Utah Public Employees Ass'n v. State

2006 UT 9, 131 P.3d 208, 545 Utah Adv. Rep. 24, 2006 Utah LEXIS 9, 179 L.R.R.M. (BNA) 2146, 2006 WL 361420

• Court: Utah Supreme Court
• Decided: February 16, 2006
• Docket: 20051121
• Status: Published

Opinions

Petition for Emergency Relief

WILKINS, Associate Chief Justice:

¶ 1 In its 2005 session, the Utah Legislature passed House Bill 213 (H.B.213), known as the “Unused Sick Leave at Retirement Amendments.” Although the Legislature set the bill’s effective date as January 1, 2006, we, at the request of Petitioners, postponed the effective date of the amendments to allow review of the constitutional issues presented in this case. The Utah Public Employees Association (UPEA) and Roes 1 through 5 have asked us, on expedited review, to consider whether the provisions of H.B. 213 result in an unconstitutional taking of state employees’ vested property rights. We conclude that they do not.

BACKGROUND

I. FACTUAL BACKGROUND

¶ 2 For more than 25 years, the State has permitted its agencies to adopt an incentive program intended to both reduce the misuse of sick leave and to induce persons to work for the State in spite of generally better private-sector wages and benefits. This program originated in 1979 and has been subject to periodic legislative change since its inception. The program is currently titled the “Unused Sick Leave Retirement Option Program” (the Program), and is found in Utah Code section 67-19-14.2. Plaintiffs contend that the 2005 amendments to the Program, contained in H.B. 213, effect an unconstitutional taking of employees’ unused sick leave benefits by retroactively devaluing already vested rights. The State counters that no rights vest until the date of actual retirement, and therefore the employees lack a constitutionally protected property interest in those unused sick leave hours.

A. Statutory History of Utah Code section 67-19-H..2

¶ 3 Our extensive research led to the discovery that by statute, the Legislature has occasionally changed the menu of benefits that could be acquired upon retirement in exchange for accrued and unused sick leave over the past 25 years, and that the Legislature has imposed varied restrictions on how those hours may be redeemed. We requested additional briefing on this statutory history because in their original briefs on appeal, both parties misstated the statutory history.

¶ 4 The most cursory reading of the statutory history discloses that since 1979 the Legislature has empowered state agencies to permit their respective employees to participate in some form of unused sick leave trade-in program. At its inception, the program permitted employees to “at the time of retirement” convert unused sick leave hours “into paid-up health and medical insurance.”¹ Under this iteration of the statute, an employee could convert 100% of accrued sick leave hours into post-retirement health and medical insurance.²

¶ 5 Beginning in 1983, however, the Legislature changed the language of the statute to require employees to accept a cash pay-out for 25% of the accrued sick leave and medical and life insurance for the remaining 75%.³ This distinction between the sanctioned use of the 25% versus the 75% remained in effect until 1998 when the Legislature changed the statutory scheme again to permit an employee to apply 25% to either a cash-payout or a 401(k) contribution.⁴ Then in 2004, legislative modifications again allowed, but did not require, use of the entire 100% for medical and life insurance benefits.⁵

¶ 6 Due to the perceived desirability of the offered incentives, most state agencies have chosen to extend the offer to their employees, and many state employees have accordingly reserved unused sick leave for the purposes permitted by the Program. Participating State employees accrue sick leave hours at the rate of four hours per two-week pay period, and many have reserved, or “banked,” a significant number of unused sick leave hours. As the Program has been administered, upon retirement, employees have been allowed to redeem these banked hours for prepaid medical and life insurance coverage or for other forms of cash-payouts. Generally, the Program has permitted employees to exchange eight unused sick leave hours for one full month’s coverage of health insurance.⁶ Additional statutory provisions permit employees to apply the remaining unused sick leave hours to medical and life insurance coverage for spouses and other dependents once the employee reaches the age of Medicare eligibility.⁷

¶ 7 Our own research has also led to the discovery that there have been widespread inconsistencies between the uses of unused sick leave hour redemption permitted by the statute and those allowed by state personnel regulations.⁸ In many instances, the regulations and practices appear to have permitted use of 100% of unused sick leave hours to be traded for medical and life insurance prior to 2004, although this practice was clearly unsupported by the statutory language between 1983 and 2004. In fact, legislative debate regarding the 2004 statutory amendment was represented by the bill’s sponsors as intended to bring the statute into accord with the widespread practice of allowing retiring employees to apply all unused sick leave toward paid-up medical and life insurance at the rate of eight hours to one month of insurance.⁹

B. H.B. 213: An Amendment to the Program

¶ 8 Beginning in 2003, the Legislature expressed increasing concern with escalating health insurance costs facing the State under the Program. In a short span of five years, the costs to the State for already retired employees nearly doubled. Moreover, the State anticipated an additional increase in the next ten years of more than 300%. The Legislature responded to these concerns by modifying the Program in 2005 with H.B. 213. In essence, this modification returns to the 1983-2004 statutory scheme, although not the actual practice, which allowed only 75% of the unused sick leave to be redeemed for medical and life insurance. Under H.B. 213, the statutory scheme again limits the use of the other 25%: banked sick leave falls into one of two new programs, depending upon when the .employee banked the sick leave hours.

¶ 9 “Program I” applies to all sick leave accrued prior to January 1, 2006, and implements a gradual, five-year phase-out of the guaranteed continuing medical and life insurance benefits (and the corresponding 480-hour automatic reduction of unused sick leave) that had been guaranteed under the original Program. Program I also eliminates the original Program’s provision permitting employees to cash-out up to 25% of their unused sick leave and instead mandates that 25% be contributed to the employee’s 401(k). Plaintiffs challenge the constitutionality of the Program I modifications as substantially reducing the value of what they believe to be a vested right to use all 100% of banked sick leave in exchange for post-retirement medical and life insurance at the rate of eight hours of leave to one month of insurance coverage.

¶ 10 “Program II”, on the other hand, applies to all unused sick leave hours accrued after January 1, 2006. There is no dispute between the parties that the State may implement program changes with prospective effects. We find nothing erroneous in that agreement, and as a result, we need not address the provisions of H.B. 213 that apply to Program II.

C. The Parties

¶ 11 Plaintiffs Roes 1 through 5 have cumulatively banked more than 8,000 hours of unused sick leave prior to January 1, 2006.¹⁰ In banking this many hours of sick leave, Roe Plaintiffs took personal leave days rather than sick leave and often worked when ill. Roes 1 through 5 testified that they had been told that if they did not retire by December 16, 2005, they would not be able to utilize all of their banked sick leave hours to acquire medical and life insurance as they could have under the 2004 statutory scheme. Roes 1, 2, 4, and 5 are currently employed with the State; Roe 3 retired on August 1, 2005. The parties agree that a number of state employees retired prior to December 16, 2005, to preserve the greater benefit allowed under the 2004 language of the statute.

¶ 12 Acting in its role as the labor association representing the interests of current and former public employees on matters pertaining to public employment, UPEA commenced this suit along with Roes 1 through 5. The record reflects the extensive communication between UPEA and its members after the proposal of H.B. 213 and demonstrates that UPEA adequately represents the interests of its members in this case.

II. PROCEDURAL BACKGROUND

¶ 13 Plaintiffs UPEA and Roes 1 through 5 filed their complaint on June 29, 2005, in the district court and subsequently moved for a preliminary injunction to stay the effective date of H.B. 213 pending resolution of their constitutional challenge. The State opposed the injunction and moved for a dismissal based on the allegations of the pleadings. After briefing, the district court held eviden-tiary hearings on November 7, 9, 16, and 18, 2005. On December 8, 2005, the district court denied Plaintiffs’ motions for a preliminary injunction and granted the State’s motion for a judgment in its favor on the pleadings.

¶ 14 Plaintiffs petitioned this court on December 13, 2005, for an emergency stay on the effective date of the statutory changes to allow an appeal of the district court’s decision. Absent such an emergency stay, the window of opportunity for employees otherwise in a position to realize the greater benefit of exchanging 100% rather than 75% of their unused sick leave for paid insurance upon retirement would have expired within three days of the matter reaching us. We granted the emergency stay on December 14, 2005, and enjoined, for at least until thirty days after the final disposition of this appeal, the implementation of H.B. 213’s provisions insofar as they amend Utah Code section 67-19-14.2. The State filed a motion to vacate the order granting emergency relief and requested oral arguments on the matter, which we heard on December 15, 2005. The State argued that the petition did not meet the necessary standards we impose for such relief, but ultimately agreed to the ongoing injunction with the request that the court act with all possible haste so that the impending legislative session might deal with any necessary revisions of the scheme. We denied the State’s motion to vacate the order granting emergency relief, and to facilitate expedited review of the matter on its merits, ordered Plaintiffs to perfect their appeal on or before December 29, 2005, ordered expedited briefing by the parties, and set oral argument on the merits for January 10, 2006.

¶ 15 Given the extremely short time allotted to each party to present its arguments in the briefs, the submissions were adequate. However, after oral argument, it became obvious to the court that important and influential matters had not been included in any briefing or argument by either party. Consequently, on January 23, 2006, we requested additional briefing. The parties had failed to address the complex history of the statutory scheme and its relevance to the constitutional challenge presented. Moreover, the parties insisted on staking out diametrically opposing positions, apparently without any thought of assisting the court in finding a principled, legally correct solution to the problem created by the obtuse language employed in the statute and the actual practice engaged in by the State over decades. Unfortunately, although the court requested the parties to address those questions that most concerned it, the parties chose in their supplemental briefs to either discount the importance of the issues raised by the court or failed to shed any meaningful light on the questions.

¶ 16 Ordinarily, in matters presented to the court, the parties and the court have the benefit of thoughtful and thorough analysis by both the parties and the lower court to expose and resolve questions. In the case of an expedited review of this sort, where the district court’s order had not even been reduced to writing at the time the petition was presented to us for action, and the time for preparation of the briefs, record, and other supplemental materials necessary for our review has been shortened to the point of practical elimination, the usual help given to the court by the parties has been diminished.

¶ 17 Nevertheless, it is the obligation of the court to reach a conclusion on the questions presented. To not answer, or to refuse to answer under such pressure of time, and with inadequate help from the parties, is not an option. However, since there is no other authority available to review and correct our errors in judgment on the legal merits of the ease presented should we wrongly decide the question of constitutionality of the statute, we are also required to do all that we can to discover, consider, and incorporate those legal and statutory elements that are critical to a correct decision. This we have labored to do.

¶ 18 It is also important to note that in a republican form of government, and as specified in our state constitution, the judicial power of the State is vested in this court. Moreover, judges must exercise that power only in accord with the law and the facts of the case, without regard to pressures brought by the other branches of government or special interests of any kind. This, too, we have labored to do. If media reports are accurate of threats by members of the Legislature to withhold salary increases for all state employees generally, and judicial salaries in particular, in an effort to force this court to act more quickly or to reach a certain result, then those making such threats fail to grasp the very core of the separation of powers doctrine and the value to the people of our state of a truly independent and responsible judiciary. Further, the suggestion in the briefing of the State that a decision unfavorable to the State’s position might result in a negative impact on judicial retirement benefits, among others, might also be perceived as an unwise effort to appeal to personal interests, an effort that we reject as disrespectful of our function and therefore of the constitutional responsibilities of the judicial branch itself.

ANALYSIS

I. PLAINTIFFS MAY ASSERT A FACIAL CHALLENGE TO H.B. 213

¶ 19 When challenging the constitutionality of a statute, Plaintiffs carry the burden of establishing that the statute is “unconstitutional either on its face or as applied to the facts of the given case.”¹¹ In this instance, because the statutory changes set forth in H.B. 213 are not yet effective, the parties may assert only a facial challenge. They concede that an as applied challenge would be improper.

¶ 20 The State contests the availability to Plaintiffs of a facial challenge, relying on United States v. Salerno, a case in which the United States Supreme Court required the challenger to establish that “no set of circumstances exists under which the [challenged] Act would be valid” in order to succeed.¹² However, in its reliance on Salerno, the State fails to acknowledge that both the United States Supreme Court and this court have discredited, at least to some extent, the application of the Salerno standard. The facts of this case present circumstances where Salerno is not the correct standard and need not be followed.

¶ 21 When state courts interpret their own state law, the United States Supreme Court has not required adherence to Salerno. The plurality opinion in City of Chicago v. Morales clarified that the “assumption that state courts must apply the restrictive Salerno test is incorrect as a matter of law; moreover it contradicts ‘essential principles of federalism.’ ”¹³ We agree. The Court explained that because state courts are not bound by federal law when assessing the constitutionality of state law under state constitutions, they need not follow the narrow interpretation of facial challenges found in Salemo.14

¶ 22 The Morales Court also suggested, by referencing scholarly articles on the matter, that in state law cases in state courts, a more appropriate threshold for determining the validity of facial challenges may simply exist in establishing the substantive merits of the case — the unconstitutionality of the legislation.¹⁵

¶ 23 More importantly in this situation, we have rejected the Salerno standard in some instances and have discredited its universal application. For instance, in State v. Gardner, an Eighth Amendment Cruel and Unusual Punishment Clause case, we determined that the “[s]tate’s reliance on the due process standard — ‘no set of circumstances exists under which the act would be valid’ [from Salerno ] — [was] ... misplaced.”¹⁶ We relied rather on the broader Supreme Court standard for cruel and unusual punishment eases found in Gregg v. Georgia.17

¶ 24 We have also declined to apply Salerno in takings cases. In Smith Investment Company v. Sandy City, for example, our court of appeals turned to the substantive law in determining whether a facial challenge was proper.¹⁸ In other words, the court looked specifically to the constitutionality of the legislation affecting the challenger’s property.¹⁹ The court held that if plaintiffs do not allege “any injury due to the enforcement of the statute, there is as yet no concrete controversy regarding the application of the specific provisions and regulations. Thus, the only question before this court is whether the mere enactment of the statutes and regulations constitutes a taking.”²⁰ This is an approach we endorse. Many other courts in the United States have likewise relied on the substantive merits of the takings claim in determining the validity of a facial challenge.²¹

¶25 Plaintiffs’ facial challenge is validly brought under both United States Supreme Court jurisprudence and our own case law. As articulated by the Supreme Court in Morales, an essential principle of federalism is that states have the authority to create their own constitutional law when reviewing claims brought under their own state constitution. Here, Plaintiffs have filed their takings claim under the Utah Constitution in Utah state court. Consequently, we are not required to follow Salerno's “restrictive” test for facial challenges, and we elect not to in this instance. Rather, we conclude that because Plaintiffs UPEA and Roes 1 through 5 have undisputed standing, the ultimate test for the propriety of bringing a facial challenge lies in the substantive merits of the claim. Thus, our analysis turns on the question of whether H.B. 213 constitutes an unconstitutional taking as alleged.

II. THE RETROACTIVE APPLICATION OF H.B. 213 DOES NOT CONSTITUTE AN UNCONSTITUTIONAL TAKING

¶ 26 The thrust of Plaintiffs’ claim is that the imposition of the retroactive provisions of H.B. 213 constitutes an unconstitutional taking of their vested property interest in the banked unused sick leave. Article I, section 22 of the Utah Constitution provides that “[pjrivate property shall not be taken or damaged for public use without just compensation.” We have previously defined what constitutes a taking under this constitutional provision; “A ‘taking’ is ‘any substantial interference with private property which destroys or materially lessens its value, or by which the owner’s right to its use and enjoyment is in any substantial degree abridged or destroyed.’”²² Thus, to establish that H.B. 213 results in an impermissible taking, Plaintiffs must demonstrate that they have a pro-tectable property interest in redeeming the banked sick leave hours for medical and life insurance and that provisions of H.B. 213 would result in the government’s taking of that property.

A. Plaintiffs Do Not Have a Property Interest in the Specific Use of Their Unused Sick Leave

¶ 27 “A claimant must possess some protectable interest in property before [being] entitled to recovery] under this [takings] provision.”²³ In this case, Plaintiffs argue that exchanging their banked and unused sick leave hours for medical and life insurance at the rate authorized by the 2004 version of the statute is vested personal property to which they have a contractual right. As a general rule, public employment is governed by statute and legislative policy, and is therefore subject to change as thought best by the people, acting through their legislative representatives.²⁴ Nevertheless, the modification of the terms of public employment are subject to two common sense exceptions to the general rule; first, when a public employee has a vested contractual interest in retirement benefits;²⁵ or second, when the government entity has entered into an express or implied contract by voluntarily undertaking additional obligations beyond the relevant statutory requirements.²⁶ Plaintiffs argue that they have valid contractual rights under both exceptions. We disagree.

1. Plaintiffs lack vested contract rights.

¶ 28 Plaintiffs assert their interests under the first exception, claiming that a public employee has a vested contractual interest in exchanging 100% of the unused sick leave hours for medical and life insurance at retirement. We disagree.

¶ 29 Both parties argue that a public employee obtains vested rights to retirement benefits “only when he has satisfied all conditions precedent.”²⁷ We agree that parties must satisfy all conditions precedent before the rights vest. The pivotal question is at what point state employees satisfy the requisite conditions precedent to vest a protecta-ble property interest in using 100% of their unused sick leave hours for medical and life insurance.

¶ 30 As always, we first look to the plain language of the statute to determine the conditions precedent. Based on the statute and the accompanying regulations,²⁸ the State contends that the statutory scheme unambiguously dictates that an employee may not receive retirement benefits until that employee actually retires. Plaintiffs, on the other hand, interpret the statutory language to mean that any member who chooses to bank unused sick leave has a vested property interest to use that sick leave for medical and life insurance benefits at retirement. We disagree with both parties’ statutory interpretations.

¶31 Instead, we find the statutory language ambiguous as to when an employee’s right to redeem the unused sick leave for medical and life insurance vests. Section 67-19-14.2 states that “[a]n agency may offer the [ ]Program to an employee who is eligible to receive retirement benefits in accordance with Title Jp9, Utah State Retirement and Insurance Benefit Act.” ²⁹ One might expect Title 49 to provide direction on the conditions precedent necessary for an employee to be “eligible to receive retirement benefits.”

¶ 32 Title 49, however, fails to clarify when an employee is “eligible to receive retirement benefits.” The Title, with its eight parts and forty-four statutory sections, speaks of “service credits,” “benefits,” and “allowances” but fails to explain the distinctions, including when an employee is eligible for each. The State argues that retirement benefits are synonymous with “allowances.” Plaintiffs, on the other hand, argue that if an employee is earning service credits, an employee is eligible for retirement benefits but not for allowances. Our research indicates that neither retirement benefits nor allowances are used to define or explain one another, and that employees are generally eligible for service credits upon the effective date of employment.³⁰

¶ 33 Absent clear language regarding oí-an obvious interpretation of “eligible to receive retirement benefits” in section 67-19-49 and Title 49, we conclude that the statutory language is ambiguous. It is clearly capable of more than one logical meaning within the statutory scheme. For example, a state employee might be “eligible to receive retirement benefits” when she reaches the length of service required for retirement and the age required for retirement, and submits her signed notice of retirement to the appropriate office or official of state government. Alternatively, one might be “eligible to receive retirement benefits” when reaching the service and age mínimums, even if he continues to work. Additionally, one might be considered “eligible to receive retirement benefits” when one is employed in a full-time position by the State, in an agency or position for which there exists a retirement program under the extensive provisions of Title 49. While one or more of these possibilities may seem more logical, useful, or fair than another, such is not the question we face. Unable to accurately discern from the naked language alone which of the possible meanings is the meaning intended by the legislative drafters, we have no choice but to examine other appropriate evidence of what meaning is correct.

¶ 34 Moreover, the plausible interpretations of the isolated word “eligible” in both section 67-19-14.2 and Title 49 also render the statutory language ambiguous. The State suggests that one is “eligible” when one is “qualified” to receive an allowance.³¹ UPEA, on the other hand, argues that because Title 49 never refers to “eligibility” in relation to allowance but rather only in respect to service credits, “eligible to receive retirement benefits” cannot be synonymous with “qualified to receive an allowance.”

¶ 35 Furthermore, our prior case law suggests that “eligible to receive retirement benefits” is an ambiguous phrase. In Hansen v. Public Employees Retirement System Board of Administration, for instance, we struggled with how to define eligibility for retirement benefits.³² We held there that an employee “who has neither served the necessary years to qualify for pension, nor attained the retirement age[ ] has no vested rights in the pension or retirement system”³³ and that since the plaintiff had “neither served the time requisite to entitle him to retire and receive a pension, nor had he attained retirement age,” he had no vested rights in a pension or the retirement system.³⁴ This interpretation adds to the ambiguity because it implies that an employee may be eligible to receive retirement benefits upon attaining retirement age, serving a requisite number of years, qualifying for retirement benefits, or some combination thereof.

¶36 Consequently, we conclude that section 67-19-14.2 lacks a clear meaning for “eligible to receive retirement benefits” because the language gives rise to several plausible interpretations. As noted, it may refer to the time at which the employee walks out of the building for the last time and actually retires, or perhaps to the point when, after having worked for the State the requisite number of years to receive contributions to the Utah Retirement System, the employee chooses yet to continue state employment. It may also mean the condition described under Utah Code sections 49.12.201, 49.13.201, 49.14.201 and any of the other general membership requirements to the sixteen retirement acts listed under Title 49.³⁵ Each of those sections applies to any full-time employee whose employer chose to participate in the described program and who is earning service credits. Both the statutory language and Utah case law are ambiguous as to whether employees’ property rights vest at eligibility for retirement, actual retirement, or eligibility for the payout.

¶ 37 We accordingly turn to the available indications of legislative intent to determine at what point all conditions precedent are satisfied for the vesting of employees’ right to redeem unused sick leave for medical and life insurance under the Program.³⁶ The legislative intent behind these particular retirement benefits is clearly stated as “inducements to work for the state”³⁷ and “to reduce sick leave abuse.”³⁸ Logically, no incentive exists if, as the State urges, the agency may offer the benefit only on the occasion of the employee leaving his or her state job by retirement. A benefit not known until the very day on which the employee can do nothing to earn it, is no incentive at all.

¶ 38 In fact, the undisputed evidence before the district court was that state agencies routinely described the availability of the sick leave conversion to prepaid medical and life insurance at retirement to their employees for the very purpose described in the statute: to encourage state employees to remain state employed in the face of lower wages than available elsewhere, and to encourage limited use of sick leave.

¶ 39 Thus, we conclude that state agencies inviting employees to participate in the Program during the course of their state employment constituted an offer by the State.

¶40 We also conclude, however, that the State’s offer was to exchange the unused sick leave for a benefit upon retirement, but not necessarily any particular benefit. The various changes in the statutory scheme from 1979 to 2004 clearly demonstrate that the Legislature intended to reserve the ability to modify the menu of available benefits, and did not intend to bind the State forever to redeem 100% of the unused sick leave hours for any one use, and in particular not necessarily for medical and life insurance.

¶41 The critical issue is at what point employees can act to accept the offer to redeem banked sick leave exclusively for medical and life insurance. This is an important question because employees’ property interest to use these accrued hours for medical and life insurance vests only after an acceptance of the State’s offer to redeem them in such a way.

¶42 In our review of the statutory language and relevant legislative history, we are compelled to conclude that the State intended employees to accept the offer to redeem the hours for unused sick leave only upon retirement. For example, the regulations promulgated pursuant to the statute provide that “[ujpon retirement from active employment, an employee may be offered a retirement benefit program, according to Section 67-19-14.2.”³⁹ We can only interpret this to mean that at the time of retirement an employee is offered a choice of the manner in which the hours may be exchanged for other benefits of value. Those choices can only be from those delineated in the then-current statutory version of the Program. Only at that point may the employee accept that particular offer to redeem the hours in the manner set forth in the current statute. Moreover, as a matter of ordinary contract law, until accepted, the State’s offer is subject to unilateral modification. Thus, a property interest in accumulated sick leave hours for the specific purpose of exchanging them for paid medical and life insurance cannot vest, as a matter of law, until the employee retires. The result is that the first exception to the general rule is of no consequence in our analysis of Plaintiffs’ claims.

2. The State undertook a voluntary obligation.

¶43 Nevertheless, a contract in a public employment setting may also arise if the State “voluntarily undertake[s] an additional duty that it would otherwise have no obligation to perform.”⁴⁰ Plaintiffs argue that their contractual rights exist because State agencies did exactly that in offering the Program to their employees.

¶ 44 The State, on the other hand, argues that in permitting agencies to choose whether to offer employees the benefits of the Program, those agencies failed to undertake an additional obligation beyond statutory terms,⁴¹ since the statutory scheme authorized the offer. The State misinterprets prior Utah eases on the issue. The eases to which the State cites, namely, Buckner v. Kennard,42 Knight v. Salt Lake County,⁴³ and Hom v. Utah Department of Public Safety,⁴⁴ deal specifically with changes to prospective compensation, hiring procedures, or other employment structures controlled only by statute and which the State required the involved agencies to adopt. The statutory terms at issue in those instances were not regarding additional duties that the agencies “would otherwise have no obligation to perform.” ⁴⁵

¶45 With the Program at issue in this ease, however, state agencies had no obligation to offer the incentives found in Utah Code section 67-19-14.2 to their employees. Instead, the Legislature specifically constructed the statute to state that “[a]n agency may offer the Unused Sick Leave Retirement Option Program” to its employees.⁴⁶ Therefore, in choosing to offer the Program, state agencies volunteered to undertake the additional duty of providing enhanced retirement benefits in exchange for the employee taking fewer sick days and for staying with the State until retirement. This constituted a valid offer to redeem unused sick leave hours upon retirement.

¶ 46 Nevertheless, the critical question remains at what point in time employees are able to accept the offer. As described above, employees may not accept this offer until retirement. The State’s offer of various payout options, specifically, the 401(k), cash-out, or medical and life insurance coverage, can only be accepted when employees retire. At that point, an employee chooses how to redeem accumulated unused sick leave from the options then available, and the State is bound. Until that time, however, the State retains the ability to modify terms of the offer as needed or prudent.⁴⁷

¶ 47 Therefore, although the State voluntarily undertook an obligation to employees who bank unused sick leave to allow those employees to eventually redeem unused sick leave hours for value, the State’s offer does not lock in the method of pay-out until retirement. Consequently, it cannot be said that the State voluntarily undertook an obligation to permit employees to redeem 100% of their unused sick leave hours for medical and life insurance. Absent this specific voluntary obligation by the State, employees have no pro-tectable property interest in redeeming all or any of those hours for medical and life insurance until they reach actual retirement and make the appropriate election from among the then-available options.

B. We Need Not Address Whether H.B. 213 Materially Lessens the Value of Plaintiffs’ Property Interest

¶ 48 Because the ability to redeem 100% of the banked unused sick leave hours for a particular purpose does not vest until the employee makes a choice at the time of retirement, the option of using them all for paid insurance is not personal property and cannot be taken by the State. Consequently, we need not consider the second prong of the takings analysis, namely, whether H.B. 213 substantially interfered with the unused sick leave hours in a manner that destroyed or materially lessened their value or abridged or destroyed employees’ use or enjoyment of them in any substantial degree.⁴⁸ Because Plaintiffs lack a constitutionally protected property interest in redeeming 100% of their unused sick leave hours for medical and life insurance, their takings claim fails.

CONCLUSION

¶ 49 Plaintiffs UPEA and Roes 1 through 5 have properly raised a facial challenge to H.B. 213. Their facial challenge fails on the merits because implementation of H.B. 213 does not result in an unconstitutional taking under the Utah Constitution. Plaintiffs have no present property interest in redeeming their unused sick leave hours for medical and life insurance because (1) although the State voluntarily offered to undertake a contractual duty with them, State employees cannot accept the offer specifying the form of redemption until retirement, and (2) Plaintiffs contractual rights cannot vest until that offer has been accepted. Further fact finding regarding a vital state interest and a substantial substitute are unnecessary because Plaintiffs lack a constitutionally protected property interest. Thus, we conclude that H.B. 213 does not effect a taking of property and is therefore constitutional under article I, section 22 of the Utah Constitution.

¶ 50 The decision of the trial court is affirmed. The stay and injunction imposed by this court is vacated, effective 30 days from the date of this opinion. Further relief is denied.

¶ 51 Chief Justice DURHAM and Judge GREENWOOD concur in Associate Chief Justice WILKINS’ opinion. ¶ 52 Having disqualified himself, Justice DURRANT does not participate herein; Utah Court of Appeals Judge PAMELA T. GREENWOOD sat.

1 . Utah Code Ann. § 67-19-14 (1979).

2 . See id.

3 . Utah Code Ann. § 67-19-14 (1983) ("The program shall provide for an employee to be paid for 25% of unused accumulated sick leave at the employee’s preretirement rate of pay.... An employee ... whose unused sick leave, after the 25% cashout has been paid ... may continue health and life insurance.”).

4 . See Utah Code Ann. § 67-19-14.2 (1983), (1988), (1993), (1998), (1999).

5 . Utah Code Ann. § 67-19-14.2 (2004) ("[U]pon retirement an employee is paid for up to 25% of the employee's unused accumulated sick leave at the employee’s rate of pay at the time of retirement.” (emphasis added)).

6 . More specifically, the Program allows each retiring employee to receive continuing medical and life insurance benefits for up to five years or until age 65, whichever occurs first. As briefly mentioned above, under the post-2004 version of the Program, upon retirement an employee may redeem unused sick leave hours in two ways:

(1) An employee is paid for up to 25% of the unused accumulated sick leave at the employee’s rate of pay at the time of retirement. The employee may choose to have money from this pay-out transferred directly to the deferred compensation plan qualified under section 401 (k) of the Internal Revenue Code sponsored by the Utah State Retirement Board.

(2) An employee may purchase additional continuing medical and life insurance benefits, at the rate of one month’s coverage per policy for eight hours of unused sick leave remaining after:

(a) the 25% cash out of 401(k) payout, if any;

(b) and an additional mandatory deduction of 480 hours of unused sick leave.

See Utah Code Ann. § 67-19-14.2(2) (2004).

7 . Id. §§ 67-19-14.2(2), 67-19-14.2(4)(a).

8 . See, e.g., Utah Admin. Code R477-8-7(6)(c) (2000) (“An employee may elect to receive a cash payment or transfer ... up to IS percent of his accrued unused sick leave at his current rate of pay.” (emphasis added)).

9 . The bill's sponsor, Representative David Clark, introduced the bill by stating that "[i]n fact, the purpose of this legislation is to make clarifying changes only that are based on current agency interpretations and implementations of practice. There are no substantive changes that are meant or to be included in this draft.” Audio recording: House Debate of H.B. 11, 55th Leg., Gen. Sess. (Feb. 10, 2004), available at http://le.utah.gov/asp/audio/in-dex.asp?Sess=2004GS & Day=0 & Bill=HB0 011 & House=H (emphasis added).

10 .Plaintiffs’ complaint asserts the following facts about Roes 1 through 5:

(1) Roe 1 is 62 years old and has worked for the State for over 30 years. He has accumulated over 1,800 hours of unused sick leave and had planned to retire in 2006, but due to the changes implemented with H.B. 213, he plans to retire before the bill becomes effective. If he retires after the bill becomes effective, he loses nearly 5 years of health insurance coverage which would have been covered by his accrued unused sick leave.

(2)Roe 2 is 58 years old and has worked for the State for over 30 years. He plans on retiring upon turning 60 in 2007. Under the Program, his accumulated unused sick leave provides him with medical insurance until reaching 80 years and 10 months old. Under H.B. 213, however, his accrued unused hours will provide him with health insurance benefits only until he is 75 years and 7 months old, a difference of over 5 years of coverage.

(3) Roe 3 is 45 years old and has worked for the State for over 20 years. He has accumulated over 2,100 hours of unused sick leave. The effectiveness of H.B. 213 decreases the value of his unused sick leave coverage by 5½ years.

(4) Roe 4 is 51 years old and has worked for the State for over 20 years. Post-H.B. 213, Roe 4 loses 6 years of medical coverage.

(5) Roe 5 is 40 years old and has worked for the State for 14 years. She has accumulated over 700 hours of unused sick leave and has recently declined numerous employment offers from private employers, specifically relying on the State's health insurance benefits from the pre-H.B. 213 Program.

11 . State v. Herrera, 1999 UT 64, ¶ 4 n. 2, 993 P.2d 854; see also Smith Inv. Co. v. Sandy City, 958 P.2d 245, 251 (Utah Ct.App.1998) (explaining that plaintiffs carry a "heavy burden” in facial challenges).

12 . 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987).

13 . 527 U.S. 41, 55 n. 22, 119 S.Ct. 1849, 144 L.Ed.2d 67 (1999) (quoting Michael C. Dorf, Facial Challenges to State and Federal Statutes, 46 Stan. L.Rev. 235, 284 (1994)).

14 . See id. ("Whether or not it would be appropriate for federal courts to apply the Salerno standard in some cases — a proposition which is doubtful — state courts need not apply prudential notions of standing created by this Court.”).

15 . See id.; see, e.g., Michael C. Dorf, Facial Challenges to State and Federal Statutes, 46 Stan. L.Rev. 235 (1994).

16 . 947 P.2d 630, 645 (Utah 1997) ("[A] facial challenge to a statute under the Eighth Amendment's cruel and unusual punishment provision requires a different standard than that applicable under the due process clause at issue in Salerno.").

17 . Id. (rejecting Salerno to follow Gregg v. Georgia, 428 U.S. 153, 175, 96 S.Ct. 2909, 49 L.Ed.2d 859 (1976)).

18 . 958 P.2d 245, 251 (Utah Ct.App.1998) (relying on Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987)).

19 . Id.

20 . Keystone Bituminous, 480 U.S. at 493, 107 S.Ct. 1232.

21 .See, e.g., NJD, Ltd. v. City of San Dimas, 110 Cal.App.4th, 1428, 1438-39, 2 Cal.Rptr.3d 818 (2003) (describing the test for a valid facial challenge as "straightforward” and based on the substantive law: "whether the mere enactment of the legislation constitutes a taking"); Shea Homes Ltd. P'ship v. County of Alameda, 110 Cal.App.4th 1246, 1266-67, 2 Cal.Rptr.3d 739 (2003) ("A facial challenge questions only 'whether the mere enactment of' the land use regulation constitutes a taking. The test to be applied in considering a facial challenge is straightforward.”); Glisson v. Alachua County, 558 So.2d 1030, 1036 (Fla.Dist.Ct.App.1990) (noting that when a taking claim arises in the context of a "facial challenge rather than in the context of a concrete controversy ..., the only issue is whether the mere enactment of the regulation constitutes a taking. The test to be applied in considering a facial challenge is relatively straightforward, i.e., '[a] statute regulating the uses that can be made of property effects a taking’ ”).

22 . Colman v. Utah State Land Bd., 795 P.2d 622, 625 (Utah 1990) (quoting State ex rel. State Rd. Comm'n v. Dist. Court, Fourth Judicial Dist., 94 Utah 384, 78 P.2d 502 (1937)).

23 . Id. at 625; see also Smith v. Price Dev. Co., 2005 UT 87, ¶ 12, 125 P.3d 945.

24 . Cf. Canfield v. Layton City, 2005 UT 60, ¶ 16, 122 P.3d 622; Buckner v. Kennard, 2004 UT 78, ¶ 32, 99 P.3d 842; Knight v. Salt Lake County, 2002 UT App 100, ¶ 8, 46 P.3d 247; Horn v. Utah Dep’t of Pub. Safety, 962 P.2d 95, 101 (Utah Ct.App.1998).

25 . See, e.g., Hansen v. Pub. Employees Ret. Sys., 122 Utah 44, 246 P.2d 591 (1952); Newcomb v. Ogden City Pub. Sch. Teachers’ Ret. Comm'n, 121 Utah 503, 243 P.2d 941 (1952); Driggs v. Utah Teachers Ret. Bd., 105 Utah 417, 142 P.2d 657 (1943).

26 . See Canfield, 2005 UT 60, ¶ 16, 122 P.3d 622; Buckner, 2004 UT 78, ¶ 32, 99 P.3d 842.

27 . Hom, 962 P.2d at 100.

28 . For example, R477-7-6 of the Human Resource Management Regulations Governing Sick Leave and Sick Leave Retirement Benefits found in the Utah Administrative Code states that "[u]pon retirement from active employment, an employee may be offered a retirement benefit program, according to Section 67-19-14(2)."

29 . Utah Code Ann. § 67-19-14.2(b) (emphasis added).

30 . See Utah Code Ann. §§ 49-12-201(1), -401.

31 . See Utah Code Ann. §§ 49-12-401(1), -402; 49-13-401(1), -402.

32 . 122 Utah 44, 246 P.2d 591, 596 (1952).

³³

34 . Id. at 596-97.

35 . Utah Code Ann. §§ 49.12.201, 49.13.201, 49.14.201 (2004).

36 .See Murphy v. Crosland, 886 P.2d 74, 80 (Utah Ct.App.1994) (“[W]here there is an ambiguity or uncertainty in a portion of a statute ... and if it is reasonably susceptible of different interpretations, the one should be chosen which best harmonizes with its [the statute’s] general purpose.").

37 . Utah Code Ann. § 67-19-3(16) (2005) (" 'Total compensation’ means salaries and wages, bonuses, paid leave, group insurance plans, retirement, and all other benefits offered to state employees as inducements to work for the state." (emphasis added)).

38 . Id. § 67-19-14 (1979); id. § 67-19-14 (1983); id. § 67-19-14(1) (1988); id. § 67-19-14(1) (1993); id. § 67-19-14(1) (1998); id. § 67-19-14(1) (1999).

39 . Utah Admin. Code R477-7-6 (2005).

40 . Buckner v. Kennard, 2004 UT 78, ¶ 34, 99 P.3d 842.

⁴¹

42 . 2004 UT 78, 99 P.3d 842.

43 . 2002 UT App 100, 46 P.3d 247.

44 . 962 P.2d 95 (Utah Ct.App.1998).

45 . Buckner, 2004 UT 78, ¶ 34, 99 P.3d 842.

46 . Utah Code Ann. § 67-19-14.2(l)(b).

47 . See Utah Code Ann. § 67-19-14.2 (the title to the section includes "Payout at Retirement”).

48 . See Colman v. Utah State Land Bd., 795 P.2d 622, 625 (Utah 1990).