COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. DIVISION OF ADMINISTRATIVE LAW APPEALS

Appeal of:

Kenneth Cardone,


Petitioner

v. CR-07-611

Teachers' Retirement System,

Respondent

Appearance for Petitioner:

Kenneth Cardone

54 Old Foundry Street
South Easton, MA 02375

Appearance for Respondent:

James O'Leary, Esq.,

Teachers' Retirement System
One Charles Park
Cambridge, MA 02142

Administrative Magistrate:

Joan Freiman Fink, Esq.

SUMMARY OF DECISION

The Teachers' Retirement System properly excluded the increases received by the Petitioner during the 2004-2005 and 2005-2006 school years in excess of the 4% increases that he had consistently received in previous years as regular compensation in the calculation of his superannuation retirement benefit. The Teachers' Retirement System determined that the excess increases were awarded on the basis of Mr. Cardone's announced plans to retire effective June 30, 2006.

DECISION

Pursuant to G.L. c. 32, § 16(4), the Petitioner, Kenneth Cardone, is appealing the August 6, 2007 decision of the Respondent, Teachers' Retirement System, excluding certain increases that he received during the 2004-2005 and 2005-2006 school years from regular compensation for retirement purposes. (Exhibit 1.) The appeal was timely filed in accordance with the provisions of G.L. c. 32, § 16(4).

A hearing pursuant to G.L. c. 7, § 4H was held on March 9, 2009 at the offices of the Division of Administrative Law Appeals, 98 North Washington Street, Boston, MA. Various documents were entered into evidence at the hearing. (Exhibits 1 - 22.) The Petitioner's Pre-hearing Memorandum was marked as "A" for identification and the Respondent's Pre-hearing Memorandum was marked as "B" for identification. The Petitioner testified in his own behalf. One cassette tape recording was made of the hearing. The record in this case was left open until March 13, 2009 for the Petitioner to file additional documentation relating to his retirement deductions. A written letter from the Petitioner concerning his retirement deductions was submitted on March 11, 2003 and was entered into evidence as Exhibit 23. The record was closed on March 11, 2003.

FINDINGS OF FACT

Based on the testimony and evidence presented, I make the following findings of fact:

1. The Petitioner, Kenneth Cardone, d.o.b. 11/13/46, commenced employment as a teacher at Brockton High School in September of 1970. (Testimony of the Petitioner.)

2. He became a member of the Teachers' Retirement System at that time. (Testimony of the Petitioner.)

3. The Petitioner remained employed with the Brockton, MA Public School System from September of 1970 through June 30, 2006 when he retired with superannuation retirement benefits. (Testimony of the Petitioner.)

4. In September of 1977, the Petitioner was promoted to the position of Assistant House Manager at Brockton High School. He remained in that position until June of 1997. (Testimony of the Petitioner.)

5. In June of 1997, he was promoted to the position of principal of South Junior High School and remained in that position until he retired. (Testimony of the Petitioner.)

6. In or about June of 2001, the Petitioner elected to participate in the RetirementPlus Program and at that time he completed a form for the Teachers' Retirement System, a copy of which was sent to the City of Brockton Human Resource Department, in which he stated that he intended to retire in June of 2006. (Testimony of the Petitioner.)

7. On October 18, 2002, the Petitioner sent the Brockton Public School Department written notification that he intended to retire effective June 30, 2006. (Testimony of the Petitioner, Exhibit 3.)

8. During the course of his employment with the Brockton Public Schools, the Petitioner was subject to an Employment Agreement which set forth the terms and conditions of his employment for the upcoming school year. (Exhibits 11 -19.)

9. These Employment Agreements typically specified the Petitioner's base salary for the upcoming school year. After the conclusion of every school year, usually in July or August, the Petitioner would receive a performance review which included a performance raise. This raise would be retroactive to the beginning of the prior school year. (Testimony of the Petitioner; Exhibit 7.)

10. For many years including the four year period prior to the last two school years before his retirement, the Petitioner had received performance raises of 4% of his base salary for the previous school year. For the 2004-2005 school year, the Petitioner received a performance raise of approximately 7.8% and for the 2005-2006 school year, the Petitioner received a performance raise of 6%. (Testimony of the Petitioner; Exhibit 22.)

11. Retirement deductions were taken from the compensation including the performance raises that the Petitioner received during the 2004-2005 and 2005-2006 school years. (Exhibit 23.)

12. School principals in the Brockton Public School System are typically awarded a 6% salary increase during their final school year prior to retirement. (Exhibit 22 - Submission by Superintendent of Schools Basan Nembirkow.)

13. For every school year prior to 2005-2006, the Petitioner's performance review was held during the summer after the school year ended. For the 2005-2006 school year (the Petitioner's last year before his June 30, 2006 retirement), his annual performance review was held in August of 2005, before the commencement of the school year. The 6% performance raise was awarded prospectively for that year, instead of retroactively. (Testimony of the Petitioner.)

14. On March 15, 2006, the Petitioner submitted an application for superannuation retirement benefits with an effective retirement date of June 30, 2006. (Exhibit 20.)

15. By letter dated August 6, 2007, the Teachers' Retirement System informed the Petitioner that the performance increases that he received over and beyond the standard 4% raises during the 2004-2005 and 2005-2006 school years respectively would not be included as regular compensation in the calculation of his superannuation retirement benefits. The Teachers' Retirement System noted that these increases were awarded specifically to Mr. Cardone based on his impending retirement on June 30, 2006. (Exhibit 1.)

16. By letter dated August 17, 2007, the Petitioner filed an appeal of this denial with the Contributory Retirement Appeal Board. (Exhibit 2.)

CONCLUSION

The Petitioner is not entitled to prevail as the additional $9,527.00 in payments that he received during his last two school years prior to his retirement, i.e., 2004-2005 and 2005-2006, was awarded to him as a result of his impending retirement on June 30, 2006. The Teachers' Retirement System properly included the standard 4% salary increases that the Petitioner received during his last two years of employment as regular compensation and at the same time, properly excluded from regular compensation the excess amounts over and above the standard 4% salary increases.

G.L. c. 32, § 1 defines regular compensation as:
the salary, wages, or other compensation in whatever form, lawfully determined for the individual service of the employee by the employing authority, not including, bonus, overtime, severance pay for any and all unused sick leave, early retirement incentives, or any other payments made as a result of giving notice of retirement . . . . (emphasis supplied.)

840 CMR 15.03 (2)(f) provides that the term regular compensation shall not include any other payments made as a result of the member giving notice of retirement. (emphasis supplied.)

In this case, the Petitioner originally notified the Teachers' Retirement System in 2001 when he applied for the RetirementPlus Program that he intended to retire effective June 30, 2006. On October 18, 2002, the Petitioner notified the Brockton Public Schools in writing that he intended to retire effective June 30, 2006. During his last two school years, the Petitioner was awarded performance raises well in excess of the consistent 4% performance raise that he received annually. For the 2004-2005 school year, he received a performance raise of 7.8% while during the 2005-2006 school year, he received a performance raise of 6%. Both those raises were predicated on the Petitioner's having given notice of his impending retirement effective June 30, 2006.

According to the Petitioner, the salary increases over and above the standard 4% raises were designed to keep his salary in parity with other Brockton School principals who routinely earned more money than he did. Notwithstanding the Petitioner's assertion, the Petitioner's performance raise for his last year, i.e., 2005-2006, was awarded in August of 2005 prospectively. By his own admission, the Petitioner had always received his performance reviews at the conclusion of the school year and the raises were awarded retroactively. A reasonable inference can be drawn that the final year's performance raise was granted prospectively as the Petitioner would no longer be employed as of June 30, 2006. Moreover, Superintendent of Schools Basan Nembirkow submitted a letter indicating that the salaries of school principals in their last year of employment are routinely adjusted by a 6% salary increase.

Even assuming, for argument's sake, that the $9,527 payment made to the Petitioner during his last two years of employment with the Brockton School Department was not made as a result of his having given notice of retirement, it would still not be regular compensation because it is an extraordinary ad hoc payment. The Supreme Judicial Court has recognized that "the expression 'regular compensation' points to recurrent or repeated amounts of compensation not inflated by extraordinary ad hoc payments. [M]oreover 'regular' as it modifies 'compensation,' imports the idea of ordinariness or normality as well as the idea of recurrence [citations omitted]" William Bulger v. CRAB, 856 N.E. 2d 799 (2006).
In this case, the Petitioner testified that for at least the four year period between the 2000-2001 and 2003-2004 school years, he had received a 4% performance raise annually. As such, the increases of 7.8% and 6% during the last two years prior to his retirement represent extraordinary ad hoc payments.

In the case of Edmund Barry v. Teachers' Retirement Board, CR-00-1115 (DALA 2001), the Petitioner received a one-time substantial increase in his salary designed to convince him to remain in his position for the rest of the school year. In Barry, supra, it was held that the 12.6% increase in the Petitioner's compensation was not regular compensation for retirement purposes as the District School Committee did not agree to pay him that increase until he wrote a letter of intent to retire in the middle of the school year. In the instant case, the Petitioner informed the Brockton School Department in writing four years in advance of his intended retirement date. Thus, the excess salary increases awarded during his last two school years were predicated on his upcoming retirement effective June 30, 2006.

The decision of the Teachers' Retirement Board declining to include the salary increases in excess of the standard 4% raises that the Petitioner received during his last two years of employment as regular compensation in the calculation of his superannuation retirement benefit is affirmed. The retirement deductions that have been taken from those excluded amounts, if not already refunded to Mr. Cardone, should be returned to him forthwith.

SO ORDERED.

DIVISION OF ADMINISTRATIVE LAW APPEALS

/s/
Joan Freiman Fink
Administrative Magistrate


Dated: 7/27/09