| Date: | 01/10/2025 |
|---|---|
| Organization: | Division of Administrative Law Appeals |
| Docket Number: | CR-24-0257 |
The petitioner applied to purchase retirement credit for pre-membership service in a non-public school. For approximately twelve years, the application sat unprocessed with the respondent board. Under G.L. c. 32, § 4(1)(p), the petitioner’s purchase price continued to accrue “buyback” interest during that period.
Respondent the Massachusetts Teachers’ Retirement System (board) allowed petitioner Angelique Garofalo’s application to purchase retirement credit for a period of pre-membership work. Ms. Garofalo appeals from the board’s computation of the interest owing from her in connection with that purchase. The appeal was submitted on the papers without objection. I admit into evidence exhibits marked 1-7.
Findings of Fact
The following facts are not in dispute.
Analysis
Creditable service is among the variables that together determine the retirement benefits of a Massachusetts public employee. Ordinarily, an individual is credited with the service that he or she performed as an employee of a governmental unit while maintaining membership in a public retirement system. See G.L. c. 32, § 4(1)(a).
Specific provisions allow some employees to “purchase” credit for periods of work that otherwise would not qualify. The provision applicable to work in non-public schools is G.L. c. 32, § 4(1)(p). An employee making a purchase under that section must “deposit[] [with the board] . . . an amount equal to five per cent of the compensation received by [the employee] during [the pertinent] period of service.” Id. On top of that principal, the employee must pay “buyback interest to the date of [the] deposit.” Id.
The statutory language makes clear that interest under § 4(1)(p) continues to accrue until the “deposit” of the purchase price. Id. See Feldman v. Massachusetts Teachers’ Ret. Syst., No. CR-08-101, at *4-5 (Div. Admin. Law App. Sept. 28, 2012). These clear and workable statutory terms are conclusive. See Harmon v. Commissioner of Correction, 487 Mass. 470, 479 (2021).
The statutory rule also produces a fair result. During the twelve years of the board’s inaction, Ms. Garofalo retained the entire amount of her purchase price. She gained the opportunity to earn investment income on that money. See Feldman, supra. The “buyback” interest rate is designed to reflect half of a standard “rate of return on investments.” G.L. c. 32, § 1. As a result, any period by which a purchase is delayed in exchange for only “buyback” interest is already advantageous to the employee. See Spinelli v. Massachusetts Teachers’ Ret. Syst., No. CR-17-188, at *12-13 (Div. Admin. Law App. Aug. 14, 2020). A rule suspending the accrual of interest altogether as soon as the employee files a purchase application would produce an even more lopsided windfall to the member at the expense of the system’s sound finances.
In view of the foregoing, the board’s decision is AFFIRMED.
Division of Administrative Law Appeals
/s/ Yakov Malkiel
Yakov Malkiel
Administrative Magistrate
