n another blow
In an April 15 decision, the Appellate Division resoundingly
agreed with our position and concluded that the acting director did
not have the authority to refuse to implement a decision of the
Board of Trustees. The Court noted that the acting director did not
cite any authority to support taking the unprecedented action of
reviewing and reversing a decision by the Board of Trustees. The
Court agreed with us that only the Board of Trustees had the
authority under the pension laws to decide issues of creditable
compensation. The Court emphasized in no uncertain terms that
the acting director’s lack of authority to implement the final
decision of the Board of Trustees “is untethered to any statutory or
regulatory authority.” The court also called the acting director’s
actions “unprecedented” and concluded that it undermined what
was the Division’s role to provide only staffing support to enable the
Board of Trustees to carry out its role.
Finally, the Court was critical of the role that the New Jersey Attorney General played in these appeals. The Attorney General not only
served as the legal advisor to the Board of Trustees, but also represented the acting director in these appeals. The Court noted that the
Attorney General decided to represent and defend the “legally
untenable actions” of the acting director. By law, the Attorney General advises the Board of Trustees, and is present at every Board of
Trustees meeting. In addition to this role, the Attorney General represented the acting director and her position that she had the
authority to refuse to implement the Board’s decision.
The Court did suggest a procedure for any future disputes which
arise. The Court suggested that the Attorney General has the
authority to advise the PFRS Board of Trustees on what it believes
to be the proper legal interpretation of creditable compensation
under the pension laws, or on other issues as well. If the Board of
Trustees acts in “defiant refusal” of this opinion, the Attorney General can petition the Court to compel the PFRS Board to abide by
the Attorney General’s legal opinion. The Board would, in these circumstances, probably have to hire outside counsel. Because the
Attorney General did not do so in these cases, the Court concluded
that the acting director had no authority to refuse to implement the
Board of Trustees’ decisions. Because the Court decided the case on
these “jurisdictional” grounds, i.e., whether the acting director had
the authority to refuse to implement the Board’s decisions, the
Court did not address the merits of the issue: whether the senior
officer’s pay and longevity provisions at issue are creditable compensation.
As we have discussed at many meetings, these cases do not
involve the typical types of longevity provisions which increase
at regular intervals and by consistent percentages. They also
should not affect any senior officer’s pay provisions which
become effective before an officer reaches 20 years of service, as
long as they otherwise meet the definition of creditable compensation. Local PBAs would be well-advised to review any longevity
and senior officer pay clauses in their respective contracts with
their attorneys or the State PBA to determine whether there may
be an issue in the future. They should consult with their attorneys
in discussing what steps, if any, are necessary to insure that any
longevity or senior officer pay provisions continue to be
creditable compensation if they already are, and have been, part
of pensionable compensation. d
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