Pursuant to G. L. c. 32, § 16(4), the Petitioner, Richard Roy, is appealing the August 30, 2006 decision of the Respondent, Springfield Retirement System, denying his request to purchase for creditable service his prior employment 1995-1999 with the Massachusetts Career Development Institute (MCDI) Alternative School. (Ex. 22) The appeal was timely filed. (Ex. 23) A hearing was held December 6, 2007, at the offices of the Division of Administrative Law Appeals (DALA), 98 North Washington Street, 4th Floor, Boston, MA 02114, pursuant to G. L. c. 7, §4H.
Various documents are in evidence. (Exs. 1 - 26. Exhibit 26 was filed post-hearing and is Mr. Roy's social security summary statement as of June 27, 2007.) Two tapes were used. The parties entered into stipulations of fact and filed pre-hearing memoranda. ("A") Mr. Roy testified. The Springfield Retirement System presented the testimony of Barry Metayer who has been with MCDI from 1985. Both parties filed post hearing briefs by February 8, 2008.
FINDINGS OF FACT
1. Richard Roy, d.o.b. 10/29/49, was hired on October 30, 1995 as a full-time Instructor of Media Arts to work at the MCDI Alternative School. He did not hold a Massachusetts Department of Education (DOE) teacher certification, and did not need it for his job. ("A". Ex. 1. Testimony.)
2. At the time of his hire through at least 1999, the MCDI Alternative School was a stand-alone program of the Springfield School Department. It is now under the auspices of the City of Springfield Health and Human Services Department. ("A". Exs. 2 & 3. Testimony.)
3. During 1995-1999 and beyond, the MCDI Alternative School provided vocational education and training to public middle school and high school special needs students such as students with behavior or emotional issues, truant or CHINS students, and some Department of Youth Services students. No students who have attended the program have paid tuition of any kind. This has never been a residential program for any of the students. Mr. Roy was hired for the vocational education and training component of the MCDI Alternative School. Another component of MCDI has been "an adult education and vocational training institute … [serving] adult learners … in Adult Basic Education, English as a Second Language, Office System Technology, Culinary Arts, Computer Technology, Certified Nurse Assistants, Lead Paint and Asbestos Abatement, Sheet Metal and Welding, and Medical Administrators." The adult learners have never paid tuition. The reason for having both special needs public middle and high school students learning along with adults has been the hope that "adult learners could serve as role models and mentors to alternative school youth, while simultaneously providing vocational training to youngsters who were not likely to attend college." Mr. Roy set up "a multi-media center for alternative school youth …[creating] a 'studio-like setting' …. Mr. Roy was able to infuse computer literacy, journalism, speech and social awareness into his classes … [with] his students … reading, writing, speaking, learning, and enjoying themselves in a classroom setting, which was not the historical experience for most." (Exs. 3 & 19. Testimony.)
4. During 1995-1999 and for some time thereafter, MCDI was composed of two entities; the City of Springfield School Department and a non-profit corporation, MCDI, Inc. The two entities were intertwined and shared the same mission and work of operating the Alternative School. They shared employees. The nonprofit corporation served as a conduit to receive funds for the Alternative School program. This program was primarily federally funded, but with some state grants and grants from other private entities. The City of Springfield contracted with MCDI, Inc. which provided the building space for the Alternative School programs. Mr. Roy's supervisors were always City of Springfield employees. Some of the teachers at the Alternative School were City of Springfield employees. Mr. Roy was hired by the Executive Director of MCDI, Inc. who was a City of Springfield employee. All of MCDI, Inc.'s Executive Directors have been City of Springfield employees and members of the Springfield Retirement System. They were all appointed by the Mayor of Springfield. At the time of his hire, Mr. Roy was placed on the payroll of MCDI, Inc. and not on a City of Springfield payroll, but the plan at the time of his hire was to shift him onto the City payroll as soon as an opportunity to do so arose. ("A". Exs. 1 & 20. Testimony.)
5. Mr. Roy worked a regular ten month school year with middle and high school students. He had social security deductions taken from the pay he received from MCDI, Inc. until about November 1999. He was not given membership in the Springfield Retirement System between 1995-1999. He also worked during the summer months. For the summer work, he was paid from a City of Springfield payroll. He received two W-2 forms each year; one from the non-profit MCDI, Inc. and one from the City of Springfield. ("A". Exs. 9 & 24. Testimony.)
6. For each school year during the 1995-1999 time period, the Springfield School Department and MCDI, Inc. entered into a memorandum of agreement. The Springfield School Department agreed to pay MCDI, Inc. a rate per student per school year. MCDI, Inc. had to send the Springfield School Department periodic invoices to prompt payment of the costs for MCDI, Inc. The Springfield School Department was responsible "for transportation and other supportive services for the students." (Exs. 5, 6, 7, 8, 11, 12 & 13.)
7. Mr. Roy's employment terms and conditions during 1995-1999 were set forth in a Personnel Policy Manual. The July 1996 Manual's information on Mr. Roy's terms and conditions of employment was accurate for this time period. The Manual did not distinguish by its terms between employees of the City of Springfield and employees of MCDI, Inc., but the teachers paid by the City of Springfield were subject to a collective bargaining agreement. The Manual addressed the non-union and non-City payroll employees. The Manual defined employee to include Mr. Roy's position of Instructor. His position was distinguished from a temporary employee who was someone "working on a short-term basis … not … entitled to any benefits …." (Ex. 4. Testimony.)
8. The July 1996 Personnel Policy Manual at page 12 under "RETIREMENT POLICY" contained the following provision:
Employees hired after January 1, 1985, and employed 20 hours or more MUST, as a condition of employment, join the City of Springfield Retirement System. Deductions will be determined by policy established by the City of Springfield Retirement Board. Deductions will be payroll deducted and will begin on the first day after the official date of hire. (Ex. 4)
Mr. Roy always worked full-time at the MCDI Alternative School, but this provision was not applied to him until in or around November 1999 when he went onto the City of Springfield payroll, stopped having social security deductions taken from his pay, and began regular retirement system deductions as a member of the Springfield Retirement System. ("A". Ex. 26. Testimony.)
9. If supplies were needed for his teaching, Mr. Roy had to secure them from a vendor approved by the City of Springfield. He could not use an outside vendor. The Massachusetts DOE considers the MCDI Alternative School to be a public school of the Commonwealth, and it has exercised its oversight jurisdiction over the Alternative School program. Each year, the MCDI Alternative School graduating high school students have received their high school diplomas along with the Springfield public high school students at the same graduation ceremony. The Alternative School students take the same standardized tests to graduate, the MCAS, as the regular public school students. (Exs. 3, 10, 14, 15, 16, 17 & 18. Testimony.)
10. Once Mr. Roy was placed onto the City of Springfield payroll and became a member of the Springfield Retirement System, no changes of any kind occurred in his duties or in how the MCDI Alternative School operated. (Testimony)
11. In July 2000, the Job Training Partnership Act (JTPA) which was a program providing federal funding for employment and training programs, "was replaced by the Workforce Investment Act (WIA)." JTPA had always been a "major funding" source for the MCDI Alternative School. In order to continue to receive federal funding through WIA, some changes were proposed to the City of Springfield Auditor in July 2000 by Gerald A. Phillips, the Executive Director of MCDI, Inc. Mr. Phillips noted that WIA involved Individual Training Accounts (ITA), and that "for a WIA eligible student to attend one of the MCDI's training programs, that program must be on a Statewide approved list." He noted that four of the MCDI programs were "licensed and accredited" by the accrediting agency, ACCET. He explained that "municipal departments or programs cannot receive accreditation … [and] as a result, staff in these programs cannot receive City paychecks." Mr. Phillips proposed that MCDI "be allowed to transition twelve existing staff, currently on the MDCI/City payroll to a separate payroll through a payroll service, and, allow these staff to remain in the City retirement, health insurance, deferred income, and other benefit programs." (Ex. 25. Testimony.)
12. At the September 12, 2000 meeting of the Springfield Retirement System, a vote was taken to make the twelve employees of MCDI, Inc., the non-profit corporation, members of the Springfield Retirement System. (Ex. 21)
13. In September 2005, Mr. Roy's job was transferred to the Springfield School Department. Because he lacked Massachusetts DOE teacher certification, he obtained a waiver of this requirement from DOE in 2005 for his teaching work. His work at no time from 1995 and even after this transfer changed in any way. ("A". Testimony.)
14. As of June 27, 2007 Mr. Roy has sufficient social security quarters to qualify for social security benefits. (Ex. 26)
15. Mr. Roy sought to purchase his non-membership service between 1995 and 1999, and petitioned the Springfield Retirement System in and around July and August 2006. By letter of August 30, 2006, the Springfield Retirement System denied his request, and he timely appealed by letter of September 1, 2006. ("A". Exs. 22 & 23. Testimony.)
The issue in this appeal is whether or not Mr. Roy was an employee of a political subdivision or governmental unit or political unit of the Commonwealth between 1995 and 1999 when he was paid from the payroll of MCDI, Inc., and while he had social security deductions taken from his pay. The parties have briefed this issue. The key to resolving the issue is to examine the definitions in G. L. c. 32, § 1, and to review the pertinent case law. I conclude that because of the particular circumstances of this 1995-1999 employment, Mr. Roy was an employee who satisfied the prevailing tests for being a public employee under G. L. Chapter 32 so as to enable him to purchase that time for creditable service.
G. L. c. 32, §4(1)(d) states:
Any person who became or becomes an employee by reason of the taking over by the commonwealth, or by the metropolitan district commission or by any district, of any institution, or of any public or quasi-public enterprise, controlled and operated by a political subdivision of the commonwealth or by a corporation, … shall be credited with such service as would have been creditable service had it been rendered by him under the provisions of sections one to twenty-eight inclusive, or under corresponding provisions of earlier laws.
I conclude that between 1995-1999, Mr. Roy worked for a quasi-public enterprise that was controlled and operated by the City of Springfield. Mr. Roy worked in a public school. Massachusetts DOE had oversight jurisdiction over it. The only students Mr. Roy instructed were public school students, and no tuition paying students attended the MCDI Alternative School. The Alternative School high school graduates received their high school diplomas at the same time as the regular Springfield public high school graduates. The Alternative School students had to take the same tests, such as the MCAS, as the regular Springfield public school students. MCDI, Inc., a non-profit corporation, did not control and operate the school since all the employees involved in running the school, including every Executive Director of MCDI, Inc. during 1995-1999, was a City of Springfield employee, and every superior who supervised Mr. Roy was a City employee. The costs for each MCDI Alternative School student were reimbursed by the Springfield School Department to MCDI, Inc. through an annual contract arrangement. There was full intermingling of staff between those on the City payroll and those on the non-profit's payroll in terms of carrying out the Alternative School's program. When Mr. Roy was hired he was treated as the equivalent of a City of Springfield employee with the promise of transferring onto the City payroll once the opportunity for doing that arose. (See, Pellegrino v. Springfield Housing Authority, 69 Mass. App. Ct. 94 (2007) where the provisions of G. L. c. 32, § 91 were applied to a Springfield Retirement System retiree's continued employment with the Springfield Parking Authority since the Authority was found to be a "quasi public agency." Ms. Pellegrino was found to be earning money in excess of her permitted earnings under the Section 91 formula for a public employee retiree.)
G. L. c.32, §3(3) reads as follows in pertinent part:
[A]ny employee who, having or having had the right to become a member, failed to become or elected not to become a member, may apply for and be admitted to membership if under the maximum age for his group on the date of his application; provided, that during his present period of service he had previously been eligible for membership; and any employee who, having had the right to become a member of any retirement system … failed to become or elected not to become a member, may apply for and be admitted to membership if under the maximum age for his group on the date of his application. No employee shall otherwise be admitted to membership except by vote of the retirement board of the system for which application is made, and then only if that board finds that his failure to become or his election not to become a member was caused by circumstances other than those generally applicable to employees ….
Mr. Roy should have been permitted to gain membership in the Springfield Retirement System between 1995-1999. At all times from 1995-1999 before coming onto the City payroll, he worked for the City of Springfield's MCDI Alternative School, a public school, and was simply paid by the non-profit, MCDI, Inc. The findings show that MCDI, Inc. had no mission distinct from being part of the MCDI Alternative School. MCDI, Inc. received funds from federal, state, and private sources for the benefit of the Alternative School. This conclusion might not be supportable if: the Executive Director of MCDI, Inc. was a non-public employee; Mr. Roy was directly supervised by non-public employees; Mr. Roy worked only with non-public employees; or the MCDI Alternative School had private tuition paying middle and high school students. None of these alternative scenarios are pertinent. I do not conclude that the MCDI Alternative School, because it had the MCDI, Inc. component to it, was a private school teaching students who happened to have their tuition paid by the City of Springfield. Mr. Roy received regular compensation from a political subdivision, the City of Springfield, between 1995-1999. Regular compensation is defined in G. L. c. 32, §1 as "salary, wages or other compensation in whatever form, lawfully determined for the individual service of the employee by the employing authority." The need to pay him from the non-profit corporation's payroll had no impact on the fact that he was rendering service only for the City of Springfield. Perhaps there was not sufficient funding flowing from the Springfield School Department to the MCDI Alternative School so that use of the non-profit corporation's funds were used to pay him during this time period. There was no other purpose served by this non-profit than to benefit the MCDI Alternative School. His service satisfied the definition of employee in Section 1 since he was regularly employed in the service of the public school, the MCDI Alternative School. Employer is defined in Section 1 to cover a person, board, or commission having the power to employ persons as employees for the political subdivision. Because he was hired by the Executive Director of MCDI, Inc., and because he and all the Executive Directors of MCDI, Inc. have been City of Springfield employees appointed by the Mayor, the definition of employer is satisfied. There is no evidence to show a non-City of Springfield employee set his salary. Governmental unit is defined in Section 1 to be synonymous with political subdivision. Political subdivision is defined in Section 1 to include a "city, town … or any other public unit in the commonwealth." Massachusetts DOE recognizes the MCDI Alternative School as a public school with public school students attending it, and all of its governance is done by City of Springfield employees. MCDI, Inc. is only a component of the MCDI Alternative School, and is no less a political unit of the City of Springfield. These facts show the pertinent definitions of Section 1 are satisfied by Mr. Roy's circumstances during 1995-1999.
The Springfield Retirement System cites case law that concludes employment by a non-profit corporation is private employment ineligible for creditable service. See, Castellano v. Springfield Retirement System, CR-04-1118 (DALA, 5/2/06) (CRAB, 1/3/07) (an employee of a non-profit corporation set up to plan for and to have oversight over CETA and its predecessor programs of JFTA and WIA, who had social security deductions taken from his pay, and who was required to participate in a non-contributory defined contribution pension plan, was not working for a governmental unit so his service was not eligible for creditable service); ( Popeo v. Worcester Retirement Board, CR-95-963 (DALA, 6/6/96) (CRAB, 10/7/96) (the Executive Director of a non-profit corporation designated by the City of Worcester as an anti-poverty agency who had social security deductions from his pay, was not a City employee); ( McLaughlin & Ciommo v. Boston Retirement Board, CR-00-1162 & 1163 (DALA, 7/19/02) (no CRAB Decision) (employees of a non-profit corporation managing grants for the City of Boston were not City employees); ( Davis v. Teachers' Retirement System, CR-02-46 (DALA, 5/24/02) (No CRAB Decision) (an employee of an alcohol and substance abuse program operated by a non-profit corporation funded by state and local funds, did not work for a governmental unit eligible for creditable service). On the other hand, there are cases where clear overlaps and intertwined functions and governance between a governmental unit and a non-profit corporation have concluded that is enough to make the service employment for a political unit or governmental unit, and eligible for creditable service. In Sennott v. Teachers' Retirement Board, CR-03-688 (DALA, 12/5/03) (No CRAB Decision), Ms. Sennott taught typing for a federally-funded employment and training agency that was established to help residents of the City of Gardner. The agency was made a non-profit corporation although that did not change its operations or funding in any way or its status with the City. The agency operated out of a City building, and did not pay rent. Ms. Sennott was paid by the non-profit corporation. Nevertheless, she was found able to gain creditable service for this work. The agency was found to be a public unit under the G. L. c. 32, § 1 definition of political subdivision because it was a component unit of the City of Gardner. In Boyle v. Pittsfield Retirement Board, CR-02-587 (DALA, 5/11/07) (Objections filed, CRAB decision pending), service for a training and employment program that was primarily federally funded, although the program was within a non-profit corporation, was eligible for creditable service. There was an overlap between the City's work and the non-profit's work, as well as governance of the non-profit by City employees. Although social security deductions had been taken from the pay received by Mr. Boyle, this fact was not found to be decisive. The program Mr. Boyle worked for was considered to be an unclassified department of the City of Pittsfield. At all times the Mayor of Pittsfield had the authority to promote, demote or discharge Mr. Boyle from his employment. The Mayor had administrative, financial, and oversight responsibility over the non-profit's program. The case of Gomes v. CRAB, Middlesex Superior Court No. 94-5927-B, Welch, J. (1995) was relied upon to show that the source of funds, i.e. federal grants, will not prevent the service from being eligible for creditable service.
The findings show an abundance of factors in Mr. Roy's circumstances of the clear connection of his service to benefit the City of Springfield's public school students, including the City of Springfield's administration and control of the MCDI Alternative School. There is ample support to find Mr. Roy worked for a political subdivision or political unit of the commonwealth from 1995-1999 in satisfaction of the Section 1 requirements. This means that service is eligible for creditable service. Further support for this conclusion is the vote of the Springfield Retirement System in September 2000 making all twelve remaining employees of MCDI, Inc. members of the Springfield Retirement System.
For these reasons, the decision of the Springfield Retirement System is rescinded and Mr. Roy is to receive creditable service for his work between 1995-1999 for the MDCI Alternative School when he was paid through MCDI, Inc.
DIVISION OF ADMINISTRATIVE LAW APPEALS
Sarah H. Luick, Esq.
DATED: April 18, 2008