Opinion ID: 2276172
Heading Depth: 1
Heading Rank: 1

Heading: Interpretation and Application of Laws 1991, 313:7

Text: Both parties agree that the threshold issue is whether the board correctly rejected the petitioners' assertion that payments were based on unused, pre-1991 sick time. The petitioners assert, and the NHRS does not dispute, that the plain meaning of based on, Laws 1991, 313:7, means having as its basis, and that the plain meaning of basis is the base, foundation, or chief supporting factor. (Quotation omitted.) Accordingly, the instant dispute centers upon the application of this definition. Laws 1991, 313:7 places the burden upon the retiring members to demonstrate that severance pay was based on unused, pre-1991 sick time. See Laws 1991, 313:7. Laws 1991, 313:7 further vests the NHRS with discretion to accept or reject the proffered explanation. See id. (stating that retiring member must demonstrate[] to the satisfaction of the [board] that all or part of ... severance pay was based on accrued holiday, vacation or sick time before exemption from 150 percent cap applies). Given the evidence adduced by the hearings examiner, the petitioners have failed to demonstrate that the NHRS clearly exercised its discretion unreasonably or unlawfully. The petitioners concede that teachers retiring early would receive the same total amount in severance whether they had accumulated pre-1991 sick leave or not. Nevertheless, they argue that the school district intended for this compensation to be based on unused, pre-1991 sick time and computed their contributions to the NHRS accordingly. The evidence before the hearings examiner indicated that the petitioners' early retirement benefits unexpectedly increased employer contribution rates. Maureen Kryger, who ensured for the NHRS that retirement annuities paid to retired employees were in line with employer contributions, testified that after the 150 percent cap was in place, employer contribution rates increased, that the actuary attributed this increase to the severance payments that members were receiving, because ultimately it enhanced their pension benefit, and that there was a great deal of discussion about it in the [NHRS] office with the actuary, even with the legislature at times. The need to increase employer contribution rates suggests that the school district, which presumably used sound accounting methods to determine its contributions to the NHRS, see N.H. CONST. pt. I, art. 36-a, had neither anticipated nor accounted for unused, pre-1991 sick time to be exempt from the 150 percent cap by virtue of the early retirement benefit. Kryger also questioned the forms generated by the school district to report the early retirement benefit because early retirement incentives were generally lump sum payment[s] and were not expressed in terms of days. She also found it very unusual ... to see[] sick leave paid at two different rates, one rate for unused, pre-1991 sick time and another for unused, post-1991 sick time. Nancy Mahar, who served as payroll manager for the school district, refused to certify the early retirement benefit forms because, in her opinion, the figures were not properly reconciled. She testified that the school district failed to abide by the CBA's fifty percent cap on unused, pre-1991 sick time as part of the early retirement benefit. The NHRS, however, continued to accept as sufficient the school district's assurances, including sworn certification, that the early retirement benefits were based, at least in part, on unused, pre-1991 sick time. In 2003, the NHRS looked anew at the early retirement benefit, in part because a document included within one petitioner's NHRS submission was prominently labeled, in bold print, INTERNAL DOCUMENTNOT FOR USE WITH NHRS! The document explained how the individual payout was calculated and made it clear that the retiree's early retirement benefit remained the same regardless of the amount of her unused, pre-1991 sick time. Further investigation revealed to the NHRS that age was the only variable in the early retirement benefit calculation. In this light, the NHRS rejected the petitioners' assertion that their early retirement benefit was based on unused, pre-1991 sick time, finding instead that the substance of the benefit controls its character, see N.H. Division of Human Services v. Allard, 141 N.H. 672, 675, 690 A.2d 566 (1997); cf. Commissioner v. Hansen, 360 U.S. 446, 461, 79 S.Ct. 1270, 3 L.Ed.2d 1360 (1959), not arbitrary labels attached by the CBA. The petitioners contend that, to the extent doubt existed regarding whether the early retirement benefits were based on unused, pre-1991 sick time, this doubt should be resolved in their favor in accordance with Laws 1991, 313:7. We disagree. Laws 1991, 313:7 requires only doubts as to the interpretation of service data in determining when credits were earned be resolved in favor of the retirees. The NHRS does not dispute the amount of unused, pre-1991 sick time each petitioner has accrued. Accordingly, there is no doubt about the interpretation of their service data. The petitioners also argue that roughly ten years of permitting early retirement benefits to be exempt from the cap amounts to an agency interpretation to which the NHRS is bound and to which this court must defer. See Casale v. Pension Com., Etc., of Newark, 78 N.J.Super. 38, 187 A.2d 372 (Law Div.1963). We disagree. Laws 1991, 313:7 vests the NHRS with discretion to determine whether and to what extent the early retirement benefits were based on unused, pre-1991 sick time. Although we might agree that granting pensions could amount to a prior administrative construction which is entitled to great weight, any such construction could not prevail over the plain meaning of the statute. Casale, 187 A.2d at 374. Laws 1991, 313:7 plainly requires that each retiring member demonstrate to the satisfaction of the ... board that compensation was based on unused, pre-1991 sick leave. This discretion necessarily contemplates that the NHRS may reach different outcomes under different circumstances. Cf. Appeal of Public Serv. Co. of N.H., 141 N.H. 13, 22, 676 A.2d 101 (1996) (noting that an [a]n administrative agency is not disqualified from changing its mind (quotation and brackets omitted)); NLRB v. Bell Aerospace Co., 416 U.S. 267, 294, 94 S.Ct. 1757, 40 L.Ed.2d 134 (1974) (stating that administrative agencies may choose to formulate policy through adjudication). Under the circumstances of this case, the NHRS administered Laws 1991, 313:7 in accordance with its plain meaning by reasonably determining that the petitioners had presented insufficient evidence to sustain their contention. Likewise, we note that nothing herein prevents future retirees from asserting and attempting to demonstrate to the NHRS that compensation they received was based on unused, pre-1991 sick leave.