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Regular compensation for administrators
What constitutes “regular compensation” for MTRS members is defined in 807 CMR 6.00. It is in everyone’s best interests to understand and have a clear idea of what will be regarded as regular compensation so that at the time of retirement there won’t be any misunderstandings or false expectations on what will be included in the member’s final three year average salary.
The amount that members of the MTRS contribute to the retirement system is based upon their regular compensation. Regular compensation is a term of art which is defined in Massachusetts General Laws Chapter 32, the public pension law. It is defined as salary, wages 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, payments for unused vacation, early retirement incentives, or any other payments made as a result of giving notice of retirement.
For school administrators who negotiate their individual contracts, determining what is considered regular compensation requires careful review and consideration. The System has a fiduciary duty to comply with the law and to ensure that only those payments which meet the definition of regular compensation are used in the member’s three year average salary. For that reason, at the time a school administrator submits his/her application for retirement, the MTRS will request copies of all the contracts covering the final four years of the administrator’s employment. The MTRS must review the language of the contracts, the dates of their execution and the rate of percentage of salary increases. As a general rule, reimbursements and payments received for travel and business expenses will not be considered regular compensation. Moreover, any significant increase in the administrator’s salary in any of the final three years may be questioned. It is not unusual for a retirement counselor to request explanations of certain payments and to ask to be provided with a copy of the person’s notice of retirement.
What is included in regular compensation:
| 1. | Annual salary set forth in the collective bargaining agreement or the administrator’s contract |
| 2. | Salary derived from federal grants, excluding grant money or reimbursement which is used for professional development or educational assistance (i.e. recertification workshops) |
| 3. | Educational step increases according to salary schedule set forth in collective bargaining agreement. Again, excluding money for reimbursement for attending educational workshops |
| 4. | Salary payable under the terms of the collective bargaining agreement for services rendered in connection with a school lunch program |
| 5. | Salary payable for services in connection with a program for physical education instruction and athletic contests such as intramural sports |
| 6. | Cost of living bonuses |
| 7. | Cost of living adjustments |
| 8. | Premiums paid by the employer for a 403(B) plan |
| 9. | Premiums paid by the employer for life/disability insurance |
What is excluded from regular compensation:
| 1. | Overtime—includes payments for additional services which are made on an hourly basis (i.e. driver’s education, specifically road instruction) |
| 2. | Bonus |
| 3. | Early retirement incentives |
| 4. | Special projects |
| 5. | Summer school |
| 6. | Travel expenses and other reimbursements |
| 7. | Reimbursements for business expenses |
| 8. | Merit pay unless it becomes part of the member’s base salary |
| 9. | Any payment made as a result of the employer having notice of the member’s intent to retire, including renegotiated contracts after notice of retirement has been given, additional duties not part of the collective bargaining agreement and administrator’s contract, working additional days unless expressly provided in the contract, significant salary increases which appear as a result of retirement, buyback of sick leave, payment for unused vacation time, longevity provisions which are in fact payments for retirement and stipends paid outside of the contract.
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