Stipends that are not found to be “regular salary” or “summer session salary” excluded in determining educator’s final average salary

Stipends that are not found to be “regular salary” or “summer session salary” excluded in determining educator’s final average salary
O'Brien v New York State Teachers' Retirement System, 2010 NY Slip Op 51398(U), Decided on August 4, 2010, Supreme Court, Albany County, Judge Henry F. Zwack [Not selected for publication in the Official Reports]

Typically a schoolteacher has a 10-month professional obligation and school districts generally permit the educator to elect to receive his or her annual compensation over ten months in 21 periods or over twelve months in 26 payroll periods. In the event the educator elects to receive his or her annual salary in 26 payroll periods, the school district usually commences the 26 biweekly payroll mode for a person having a ten-month professional obligation [typically September 1 to the June 30 next following] in September. The individual actually would be underpaid for the period September through the following June 30 and payments received during July and August would constitute payment for past services already performed.*

In this CPLR Article 78 proceeding New York State Teacher's Retirement System [TRS] retiree Florence O’Brien contended that TRS improperly calculated her final average salary. She claimed that that TRS should have included the payments she had received in the 2006-07, 2007-08 and 2008-09 school years -- $4,000.00, $5,000.00 and $6,000.00 respectively --pursuant to the terms of a collective bargaining agreement.

The collective bargaining agreement provided for these stipends under what was called a "24-12" plan and O’Brien claimed that the stipends were for her work developing and teaching summer school programs.

TRS disagreed, arguing that "24-12" plan allows a teacher to receive his or her salary in 24 payments over 12 months, as opposed to only over the course of the academic year. In contrast, the collective bargaining agreement, said TRS, required participating teachers to "complete a total of 8 hours of work during each July and August." Accordingly, the System decided that such stipend payments “are not properly considered regular salary.”

TRS also noted that O’Brien’s work during the three relevant summers was not reported pursuant to the summer school salary schedule.**

Observing that “It is well established that when a court is reviewing an administrative determination, it ‘may not substitute its judgment for that of the agency making the determination but must determine whether the agency's decision has a rational basis and is not arbitrary and capricious,’” Judge Zwack ruled that the System’s determination that the stipends paid to O'Brien under the 24-12 plan was non-regular compensation was neither arbitrary nor capricious.

Significantly, the court noted that:

1. The stipend was in addition to base salary;

2. The payments under the 24-12 plan were not based on performance of teaching service and were fixed based upon a teacher's length of service;

3. The main purpose of the 24-12 plan appears to be to offer teachers an option to receive salary over the entire calendar year; and

4. That there was a separate arrangement for summer school teaching and compensation.

5. Accordingly, Judge Zwack sustained the Retirement System’s determination.

* If, on the other had, the district commenced its payroll for such personnel in July, such employees would be receiving payments during July and August for work yet to be performed during the following academic year, i.e., the following September-June school year period. In Guilderland CSD v Trombetta [Not selected for publication in the Official Reports] the court said that "Where a school district employee is paid more than the per diem value of his or her annual salary, and thereafter fails to complete the temporal period of work he or she is obligated to perform, there must be a per diem adjustment of salary paid, so as to equate salary paid with work performed, and a return to the school district of any overpayment computed on such basis."

** TRS conceded that “summer school compensation constitutes regular salary,” but concluded that the stipend payments claimed by O’Brien for the purposes of determining her “final average salary” were payments separate and distinct from summer school compensation.

The text of the decision is posted on the Internet at: http://www.courts.state.ny.us/reporter/3dseries/2010/2010_51398.htm
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