On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County.
Michels, Pressler and Bilder. The opinion of the court was delivered by Michels, J.A.D.
[161 NJSuper Page 68] This is an appeal from a final judgment of the Chancery Division which, in part, declared that the early retirement remuneration plan (plan) included in the collective bargaining agreement entered into by plaintiff Fair Lawn Education Association (the Association) and defendant and third-party plaintiff Fair Lawn Board of Education (the board) to be enforceable and directed the [161 NJSuper Page 69] board to make payment to retiring teachers in accordance with the provisions of the plan.*fn1 At issue here is the
authority of the board to pay to its early retiring teachers retirement benefits in addition to the normal retirement benefits provided by the Teachers' Pension and Annuity Fund Law (Teachers' Pension Law), N.J.S.A. 18A:66-1 et seq.
The essential facts are not in dispute. The Association is the exclusive representative for collective negotiations of the teachers employed by the board. On July 1, 1976 the Association and the board entered into a two-year collective bargaining agreement which, among other things, provided the terms and conditions of employment for teachers in the Fair Lawn School District for the 1976-1977 and 1977-1978 school years. Included in the agreement was a supplemental retirement benefit plan which provided for the payment of $6,000 to any teacher who (1) was 55 years or more as of August 31, 1977 (but who had not yet reached the mandatory retirement age of 70); (2) had at least 15 years of service with the board and, (3) notified the board in writing before April 1, 1977 of his intention to retire prior to September 1, 1977. This payment was in addition to the benefits provided under the Teachers' Pension Law. For the following year there is a graduated payment schedule based on age, which, in effect, penalizes a teacher who delays retirement by decreasing the amount of the retirement benefit. It is apparent that the plan was designed to induce the early retirement of older, more highly compensated teachers, to make way for younger teachers, who would be paid less commensurate with their education, experience and length of service. The rationale for the payment of such supplemental retirement benefits is that the older teachers would be rewarded for lengthy service and the board would effect a saving by a reduction in salaries.
After the collective bargaining agreement was signed, and prior to April 1, 1977, 12 teachers informed the board in writing that they intended to retire on or before September 1, 1977 and sought to recover retirement benefits for their early retirement as provided by the plan. The board, however, after consideration, refused to make payments to the retiring teachers unless each agreed to indemnify the board and to repay any benefits received if the plan and the payments were subsequently determined to be invalid. The board also agreed to permit the teachers to resind their resignations and return for the 1977-1978 school year. The board's refusal to pay the teachers the supplemental retirement benefits pursuant to the plan was occasioned, in part, by the New Jersey Attorney General's opinion to the Director of Pensions that a local board of education may not establish a supplemental retirement benefits program for retired members of the Teachers' Pension and Annuity Fund. Apparently, another local board of education negotiated a supplemental retirement benefits program in a collective bargaining agreement with its teachers' representative which provided that any teacher, who attained the age of 55 years with 25 years of service and retired within a prescribed period of time would receive an additional retirement benefit of two times his last full year's salary. The Attorney General ruled that "a local board of education may not modify the retirement rights, benefits and privileges as uniformly established for the membership of the Teachers' Pension and Annuity Fund by N.J.S.A. 18A:66-1, et seq. , through the implementation of 'local supplemental retirement programs.'" The Attorney General advised the Director of Pensions to notify all local boards that they may not implement supplemental retirement benefit programs; that any retirements granted pursuant to such a program should be vacated, and that any retirement allowance erroneously paid during the retirement period be repaid to the Fund.
As a result of the board's action, the Association instituted this action seeking a declaration that the retiring teachers
were entitled to immediate payment in accordance with the plan and an order directing the board to make such payments to the said teachers. The board counterclaimed, seeking a declaration that the plan is valid and enforceable and joined the Teachers' Pension and Annuity Fund, Division of Pensions, Department of Treasury, State of New Jersey (Fund), as a third-party defendant.
At the conclusion of a plenary hearing the trial judge held that (1) the payment of supplemental retirement benefits was a term and condition of employment subject to negotiation between the board and the Association pursuant to the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1 et seq.; (2) the plan was valid and enforceable, and (3) the board was directed to make retirement benefit payments to the retired teachers in accordance with the plan's terms. The Fund appeals, contending, essentially, that the board lacked the statutory authority to pay retirement benefits to its former employees; that the Teachers' Pension Law is the exclusive source of retirement benefit for teachers retiring in New Jersey, and therefore the plan is ultra vires , void and unenforceable. We agree and reverse the judgment of the Chancery Division.
It is, of course, fundamental that local boards of education, as creations of the State, are capable of exercising only those powers which are granted expressly or by necessary or fair implication by the Legislature. See Wagner v. Newark , 24 N.J. 467, 474-475 (1957); Belvidere Bd. of Ed. v. Bosco , 138 N.J. Super. 368, 376 (Law Div. 1975); Resnick v. East Brunswick Tp. Bd. of Ed. , 135 N.J. Super. 257, 260 (Ch. Div. 1975), aff'd 144 N.J. Super. 474 (App. Div. 1976); Botkin v. Westwood , 52 N.J. Super. 416, 427 (App. Div. 1958), app. dism. 28 N.J. 218 (1958). The Legislature has expressly vested local boards of education with ...