New York Law Review

Tag: Teacher Retirement Benefits

  • Koch v. New York City Dept. of Educ., 98 N.Y.2d 573 (2002): Inclusion of ‘Per Session’ Pay in Teacher Pension Calculations

    Koch v. New York City Dept. of Educ., 98 N.Y.2d 573 (2002)

    ‘Per session’ compensation earned by New York City public school teachers for additional hourly work, such as teaching summer school, is considered part of their pensionable salary base when calculating retirement benefits.

    Summary

    This case concerns whether “per session” compensation, which New York City teachers earn for hourly work outside their regular duties (e.g., summer school), should be included in the calculation of their retirement benefits. The teachers argued that this compensation is part of their pensionable salary, while the Board of Education (BOE) contended it is not. The New York Court of Appeals held that per session earnings should be included in the calculation of teachers’ pension benefits, finding no statutory basis to exclude it and emphasizing that the Legislature’s exclusion of specific compensation types implies the inclusion of others not listed.

    Facts

    New York City public school teachers could earn extra compensation through “per session” employment, including teaching summer school or leading extracurricular programs. Teachers applied for these positions annually, with the BOE limiting participation and setting compensation ceilings. The BOE’s expenditures on per session work amounted to hundreds of millions of dollars annually. A group of teachers sued, arguing that their per session earnings should be considered when calculating their retirement benefits.

    Procedural History

    The teachers sued the New York City Board of Education, seeking a declaration that per session earnings should be included in their base salary calculations for retirement. The Supreme Court ruled in the teachers’ favor. The Appellate Division affirmed this decision. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether “per session” compensation earned by New York City public school teachers is considered part of their “salary” for the purpose of calculating retirement benefits under the relevant provisions of the Administrative Code of the City of New York and the Retirement and Social Security Law.

    Holding

    Yes, because the relevant statutes do not explicitly exclude per session compensation from the calculation of retirement benefits, and the Legislature’s specification of exclusions implies that items not excluded are intended to be included. Moreover, per session work has become a “regular” component of the New York City system of public education.

    Court’s Reasoning

    The Court of Appeals conducted a de novo review, rejecting deference to the NYCTRS’s interpretation. The Court highlighted that the statutes creating Tiers I and II of the retirement system do not define “salary,” necessitating an examination of legislative history and intent. The court noted that the legislative intent behind the NYCTRS was to provide “an income related to actual earnings during employment.” The court found it significant that while the Legislature had explicitly excluded certain types of payments (e.g., lump sum payments for unused sick leave, termination pay) from the salary base used to calculate retirement benefits in Retirement and Social Security Law § 431, it did not exclude per session compensation. The Court reasoned that “where the Legislature lists exceptions in a statute, items not specifically referenced are deemed to have been intentionally excluded.” The Court also noted that the nature and implementation of per session activities, as well as the BOE’s commitment of significant resources to these programs, demonstrate that they have become a “regular” part of the New York City system of public education. This “regular” nature aligns with the definition of “wages” as “regular compensation” in the statutes governing Tiers III and IV of the retirement system. The Court emphasized that the inclusion of per session compensation did not violate the public policy against inflating earnings in the final years of public service, given the BOE’s oversight and the statutory limitations on annual salary increases. The Court found the potential for abuse curtailed by the regulations of the Chancellor of the New York City School Board and the BOE’s oversight. As the court stated, “the highly regulated nature of per session activities prevents artificial manipulation of total compensation in the preretirement period.”