that employee under section 351 or the dependent of a deceased employee receiving or entitled to receive benefits under section 321 whose benefits are based on a date of personal injury between September 1, 1965, and December 31, 1979, shall be entitled to a supplement to weekly compensation. The supplement shall be computed using the total annual percentage change in the state average weekly wage, rounded to the nearest Vio of 1%, as determined [437]*437under section 355.[9] The supplement shall be computed as a percentage of the weekly compensation rate which the employee or the dependent of a deceased employee is receiving or is entitled to receive on January 1, 1982 had the employee been receiving benefits at that time, rounded to the nearest dollar. The supplement shall not exceed 5% compounded for each calendar year in the adjustment period. The percentage change for purposes of the adjustment shall be computed from the base year through December 31, 1981. A supplement shall not be paid retroactively for any period of disability before January 1, 1982. [Emphasis added.]
As the text makes clear, § 352(1) limits its application to those employees who receive benefits pursuant to §§ 321 and 351.
Section 321* 123******10 provides benefits for the depen[438]*438dents of a deceased employee. While the instant case does not relate to such benefits, a review of § 321 is nevertheless useful. It demonstrates on its face that the use in § 321 of the term "weekly compensation,” as well as "weekly payments,” refers solely to compensation for which the employer is obligated. Accordingly, the wording and obvious meaning of §321 provide no support for plaintiffs argument that "weekly compensation rate” includes differential benefits, an obligation of the sif.
We turn now to § 351(1) which provides:
While the incapacity for work resulting from a personal injury is total, the employer shall pay, or cause to be paid as provided in this section, to the injured employee, a weekly compensation of 80% of the employee’s after-tax average weekly wage, but not more than the maximum weekly rate of compensation, as determined under section 355. Compensation shall be paid for the duration of the disability. The conclusive presumption of total and permanent disability shall not extend beyond 800 weeks from the date of injury and thereafter the question of permanent and total disability shall be determined in accordance with the fact, as the fact may be at that time. [MCL 418.351(1); MSA 17.237(351X1). Emphasis supplied.]_
[439]*439While §351(1) applies to all eligible employees whose incapacity for work is total, it should be kept in mind that some are totally incapacitated for a period of time, while others are totally and permanently disabled. It is clear that the "weekly compensation” referred to in § 351(1) is the basic or general compensation that is the obligation of the employer and which is received by all eligible employees who are totally incapacitated. As already indicated, a totally and permanently disabled employee, such as the plaintiff, may also receive "differential” benefits. However, his entitlement to "differential” benefits is not based on § 351; rather, it is based on § 521, to which no reference is made in § 351.
Although the words "basic compensation rate,” in §352(1), as it originally appeared in 1980 PA 357, were later modified by 1982 PA 32 to read "weekly compensation rate,” we do not find, as plaintiff contends, that the modification was made for the purpose of changing or broadening the meaning of the term. Furthermore, plaintiff has been able to point to no legislative history which would support such an interpretation.
On the other hand, we believe the relationship of those words to other words within § 352(1), as well as to lánguage used in other provisions of the act, points to the conclusion that the Legislature intended to clarify, rather than to expand, the meaning of the words.
As the csf has pointed out, the term, "basic compensation,” in the 1980 version of § 352(1), was a new term without definition which appeared nowhere else in the act. If the term had not been modified, there would have been a question whether "basic compensation” in the third sentence of § 352(1) referred to "weekly compensa[440]*440tion” as used in the first sentence of the same section.
Furthermore, a review of the act reveals that the term "weekly compensation” and slight variations thereof are used in various sections throughout the act to refer to that compensation which is the obligation of the employer.11 It is our conclusion that the words "basic compensation” were changed to "weekly compensation” merely for the purpose of conforming and making more consistent the wording within § 352(1) and in its relation to other sections of the act.12
After a careful examination of § 352(1) as well as §§ 321 and 351, we conclude that the wcab was correct when it said:
The Legislature’s use [in § 352(1)] of the term "weekly compensation rate” was employed as a shorthand abbreviation of the employer’s obligation as spelled out in detail in Section 351 to pay disability and that if it had intended to include differential beneffts it had the opportunity to use a much broader term when writing the statute. [Emphasis in original.]
We also take note of the fact that 1982 PA 32 made several other changes in § 352(1) which were clarifying in nature. For example, by inserting the words "equal to the maximum payable to that employee” in the first sentence, it appears that the Legislature sought to reinforce its intent that the new "supplemental” benefit would be paid only to employees receiving benefits under §§ 321 and 351. Furthermore, the penultimate sentence of § 352(1) [441]*441was changed to delete "to 1982” and insert "through December 31, 1981.” While the director might have administered the provision in the same way without such an amendment, it served to provide clarification.
Plaintiff cites Van Dorpel v Haven-Busch Co, 350 Mich 135; 85 NW2d 97 (1957), for the proposition that doubt as to the construction of a provision in the workers’ compensation act should be resolved in favor of the worker. However, that proposition is counterbalanced in this case by the maxim that statutes granting the power to expend public funds are to be narrowly construed. 3 Sands, Sutherland Statutory Construction (4th ed), § 65.02, p 222. Furthermore, such doubt as may have existed is resolved upon a close examination of the context in which the phrase "weekly compensation rate” is used.
In the light of those considerations as well as the legislative history, we conclude that when it enacted § 352(1), the Legislature’s principal purpose was to provide the supplemental benefit as inflation relief for the long-term totally disabled who previously had received no inflation adjustments. However, the Legislature also provided that those totally and permanently disabled who previously had been receiving inflation adjustments in the form of differential benefits would receive the supplement if, and only to the extent that, it exceeded the differential benefit in a particular case.
v
Accordingly, we hold that the words, "weekly compensation rate” in the third sentence of § 352(1), MCL 418.352(1); MSA 17.237(352X1), refer only to the amount of weekly compensation pay[442]*442able as the obligation of the employer, and the words do not refer to or include the amount of differential benefits payable pursuant to § 521, MCL 418.521; MSA 17.237(521), as the obligation of the Second Injury Fund.
We reverse the decision of the Court of Appeals and reinstate the order of the Workers’ Compensation Appeal Board.
Riley, C.J., and Levin and Brickley, JJ., concurred with Griffin, J.