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Pursuant to G.L. c. 32 §16(4), the Petitioner, Paula Meara, is appealing the September 16, 2005 decision of the Respondent, Springfield Retirement Board, not to include certain payments made to her by the City of Springfield as regular compensation in the calculation of her superannuation retirement benefit (Exhibits 1 & 3). The appeal was filed pursuant to G.L. c. 32 § 16(4).
A hearing pursuant to G.L. c. 7 §4H was held on October 12, 2006 at the offices of the Division of Administrative Law Appeals, 98 N. Washington, Boston, Ma. At that time, the Respondent did not appear at the hearing. The record was left open until October 31, 2006 for the filing of a closing written memorandum by the Respondent. On October 18, 2006, the Respondent filed a Motion to Re-open the Hearing to Allow the Respondent to Present Evidence Late. This motion was allowed on November 2, 2006 and a hearing was scheduled for December 12, 2006. On December 6, 2006, the Petitioner filed a Motion to Continue the hearing until the spring of 2007 as the Petitioner had recently undergone major surgery. This Motion was Allowed and a second day of hearing was held in this matter on May 14, 2007. A third day of hearing was held on June 6, 2007.
Various documents were entered into evidence at the hearing (Exhibits 1 - 23). 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 her own behalf as did Sheila Mulholland, an attorney who was involved in the negotiation of employment contracts on behalf of Chief Meara with the City of Springfield. The following witnesses testified on behalf of the Respondent: Charles Ryan, former Mayor of the City of Springfield, Edward Pikula, City Solicitor of the City of Springfield since January of 2006, Philip Puccia, Executive Director of the Springfield Finance Control Board since August of 2004, and Colleen Trahan, Administrator of the Springfield Retirement Board for the past eighteen years. Three cassette tape recordings were made of the hearing. The record in this case was left open until November 27, 2007 for the filing of written closing memoranda.
Based on the testimony and evidence presented, I make the following findings of fact:
1. The Petitioner, Paula Meara, d.o.b.3/23/45, commenced employment as a police officer with the City of Springfield Police Department in 1974. In 1985, she was promoted to the position of Sergeant; in 1987, she was promoted to the position of Lieutenant; in 1992, she was promoted to the position of Captain, and in February of 1996, she was promoted to the position of Police Chief by the then Mayor, Michael Albano (testimony of the Petitioner).
2. She served in the position of Police Chief from 1996 through the time of her retirement on June 30, 2005 (testimony of Petitioner).
3. In December of 2001, Mayor Albano called the Petitioner and told her that he wanted to increase her pay (testimony of the Petitioner).
4. Prior to 2002, Chief Meara did not have a signed employment contract with the City of Springfield. At some point in 2002, Chief Meara entered into employment contract negotiations with the City of Springfield concerning a potential salary increase (testimony of the Petitioner).
5. In 2002, the Petitioner received a draft agreement from the City of Springfield relative to her compensation for the years 2002-2005. This draft agreement, which was never signed, provided that her salary would be $126,000 for 2002 and thereafter she would receive a three percent increase for each twelve month period (Exhibit 6).
6. However, the contract negotiations with the Petitioner were placed on hold as the City of Springfield was pre-occupied with a financial crisis. In addition, the City was involved in negotiations with the police officers' union as all Springfield police officers, at that point, were working without a collective bargaining agreement in place (testimony of the Petitioner).
7. The Petitioner did not feel that it was appropriate for her to engage in contract negotiations when police officers under her command were working without a contract (testimony of the Petitioner).
8. In 2003, Charles V. Ryan was elected Mayor of the City of Springfield. Mayor Ryan had previously served as Mayor of the City of Springfield from 1962-1967 (testimony of Mayor Ryan).
9. Immediately upon assuming the position of Mayor of the City of Springfield in early 2004, Charles Ryan sought to change the direction of the police department as he felt that crime had escalated in the city and that morale was low among police officers (testimony of Mayor Ryan).
10. The Petitioner and Mayor Ryan did not agree as to what changes needed to be implemented to improve the efficiency of the Springfield Police Department (testimony of the Petitioner, testimony of Mayor Ryan).
11. During the years 2002-2004, the City of Springfield faced severe financial deficits. In July of 2004, legislation was passed calling for the formation of a Finance Control Board, comprised of three gubernatorial appointees, to oversee finances for the City of Springfield. From that date forward, the Finance Control Board had jurisdiction over all issues relative to the financial operation of the City of Springfield (testimony of Mayor Ryan).
12. In early January of 2005, the Finance Control Board hired a consultant, Carroll Burracker & Associates, to study the Police Department. Shortly thereafter, Burracker & Associates issued a lengthy written report in which it concluded that changes needed to be made immediately to the Police Department including a change in leadership (Exhibit 18, testimony of Mayor Ryan).
13. In early 2005, based on the findings in the Burracker report, the Finance Control Board ordered its executive director, Philip Puccia, to remove Chief Meara either by preparing a buy-out package for her, or by commencing administrative proceedings to remove her from her position (testimony of Philip Puccia).
14. The Finance Control Board also delegated authority to the law firm of Morgan, Brown & Joy to negotiate with Chief Meara to settle any claim that she might have against the City with the expectation that there would be new leadership in the Springfield Police Department. These negotiations commenced on or about late January of 2005 between the Petitioner and the designated law firm (testimony of Mayor Ryan).
15. On June 16, 2005, the Petitioner filed an application for voluntary superannuation retirement with the Springfield Retirement Board. On this application, the Petitioner listed June 30, 2005 as the effective date of her retirement (Exhibit 11).
16. Although the Petitioner filed the application for superannuation retirement benefits on June 16, 2005, she had tenure in her position as Police Chief of the City of Springfield and was not required to retire until 2010 (testimony of the Petitioner).
17. A document entitled Employment Contract, Settlement Agreement and Release was entered into by the parties and signed by the Petitioner on June 20, 2005 and signed by Mayor Ryan and Finance Control Board Chairman Alan LeBovidge on June 22, 2005 (Exhibit 3).
18. Paragraph Two of this contract provides as follows: "Whereas, Meara has notified the City of her plans to retire and intends to afford the City the opportunity to make arrangements for a transition in Police Department leadership…" (Exhibit 3).
19. Paragraph Five of this contract provides that the "City and Board (Finance Control Board) agree to payment of the total amount of $300,000 in settlement of all issues which have arisen or may arise as a consequence of Meara's employment with the City" (Exhibit 3).
20. The $300,000 payment to the Petitioner upon execution of the contract provided that the Petitioner would receive a check for the sum of $150,000 representing retroactive payment of annual salary increases of $40,000 for FY'03, $50,000 for FY'04, and $60,000 for FY'05. The contract provided that the $150,000 payment constituted "full and final resolution of Meara's employment agreement for that period of time with the City, resolution of which was delayed due to the financial circumstances affecting the City in 2002-2003" (Exhibit 3).
21. The contract further provided for a payment of $50,000 payable under the execution of the Agreement and a check in the amount of $10,000 made payable to the Petitioner each year on July 1st for the next ten years commencing in 2006 and concluding in 2016 (Exhibit 3).
22. In addition, the contract provided that the Petitioner receive $7500 to be applied to her legal fees associated with the negotiation and preparation of the agreement (Exhibit 3).
23. Prior to signing this document, the Petitioner contacted Attorney Vivenzio, who represented the Springfield Retirement Board, and discussed the issue as to whether certain payments received under the terms of the Employment Contract, Settlement Agreement and Release would be considered regular compensation in the calculation of her retirement benefit. Initially the Petitioner was given told that those amounts would likely be considered to be regular compensation; however, subsequent to her signing the contract, the Petitioner was informed that certain amounts would be considered as monies awarded in contemplation of retirement and as such, not considered as regular compensation in the calculation of her retirement benefit (testimony of the Petitioner).
24. On June 30, 2005, the Springfield Police Department held a pizza party in honor of Chief Meara's last day of work (testimony of the Petitioner).
25. On July 1st, 2005, Mayor Ryan announced that Chief Meara was resigning and that a new Chief of Police would be selected (testimony of the Petitioner).
26. On July 6, 2005, Alan LeBovidge, the Chairman of the Finance Control Board, sent the Springfield Retirement Board a letter in which he stated that the financial agreement that was reached with the Petitioner in June of 2005 was "intended as an inducement to obtain Ms. Meara's retirement as Chief of the Springfield Police Department" (Exhibit 12).
27. On July 15, 2005, the Petitioner sent the Springfield Retirement Board a letter requesting that the $150,000 payment she received upon the execution of the settlement agreement in June 2005 be subject to retirement deductions and therefore included as regular compensation in the calculation of her retirement benefit (Exhibit 4).
28. On September 16, 2005, the Springfield Retirement Board sent the Petitioner formal notification that her request to deduct retirement contributions on the $150,000 payment she had received had been denied (Exhibit 1).
29. On September 24, 2005, the Petitioner filed an appeal of this decision with the Contributory Retirement Appeal Board (Exhibit 2).
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). 840 CMR 15.03(2)(e) provides that regular compensation does not include severance pay (emphasis supplied).
The Petitioner contends that the Employment Contract, Settlement Agreement and Release signed by the parties in June of 2005 (Exhibit 3) is an employment contract intended to compensate her for prior service. She asserts that the sums of $40,000, $50,000 and $60,000 awarded to her under the terms of the contract represented retroactive salary increases specifically designed to compensate her for her prior years of service and were not awarded in contemplation of her retirement nor awarded as severance pay. According to the Petitioner, the salary increases were designed to keep her salary commensurate with salaries of comparable police department heads throughout the Commonwealth. She further notes that she had tenure in the position as Police Chief and that she did not have to retire until 2010.
An initial determination must be made as to the nature of the payments made to the Petitioner. Specifically, were the payments made as an inducement for her to sever her employment status prior to her tenure expiration date in 2010 or were they made as an adjustment to upgrade her salary to make her salary competitive with individuals holding similar positions?
Based on the testimony and evidence provided in this hearing, I conclude that the provisions of the Employment Contract, Settlement Agreement and Release including the $150,000 payment for retroactive salary plus the yearly increments for the next ten years were negotiated with the Petitioner as an inducement for her to retire and were granted in the nature of a severance package designed to reward her for her long and dedicated service to the Springfield Police Department. The agreement providing for these payments was formalized and signed by both parties subsequent to the Petitioner's having filed a voluntary application for superannuation retirement benefits with the Springfield Retirement Board. The payments in question were issued after the Petitioner's official retirement date. Since the payments were made both as an inducement and in contemplation of her retirement as well as a severance package, they do not constitute regular compensation. See 840 CMR 15.03(2)(e) and (f).
Although the Petitioner now asserts that she did not actually decide to retire until later in the summer of 2005, nonetheless, on June 16, 2005, she did file an application for superannuation retirement benefits with an effective retirement date of June 30, 2005. No evidence was introduced at the hearing to demonstrate that the Petitioner had informed the Springfield Retirement Board that this application should be placed "on hold" or should not be processed. In addition, the second paragraph of the contract that the Petitioner voluntarily signed on June 20, 2005 states as follows: "Whereas, Meara has notified the City of her plans to retire and intends to afford the City the opportunity to make arrangements for a transition in Police Department Leadership" (emphasis supplied). If the Petitioner was equivocating concerning her future employment plans, it is likely that she would not have agreed to this provision providing for her retirement and the appointment of a successor Police Chief. Moreover, the members of the Springfield Police Department held a celebratory pizza party on June 30, 2005 to honor her on her last day of work. If the Petitioner did not intend to retire at that time, she would not have permitted her fellow officers to continue with the party as she would have looked foolish returning to work after everyone had congratulated her on her retirement.
Even assuming, for argument's sake, that the payment of $150,000 provided for in the Employment Contract, Settlement Agreement and Release was not made as a result of her 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 in negotiations with the City of Springfield relative to her salary during the years in question, 2002-2004, she had been offered raises in the three to four percent increase range. Since the City of Springfield was facing an ongoing fiscal crisis and the police officers were working without a contract, these negotiations were placed on hold. Based on the Petitioner's salary of less than $126,000 in 2002, the amounts of $40,000, $50,000 and $60,000 referred to in the contract constitute approximate increases of 30%, 40%, and 48% respectively, well in excess of the three to four percent increase range that she had been negotiating for that same period of time. As such, the amounts of $40,000, $50,000 and $60,000 represent extraordinary ad hoc payments, especially in light of the financial crisis that the City of Springfield was experiencing in 2005. The payments outlined in the contract in question were paid in contemplation of the Petitioner's expected retirement at the end of June 2005 as well as a severance package for a dedicated and long-standing employee of the City of Springfield. See Bulger, supra.
In the case of Edmund Barry v. Teachers' Retirement Board, CR-00-1115 (DALA dec. 9/7/01, no CRAB dec.), 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 negotiated Employment Contract, Settlement Agreement and Release, was signed by the parties after the Petitioner had filed her voluntary application for superannuation retirement benefits
The current case may be distinguished from the case of John Cronin v. Milton Retirement Board, CR-01-946 and CR-02-555 (DALA dec.10/25/02; CRAB dec. 7/30/03). In Cronin, supra, the Petitioner had made no announcement regarding his plans concerning retirement prior to the negotiation and signing of his employment agreement providing for certain increased payments to him. Thus, these payments were made to him with no consideration of Mr. Cronin's potential retirement. In the instant case, the Petitioner had announced her retirement plans in advance of the final negotiations for the Employment Contract, Settlement Agreement and Release.
For the foregoing reasons, I conclude that the $150,000 payment as well as the yearly increases made to the Petitioner as outlined in the Employment Contract, Settlement Agreement and Release signed by the Petitioner on June 20, 2005 and by the City of Springfield on June 22, 2005 are not be considered to be regular compensation. The decision of the Springfield Retirement Board declining to include these payments in the calculation of the Petitioner's superannuation retirement benefit is hereby affirmed.
DIVISION OF ADMINISTRATIVE LAW APPEALS
Joan Freiman Fink, Esq.