Pursuant to G.L. c. 32, § 16(4), the Petitioner, Joyce Santerre, appealed the June 1, 2012 decision of the Respondent, Massachusetts Teachers’ Retirement System (MTRS), denying her request that a one-time payment made to her in the 2009/2010 school year qualify as regular compensation in the calculation of her retirement allowance.
On June 8, 2012, Ms. Santerre filed a timely appeal with the Division of Administrative Law Appeals (DALA). An administrative magistrate issued a January 28, 2016 First Pre-Hearing Order that Ms. Santerre file a Pre-Hearing Memorandum, including a Statement of Relevant Facts, a witness list, an exhibit list, a summary of legal issues to be decided, and the Petitioner’s response to each issue by February 28, 2016. The Order ordered that MTRS file a Pre-Hearing Memorandum containing a response to each paragraph of the Petitioner’s Statement of Relevant Facts, a witness list, any additional exhibits, a summary of legal issues to be decided, and the Respondent’s position on each issue.
On March 1, 2016, Ms. Santerre filed her Pre-Hearing Memorandum and a proposed exhibit (Exhibit 7), including a Motion that the matter be handled as a submission without a hearing pursuant to 801 CMR 1.01(10)(c). On March 23, 2016, I allowed her Motion, and ordered that the parties to file their written arguments and any additional exhibits by May 27, 2016. On June 3, 2016, I allowed MTRS’ motion to extend the filing time. On June 30, 2016, DALA received MTRS’ written submission and proposed exhibits (Exhibits 1-6), whereupon the administrative record closed.
I marked Ms. Santerre’s Pre-Hearing Memorandum “A” for identification. I marked MTRS’ written submission as “B” for identification. I admitted Ms. Santerre’s appeal to DALA as Exhibit 8.
I accepted the following into evidence:
Exhibit 1. Ms. Santerre’s Retirement Application, 3/6/2012;
Exhibit 2. Agreement Between the Pioneer Valley Regional School District Committee (PVRSD) and the Pioneer Valley Union Education Association (PVUEA), 9/1/2006 – 8/31/2009;
Exhibit 3. Agreement Between the PVRSDC and the PVUEA), 9/1/2009 – 8/31/2012;
Exhibit 4. Contract Status 2008/2009 between PVRSD and PVUEA, 6/20/2008;
Contract Status 2009/2010 between PVRSD and PVUEA, 6/19/2009;
Contract Status 2010/2011 between PVRSD and PVUEA, 6/14/2010;
Contract Status 2011/2012 between PVRSD and PVUEA, 6/10/2011;
Exhibit 5. MTRS denial of Ms. Santerre’s request that 2009/2010 $500 payment be eligible as regular compensation for inclusion in her three-year salary range, 6/1/2012;
Exhibit 6. Email from MTRS to PVRSD, 5/3/2012;
Exhibit 7. Teacher Salary Schedule 2009/2010, Settlement Agreement Between the PVRSD and PVUEA: 2009-2010 Contract, 4/27/2009;
Exhibit 8. Ms. Santerre’s appeal, 6/8/2012.
FINDINGS OF FACT
Based on the documents admitted into evidence, I make the following findings of fact:
- Ms. Santerre is an inactive member of MTRS. She retired as a teacher from the Pioneer Valley Regional School District (PVRSD) on June 30, 2012. (Exhibit )
- Ms. Santerre worked in North Middlesex Regional and Fitchburg schools from 1977 – 1980 as a substitute, a tutor, and a teacher. (Exhibit 1.)
- In 1992, she reentered the teaching sector and worked as a substitute, then a tutor, then a long-term substitute, and then a full-time teacher from 2001-2012, until her retirement from PVRSD. (Exhibit 1.)
- On June 20, 2008, PVRSD informed Ms. Santerre in a Contract Status lette, that she had been placed on the “B+15/16 step [with] $58,057 total salary for the 2008/2009 school year.” (Exhibits 2 and )
- On June 19, 2009, PVRSD informed Ms. Santerre in a Contract Status letter, that she had been placed on the “B+15/16 step [with] $58,057, plus $500 one-time payment, $58,557 total salary for the 2009/2010 school year,” in accordance with the September 1, 2009 – August 31, 2012 CBA “Teacher Salary Schedule 2009/2010.” (Exhibits 3 and 4.)
- On June 14, 2010, PVRSD informed Ms. Santerre in a Contract Status letter, that she had been placed on the “B+15/15 step [with] $59,799 total salary for the 2010/2011 school year,” in accordance with the “Teacher Salary Schedule 2011/2012” indicated that Step 15 in the “B+15” category was $60,69 (Exhibits 3 and 4.)
- On June 10, 2011, PVRSD informed Ms. Santerre in a Contract Status letter that she had been placed on the “B+15/15 step $60,696, [with] $60,696 total salary for the 2011/2012 school year.” (Exhibit 4.)
- On March 6, 102, Ms. Santerre submitted a Retirement Application for superannuation retirement benefits. (Exhibit 1.)
- In Part II of the application, Ms. Santerre reported that her salary for the 2009/2010 school year was $58,557. (Exhibit 1.)
- On April 30, 2012, MTRS sought clarification from PVRSD about the $500 discrepancy between Ms. Santerre’s self-reported salary of $59,158 when the CBA reported figure of $58,658. (Exhibit 6.)
- On May 3, 2012 a PVRSD Payroll Administrator responded to MTRS, stating, “The salary schedule for the 2008/2009 and the 2009/2010 were the same for the employees who had been on the step 16 so in the 2009/2010 contract all employees who were maxed out received a on-time [sic] payment of $500. ($58,658 + 500.00 = $59,158).” (Exhibit 6.)
- On June 1, 2012, MTRS denied Ms. Santerre’s request to include the $500 payment, informed her of her appeal rights, and explained:
The $500.00 payment you received in this three school year [sic] is not regular compensation pursuant to M.G.L. c. 21, §1 because it was not paid for the performance of service but rather as a bonus since you were at the maximum step and could not move up any further. Therefore, it is not eligible to be considered as regular compensation.
- Ms. Santerre filed a timely appeal on June 7, 2012. (Exhibit 8.)
The decision of the MTRS is affirmed. The issue in this matter is whether the $500 one-time payment in the 2009/2010 school year made by PVRSD qualifies as “regular compensation,” as defined by G.L. c. 32, § 1, for purposes of calculating her retirement allowance pursuant to G.L. c. 32, § 5(2)(a).
From January 1, 1946 until June 30, 2009, G.L. c. 32, § 1 defined “regular compensation,” in pertinent part, 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 other payments made as a result of giving notice of retirement, … provided, that … salary, wages or other compensation payable in the form of cost of living bonuses and cost of living pay adjustments shall be included in such term.
This definition has been interpreted to mean recurrent or repeated amounts of compensation not inflated by extraordinary or ad hoc payments. “Regular” as it modifies “compensation” imports the idea of ordinariness or normality as well as the idea of recurrence.” Boston Association of School Administrators and Supervisors v. Boston Retirement Bd., 383 Mass. 336, 341 (1981).
After June 30, 2009, the legislature defined “regular compensation” as “compensation received exclusively as wages by an employee for services performed in the course of employment for her employer.” G.L. c. 32, § 1. The definition of regular compensation has been clarified by a regulation of the Public Employee Retirement Administration Commission (PERAC) at 840 CMR 15.03(1)(a)(3), which requires in pertinent part that regular compensation “be ordinary, normal, recurrent, repeated, and of indefinite duration.” 840 CMR 15.03(2)(c) explicitly excludes from regular compensation: “any amounts paid as bonuses other than cost-of-living bonuses, provided that any payment to an employee or group of employees which will not recur or which will recur for only a limited time or definite term will be considered a bonus ….” Further, 840 CMR 15.03(2)(f) provides that “‘[w]ages’ shall not include . . . bonuses other than cost-of-living bonuses.”
In her appeal to DALA, Ms. Santerre argued that the 2009/2010 contract was not different from her other contracts, it did provide for a bonus, and she was not aware that the school district awarded bonuses. She further argued that the $500 one-time payment was “simply an ordinary, very tiny increase over the previous year’s salary,” and that “teachers on top step who do not qualify for longevity receive a one-time $500 payment.”
The $500 payment is not regular compensation because it is a “one-time payment” and not “ordinary, normal, recurrent, repeated, and of indefinite duration,” as required under 840 CMR 15.03(1)(a)(3). It is “extraordinary, ad hoc, onetime, and of finite duration.” Stevens v. Massachusetts Teachers’ Retirement System, Docket No. CR-13-332 (Mass. Division of Admin. Law App., 2017). In that case, a “one-time payment” made pursuant to agreement stating that all teachers “who have reached the . . . (top) step on the salary schedule . . . shall receive a one time bonus payment” was not regular compensation but a bonus because it was not a regular and recurring payment). Ms. Santerre’s $500 “one-time payment” was a bonus under 840 CMR 15.03(2)(c) because it “will not recur.”
Ms. Santerre asserted that the $500 payment “has always been part of [her] salary for purposes of future salary increases,” but the language “teachers on top step who do not qualify for longevity receive a one-time $500 payment” found in both the CBA and Salary Schedule for the 2009/2010 school year conveys the opposite. The purpose of the $500 payment was not for “future salary increases,” but instead to compensate “those teachers on top step [Step 16] who did not do not qualify for longevity.” (Exhibits 3, 4 and 7.) MTRS reasonably characterized the $500 payment as “not for the performance of service but rather as a bonus since [Ms. Santerre was] at the maximum step and could not move up any further.” This is confirmed by the May 3, 2012 email from a PVRSD Payroll Administrator to MTRS, which stated that “in the 2009/2010 contract all employees who were maxed out [Step 16] received a one-time payment of $500.” (Exhibit 6.)
G.L. c. 32, § 5(2)(a) provides in pertinent part:
The normal yearly amount of the retirement allowance for any member … who has paid the full amount of regular deductions on the total amount of regular compensation, … shall … be based on the average annual rate of regular compensation received by such member during any period of three consecutive years of creditable service for which such rate of compensation was the highest …
G.L. c. 32, § 5(2)(a) and§ 1, defining “regular compensation” as requiring ordinariness, normality and recurrence, are a “safeguard against the introduction into the computations of adventitious payments to employees which would place untoward, massive, continuing burdens on the retirement systems.” Boston Association of School Administrators and Supervisors, 383 Mass. at 341; Bishop v. Mass. Teachers’ Ret. Sys., Docket No. CR-10-34, Decision (Mass. Div. of Admin. Law App., May 15, 2015); Stevens, Docket No. CR-13-332, Decision (Mass. Div. of Admin. Law App., Sept. 1, 2017).
The decision of the MTRS is affirmed. The $500 one-time payment does not qualify as regular compensation and shall not be included in Ms. Santerre’s three-year salary average.
DIVISION OF ADMINISTRATIVE LAW APPEALS
Angela McConney Scheepers