| Date: | 12/18/2009 |
|---|---|
| Organization: | Division of Administrative Law Appeals |
| Docket Number: | CR-06-51 |
The Haverhill Retirement System erred when it refused to follow PERAC's direction that it accept liability pursuant to G.L. c. 32, § 3(8)(c) with respect to the service of Mr. Albert Rosso as a School Adjustment Counselor for the period of 1995 to 1997. The Haverhill Retirement Board is hereby ordered to accept liability for Mr. Rosso's service from 1995 to 1997 in accordance with the provisions of G.L. c. 32, § 3(8)(c).
Pursuant to G.L. c. 32, § 16(4), the Petitioner, Teachers' Retirement System, is appealing the January 10, 2006 decision of the Respondent, Haverhill Retirement Board, declining its request to accept liability pursuant to G.L. c. 32, § 3(8)( c ) with respect to the employment of Mr. Albert Rosso for the period of 1995 through 1997. (Exhibit 1.) The appeal was timely filed in accordance with the provisions of G.L. c. 32, § 16(4).
Pursuant to the provisions of 801 CMR 1.01 (10)(c), the parties agreed to submit the case on written submissions and to waive a hearing. On November 8, 2009, the Parties submitted proposed exhibits. On November 10, 2009, the Parties submitted a joint stipulation of fact accompanied by written arguments from both sides.
The following exhibits are now marked into evidence:
1. Decision Letter dated 1/10/06
2. Appeal Letter dated 1/20/06
3. New Member Enrollment Form for Mr. Alberto Rosso
4. Mr. Rosso's Certificate of Citizenship
5. Affidavit of Kathleen Gallant, Executive Secretary/Administrator of the Haverhill Retirement System
6. Letter from Robert Antonucci to Maurice Covino dated 11/31/95
7. Letter from Maurice Covino to Richard Langlois dated 11/21/95
8. Letter Alberto Rosso to Richard Langlois dated 3/27/02
9. Commonwealth of Massachusetts Department of Education Important Notice regarding School Social Worker/School Adjustment Counsel certification
10. Teachers' Retirement System letter to the Haverhill Retirement Board, 7/14/03
11. Detail of funds transferred pertaining to Mr. Rosso, 7/31/03
12. Copy of check from Haverhill Retirement Board
13. Mr. Rosso's Memberhsip File Annuity Savings Record detailing transferred sum
14. Mr. Rosso's weekly posting of deductions
15. Letter from the Haverhill Retirement Board to the Teachers' Retirement Board, 8/8/03
16. Letter from the Teachers' Retirement Board to the Haverhill Retirement Board, 8/23/05
17. Letter from the Haverhill Retirement Board to the Teachers' Retirement Board, 8/26/05
18. Letter from Attorney Fabino to the Haverhill Retirement Board, 12/5/05
19. Letter from Attorney Fabino to PERAC, 12/6/05
20. Letter from PERAC to Attorney Fabino, 3/6/06
21. Letter from Attorney Sacco to PERAC, 4/14/06
22. Haverhill Retirement Board's most recent actuarial valuation
I hereby adopt as findings of fact no. 1 - 14, the stipulations of the parties in this matter. Based upon the representation of the Haverhill Retirement Board, I make the additional finding of fact, no. 15.
1. Mr. Albert Rosso was first employed as a School Adjustment Counselor with the Haverhill Public Schools on August 28, 1995. He was erroneously enrolled in the Haverhill Retirement System at this time after completing a New Member Enrollment Form.
2. As a School Adjustment Counselor, Mr. Rosso should have become a member of the Massachusetts Teachers' Retirement System.
3. The Haverhill Retirement Board received its first contribution on behalf of Mr. Rosso on September 8, 1995. The Haverhill Retirement Board stopped receiving contributions for Mr. Rosso as of June 13, 1997.
4. By letter dated July 14, 2003, the Teachers' Retirement System contacted the Haverhill Retirement Board about Mr. Rosso's creditable service. The Teachers' Retirement System requested that the Haverhill Retirement Board transfer Mr. Rosso's funds to the Teachers' Retirement System and indicate the amount of creditable service liability it would accept as a result of the transfer.
5. On July 31, 2003, the Haverhill Retirement Board forwarded a check to the Teachers' Retirement System for $7,149.15. This amount represented all of the deductions that had been taken from Mr. Rosso in error between 1995 and 1997, with interest.
6. The Haverhill Retirement Board reviewed the issue and determined that Mr. Rosso should never have been admitted as a member of the Haverhill Retirement System because the position of Adjustment Counselor is included in the definition of "teacher" as contained in G.L. c. 32, § 1.
7. By letter dated August 8, 2003 to the Teachers' Retirement System, the Haverhill Retirement Board noted that between August 28, 1995 and June 13, 1997, Mr. Rosso was employed as a School Adjustment counselor and his deductions should have been forwarded to the Teachers' Retirement System. The Haverhill Retirement Board noted that it would assume no pension liability with regard to this period pursuant to G.L. c. 32, § 3(8)(c), because the deductions were taken in error.
8. By letter dated August 23, 2005, to the Haverhill Retirement Board, the Teachers' Retirement System again expressed its opinion that the Haverhill Retirement Board should accept liability for Mr. Rosso's service between 1995 and 1997.
9. By letter dated August 25, 2006, the Haverhill Retirement Board reaffirmed its opinion that it would accept no liability with respect to Mr. Rosso's service.
10. By letter dated December 5, 2005, Counsel for the Teachers' Retirement System wrote to the Haverhill Retirement Board and again requested that the Haverhill Retirement board accept liability for Mr. Rosso's service between August 28, 1995 and June 13, 1997.
11. On December 6, 2006, the Teachers' Retirement System requested an opinion from the Public Employee Retirement Association Commission (PERAC) as to whether the Haverhill Retirement Board should accept liability for Mr. Rosso's service from 1995 to 1997.
12. By letter dated March 6, 2006, PERAC opined that the Haverhill Retirement Board must assume liability pursuant to G.L. c. 32, § 3(8)(c) for Mr. Rosso's creditable service while he was a member of the Haverhill Retirement System.
13. By letter dated January 10, 2006, Counsel to the Haverhill Retirement Board wrote to the Teachers' Retirement System and reaffirmed that it would not accept liability pursuant to G.L. c. 32, § 3(8)(c) for Mr. Rosso's service between 1995 and 1997. (Exhibit 1.)
14. By letter dated January 20, 2006, the Teachers' Retirement System filed a timely appeal of this decision with the Contributory Retirement Appeal Board. (Exhibit 2.)
15. The Haverhill Retirement Board did not know that Mr. Rosso was ineligible for membership in its system at the time that he initially filed his New Member Enrollment Form as the handwritten notation listing "Adjustment Counselor" as his position was added subsequent to Mr. Rosso's enrollment in the system. (Exhibit 3.)
The Haverhill Retirement Board improperly denied the Teachers' Retirement System's request to accept liability pursuant to G.L. c. 32, § 3(8)(c), for Mr. Alberto Rosso's service from August 1995 through June of 1997. During that period of time, Mr. Rosso was erroneously enrolled in the Haverhill Retirement System. However, the error was not discovered until July 2003 at which time his employee contributions and interest, i.e., his accumulated total deductions, were transferred to the Teachers' Retirement System.
G.L. c. 32, § 3(8) (c) provides in pertinent part that:
Whenever any retired member or beneficiary receives a pension or survivor's allowance from a system pertaining to one government unit in a case where a portion of such pension or survivor's allowance is attributable to service in a second governmental unit to which another system pertains, the first governmental unit shall be reimbursed in full, in accordance with the provisions of this paragraph, by the second governmental unit for such portion of the pension as shall be computed by the actuary ….
In accordance with the statute, when a transfer occurs, the second governmental unit receives the member's accumulated total deductions only. In exchange, the first governmental unit is required to reimburse the second governmental unit, as outlined in G.L. c. 32, §3(8)(c), for the period connected with that transfer. Notwithstanding the reimbursement, the first governmental unit is permitted to retain the investment earnings and employer contributions associated with the member's service.
The provisions of G.L. c. 32, 3(8)(c) require the actuary to make the determination concerning liability and to compute the amount of the full reimbursement. The statute also requires the actuary to consider the employee's length of service when making that computation. The statute invests the actuary with some measure of discretion in making these determinations. See Massachusetts Port Authority Employee's Retirement Board v. Contributory Retirement Appeal Board, 63 Mass. App. Ct. 1102, 822 N.E. 2d 1213 (2005).
G.L. c. 32, § 1 defines "actuary" as a member of the American Academy of Actuaries or a member of the staff of the Public Employee Retirement Administration (PERAC).
In the current case, on December 6, 2006, the Teachers' Retirement System requested that PERAC review the facts involved in this matter to determine whether the Haverhill Retirement Board should accept liability for Mr. Rosso's service from 1995 to 1997. By letter dated March 6, 2006, PERAC responded stating that "it is the position of the Commission that Haverhill Retirement Board must assume liability pursuant to G.L. c. 32, § 3(8)(c) for Mr. Rosso's creditable service while he was a member of that system."
After reviewing the evidence presented in this appeal, I conclude that PERAC's position was neither arbitrary, capricious, nor an abuse of discretion. I further conclude that PERAC's position was total consistent with the holding in the recent Appeals Court decision in Arlington Contributory Retirement Board v. CRAB & another, 2009 WL 3297962 (Mass App.Ct.)(10/16/09), the facts of which are extremely similar to those of the present case. In Arlington, Employees of the Minuteman Regional School District were members of the Arlington retirement system commencing in 1973. In September of 1983, pursuant to Chapter 364 of the Acts of 1983, the Minuteman Regional Vocational Technical School District employees' retirement system (Minuteman Retirement System) was established as an independent retirement system for persons employed by the Minutemen district as of January 1, 1983. Pursuant to the Act, the annuity account of each member of the newly created Minuteman retirement system was transferred from the Arlington Retirement Board to the new Minuteman Retirement System. The Arlington Retirement Board subsequently denied the request from the Minuteman Retirement System to accept liability for the ten years that its employees were members of the Arlington Retirement System. The Appeals Court rejected the town of Arlington's argument that it should not share in liability pursuant to G.L. c. 32, § 3(8)(c) where the town never actually benefitted from the employment service of the Minuteman district employees.
The court in Arlington, supra, noted that:
While it is true that the town of Arlington never enjoyed the benefit of employment service from Minuteman district employees, the Arlington retirement system did receive the benefit of Minuteman employees' participation in the Arlington retirement system: under the pay as you go method, annual appropriations from the Minuteman district … were used to pay the pension benefits of retired Arlington employees … Additionally, the board had access to income from the investment of funds deducted in the regular course from Minuteman district employee paychecks, which could be used to pay Arlington retirement system expenses. See G.L. c. 32, § 22. PERAC and CRAB have construed the Act and G.L. c. 32, § 3(8)(c) in harmony, to create a series of reciprocal obligations between the Arlington and Minuteman retirement systems. Minuteman employees' annuity accounts, including regular interest, moved with them from Arlington to the Minuteman retirement system … Arlington was not required to repay Minuteman any additional interest earnings on those accounts … nor was Arlington required to repay Minuteman the roughly $700,000 in appropriations it received prior to 1983. (emphasis supplied.)
Moreover, PERAC's position is consistent with the holding of the Suffolk Superior Court in MTRB v. PERAC, Suffolk Superior Court Civil Action No. 01-2683 (Sander, J.)(4/10/02). In MTRB, supra, court opined that in cases where a member is erroneously enrolled in a retirement system and later transfers to a second retirement system, "a retirement system's liability turns on when the money is transferred, not on eligibility." The Superior Court further opined that allowing local boards to retain investment returns in situations where a member is erroneously enrolled without accepting liability under G.L. c. 32, § 3(8)(c) would be a windfall for local boards that is neither fair or in accordance with legislative intent as expressed in the statute.
Since PERAC did not abuse its discretion under the statute, I conclude that the decision of the Haverhill Retirement Board declining to accept liability must be reversed. The Haverhill Retirement Board is hereby ordered to accept liability for Mr. Rosso's service from 1995 to 1997 in accordance with the provisions of G.L. c. 32, § 3(8)( c).
SO ORDERED.
DIVISION OF ADMINISTRATIVE LAW APPEALS
/s/
Joan Freiman Fink
Administrative Magistrate
Dated: 12/18/09
