A state employees' union is filing a labor-contract grievance against the state, seeking a $17.7 million refund from a health benefits account.

Greg Devereux, executive director of the Washington Federation of State Employees says that the account had a surplus from which the Legislature removed about $118 million to help balance the budget this year. Devereux says that 15 percent of that amount is due back to union workers because the surplus was from an account that holds comingled funds from taxpayers and by state workers.

Marty Brown, the budget director for Gov. Chris Gregoire says that the Legislature had the authority to use the funds.

Devereux says that union workers should receive a $200 rebate. He says if the state doesn't settle the grievance, they'll seek arbitration.