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Morris Hills Regional District Education Association v. Board of Trustees of the Teachers' Pension and Annuity Fund


May 17, 2012


On appeal from the Teachers' Pension and Annuity Fund Board of Trustees, Docket No. TPAF 1-00450.

Per curiam.


Argued February 28, 2012

Before Judges Carchman and Nugent.

Petitioner Morris Hills Regional District Education Association*fn1 appeals from a Final Decision of the Board of Trustees of the Teachers' Pension and Annuity Fund (the Board or TPAF). The Board denied petitioner's claim for retroactive pension credits for the contract period from July 1, 2004 through June 30, 2007. During this three-year period, petitioner's employees worked up to three additional days each year beyond the contracted annual term of 183 days. The Board concluded that, by the statutory as well as contractual terms, the employees' work on these days was "extra work" for which they received "extra pay." Accordingly, the Board determined that the employees were not entitled to pension credits. We disagree and reverse.

The relevant facts are not in dispute. Petitioner and the Morris Hills Regional District Board of Education (Morris Hills BOE or BOE) are parties to a series of collective bargaining agreements (CBAs or, collectively, the agreement) setting forth various terms and conditions of employment. The agreement provides that the work year for Counselors, Child Study Team members, Student Assistance Coordinators (SAC), and English as a Second Language (ESL) teachers (collectively, the Provision 2*fn2 employees) may include additional days for which they earn per diem compensation. In October 2005, petitioner requested that respondent grant pension credit for the compensation received by the Provision 2 employees for additional days worked. At its December 1, 2005 meeting, the TPAF determined that the additional salary earned by these individuals was not creditable compensation for pension purposes. Petitioner appealed the Board's decision and successfully requested that the matter be transmitted to the Office of Administrative Law (OAL) for a hearing.*fn3

At the hearing, the following facts emerged. Section II, Article 16, Provision 1 of the agreement sets forth the in-school work year of teaching staff members employed on a ten-month basis. In Provision 2, the CBA details the work year of Counselors, Child Study Team members (i.e., school psychologist, school social worker and learning disabilities teacher-consultant), SACs and ESL teachers, described in the following language:

Counselors: Work up to five (5) days, i.e. two (2) days at the end of June after school closes and three (3) days during the last week in August prior to the opening of school at the rate of 1/2 of 1% per day.

Child Study Team: Work up to three (3) days during the months of July and/or August.

The days to be mutually scheduled with the district Director and paid at the rate of 1/2 of 1% per day.

SAC: Work up to five (5) days at the rate of 1/2 of 1% per day. Days to be mutually scheduled with the immediate supervisor during July or August.

ESL: Work up to five (5) days at the rate of 1/2 of 1% per day. Days to be mutually scheduled with the immediate supervisor during the last two weeks in August.

The Provision 2 employees were not mentioned in the 2004-2007 CBA due to the parties' oversight; the omission was an error. After the 2004-2007 contract was signed, in February 2005, Peter Lazzaro, a member of the Association who was also a guidance counselor, met with Robert Weakley, then-Director of Educational and Administrative Services for Morris Hills Regional, to discuss the omission. The parties corrected the omission through the execution of a side bar agreement. Weakley insisted on saying that the parties did not agree that the language used in the side agreement described work for which time was pensionable. Association representatives signed the agreement because their field representative informed them that the question of pensionability was a matter of statutory and regulatory interpretation rather than of the terms of the parties' contract.

Various members of petitioner addressed whether and to what extent the work described in Provision 2 was optional. Discussing the execution of the agreement, Lazzaro stated that management mandated that the Provision 2 employees work the extra days described in the section; "it was never an option." Lazzaro further noted, "the reality of it was that [these employees] were required to work five days, and the reasons were very clear. Because they were doing their regular work . and they needed these extra days [to] complete that work, and it was tied with what they do normally in their positions . . . ."

Deborah Stuby, a guidance counselor, regularly worked 188 days a year and was never given a choice whether to work the extra five days. Her supervisor and principal told her when she had to work the extra five days. The work she did on those five days was what she would "[n]ormally do during the course of the school year. It [was] not summer work . . . ." She noted that, in addition to these five days, which were mandatory, there were other summer days when guidance counselors could volunteer to work.

This view was confirmed by Yvonne Hourihan, a guidance counselor, who described the end of the school year as "crunch time" for guidance counselors. She explained that shortly before the end of the school year, she would be notified about which days she was to work over the summer. The only year she did not work the extra five days was when administration officials decided that the guidance counselors should not come to work because the school was under construction.

The contractual terms were applied in a similar fashion for social workers. Barbara Lehmann, a social worker, stated that since the CBA went into effect, she worked three days during the summer every year to review incoming students' files. Lehmann's supervisor directed her to come in a certain number of days during the summer; the employees could schedule these work days themselves. In addition to these mandated days, Lehmann worked additional days during the summer on a voluntary basis because she needed to devote that much time to her work in order to prepare for the upcoming school year. She received a separate paycheck for the work she performed pursuant to her supervisor's direction; however, the administration denied her request for additional pay for the days in excess of the three provided for in the CBA.

Theresa Wisolmerski, a learning disabilities teacher consultant, worked between fifteen and twenty-one days during the summer, including the three days mentioned in the contract. She worked in the summer because she received student files after the conclusion of the school year and had to determine student placement before the start of the following school year. She received a "regular paycheck" for the three days described in the contract. Initially, Wisolmerski received a stipend as payment for each day she worked in excess of the three contracted days;*fn4 more recently, she received a "regular salary" for this work.

The ALJ concluded that the additional days described in Provision 2 were mandated by the agreement and that the work described in Provision 2 that the employees performed on those days was a permanent and integral part of their regular responsibilities and work. Relying on N.J.S.A. 18A:66-2(d), the judge concluded that the members should receive pension credits for that compensation.

The TPAF Board voted to adopt the ALJ's findings of fact but rejected her conclusions of law. The Board concluded that the work days described in Provision 2 beyond the 183 days specified in the contract were not eligible for pension credit. This appeal followed.

On appeal, petitioner urges the reversal of the Board's decision as contrary to the provisions of N.J.S.A. 18A:66-2(d) and N.J.A.C. 17:3-4.1.

Critical to our analysis of the issues here is our standard of review of the Board's decision. As we have noted, the facts are not in dispute, and the issue before us is a question of law.

In reviewing the decision of an administrative agency, "we must give deference to the agency's findings of facts, and some deference to its interpretation of statutes and regulations within its implementing and enforcing responsibility." Utley v. Bd. of Review, 194 N.J. 534, 551 (2008) (quotations and citations omitted); see also Glukowski v. Equity One, Inc., 180 N.J. 49, 66 (2004). Such deference is appropriate for two reasons: 1) the responsibility for assessing the wisdom of policy choices and resolving the struggle between competing views of the public interest is not a judicial one; and 2) an agency has greater familiarity with the ever-changing facts and circumstances surrounding the subjects regulated. Id. at 65 (citing F.D.A. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132, 120 S. Ct. 1291, 1300, 146 L. Ed. 2d 121, 134 (2000)). This dispute concerns the interpretation of pension laws by the TPAF Board, an entity with expertise in this subject matter. However, courts are "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue." Utley, supra, 194 N.J. at 551 (quotation marks and citation omitted).

In addressing the merits of this case, we note certain policy considerations that inform our consideration of the text in dispute. Public pensions are salutary, and their place in the scheme of compensation for pubic service is noteworthy.

Pensions for public employees serve a public purpose. A primary objective in establishing them is to induce able persons to enter and remain in public employment, and to render faithful and efficient service while so employed. They are in the nature of compensation for services previously rendered and act as an inducement to continued and faithful service. Being remedial in character, statutes creating pensions should be liberally construed and administered in favor of the persons intended to be benefited thereby. [Geller v. Dep't of Treasury, 53 N.J. 591, 597-98 (1969) (citing 3 Eugene McQuillin, The Law of Municipal Corporations §§ 12.141, 12.143 (3d ed. rev. 1963)); see also Klumb v. Bd. of Educ. of Manalapan-Englishtown Reg'l High Sch. Dist., 199 N.J. 14, 34 (2009).]

N.J.S.A. 18A:66-2(d) defines the type of compensation that is creditable for pension purposes:

"Compensation" means the contractual salary, for services as a teacher[,] . . . which is in accordance with established salary policies of the member's employer for all employees in the same position but shall not include individual salary adjustments which are granted primarily in anticipation of the member's retirement or additional remuneration for performing temporary or extracurricular duties beyond the regular school day or the regular school year.*fn5

N.J.A.C. 17:4-4.1, the regulation regarding creditable compensation, states that only base salary is creditable compensation, and "base salary" is defined as follows:

1. "Base salary means the annual compensation of a member, in accordance with contracts, ordinances, resolutions, or other established salary policies of the member's employer for all employees in the same position, or all employees covered in the same collective bargaining agreement, which is reported in regular, periodic installments in accordance with the payroll cycle of the employer; and

2. "Extra compensation" means individual salary adjustments which are granted primarily in anticipation of a member's retirement; additional remuneration for performing temporary duties beyond the regular work day or work year. Forms of compensation that have been identified as extra compensation include . . . .

ii. Pay for extra work, duty or service beyond the normal work day, work year for the position, or normal duty assignment.

The TPAF Board contends that "the permanent or temporary nature of a position" "is not the sole determining factor" in determining whether work is pensionable. Rather, the Board found that the contested work was not pensionable for the following reasons: the Board claimed that "[i]t is undisputed that the regular contractual school year for teachers is 183 days," and characterized the compensation petitioner's witnesses received for summer work as a "stipend." From these facts, the Board concluded that any days worked past 183 were extra work, for which the employees received "extra pay," and as such, that work was ineligible for pension credit.

The Board's argument is flawed for two reasons. As a factual matter, the Board mischaracterizes the payment Provision 2 employees receive as a "stipend." The employees who testified during the hearing noted that, although they had previously received a stipend for summer work, when the agreement was revised to acknowledge that they would work as many as three or five extra days per year, the employees began receiving paychecks for their work on these days.

Second, the language the Board cites is found not in the statute, but in N.J.A.C. 17:4-4.1(a)(1)(ii). The regulatory language is an impermissible narrowing of the statute. Siri v. Bd. of Trs., 262 N.J. Super. 147, 152 (App. Div. 1993) ("[I]n the execution of its rule-making power a state agency may not go beyond declared statutory policy. Administrative regulations, of course, cannot alter the terms of a legislative enactment or frustrate the policy embodied in the statute.") (citations omitted). The facts demonstrate that the means the BOE used to pay the employees for the work they perform on the extra days was consistent with the method for salary paid during the balance of the year. The reason why the employees received a separate paycheck for the summer days is not apparent from the record, but it may have been merely a matter of administrative convenience, especially when an employee worked the extra days in the middle of the summer. In Siri, we deemed it irrelevant for the purpose of determining pensionable time that an employee was paid with a separate paycheck for the extra half-day of work she routinely performed because "there was so much work that needed to be done[.]" Id. at 154 (internal quotation marks omitted). Concluding that the extra time the employee worked was pensionable, we stated that, the separate paycheck notwithstanding, "there can be no doubt that the . . . Board of Education obliged itself to increase petitioner's working time and to pay her additional remuneration as base salary." Id. at 156. Siri dispels any notion that payment by separate checks is dispositive of the issue of pensionable time.

The statutory term "compensation" is defined as "contractual salary," a term distinguished from "additional remuneration for performing temporary or extracurricular duties . . . beyond the regular school day or work year." N.J.S.A. 18A:66-2(d)(1). The Board argues that the summer work is not part of the Provision 2 employees' contractual salary based on its interpretation of the agreement, that the school year is 183 days for all employees covered by Article 16. The Board's conclusion that the agreement resolves the issue because the school year is 183 days is belied by the terms of the agreement as well as the record presented to the ALJ. Although the first provision of Section 2, Article 16 states that the school year for teachers is 183 days, the third provision defines the in-school work year as including "days when pupils are in attendance, orientation days, and any other day on which teacher attendance is required." The second provision provides that the work year for Counselors, Child Study Team, SAC and ESL teachers includes additional days beyond the 183 days specified in the CBA.

For the employees identified under Provision 2, the Board notes that "up to" indicates that there is some flexibility, potentiality, or permissiveness in the work schedules of the Provision 2 employees, which suggests this work is extra time for extra pay. However, the work in excess of the 183-day year is described in the imperative form ("Counselors: Work up to five (5) days"), indicating that the employees must work some extra days, and they must schedule their work with their supervisors. These extra days are days "on which [their] attendance is required," as the term is used in Provision 3. The contract fixes the amount of compensation the specified employees are to receive for their work on the extra days. By the terms of Provisions 2 and 3, the Provision 2 employees receive a contractual salary for the work they perform during the school year.

The Board contrasts the language of Provision 2 with that of Section II, Article 24, Provision B, which states that the length of the work year for consulting teachers "shall be teacher calendar plus five (5) days as assigned by the Superintendent." The Board concludes that if the parties had meant to make the Provision 2 employees' work in excess of the 183-day school year pensionable, Provision 2 would have been drafted with language identical to that found in Section II, Article 24, Provision B.

Lazzaro indicated that there was no meeting of the minds between the two parties about whether the summer days would be considered pensionable time, as evidenced by the statement in the February 2, 2005 Letter of Agreement that the letter "cannot be construed to indicate that the District agrees that such payment is pensionable." The pensionability of the Provision 2 employees' extra work was a point of contention between the two parties; we are not persuaded that the failure of the parties to agree to language identical to that in Article 24, Provision B is dispositive. See Siri, supra, 262 N.J. Super. at 154-55 (holding that the petitioner's pensionable time was three days per week because that was the amount of time she had actually worked, despite the fact that the letter-contract petitioner received indicated that she would only be working two and a half days a week).

Second, the language of Article 24, Provision B supports the argument that the Provision 2 employees' summer work should be pensionable because, as is the case for consulting teachers who work 188 days a year, the Provision 2 employees work more than 183 days, and they must schedule those days with their supervisor.

Third, inconsistencies in the contractual language notwithstanding, the Provision 2 employees established that, in reality, the extra days were part of their regular work year: they always worked extra days (except for one year when there was construction on the school facilities); and they viewed the extra work days as mandatory, both because they were not comfortable telling their supervisors that they would not report to work and because their job tasks could not be fulfilled unless they worked those days.

By the terms of Article 16, Provision 2, and in light of the reality that the Provision 2 employees always worked at least the maximum number of extra days specified in Provision 2, those days are part of the "in-school work year," as it is defined in Article 16, Provision 3. If the "in-school work year" were limited to 183 days, Provision 3 would be surplusage; Provision 3, following Provisions 1 and 2, suggests that the "in-school work year" is a catch-all provision that encompasses all days that meet the "in-school work year" definition, not merely the 183 days specified in Provision 1. The terms from the relevant statute and regulation refer, respectively, to the "regular" and "normal" school year. Applying those terms to Article 16, Provision 3, the language of Provision 3 indicates that the "regular" or "normal" school year is comprised of "days when pupils are in attendance, orientation days, and any other day on which teacher attendance is required." In statutory or regulatory terms, the "normal" or "regular" school year is comprised of the 183 days that all teachers work, as well as the extra days, recognized in the CBA, that Provision 2 employees have worked every year, with the exception of one year when the schools were closed due to construction. By the terms of the CBA, the Provision 2 employees receive a contractual salary for the days described in Provision 2, entitling them to pension credit for the time worked pursuant to Provision 2.

The Board erred for the additional reason that it mischaracterized the law when it claimed that "the permanent or temporary nature of a position" "is not the sole determining factor" in determining whether work is pensionable. See Cavalieri v. Bd. of Trs., 368 N.J. Super. 527, 533 (App. Div. 2004). We focus on whether the days that the Provision 2 employees work in excess of 183 per year constitute temporary or extracurricular duties for which they receive extra compensation. Cortese v. Bd. of Trs., 338 N.J. Super. 607, 611 (App. Div. 2001) ("The statutory bar does not refer to a temporary position but rather to the performance of 'temporary . . . duties.'") (quoting Rokos v. State, Dep't of Treasury, 236 N.J. Super. 174, 183 (App. Div. 1989)).

During the hearing before the ALJ, Weakley noted that the term "extracurricular" applied to work wholly separate from one's teaching responsibilities, such as coaching an athletic team or leading an after-school extracurricular activity. Weakley's understanding of the term is consistent with the case law interpreting this language. See Cortese, supra, 338 N.J. Super. at 611 ("the term 'extracurricular' was essentially used to prohibit pension credit for overtime, special assignments, and the like"). Indeed, "the statute does not exclude from credit for pension purposes compensation for the temporary performance of permanent duties; it only excludes the performance of temporary or extracurricular duties. Thus, the duty itself must be temporary or extracurricular in order to be non-creditable." Siri, supra, 262 N.J. Super. at 151. According to Weakley's own understanding of the term "extracurricular," it applies to job tasks and skills that are wholly separate from those of a teacher or guidance counselor. For instance, the position of athletic team coach requires a different skill set and is unrelated to the job of a teacher, as evidenced by the fact that athletic coaches are often not teachers, and the school district does not require that they possess any education skills or training in order for them to perform their duties.

The record supports the claim that the tasks the Provision 2 employees perform in the summer are not extracurricular duties. At the end of and before the school year, the Provision 2 employees perform tasks that are part of their job descriptions: for instance, guidance counselors and social workers complete students' case records and enroll students in summer school. Some of the work performed during the summer is performed then because the work cannot be performed at any other time during the 183-day work year. For example, guidance counselors cannot determine class sizes before student enrollment is finalized, and they have to make class assignments before the school year commences. These job tasks, which as a general rule can only be performed during the summer, are integral to the functions the Provision 2 employees perform during the school year. For instance, reviewing a student's files before school starts is a necessary part of overseeing special education programming because the files provide the basis for determining the child's placement in an appropriate program. "[T]hese duties [a]re not dehors [the Provision 2 employees'] position[s] . . . -- they define[] and constitute[] [their] position[s] . . . ." Rokos, supra, 236 N.J. Super. at 182. Tellingly, Provision 2 offers no description of the work to be performed during the summer days. If the job tasks to be performed during those days were markedly different from the work Provision 2 employees perform throughout the school year, one would expect that such unique job duties would be made explicit in the contract. These summertime tasks do not fall within any rational understanding of the term "extracurricular."

In Cortese, we defined "temporary" for the purposes of the PERS statute which, as noted above, is nearly identical to the statute applicable here. "Temporary" is the opposite of "permanent" and means "for a limited time only," or "lasting for a limited time." "Temporary" also means "made to supply a passing need." The term "occasional" means "[h]appening or operating on some particular occasion; limited to specific occasions . . ." and "[a]cting or employed for the occasion or on particular occasions." Supra, 338 N. J. Super at 612. In Cortese, we concluded that the petitioner's work was temporary because he performed services for the Essex County Utilities Authorities in connection with the Authority's one-time issuance of revenue bonds. Id. at 609, 612.

By contrast, here, the Provision 2 employees demonstrated that the job tasks they performed during the summer were the same job tasks they performed every summer, as well as throughout the year. In dicta in Cortese, we distinguished the temporary work that the petitioner had performed as belonging to "a category of temporary services even less enduring and regular than those of a temporary office employee hired for a short period." Id. at 612. As Lazzaro tellingly noted, the BOE had previously hired "outside people" to "com[e] in" to handle the summer work, but because the temporary workers didn't know the individual student's needs . . . it was not really efficient. . .

[W]hen the guidance counselors came back in and the child study team came back in in September, they were correcting a lot of mistakes that were made over the summer.

And we said, "Wouldn't it be more efficient if we had our own people in here doing our work . . . . ."

We distinguish these duties from the temporary work that we recognized in Cortese. The summer work is so much a part of the Provision 2 employees' school year responsibilities that the employees are critical to the performance of these tasks efficiently for the benefit of the school district and most important, the students. Their summer tasks, which are integral to Provision 2 employees' term-time responsibilities, comprise "the regular duties of th[e] position, not extra duties assigned to an otherwise existing position." Rokos, supra, 236 N.J. Super. at 183. As several Provision 2 employees noted, they would not be able to perform their duties during the school year if they did not spend several days during the summer working at school. This is not temporary work.

We conclude that the Provision 2 employees' summer work is eligible for pension credit. The Board's opposite conclusion is based on a mischaracterization of the case law, a disregard for facts established before the ALJ and an erroneous interpretation of the CBA. Pension statutes are to be "liberally construed and administered in favor of" people such as the Provision 2 employees. Geller, supra, 53 N.J. at 598. These employees are entitled to relief.


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