I/M/O Town of Harrison and Fraternal Order of Police, lodge No. 116 , 440 N.J. Super. 268 ( 2015 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0083-11T2
A-0099-11T2
A-0123-11T2
A-0124-11T2
A-0157-11T2
A-0158-11T2
A-0159-11T2
A-0195-11T2
A-0208-11T2
I/M/O TOWN OF HARRISON AND
FRATERNAL ORDER OF POLICE, LODGE
NO. 116
___________________________________ APPROVED FOR PUBLICATION
I/M/O VERNON TOWNSHIP PBA LOCAL 285 April 15, 2015
CONTRACT
APPELLATE DIVISION
___________________________________
I/M/O BOROUGH OF RAMSEY AND PBA
LOCAL NO. 155
___________________________________
I/M/O TOWNSHIP OF WOODBRIDGE AND
PBA LOCAL 38
___________________________________
I/M/O CITY OF LINDEN AND FMBA LOCAL
NO. 234
___________________________________
I/M/O TOWN OF HARRISON AND FMBA
LOCAL NO. 22
___________________________________
I/M/O TOWN OF HARRISON AND PBA
LOCAL NO. 22
___________________________________
I/M/O TOWN OF HARRISON AND FMBA
LOCAL NO. 22
____________________________________
I/M/O CITY OF LINDEN AND FMBA LOCAL 234
_______________________________________
Argued September 17, 2014 – Decided April 15, 2015
Before Judges Fuentes, Ashrafi and O'Connor.
On appeal from the New Jersey Division of
Pension and Benefits.
Paul L. Kleinbaum argued the cause for
appellant SOA 22A in A-0083-11 (Zazzali,
Fagella, Nowak, Kleinbaum & Friedman,
attorneys; Mr. Kleinbaum, on the brief).
Markowitz & Richman, attorneys for appellant
Town of Harrison and Fraternal Order of
Police, Lodge No. 116 in A-0083-11 (Matthew
D. Areman, on the brief).
James M. Mets argued the cause for appellant
Vernon Township Local 285 Contract in
A-0099-11 (Mets Schiro & McGovern, LLP,
attorneys; Mr. Mets and Brian J. Manetta, on
the brief).
Paul L. Kleinbaum argued the cause for
appellant Borough of Ramsay and PBA Local
No. 155 in A-0123-11 (Zazzali, Fagella,
Nowak, Kleinbaum & Friedman, attorneys; Mr.
Kleinbaum and Marissa A. McAleer, on the
brief).
Paul L. Kleinbaum argued the cause for
appellant Township of Woodbridge and PBA
Local 38 in A-0124-11 (Zazzali, Fagella,
Nowak, Kleinbaum & Friedman, attorneys; Mr.
Kleinbaum and Marissa A. McAleer, on the
brief).
2 A-0083-11T2
Daniel J. McCarthy argued the cause for
appellant City of Linden and FMBA Local No.
234 in A-0157-11 (John G. Hudak, City
attorney, Mr. McCarthy, on the brief).
Craig S. Gumpel argued the cause for
appellant FMBA Local No. 234 in A-0157-11
(Mr. Gumpel and Bassel Bakhos, on the
brief).
Craig S. Gumpel argued the cause for
appellant Town of Harrison and FMBA Local
No. 22 in A-0158-11 (Mr. Gumpel and Bassel
Bakhos, on the brief).
Paul L. Kleinbaum argued the cause for
appellant Town of Harrison and PBA Local No.
22 in A-0159-11 (Zazzali, Fagella, Nowak,
Kleinbaum & Freidman, attorneys; Mr.
Kleinbaum and Marissa A. McAleer, on the
brief).
Javerbaum, Wurgaft, Hicks, Kahn, Wikstorm &
Sinns, attorneys for appellants in Town of
Harrison and FMBA Local 22 in A-0195-11,
join in the briefs of co-appellants.
Craig S. Gumpel argued the cause for
appellant City of Linden and FMBA Local 234
in A-0208-11 (Mr. Gumpel and Bassel Bakhos,
on the brief).
Eileen S. Den Bleyker, Senior Deputy
Attorney General, argued the cause for
respondent New Jersey Division of Pensions
and Benefits (John J. Hoffman, Acting
Attorney General, attorney; Ms. Den Bleyker,
on the brief).
The opinion of the court was delivered by
FUENTES, P.J.A.D.
In this opinion, we decide nine appeals filed by five
municipalities and four collective bargaining agents (unions)
3 A-0083-11T2
that represent police officers and firefighters employed by
these municipalities. Although the respective functions of
these appellants and the traditional roles they have
historically played have cast them as antagonists, they speak
with one voice here. These parties have mounted a collective
legal challenge to the Acting Director of the Division of
Pensions and Benefits' decision to refuse to implement the final
determination of the Board of Trustees of the Police and
Firemen's Retirement System (PFRS Board of Trustees), which
found certain senior officer and longevity pay provisions in the
collective bargaining agreements entered into by appellants were
creditable compensation for pension purposes under N.J.S.A.
43:16A-1(26)(a).
Thus, to be clear, we do not decide here whether the
particular longevity pay provisions in these collective
bargaining agreements constitute creditable compensation
benefits as defined in N.J.S.A. 43:16A-1(26)(a) or N.J.A.C.
17:4-4.1. The singular legal question before us is this: Does
the Acting Director of the Division of Pensions and Benefits
have the legal authority to refuse to implement a final decision
of the PFRS Board of Trustees because the Acting Director has
independently concluded that the decision of the PFRS Board of
Trustees is legally incorrect? After reviewing the statutory
4 A-0083-11T2
scheme established by the Legislature in the Police and
Firemen's Retirement System Act, N.J.S.A. 43:16A-1 to -68, and
the regulations promulgated by the PFRS Board of Trustees to
administer this system, we conclude the answer to this question
is unequivocally "no."
The Legislature vested the PFRS Board of Trustees with
exclusive authority and "responsibility for the proper operation
of the retirement system." N.J.S.A. 43:16A-13(a)(1). Although
the Division of Pensions and Benefits has the power and
responsibility to "investigate increases in compensation
reported for credit which exceed reasonably anticipated annual
compensation increases for members of the retirement system[,] .
. . cases where a violation of the statute or rules is suspected
shall be referred to the Board." N.J.A.C. 17:4-4.1(d) (emphasis
added).
The PFRS Board of Trustees has the authority to "question
the compensation of any member or retiree to determine its
credibility where there is evidence that compensation reported
as base salary may include extra compensation." N.J.A.C. 17:4-
4.1(b). Only this court has the legal authority to overturn a
final decision of the PFRS Board of Trustees in the context of
an appeal filed by a member of the PFRS. See N.J.A.C. 17:4-
1.7(a); R. 2:2-3(a)(2). The action taken by the Acting Director
5 A-0083-11T2
in the cases before us lacked statutory or regulatory authority
and was therefore ultra vires, without legal force or effect.
See Lourdes Med. Ctr. v. Bd. of Review, 197 N.J. 339, 378
(2009).
We start our factual recitation with a brief overview of
the longevity salary increase provisions in the various
collective bargaining agreements negotiated by the
municipalities and unions that have appealed the Acting
Director's actions.
I
Town of Harrison
We have consolidated the following appeals affecting the
Town of Harrison: I/M/O Town of Harrison and PBA Local No. 22,
Docket No. A-0159-11; I/M/O Town of Harrison and FOP, Lodge No.
116, Docket No. A-0083-11; I/M/O Town of Harrison and FMBA Local
No. 22, Docket No. A-0158-11; and I/M/O Town of Harrison and
FMBA Local No. 22, PBA Local No. 22, and SOA 22A, Docket No. A-
0195-11. The Fraternal Order of Police, Lodge No. 116 (FOP
Lodge 116), Police Benevolent Association, Local No. 22 (PBA
Local 22), and Firemen's Mutual Benevolent Association, Local
No. 22 (FMBA Local 22) filed briefs in support of these appeals
and join in each other's arguments. The Town of Harrison has
6 A-0083-11T2
also joined in these appeals challenging the action taken by the
Acting Director.
Police Officers
FOP Lodge 116 identifies itself as "a labor organization
and representative within the meaning of N.J.S.A. 34:13A-3(e)."
This appellant represents all uniformed officers in the Harrison
Police Department holding the ranks of Sergeant, Lieutenant and
Captain, for purposes of collective bargaining. In 2007, FOP
Lodge 116 was certified as the exclusive bargaining agent for
all superior officers employed by Harrison. FOP Lodge 116
entered into a collective bargaining agreement with Harrison,
which was valid from January 1, 2007 through December 31, 2011.
Before 2007, PBA Local 22 represented police officers holding a
supervisory rank.
Since 1999, the two principal bargaining agents
representing superior officers in the Harrison Police Department 1
negotiated a provision in their collective bargaining agreements
allowing for increases to officers' base salary contingent upon
their years of service with the Town. This longevity clause
provides as follows:
1
PBA Local 22 represented these officers from 1999 to 2007; FOP
Lodge 116 was the recognized bargaining agent from January 1,
2007 through December 31, 2011.
7 A-0083-11T2
ARTICLE XVIII
LONGEVITY
Section 1: In addition to wages, members
shall receive longevity as follows:
After three years: Two (2%) percent
After five years: Four (4%) percent
After ten years: Six (6%) percent
After fifteen years: Eight (8%) percent
After twenty years: Ten (10%) percent
Start of twenty-three years: Twelve (12%)
percent
Start of twenty-four years: Fourteen (14%)
percent
Section 2: Longevity will be paid in weekly
salaries.
This precise language was adopted in the Article XV-
Longevity provision of the Harrison salary ordinance to mirror
the provisions contained in the parties' collective negotiations
agreement. Article XVIII was included, verbatim, in the
contract between Harrison and PBA Local 22, effective January 1,
1999 through December 31, 2001. By letter dated June 15, 2000,
Regina M. Trauner, the secretary of the PFRS Board of Trustees
at the time, formally advised Harrison that the PFRS Board of
Trustees found the "stipend referred to in Article XIX Workday
8 A-0083-11T2
of the agreement" was "not considered creditable for pension
purposes."
Because Trauner did not mention the longevity provision in
her June 15, 2000 letter, Harrison and FOP Lodge 116 inferred
from this absence of criticism that the PFRS Board of Trustees
had tacitly approved the longevity provision.2 According to FOP
Lodge 116, it and Harrison "continued to negotiate successor
agreements" based on this "tacit approval of the negotiated
longevity provision[.]" Article XVIII remained in the 2007-2011
collective bargaining agreement between FOP Lodge 116 and
Harrison.
By letter dated January 21, 2011, Michael R. Czyzyk, the
Division's Supervisor, External Audits, informed Harrison's
Chief Financial Officer (CFO) that the Division had determined
"that the longevity compensation, as a component of the
ordinance, is not creditable in its entirety for pension
purposes as per N.J.A.C. 17:2-4.1."3
2
We must point out that prudence dictates that Harrison should
have been more proactive. Under these circumstances, Harrison
should have obtained a formal statement from the PFRS Board of
Trustees confirming it had approved the specific longevity
provision.
3
The relevant section of this regulation states:
The compensation of a member subject to
pension and group life insurance
(continued)
9 A-0083-11T2
As explained by External Audit Supervisor Czyzyk, the
Division found
that the longevity increment from 10% to 12%
in the 23rd year of service and the
longevity increment from 12% to 14% in the
24[th] year of service incrementally
excessive compared to prior increases.
Also, granting such an increase in the 23rd
and 24th year of an employee's service is
clearly being awarded in order to enhance
that member's retirement benefit.
Of particular relevance here, the Division also explained to
Harrison's CFO that this determination was merely an interim
step, subject to further scrutiny if the employees affected by
it exercised their rights to appeal:
The Division will not implement this
Administrative determination until 90-days
have elapsed from the date of this letter to
permit any members who wish to appeal
adequate time to do so. Please provide a
copy of this letter to all employees and
retirees who are affected by this
(continued)
contributions and creditable for retirement
and death benefits in the system shall be
limited to base salary and shall not include
extra compensation. Forms of compensation
that have been identified as extra
compensation include, but are not limited
to:
. . . .
Increments or adjustments in recognition of
the member's forthcoming retirement[.]
[N.J.A.C. 17:2-4.1(a)(10).]
10 A-0083-11T2
determination. Any affected member who
disagrees with the determination may appeal
to the PERS Board of Trustees by writing a
letter setting forth the reasons thereof.
The appeal should be directed to the
attention of Kathleen Coates, Board
Secretary to the PERS Board of Trustees, at
the address on the letterhead.
Despite references in the letter to the right to appeal to
the Public Employee Retirement System (PERS) Board of Trustees,
by letters dated March 25, 2011 and August 16, 2002, the
Division acknowledged the PFRS Board of Trustees' jurisdiction
to hear appeals from its administrative determination. In fact,
in his March 25, 2011 letter, Czyzyk acknowledged that "Harrison
[Town] employees enrolled in the PFRS have filed appeals after
receiving the Division's January 21, 2011 correspondence."
Thus, "[i]n order to provide both the PERS and PFRS Trustees
with a complete record of the matter," Czyzyk requested Harrison
to
please forward to my attention . . . all
contracts, agreements, including addendums
and sidebar agreements currently in-force as
well as individual agreements and ordinances
for all individuals or groups of individuals
affected by a longevity provision as
described in the Division's January 21, 2011
correspondence.
(Emphasis added).4
4
We have highlighted the word "correspondence" to distinguish
it from the Acting Director's subsequent characterization of the
Division's action as a "final administrative determination"
(continued)
11 A-0083-11T2
In accordance with the instructions in Czyzyk's January 21,
2011 letter, on April 12, 2011, FOP Lodge 116 appealed the
Division's "administrative determination" to the PFRS Board of
Trustees. On April 15, 2011, the Secretary to the PFRS Board of
Trustees informed the parties that the appeal would be
considered on May 2, 2011. By letter dated May 5, 2011, the
PFRS Board of Trustees issued a final decision, which approved
the longevity schedule and rejected the Division's
"administrative determination" reflected in Czyzyk's January 21,
2011 letter. The letter, signed by the PFRS Board of Trustees'
Secretary, Wendy Jamison, stated:
Based on a review of the pertinent
documents, the PFRS Board voted to approve
the longevity schedule as cited in Article
XVIII of the current contract dated January
1, 2007 to December 31, 2011.
Consequently, there will be no change in any
of the retiree's monthly PFRS retirement
allowances.
Nearly three months after the PFRS Board of Trustees' final
decision, Florence J. Sheppard, the Division's then Acting
Director, sent a letter dated July 27, 2011, addressed to the
attorneys representing the affected parties. After reinstating
(continued)
legally competent to supersede the PFRS Board of Trustees'
conflicting determination, and subject to appellate review by
this court under Rule 2:2-3(a)(2) as a final agency decision.
12 A-0083-11T2
the analysis reflected in Czyzyk's January 21, 2011 letter,
Sheppard informed the parties that "the Division will not
implement the decision of the Board to permit such increases as
creditable for pension retirement credit." Sheppard concluded
her letter by informing the recipients, "[y]ou have the right to
appeal this final administrative action to the Superior Court of
New Jersey, Appellate Division, within 45 days of the date of
this letter in accordance with the Rules Governing the Courts of
the State of New Jersey."
FOP Lodge 116, PBA Local 22, and the Town of Harrison have
appealed to this court, arguing the Acting Director did not have
the legal authority to refuse to implement a final decision of
the PFRS Board. They seek an order from this court directing
the Division to implement the PFRS Board of Trustees' decision.
Firefighters
Harrison FMBA Local 22 describes itself as "the exclusive
bargaining representative for uniformed employees in the Fire
Department of the Town of Harrison below the rank of Chief."
FMBA Local 22 and Harrison entered into a collective bargaining
agreement effective January 1, 2007 through December 31, 2011.
Article XX of that agreement contains a longevity provision
identical to the provision in the contract between Harrison and
13 A-0083-11T2
the bargaining agents that represented the police officers
described supra.
According to FMBA Local 22, Harrison has had a longevity
program since at least 1976. In a certification submitted in
this appeal, Harrison Fire Department Battalion Chief and former
FMBA president Michael Greene describes the history of longevity
pay in the FMBA's contracts is as follows:
From 1976 to 1983, all Town employees
received the following longevity:
After five years Two (2%) percent
After ten years Four (4%) percent
After fifteen years Six (6%) percent
After twenty years Eight (8%) percent
. . . .
In 1984, the longevity provision of the FMBA
agreement was as follows:
After three (3) years One (1%) percent
After five (5) years Three (3%) percent
After ten (10) years Five (5%) percent
After fifteen (15) years Seven (7%) percent
After twenty-two (22) years Nine (9%)
percent
. . . .
In 1985 . . . :
After three (3) years Two (2%) percent
After five (5) years Four (4%) percent
After ten (10) years Six (6%) percent
After fifteen (15) years Eight (8%) percent
14 A-0083-11T2
After twenty-two (22) years Ten (10%)
percent.5
The longevity schedule increased throughout the years until
about January 1, 1996, when the current formula was adopted.
According to Greene, "[t]his formula for longevity is the same
as the current longevity schedule and has been in at least five
(5) collective negotiations agreements, including the current
one which expires December 31, 2011." Stated differently, these
longevity provisions have been considered creditable
compensation for pension purposes, allowing retired firefighters
to receive pension benefits inclusive of longevity since 1976.
FMBA Local 22 asserts that the Division has reviewed and
acquiesced to the creditability for pension purposes of these
same longevity provisions on multiple prior occasions. The
record before us contains a letter dated August 16, 2002,
written by External Audit Supervisor Czyzyk to the Harrison Town
Clerk. Czyzyk informed the Clerk in this letter that the audit
section of the Division had determined that several provisions
of the FMBA Local 22 contract applicable from January 1, 1999
through December 31, 2002, including the longevity provision,
were "in violation" of the creditable compensation provision,
N.J.A.C. 17:4-4.1.
5
The Senior Deputy Attorney General representing the Division
in this appeal did not object to this exhibit.
15 A-0083-11T2
The record before us concerning how this 2002 notice of
"violation" from Czyzyk was addressed and resolved by Harrison
and FMBA Local 22 is murky at best. The paper trail in support
of appellants' position consists of a series of contemporaneous
correspondence from the attorneys representing both FMBA Local
22 and Harrison memorializing telephone discussions and
agreements allegedly reached with a Division representative
named JoAnn E. Martin. The three outstanding issues were
identified by the attorney representing FMBA Local 22 in his
October 1, 2002 letter to the attorney representing Harrison:
1. Fire Sub-Code Official Stipend. A
letter from the Town clarifying the actual
title would resolve the issue.
2. Execution of Side Agreement clarifying
holiday pay in base pay would resolve the
issue.
3. Longevity issue sent to Committee on
Creditable Compensation for review.
(Emphasis added).
The record does not contain a direct indication that
Harrison reached an agreement with the Division addressing the
longevity issue highlighted in Item 3 above. The record is
equally barren of any correspondence or notice of violation from
the Division on the longevity issue during the nine-year period
from 2002 to 2011. However, whether Harrison and FMBA Local 22
reached an agreement with the Division concerning the violation
16 A-0083-11T2
referred to by Czyzyk in 2002 is not relevant to the question
before us. As we made clear in our prefatory remarks, this
appeal is limited to a single legal question: whether the
Director of the Division of Pensions and Benefits has the legal
authority to refuse to implement a final decision reached by the
PFRS Board of Trustees.
On January 21, 2011, the same date Czyzyk announced his
decision to FOP Lodge 116 regarding the longevity provisions in
the agreement with the police officers, he communicated the same
determination that FMBA Local 22's longevity provision was not
creditable for pension purposes under N.J.A.C. 17:2-4.1. On
April 18, 2011, FMBA Local 22 appealed the Division's January
21, 2011 "administrative determination" to the PFRS Board of
Trustees. On May 2, 2011, the PFRS Board of Trustees rejected
the Division's determination and approved the longevity schedule
cited in the collective bargaining agreement.
Consistent with the position she took with respect to the
longevity provision in the collective bargaining agreement
involving the police officers, the Acting Director announced the
Division would not implement the decision of the PFRS Board of
Trustees with respect to the longevity provisions in the
agreement Harrison entered into with FMBA Local 22. In fact,
17 A-0083-11T2
the Acting Director used nearly identical language in the letter
affecting the firefighters.
On August 5, 2011, the attorneys representing FMBA Local
22 wrote to the Acting Director to express their disagreement
with her decision to disregard the final determination of the
PFRS Board of Trustees. The firefighters also disagreed that
her unprecedented, unilateral decision was reviewable as of
right by this court under Rule 2:2-3(a)(2). The Acting Director
did not respond to FMBA Local 22's letter. FMBA Local 22 now
appeals to this court seeking the same relief sought by the Town
of Harrison and the Unions representing the police officers.
II
City of Linden
The appeals involving Linden relate to the collective
bargaining agreement Linden entered into with FMBA Local 234
effective January 1, 2005. FMBA Local 234 and Linden also have
a Memorandum of Understanding (MOU) covering the period from
January 1, 2009 through December 31, 2013. The first provision
at issue in this case involves Article VIII Section D of the
parties' now expired collective bargaining agreement:
D. Senior Fire Officer Differential
Effective January 1, 2000, Fire officers who
have completed their twentieth (20th) year
of service with the City of Linden shall
receive a Senior Fire Officer Differential
18 A-0083-11T2
in the amount of $1,500.00 per year to be
paid in equal bi-weekly installments.
Article VIII of the agreement, effective January 1, 2009
through December 31, 2013,6 also includes the following
provision:
C. Senior Deputy Chief Differential
Effective January 1, 2010, Senior Officer
Pay shall be as follows:
Beginning of 14th year of service: $1,000.00
Beginning of 21st year of service: $1,750.00
Beginning of 24th year of service: $2,250.00
Said pay shall be non-cumulative and paid in
equal bi-weekly installments.
By letters dated January 15, 2010 and March 18, 2010,
Division auditor Jean C. Monahan began reviewing the collective
bargaining agreement Linden had entered into with FMBA Local
234, effective January 1, 2005 through December 31, 2008.
Monahan asked Linden's Labor Relations Specialist, attorney
Allan C. Roth, whether "compensation associated" with the Senior
Fire Officer Differential reflected in Article VIII, Section C
was "reported as creditable salary for pension purposes[.]"
Neither Roth nor any other representative of Linden responded to
Monahan's requests for "clarification" of the compensation
6
This exact language was also included in paragraph 18 of an
MOU entered into before the 2009-2013 agreement was successfully
negotiated.
19 A-0083-11T2
awarded to firefighters under this provision of the collective
bargaining agreement.
On October 19, 2010, Supervisor of External Audits Czyzyk
wrote Roth, in his capacity as Linden's legal representative,
advising him that "[a]fter careful review" of the collective
bargaining agreement and the MOU, the Division had made "an
administrative determination" that these agreements contained
provisions "that may be in violation of the statutes and
regulations which set forth those forms of compensation that are
creditable for pension purposes. N.J.A.C. 17:4-4.1(a)(1) and
(2)." (Emphasis added). Czyzyk specifically noted that "[t]he
Division finds that senior officer compensation payable in the
20th, 21st and 24th year of service is extra compensation
received in anticipation of retirement and in violation of
N.J.A.C. 17:4-4.1(a)1 and 2(ix) and (xiii)."7
As he did in his correspondence with the Town of Harrison,
Czyzyk concluded his letter to Roth with the following
statement:
The Division will not implement this
Administrative determination until 90 days
have elapsed from the date of this letter to
permit any members who wish to appeal
7
The October 19, 2010 letter from Czyzyk contains a
comprehensive review of these two labor agreements. Czyzyk
raises other questions and concerns in this letter that are not
germane to the issues raised in this appeal.
20 A-0083-11T2
adequate time to do so. Please provide a
copy of this letter to all employees and
retirees who are affected by this
determination. Any affected member who
disagrees with the determination may appeal
to the PFRS Board of Trustees by writing a
letter setting forth the reasons thereof. .
. .
You should not make any adjustments to the
creditable salary you currently report on
these members until the end of the 90-day
appeal period. . . .
At the end of the 90-day period, if no
outstanding appeals are pending or if no
action was taken by the PFRS Board of
Trustees, the Division will instruct you to
change the creditable salary reported to
conform to this determination. . . .
(Emphasis added).
Linden sought to appeal the Division's October 19, 2010
determination in a letter addressed to Czyzyk dated January 17,
2011. Linden also included in this letter-appeal the
"additional information" Czyzyk had requested nearly two months
earlier. In his capacity as Linden's Labor Relations Specialist
counsel, Roth claimed that the Senior Deputy Chief Differential
was negotiated after the agreement had been submitted to
arbitration. According to Roth, the arbitrator "awarded senior
officer pay, in lieu of increasing or re-establishing
longevity." Thus, under the collective bargaining agreements:
[N]o employee hired after December 31, 1974
was entitled to receive longevity. However,
with the arbitrator's award of compensation
21 A-0083-11T2
entitled "senior officer pay" all uniformed
fire department employees are entitled to
[this] pay, which was and is now paid as
part of salary through the City's bi-weekly
pay system. Therefore, the City and the
FMBAs believe the pay to be pensionable and
in compliance with N.J.A.C. 4A:17-4:4.1(iv).
On March 18, 2011, FMBA Local 234 submitted a letter in support
of Linden's position.
On May 2, 2011, the PFRS Board of Trustees reversed the
Division's administrative determination and found the senior
officer pay differentials to be creditable compensation for
pension purposes. Once again, the Division's Acting Director
refused to implement the PFRS Board of Trustees' final decision.
In her letter dated July 27, 2011, the Acting Director again
found the "individual salary adjustments" were "granted
primarily in anticipation of the member's retirement," in
violation of N.J.S.A. 43:16A-1(26)(a).
As was the case with respect to the Town of Harrison, FMBA
Local 234 objected to the Acting Director's unilateral
determination. The Acting Director did not respond. FMBA Local
234 filed this appeal thereafter.
III
Vernon Township
Vernon Township entered into a collective negotiations
agreement (CNA) with PBA Local 285 effective January 1, 2008
22 A-0083-11T2
through December 31, 2011. The disputed provisions at issue in
this appeal are found in Article XVII of that agreement, which
provides as follows:
A. The salaries from Employees covered by
this AGREEMENT shall be as set forth on
Schedule A annexed.
B. The differential between ranks shall be
ten (10%) percent above the prior grade.
. . . .
E. An Officer having twenty (20) years of
service within the meaning of the Police and
Fire Retirement System or having fifteen
(15) years of service with Vernon Township
and ten (10) years of Law Enforcement
experience shall be elevated one-half (1/2)
the distance in pay to the next higher rank,
and this will be added to and become part of
the Officer's base salary.
On May 20, 2010, Czyzyk wrote a letter to Vernon's
Personnel Director, Pennie Roland, advising her that
[a]fter careful review of the PBA Local #285
Contract for the period January 1, 2008
through December 31, 2011 . . . the Division
has made an administrative determination
that the . . . contract contains a provision
that is causing monies to be included in the
base salary reported to the Division that is
not creditable for pension purposes.
After specifically identifying "Article XVII: Salaries:
Paragraph E" as the problematic provision, Czyzyk explained that
the Division "considers this to be compensation given to a
member in anticipation of retirement." Czyzyk concluded his
23 A-0083-11T2
letter to Vernon's Personnel Director Roland with the same
admonition he included in his communications with the Town of
Harrison and the City of Linden. (See supra, Part I, at 9-11;
and Part II, at 20-21). In the interest of clarity, Czyzyk
concluded his letter by emphasizing the following three points:
(1) the Division would not implement this action for ninety days
to permit employees adequate time to appeal to the PFRS Board of
Trustees; (2) the Township should not make any adjustment to the
creditable salary until the end of the appeal period; and (3)
the Division would instruct the Township how to implement its
determination only "if no outstanding appeals [were] pending or
if no action was taken by the PFRS Board of Trustees."
(Emphasis added).
Following the Division's instructions, PBA Local 285
appealed the May 20, 2010 "administrative determination" to the
PFRS Board of Trustees on August 11, 2010. After an initial
postponement to consider additional information submitted by PBA
Local 285 concerning the financial impact of the terms of the
contract, the PFRS Board of Trustees met on January 10, 2011,
and formally determined the salary increases provided under
Article XVII, Paragraph E of the CNA were compensable for
pension purposes. The PFRS Board of Trustees communicated its
decision in a letter dated January 12, 2011, from Wendy Jamison,
24 A-0083-11T2
Secretary to the PFRS Board of Trustees, to the attorneys
representing PBA Local 285.
After framing the legal question presented to the PFRS
Board of Trustees by PBA Local 285 on behalf of the members
affected by the Division's initial administrative determination,
Secretary Jamison wrote:
The Board voted to approve your request to
include Paragraph E above as creditable
compensation in the PFRS. The Board
considered the salary as an additional pay
step of the salary scale as denoted on
schedule A. A copy of this letter is being
sent to the Internal and External Audit
Sections of the Division to implement the
Board's decision.8
More than seven months after the PFRS Board of Trustees'
decision, Acting Director Florence Sheppard sent a letter dated
July 27, 2011, to the attorneys representing PBA Local 285
advising them that "the Division will not implement the decision
of the Board to permit such increases as creditable for pension
retirement credit." The letter reflects that the Acting
Director reached this decision after conducting a de novo review
of the evidence presented to the PFRS Board of Trustees and
engaging in her own independent legal analysis of the relevant
statutory and regulatory provisions. The Acting Director did
8
PBA Local 285 included in its Appendix a copy of Secretary
Jamison's January 12, 2011 letter, which lists Czyzyk as
receiving a copy of this correspondence.
25 A-0083-11T2
not cite any legal authority to support her decision to refuse
to implement the decision of the PFRS Board of Trustees.
Consistent with the approach she employed in the cases
involving the Town of Harrison and the City of Linden, the
Acting Director concluded her letter by informing PBA Local 285
that: "You have the right, if you wish, to appeal this final
administrative action to the Superior Court of New Jersey,
Appellate Division . . . in accordance with the Rules Governing
the Courts of the State of New Jersey."
By letter dated August 8, 2011, the attorneys representing
PBA Local 285 asserted that "[t]he Director of the Division of
Pensions and Benefits does not have the authority to determine
what is and is not creditable salary and to ignore decisions of
the PFRS Board." Citing N.J.S.A. 43:16A-1.2 and N.J.A.C. 17:1-
1.1(g), PBA Local 285 argued the Director's role was limited to
reviewing the positions covered by the retirement system and
recommending to the PFRS Board of Trustees whether they should
remain a covered position for pension purposes. Counsel
concluded his letter to the Acting Director with the following
request:
We also respectfully request that, while
this dispute is pending, you suspend
implementation of your July 27, 2011
determination for any PBA Local 285
collective negotiations unit member who is
receiving a pension benefit base[d] on the
26 A-0083-11T2
inclusion of the disputed contractual
clause. To reduce their pension benefits at
this time, especially in light of recent
legislation that will all but eliminate any
pension COLA [Cost of Living Adjustment],
will [wreak] havoc on the household budgets
of these retirees who relied in good faith
on the Division's calculation of their
pension benefit.
Thank [you] for your attention to this
matter. We look forward to your response.
The Acting Director did not respond to this letter. PBA
Local 285 filed its Notice of Appeal with this court on August
31, 2011.
IV
Borough of Ramsey
The Borough of Ramsey entered into a collective
negotiations agreement (CNA) with PBA Local 155 covering the
period of time from January 1, 2007 through December 31, 2011.
The CNA included a provision entitled "Salary Schedule" that
provided as follows:
Senior Officer Pay status is a new category.
After completing 23 years of service as a
police officer, top step patrolmen will be
placed in senior officer pay status. Annual
salary for those in senior officer pay
status will be salary that is midway between
the salary for an 8th step patrolman and a
sergeant.
The appellate record includes a Ramsey Police Department
Proposed Salary Schedule from 2003 through 2006. Based on this
27 A-0083-11T2
salary schedule, "midway between the salary for an 8th step
patrolman and a sergeant" in 2002 would constitute an annual
salary differential of approximately $3851.9 The Senior Officer
Pay differential in 2006 was approximately $4419.10 Senior
Officer Pay status was a new category, available only to those
police officers who had completed twenty-three years of service;
a top step patrol-officer was placed in senior officer pay
status only after reaching this career milestone.
The case involving PBA Local 155 and Ramsey followed the
same procedural pattern we have discussed at length in this
opinion in Part I involving Harrison, Part II involving Linden,
and Part III involving Vernon. By letter dated October 15,
2004, Czyzyk advised Ramsey Borough Administrator Nicholas C.
Sanos that the Division viewed the "Senior Officer Pay" status
"as a salary adjustment granted primarily in anticipation of the
member's retirement." As such, these salary increases were not
9
This Salary Schedule shows that in 2002, an annual salary for
an 8th step patrol-officer was $81,500.87. A sergeant in the
same level of seniority shows an annual salary in 2002 of
$89,203.47. The "midway" salary differential between these two
figures is approximately $3851.
10
The differential would increase commensurate with the annual
salary increases. Based on this Salary Schedule, in 2006 an 8th
step patrol-officer's annual salary was $93,525; a sergeant's
annual salary with the same level of seniority was $102,364.
The "midway" salary differential between these two figures is
approximately $4419.
28 A-0083-11T2
creditable for pension purposes under N.J.S.A. 43:16A-1 and
N.J.A.C. 17:4-4.1.
As he did with respect to the other three municipalities,
Czyzyk informed Borough Administrator Sanos that: (1) the
Division would not implement this action for ninety days to
permit employees adequate time to appeal to the PFRS Board of
Trustees; (2) Ramsey should not make any adjustment to the
creditable salary until the end of the appeal period; and (3)
the Division would instruct Ramsey how to implement its
determination only if no outstanding appeals were pending or if
the PFRS Board of Trustees had not decided otherwise.
PBA Local 155 appealed the Division's administrative action
to the PFRS Board of Trustees. By letter dated July 12, 2011,
PFRS Board of Trustees Secretary Wendy Jamison advised the
attorneys representing PBA Local 155 that the Board had ruled in
their client's favor:
Based on a review of the pertinent
documents, the PFRS Board voted to approve
the salary schedule as cited in the PBA
Local No. 155 contract, Article III and
Appendix I dated January 1, 2007 to December
31, 2011. The Board found the pay was an
additional salary step as denoted in the
salary guideline.
Consequently, there will be no change in any
of the retiree's monthly PRFS retirement
allowances.
29 A-0083-11T2
The PFRS Board of Trustees' decision in the appeal filed by
PBA Local 155 triggered a considerably faster,11 albeit familiar
reaction from Acting Director Sheppard. In a letter dated July
27, 2011, Sheppard engaged in the same de novo review of the
record presented to the PFRS Board of Trustees and reached the
opposite legal conclusion. In the Acting Director's opinion
"all of the senior officer pay violates the provisions of the
statute and regulation since the payments are clearly being
awarded in order to enhance the member's retirement benefit
'upon attainment of a specified number of years of service.'"
Once again, Sheppard concluded her letter by apprising those
affected by her decision that they had the right "to appeal this
final administrative action" to this court.
By letter dated August 5, 2011, the attorney representing
PBA Local 155 asked Sheppard the following question:
Please advise me on what authority your
determination not to enforce the Board's
decisions is considered the "final
administrative action" in light of the
11
Sheppard waited three months to communicate her unwillingness
to implement the PFRS Board of Trustees' decision in the case
involving police officers and firefighters from the Town of
Harrison; she took nearly two months to apprise the affected
police officers in the City of Linden, and more than seven
months to inform the affected police officers of the Township of
Vernon. By contrast, in the case involving police officers from
the Borough of Ramsey, Sheppard sent her refusal letter just two
weeks after the PFRS Board of Trustees' decision.
30 A-0083-11T2
existing Board of Trustees' decisions which
have not been appealed to my knowledge.
Sheppard did not respond. On September 6, 2011, PBA Local 155
filed a Notice of Appeal to this court seeking a judicial
declaration that the Director of the Division of Pensions and
Benefits does not have the legal authority to refuse to
implement a final decision of the PFRS Board of Trustees merely
because the Director disagrees with the Board's decision.
Consequently, Sheppard's decision refusing to implement the PFRS
Board of Trustees' decision is ultra vires, without legal force
or effect.
V
Township of Woodbridge
Woodbridge entered into a collective bargaining agreement
with PBA Local 38 covering the period from January 1, 2009
through December 31, 2011. Article V of this agreement is
denoted "Salaries." Paragraph B in Article V provides for a
"Senior Officer Differential." This provision states:
B. Senior Officer Differential - Employees
having completed twenty-two (22) years of
service shall be entitled to a senior
officer differential benefit. The benefit
shall be an increase in the base pay rate by
five and one-half percent (5.5%) and is
reflected in the senior officers' base rate
(1st Class)[.]
Article VII is denoted "Longevity," and provides as follows:
31 A-0083-11T2
A. The Township agrees to pay as a fringe
benefit the following longevity payments:
2.5% after the start of 6th and through
completion of 10th year or [sic] service;
4% after start of 11th and through
completion of 14th year of service;
5.5% after start of 15th and through
completion of 20th year of service;
7% at start of 21st year through completion
of 22nd year of service;
9.5% at start of 23rd year of service and
each year thereafter.
By letter dated January 20, 2011, Czyzyk advised Woodbridge
Township Chief Financial Officer (CFO) Richard Cahill that,
the Division has made an administrative
determination that the agreement executed
between the Township and the Woodbridge
Policemen's Benevolent Association, Local
No. 38 contains provisions that may be
causing monies to be included in the base
salary reported to the Division that are not
creditable for pension purposes as per
N.J.A.C. 17:4-4.1(a)(1) and (2).
After quoting from the regulatory standard, Czyzyk cited
Article V, Paragraph B "Salaries-Senior Officer Differential"
from the agreement and stated, "[t]he Division finds that senior
officer compensation payable in the 22nd year of service is
extra compensation received in anticipation of retirement and in
violation of N.J.A.C. 17:4-4.1(a)(1) and (2)(ix) and (xiii)."
32 A-0083-11T2
With respect to Article VII, Paragraph A "Longevity," Czyzyk
indicated that:
The Division finds that the longevity
increment from 7% to 9.5% in the 23rd year
of service incrementally excessive compared
to prior increases. Also, granting such an
increase in the 23rd year of an Officer's
service is clearly being awarded in order to
enhance that member's retirement benefit.
As he did when he sent similar letters to the other four
municipalities involved in this appeal, Czyzyk concluded by
informing Woodbridge CEO Cahill that: (1) the Division would not
implement this action for ninety days to permit employees
adequate time to appeal to the PFRS Board of Trustees; (2)
Woodbridge should not make any adjustment to the creditable
salary until the end of the appeal period; and (3) the Division
would instruct Woodbridge how to implement its determination
only if no outstanding appeals were pending or if the PFRS Board
of Trustees had not decided otherwise.
PBA Local 38 followed Czyzyk's instructions and appealed
the Division's January 20, 2011 administrative determination to
the PFRS Board of Trustees. By letter dated May 5, 2011, PFRS
Board Secretary Jamison informed the attorneys representing PBA
Local 38 that:
Based on a review of the pertinent
documents, the PFRS Board voted to approve
the senior officer differential as cited in
Article V and the longevity schedule as
33 A-0083-11T2
cited in Article VII of the [collective
bargaining] contract.
Consequently, there will be no change in any
of the retiree's monthly PFRS retirement
allowances.12
By letter dated July 27, 2011,13 Sheppard informed the
attorneys representing PBA Local 38 that "the Division will not
implement the decision of the Board to permit such increases as
creditable for pension retirement credit." Once again, the
Acting Director reached this conclusion after engaging in a de
novo review of the evidence presented by PBA Local 38 to the
PFRS Board of Trustees. Finally, as she had done in the cases
involving the other four municipalities in this appeal, the
Acting Director advised PBA Local 38 that it had "45 days [from]
the date of this letter" to appeal her "final administrative
action" to this court "in accordance with the Rules Governing
the Courts of the State of New Jersey."
By the time the Acting Director made this decision, the law
firm representing PBA Local 38 also represented the Town of
Harrison and PBA Local 22, and the Borough of Ramsey and PBA
12
As she had done in her prior correspondence, Jamison copied
Czyzyk in this letter.
13
The Acting Director's letter was dated nearly three months
after the PFRS Board of Trustees communicated its final decision
to PBA Local 38 and to the Division's Supervisor of External
Audits.
34 A-0083-11T2
Local 155. By letter dated August 5, 2011, the attorney for PBA
Local 38 asked Sheppard the same question he had asked on behalf
of PBA Local 155:
Please advise me on what authority your
determination not to enforce the Board's
decisions is considered the "final
administrative action" in light of the
existing Board of Trustees' decisions which
have not been appealed to my knowledge.
Once again, the Acting Director did not respond. PBA Local
38 filed its appeal to this court on September 6, 2011, seeking
a judicial declaration that the Acting Director's action in
refusing to implement a final decision of the PFRS Board of
Trustees is ultra vires, without legal force or effect.
VI
Legal Analysis
All appellants argue the Acting Director did not have the
authority to act unilaterally and refuse to implement a final
decision reached by the PFRS Board of Trustees. We agree.
Under the statutory and regulatory scheme established to
administer this pension system, the PFRS Board of Trustees is
the only administrative body authorized to make a final
administrative determination regarding what can be considered
"creditable compensation" for pension benefits under N.J.S.A.
43:16A-1(26)(a) and N.J.A.C. 17:4-4.1.
35 A-0083-11T2
The PFRS is "a statewide pension system for full-time
policemen and firemen designed to ensure the uniform protection
of all such public officers through the medium of pensions
payable from [the] fund." Saccone v. Bd. of Trs. of Police &
Firemen's Ret. Sys., 219 N.J. 369, 378-79 (2014) (quoting Seire
v. Police & Fire Pension Comm'n of Orange, 6 N.J. 586, 591
(1951)). In 1955, the Legislature "transferred" the PFRS Board
of Trustees to the Division of Pensions and Benefits in the
Department of the Treasury.14 N.J.S.A. 52:18A-96. However, the
Legislature also made clear that these public pension boards
retained "all of their respective present functions, powers,
duties, equipment and records[.]" Ibid. (emphasis added).
The Legislature vested the PFRS Board of Trustees with "the
general responsibility for the proper operation of the
retirement system." N.J.S.A. 43:16A-13(a)(1). The PFRS Board
consists of eleven trustees who are selected in the following
fashion:
(a) Five members to be appointed by the
Governor, with the advice and consent of the
14
The Legislature also transferred to the Division of Pensions
in the Treasury Department the "Board of Trustees of the Public
Employees' Retirement System, the Prison Officers' Pension
Commission, the Board of Trustees of the Teachers' Pension and
Annuity Fund, the Board of Trustees of the Alcoholic Beverage
Law Enforcement Officers' Pension Fund . . . and the
Consolidated Police and Firemen's Pension Fund Commission[.]"
Ibid.36 A-0083-11T2
Senate, who shall serve for a term of office
of four years and until their successors are
appointed and who shall be private citizens
of the State of New Jersey who are neither
an officer thereof nor an active or retired
member of any police or fire department
thereof. Of the four members initially
appointed by the Governor . . . one shall be
appointed for a term of one year, one for a
term of two years, one for a term of three
years, and one for a term of four years.
(b) The State Treasurer or the deputy State
Treasurer, when designated for that purpose
by the State Treasurer.
(c) Two policemen and two firemen who shall
be active members of the system and who
shall be elected by the active members of
the system . . . .
(d) One retiree from the system who shall be
elected by retirees from the system . . . .
[N.J.S.A. 43:16A-13(a)(2)(a)-(d).]
The five "public" unaffiliated trustees who are appointed
by the Governor, with the advice and consent of the Senate,
serve for a term of "four years and until their successors are
appointed[.]" N.J.S.A. 43:16A-13(a)(2)(a). The State Treasurer
or deputy State Treasurer serves on a permanent basis, without a
fixed term. N.J.S.A. 43:16A-13(a)(2)(b). The two active police
officers and two active firefighters are "elected by the active
members of the system" and serve "for a term of four years
according to such rules and regulations as the board of trustees
shall adopt to govern such election." N.J.S.A. 43:16A-
37 A-0083-11T2
13(a)(2)(c). The final member must be a "retiree" from the
pension system, who can be either a former police officer or
firefighter. This trustee serves "for a term of four years
according to such rules and regulations as the board of trustees
shall adopt to govern the election." N.J.S.A. 43:16A-
13(a)(2)(d).
All trustees of the PFRS Board must "take an oath of
office" affirming to fulfill his or her duties as a board member
"diligently and honestly." N.J.S.A. 43:16A-13(a)(3). Each
trustee also affirms under oath that he or she "will not
knowingly violate or willingly permit to be violated any of the
provisions of the law applicable to the retirement system."
Ibid. This oath of office must be "subscribed by the member
making it, and certified by the officer before whom it is taken,
and immediately filed in the office of the Secretary of State."
Ibid.The members of the PFRS Board of Trustees serve without
compensation, entitled only to be "reimbursed for all necessary
expenses that they may incur through service on the board."
N.J.S.A. 43:16A-13(a)(5). Each trustee has an equal vote on the
board, regardless of how he or she was selected to serve, and
six duly appointed trustees "must be present at any meeting" in
38 A-0083-11T2
order for the Board to be able to transact business. N.J.S.A.
43:16A-13(a)(6).
Subject to the limitations of Police and Firemen's
Retirement System Act, N.J.S.A. 43:16A-1 to -68, the PFRS Board
of Trustees is obligated, on an annual basis, "to establish
rules and regulations for the administration of the funds
created by this act and for the transaction of the board's and
committees' business." N.J.S.A. 43:16A-13(a)(7). Because
decisions made by the PFRS Board of Trustees may affect other
public pension systems administered by other public pension
boards,15 these "rules and regulations shall be consistent with
those adopted by the other pension funds within the Division of
Pensions and Benefits in order to permit the most economical and
uniform administration of all such retirement systems." Ibid.The Legislature also described the function it expected the
Director to perform in assisting the Board of Trustees in
carrying out the responsibilities of its office. "The Director
of the Division of Pensions and Benefits shall appoint a
qualified employee of the division to be secretary of the board.
The administration of the program shall be performed by the
personnel of the Division of Pensions and Benefits." N.J.S.A.
43:16A-13(a)(8) (emphasis added).
15
See N.J.S.A. 52:18A-96.
39 A-0083-11T2
The role and function of the Director of the Division of
Pensions and Benefits is equally defined under the prevailing
statutory and regulatory system:
The Division of Pensions established
hereunder shall be headed, directed and
supervised by a director, who shall be a
person qualified by training and experience
to direct the work of such division. The
director of such division shall be appointed
by the Governor, with the advice and consent
of the Senate, and shall serve during the
term of the Governor appointing him, and
until the director's successor is appointed
and has qualified. The Director of the
Division of Pensions shall receive such
salary as shall be provided by law.
[N.J.S.A. 52:18A-99.]
The role of the Division to assist the PFRS Board of Trustees is
clearly delineated in the regulations adopted to administer this
public pension:
With respect to all claims for benefits, the
Division of Pensions and Benefits shall
investigate increases in compensation
reported for credit which exceed reasonably
anticipated annual compensation increases
for members of the retirement system based
upon consideration of the Consumer Price
Index for the time period of the increases,
the table of assumed salary increases
recommended by the actuary and adopted by
the Board, and the annual percentage
increases of salaries as indicated in data
from the Public Employment Relations
Commission, or through other reliable
industry sources of information regarding
average annual salary increases. Those cases
where a violation of the statute or rules is
suspected shall be referred to the Board.
40 A-0083-11T2
[N.J.A.C. 17:4-4.1(d) (emphasis added).]
The Division has the same obligation generally to "investigate
increases in compensation reported for credit, which exceed
reasonably anticipated annual compensation increases for members
of the retirement system," N.J.A.C. 17:1-7.3(a), and report to
the "respective Board or Commission" cases "where a violation of
the statute is suspected." N.J.A.C. 17:1-7.3(b).
This regulatory scheme is reflected in every letter
authored and sent to every appellant by Michael Czyzyk, the
Division's Supervisor of External Audits. As Czyzyk dutifully
explained:
The Division will not implement this
Administrative determination until 90 days
have elapsed from the date of this letter to
permit any members who wish to appeal
adequate time to do so. Please provide a
copy of this letter to all employees and
retirees who are affected by this
determination. Any affected member who
disagrees with the determination may appeal
to the PFRS Board of Trustees by writing a
letter setting forth the reasons thereof. .
. .
You should not make any adjustments to the
creditable salary you currently report on
these members until the end of the 90-day
appeal period. . . .
At the end of the 90-day appeal period, if
no outstanding appeals are pending or if no
action was taken by the PFRS Board of
Trustees, the Division will instruct you to
41 A-0083-11T2
change the creditable salary reported to
conform to this determination.
The PFRS Board of Trustees has the authority to "question
the compensation of any member or retiree to determine its
credibility where there is evidence that compensation reported
as base salary may include extra compensation." N.J.A.C. 17:4-
4.1(b). The PFRS Board of Trustees is empowered to conduct
investigations of "increases in compensation reported for credit
which exceed reasonably anticipated annual compensation
increases for members of the retirement system." In re
Snellbaker, 414 N.J. Super. 26, 34 (App. Div. 2010) (citation
omitted).
If resolution of a question before the PFRS Board of
Trustees "involves a question of facts," the Board has the legal
authority to refer the matter to the Office of Administrative
Law for an evidentiary hearing before an Administrative Law
Judge. N.J.A.C. 17:4-1.7(d). If the appeal before the PFRS
Board of Trustees concerns only a legal determination, as is the
case in most of the appeals we decide here, "the Board may
retain the matter and issue a final administrative determination
which shall include detailed findings of fact and conclusions of
law based upon the documents, submissions and legal arguments of
the parties." N.J.A.C. 17:4-1.7(e). Once the PFRS Board of
Trustees reaches a final determination, the affected PFRS member
42 A-0083-11T2
has the right to appeal to the Superior Court, Appellate
Division. Ibid.The Acting Director has not cited any authority to support
taking the unprecedented action of conducting a de novo review
of the PFRS Board of Trustees' final determinations of the cases
we review here, and thereafter refusing to implement the Board's
final determination. Our own independent research has also
failed to find any authority to support the Acting Director's
action.16
16
Indeed, the Division of Pensions and Benefits' own website
states: The "general responsibility for the operation of the
PFRS is vested in the Board of Trustees under the provisions of
N.J.S.A. 43:16A-13." For those interested in submitting an
application to be considered for appointment to the PFRS Board
of Trustees, the Division provides the following description of
the responsibilities of the PFRS Board:
Render determinations regarding Disability
retirement cases.
Review appeals pertaining to the
disallowance of pension benefits.
Adopt rules and regulations to provide for
the payment of benefits and collection of
monies as required by the statute.
Establish rules and regulations within the
limitations of statutes and opinions of the
Courts and the Attorney General, designed to
prevent injustices and inequities that may
arise in the operation of the Retirement
System.
(continued)
43 A-0083-11T2
The Attorney General has responded in these appeals on
behalf of the Acting Director. In that capacity, the Attorney
General has questioned whether this court has the authority to
compel the Division to abide by the PFRS Board of Trustees'
final decision in these cases. The Attorney General argues that
mandamus relief "is only appropriate where the party seeks to
compel a governmental agency to perform a 'duty [that] is
ministerial and wholly free from doubt' or 'to compel the
exercise of discretion, but not in a specific manner.'" Twp. of
Neptune v. State, Dep't of Envtl. Prot., 425 N.J. Super. 422,
434 (App. Div. 2012) (citing Loigman v. Twp. Comm. of
Middletown, 297 N.J. Super. 287, 299 (App. Div. 1997)).
(continued)
Resolve individual questions on the merits
of each case in terms of statutes, opinions
of the Attorney General, advice of the
Actuary and cases cited by counsel as
deliberated by the Courts.
View monthly and annual reports setting
forth data such as assets and liabilities,
income and disbursements and statistical
summarization of membership as documented by
the Actuary.
[Division of Pensions and Benefits,
http://www.state.nj.us/treasury/pensions/boa
rd_results.shtml#pfrs (last visited Mar. 8,
2015).]
44 A-0083-11T2
Following this line of reasoning, the Attorney General
attempts to justify the unprecedented action taken by the Acting
Director in these cases by advancing the following argument:
While N.J.A.C. 17:4-4.1(d) and N.J.A.C.
17:1-7.3 direct the Division to report any
suspected violations to the Board, nothing
in the legislative and regulatory scheme
compels the Division to accept "claims for
benefits" that clearly offend the statute.
Indeed, "administrative agencies are . . .
charged under the State constitution with
the responsibility of faithfully executing
the laws." In re Appeal of Certain Sections
of the Uniform Admin. Procedure Rules, 90
N.J. 85, 92-93 (1982) (citing N.J. Const.
art. V, § 1, ¶ 11).
The Attorney General's position on behalf of the Acting
Director disregards that the Legislature unambiguously "vested"
the PFRS Board of Trustees with "the general responsibility for
the proper operation of the retirement system[.]" N.J.S.A.
43:16A-13(a)(1). As discussed in great detail infra, the
composition of the PFRS Board of Trustees reveals the
Legislature's intent to devise an administrative quasi-judicial
body composed predominantly of private citizens. The men and
women who serve as trustees on the PFRS Board are required to
take an oath that they will discharge their responsibilities and
exercise their legal authority "diligently and honestly," and
"will not knowingly violate or willingly permit to be violated
any of the provisions of the law applicable to the retirement
45 A-0083-11T2
system." N.J.S.A. 43:16A-13(a)(3). In the regulatory system
devised to implement this legislative mandate, the PFRS Board of
Trustees has the exclusive authority to "question the
compensation of any member or retiree to determine its
credibility where there is evidence that compensation reported
as base salary may include extra compensation." N.J.A.C. 17:4-
4.1(b).
The Acting Director's refusal to implement the final
decision of the PFRS Board of Trustees is untethered to any
statutory or regulatory authority. This unprecedented ad hoc
approach adopted by the Acting Director in these cases
undermines the complimentary role the Division is obligated to
play by providing the staffing support necessary to enable the
PFRS Board of Trustees to carry out its role as the final
administrative arbiter of what constitutes creditable
compensation for purposes of pension benefits. N.J.A.C. 17:4-
4.1(d); N.J.A.C. 17:1-7.3(b).
The PFRS Board of Trustees has acted as the final arbiter
in these matters consistently since its creation by the
Legislature. "[T]he fact that the Legislature has not acted in
response to an agency's interpretation or practice is 'granted
great weight as evidence of its conformity with the legislative
intent.'" Klumb v. Bd. of Educ. of Manalapan-Englishtown Reg'l
46 A-0083-11T2
High Sch. Dist., Monmouth Cnty., 199 N.J. 14, 24-25 (2009)
(quoting Malone v. Fender, 80 N.J. 129, 137 (1979)).
We also question the role the Attorney General has played
in these appeals. In our view, the position the Attorney
General adopted in Gladden v. Board of Trustees of the PERS, 171
N.J. Super. 363 (App. Div. 1979), should have been followed in
these cases. In Gladden, a World War II veteran who had served
for many years in our State's Legislature applied for enrollment
in the Public Employees' Retirement System in May 1977. Id. at
366-67. The Attorney General advised the PERS Board "that under
the governing statutes[,]" based on the appellant's "continuous
permanent employment in the Legislature" and his status as a
veteran, the PERS Board was "mandatorily required" to enroll the
appellant in the PERS, retroactive to 1958. Id. at 367.
The PERS Board steadfastly disregarded the Attorney
General's legal opinion and refused to enroll the appellant into
the PERS based on its interpretation of one of its own
regulations. Ibid. The PERS Board notified the appellant of
its decision, "indicating that the decision was final and could
be appealed to the Appellate Division." Ibid. Thereafter, the
Attorney General requested the PERS Board "to reconsider its
decision." Unfortunately, the PERS Board remained defiant and
47 A-0083-11T2
"denied the Attorney General's request for a reconsideration."
Ibid.The appellant in Gladden appealed to this court. The PERS
Board asked the Attorney General to represent its interests
before this court. In response,
the Attorney General reiterated to the Board
that the issue involved was purely one of
construction of the governing statutes; that
the Attorney General's opinion on the legal
issue was patently correct and binding on
the Board, and that there was no arguable
basis upon which the Board's decision could
be defended in court. Accordingly, the
Board was advised that the Attorney General
would not provide it with legal
representation in the courts at public
expense and that a motion to intervene in
support of the Attorney General's opinion
would be filed.
[Ibid.]
The PERS Board in Gladden retained private counsel and
filed an appeal from the Attorney General's "decision not to
afford representation to the [PERS] Board." Id. at 368. The
Attorney General moved to intervene on his own behalf as an
appellant. Ibid. Ultimately, we granted the Attorney General's
motion for leave to participate as amicus curiae, "permitted the
individual members of the [PERS] Board to intervene on their own
behalf," and denied the motions filed by the PERS Board's
privately retained law firm to designate it as "special counsel"
to the PERS Board and order the State to pay its legal fees in
48 A-0083-11T2
connection with the appeal. Ibid. The Supreme Court denied the
PERS Board's privately retained motions for leave to appeal our
decisions. Ibid.After deciding this flurry of motions, we reached the
following decision:
There can be no question that a refusal of a
state agency to abide by a valid state law
is a fundamental concern of the Attorney
General both in his capacity and
responsibility as adviser to the agency and
in his capacity and responsibility as
protector of the public. Since the efforts
of the Attorney General informally to
convince the Board to abide by the statutory
scheme and grant appellant's mandatory
enrollment have met with not only
unacceptance but defiance, the Attorney
General has appeared "to preserve his
function and responsibility and to protect
the public from arbitrary and illegal
action."
[Id. at 368-69 (emphasis added).]
Here, by contrast, the Attorney General has not asserted he
made any efforts, informal or otherwise, to advise the PFRS
Board of Trustees that its decisions with respect to what
constitutes creditable compensation for pension purposes under
N.J.S.A. 43:16A-1(26)(a) were legally incorrect and that there
was no arguable basis upon which the PFRS Board's decisions
could be defended in court. As we noted in Gladden, whether a
state agency is abiding by a valid state law "is a fundamental
concern of the Attorney General both in his capacity and
49 A-0083-11T2
responsibility as adviser to the agency and in his capacity and
responsibility as protector of the public." Ibid. Had the
record in these appeals contained evidence of: (1) the Attorney
General's efforts to advise the PFRS Board of Trustees of the
proper legal interpretation of creditable compensation for
pension purposes under N.J.S.A. 43:16A-1(26)(a), and (2) the
PFRS Board of Trustees' defiant refusal to abide by the Attorney
General's opinion, the proper action should have been for the
Attorney General to petition this court under Gladden to compel
the PFRS Board of Trustees to abide by the Attorney General's
legal opinion.
Instead, the Attorney General decided to represent and
defend the legally untenable actions of the Acting Director to
unilaterally refuse to implement the final decisions of the PFRS
Board of Trustees. This approach is both legally unsupportable
and completely unnecessary because it promotes ultra vires,
self-help actions by the Acting Director and overlooks the
lawful path the Attorney General could have followed under
Gladden.
The Legislature placed the Division of Pension and Benefits
within the Treasury Department and appointed the State Treasurer
or the deputy State Treasurer as a permanent member of the PFRS
Board of Trustees. N.J.S.A. 43:16A-13(a)(2)(b). Considering
50 A-0083-11T2
the five public members who are appointed by the Governor,
N.J.S.A. 43:16A-13(a)(2)(a), the Legislature structured the PFRS
Board of Trustees in a manner that gives the Executive Branch a
permanent majority of six presumably "disinterested" members on
this eleven-member Board. Although the PFRS Board of Trustees
can function and transact business with six members present,
N.J.S.A. 43:16A-13(d)(6), there is no basis to presume the
multiple permutations of the makeup of any six-member majority
will necessary favor any particular point of view. Thus, as
matter of fact, the composition of the PFRS Board of Trustees
does not favor those most affected by its decisions.
However, we do not mean to suggest or imply there are valid
reasons to question the objectivity or impartiality of the
remaining five members of the PFRS Board of Trustees, merely
because they are selected from the ranks of police officers and
firefighters. We presume all of the members of the PFRS Board
of Trustees will carry out their duties and obligations
faithfully, impartially, and according to law, regardless of how
they are selected. In fact, this court has a longstanding,
well-established view that citizens who serve on these pension
boards
are fiduciaries and therefore have a duty to
protect the fund and the interests of all
beneficiaries thereof. They must exercise
due care, diligence and skill in
51 A-0083-11T2
administering the trust. . . . It would not
serve the statutory policy to pay out moneys
to those not entitled thereto.
[Mount v. Trs. of Pub. Emps.' Ret. Sys., 133
N.J. Super. 72, 86 (App. Div. 1975). See
also Francois v. Bd. of Trs., 415 N.J.
Super. 335, 357 (App. Div. 2010); Smith v.
State, Dep't of Treasury, Div. of Pensions &
Benefits, 390 N.J. Super. 209, 215 (App.
Div. 2007); Fasolo v. Bd. of Trs., 190 N.J.
Super. 573, 586 (App. Div. 1983).]
Indeed, the PFRS Board of Trustees has excluded longevity
payments and other forms of individual salary adjustments after
having determined, based on the record of the particular case,
that the salary adjustments were granted primarily in
anticipation of the employee's retirement and were not
creditable for pension purposes as defined in N.J.S.A. 43:16A-
1(26) and N.J.A.C. 17:4-4.1. Wilson v. Bd. of Trs. of Police
and Firemen's Ret. Sys., 322 N.J. Super. 477, 484 (App. Div.
1998).
The system for administering the public pensions of police
officers and firefighters was established with the primary
objective of inducing
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
52 A-0083-11T2
favor of the persons intended to be
benefited thereby.
[Geller v. Dep't of the Treasury of N.J., 53
N.J. 591, 597-98 (1969) (citations
omitted).]
We discern no basis to conclude that the composition of the
PFRS Board of Trustees undermines this overarching public
policy. The five municipalities and four unions decided to
transcend their traditional roles as antagonists in labor
matters and speak with one voice here, because the Acting
Director's ultra vires actions to refuse to implement the final
decisions of the PFRS Board of Trustees left them without any
other alternative.
Left unaddressed by this court, the ad hoc, untenable
actions taken by the Acting Director would have left this public
pension in chaos, subject to the unfettered discretion of a
self-appointed "Board overseer." Those most affected by the
Acting Director's ultra vires actions, the thousands of retired
and active duty police officers, firefighters, and their
families, would have been left in bureaucratic limbo, unable to
organize their financial affairs and rationally plan for their
future needs. Even assuming the Acting Director acted in good
faith to preserve the actuarial integrity of the pension system
as she saw it, her powers to act in this fashion must be
expressly conferred by the Legislature.
53 A-0083-11T2
The current composition of the PFRS Board of Trustees and
the authority vested in it by the Legislature as the final arbiter
of what constitutes creditable compensation benefits as defined in
N.J.S.A. 43:16A-1(26)(a) or N.J.A.C. 17:4-4.1 is not new. It has
existed and functioned unchallenged heretofore for decades. Any
perceived or actual structural bias in its composition is a
matter for the Legislature to address. "The wisdom of a statute
is not for the courts." Dacunzo v. Edgye, 19 N.J. 443, 454
(1955). See also State ex rel. B.P.C., 421 N.J. Super. 329, 347
(App. Div. 2011) ("Our role as a court is not to question the
wisdom of legislative enactments, but to enforce them as long as
they are not contrary to constitutional principles.").
Based on the record presented by the nine appellants and
the authority the Legislature vested in the PFRS Board of
Trustees, we hold the action of the Acting Director to refuse to
implement a final determination made by the PFRS Board of
Trustees concerning what constitutes creditable compensation for
pension purposes under N.J.S.A. 43:16A-1(26)(a) in these cases
was ultra vires, without legal force or effect. Final
determinations of the PFRS Board of Trustees are reviewable only
by this court. N.J.A.C. 17:4-1.7(e); R. 2:2-3(a)(2).
So Ordered.
54 A-0083-11T2
_________________________________
ASHRAFI, J.A.D., concurring.
I concur in the court's judgment but write to point out a
seeming incongruity in the process established by statute for
adjudicative decisions of the Board of Trustees of the Police
and Firemen's Retirement System (PFRS).
In these appeals, the Division of Pensions and Benefits
(the Division) contends the appellant municipalities provide
accelerated longevity or seniority salary increments during the
later service years of their police officers and firefighters
and those salary increments should not be credited toward
calculating pension benefits.
Under the PFRS, retirement benefits are typically available
after a PFRS member reaches age fifty-five and has completed
twenty years of service. N.J.S.A. 43:16A-5. The amount of
pension benefits is based on the member's "final compensation."
N.J.S.A. 43:16A-5(2)(b), (3). The term "final compensation"
refers to the member's final year of service, N.J.S.A. 43:16A-
1(28)(a), or, alternatively for newer PFRS members, the average
of the three highest years of salary during all service years,
N.J.S.A. 43:16A-1(28)(b). The word "compensation," is defined
by statute as "base salary . . . which is in accordance with
established salary policies of the member's employer for all
employees in the same position . . . ." N.J.S.A. 43:16A-1(26).
The statute specifically excludes "individual salary adjustments
which are granted primarily in anticipation of the member's
retirement . . . ." Ibid.In plainer English, the statutes provide that PFRS pension
benefits are to be calculated using the member's legitimate
final or highest base salary and not enhancements in
compensation intended to increase the member's retirement
benefits.
The exclusion of atypical salary increases near the time of
retirement "protect[s] the actuarial soundness of the pension
fund by prohibiting the use of ad hoc salary increases intended
to increase retirement allowances without adequate compensation
to the [pension] fund . . . ." In re Puglisi, 186 N.J. 529, 534
(2005) (internal quotation marks and citations omitted).
According to the Division, the employing municipality and the
employee do not contribute enough to the pension fund from
short-term, pre-retirement salary increases to fund the higher
pension benefits that will likely be payable over many years of
retirement.
In the appeals currently before us, the Division questioned
accelerated salary increments granted by the appellant
2 A-0083-11T2
municipalities after the PFRS members' twentieth year of
service. For example, the Town of Harrison provides to its
police officers an additional two-percent longevity increment
every five years from completion of the fifth to the twentieth
years of service. It then provides an additional two-percent
increment at the start of the twenty-third year of service and
yet one more two-percent increment at the start of the twenty-
fourth year. See ante at ___ (slip op. at 8). Thus, Harrison's
longevity increments accelerate after the twentieth year,
increasing by four percent in just three years and one day of
additional service. Similarly, the City of Linden provides to
some of its firefighters a $1,000 increment as "senior officer
pay" beginning in the fourteenth year of service. It then
provides another $1,750 beginning in the twenty-first year and
still an additional $2,250 beginning in the twenty-fourth year
of service. See ante at ___ (slip op. at 19). The Division
took the position that these later increments are granted in
anticipation of the retirement of police officers and
firefighters and should not increase their pension benefits.
The unions that represent the PFRS members and the
municipalities that negotiated those contract terms presented
arguments and information to the PFRS Board of Trustees in
opposition to the Division's position. The Board then ruled
3 A-0083-11T2
that the salary increments in dispute were not granted to
enhance retirement benefits and should be included in
calculating the pensions of retiring police officers and
firefighters. The Acting Director of the Division disagreed
with those rulings and declined to implement them. The court
holds today that the Acting Director was not authorized by the
Legislature to overrule the PFRS Board of Trustees. I agree
with that holding.
The court reaches no conclusion on the merits of the
dispute, that is, whether the disputed longevity and seniority
increments are consistent with the statutory definition of
"compensation" or are "individual salary adjustments . . .
primarily in anticipation of . . . retirement," N.J.S.A. 43:16A-
1(26). See ante at ___ (slip op. at 4). I, too, reach no
conclusion on the merits of the dispute, noting as well that
these appeals provide an inadequate factual record from which we
might have decided the issue had it been properly before us.1
1
As far as I can tell, the record before the PFRS Board of
Trustees did not include information such as what the actuarial
costs of the increments are to the PFRS pension fund and, most
important, how frequently and quickly members retire after
receiving the increments. It might have been relevant to
consider whether the accelerated longevity and seniority
increments help the municipalities retain in active employment
their highly-experienced police officers and firefighters or
whether the increments simply increase "final compensation"
(continued)
4 A-0083-11T2
My present concern is with the disparity in the
administrative and judicial review process of such decisions by
the PFRS Board of Trustees. It seems that an appeal can be
taken only when the Board decides a matter against the interests
of a PFRS member. See N.J.A.C. 17:4-1.7. In that circumstance,
the member has a right to appeal the adverse decision to this
court under Rule 2:2-3(a)(2). However, if the decision of the
PFRS Board favors the member, there seems to be no interested
party who has a right to appeal. The employer municipality is
not an interested adverse party because it negotiated the
increments and is not itself responsible for paying the
increased pension benefits during the members' years of
retirement.
As these appeals illustrate, five municipalities and four
unions joined together and "speak with one voice," ante at ___
(slip op. at 4), in challenging the decisions of the Acting
Director. Not only are the municipalities bound by the
collective bargaining agreements they negotiated but they have a
financial interest in the enforcement of those agreements. The
municipalities pay the salary increments out of their own
coffers for a limited number of years until the police officer
(continued)
shortly before retirement of most officers and firefighters who
are eligible to retire.
5 A-0083-11T2
or firefighter retires. Then the burden falls on the PFRS to
pay the increased pension benefits for all the years of
retirement.
By negotiating terms that provide favorable retirement
benefits to their employees, the municipalities might obtain
concessions in other areas of negotiations that benefit the
municipalities financially. In Board of Trustees of the
Teachers Pension and Annuity Fund of New Jersey v. La Tronica,
81 N.J. Super. 461, 471 (App. Div. 1963), certif. denied, 41
N.J. 587 (1964), we described unusual salary arrangements in the
final years of a public employee's active employment as the
local employer's "grand gesture of farewell at little expense."
In these cases, the Acting Director claims she refused to
implement the PFRS Board's decisions to protect the viability of
the pension fund for all PFRS members. It seems, however, that
the Legislature has afforded her, and the Executive Branch of
State government, no right to review the PFRS Board's decisions
or to appeal to this court.
This court's decision today explains the statutory and
regulatory provisions that establish the Division's and the PFRS
Board's relative authority in addressing the matters in dispute.
The Division's primary function is administrative. N.J.S.A.
43:16A-13(a)(8). It also has an investigatory and referral
6 A-0083-11T2
function when it detects salary enhancements that may be
contrary to the statutory definition of "compensation," N.J.A.C.
17:4-4.1(d), but it does not have adjudicatory responsibilities
or authority in determining what compensation should be credited
for purposes of calculating a member's pension rights.
The court today holds that the Legislature has placed the
adjudicative function and authority exclusively with the PFRS
Board of Trustees. Ante at ___ (slip op. at 46). I am not as
certain as my colleagues that the Board's adjudicative authority
is exclusive, but I agree that no statute, regulation, or case
law cited to us grants the Acting Director power to review the
Board's decisions. See N.J.S.A. 43:16A-13(a)(1) ("the general
responsibility for the proper operation of the retirement system
is hereby vested in a board of trustees . . . ."); N.J.A.C.
17:4-1.7 (setting forth procedures for a member's appeal to the
PFRS Board of Trustees); Hemsey v. Bd. of Trs., Police &
Firemen's Ret. Sys., 198 N.J. 215, 220-22 (2009) (final
administrative decision issued by Board of Trustees); see also
Sellers v. Bd. of Trs. of the Police & Firemen's Ret. Sys., 399
N.J. Super. 51, 62 (App. Div. 2008) (Decision-making powers of
PFRS Board of Trustees include authority "to apply equitable
7 A-0083-11T2
principles to provide a remedy when justice so demands, provided
the power is used rarely and sparingly . . . .").2
While full adjudicative authority placed in such a board
may not be unusual, the Board of Trustees in this case is not
entirely under the control of the Executive and Legislative
Branches of State government. The eleven-person Board consists
of five positions that are reserved for and elected solely by
active or retired police officers and firefighters who are
members of PFRS. N.J.S.A. 43:16A-13(a)(2)(c), (d); N.J.A.C.
17:4-1.4(b). Those five Board members may be adjudicating a
dispute about salary provisions that are the same as ones from
which they themselves benefit financially.
In comparison, persons with similar conflicts of interest
would likely be excused for cause from serving on a jury that
was asked to decide the issue, although jurors too take an oath
to render a fair and impartial decision. See N.J.S.A. 2B:23-6.
I do not mean that a jury and an administrative board are the
same kind of adjudicative body. I use the analogy as an
illustration of the impartiality we expect in governmental
2
The Division does not argue that the Acting Director is the
"head of the agency" who, under the provisions of the
Administrative Procedures Act, N.J.S.A. 52:14B-1 to -15, must
issue a final agency decision in a contested pension benefits
case, N.J.S.A. 52:14B-10. Also, the Division has not cited
N.J.S.A. 52:14B-8 as supporting a declaratory ruling of the
Acting Director with respect to the disputed salary provisions.
8 A-0083-11T2
adjudication of factual disputes. Nor are my comments intended
to criticize the membership of the PFRS Board of Trustees. I do
not denigrate the integrity and good faith of the police and
firefighter members of the PFRS Board of Trustees any more than
a trial judge denigrates the integrity and good faith of a
potential juror who is excused from a case.
Whatever the Board's membership may be, my comments are
primarily directed to the absence of administrative and judicial
review of its decisions when they are favorable to the PFRS
member. If such decisions of the Board are final and the
Director of the Division has no power to review them
administratively or to decline to implement them, then the
Executive Branch is seemingly without recourse in protecting the
pension fund against a legally erroneous or skewed ruling of the
Board.
The court's decision today explains the unusual procedural
steps taken by the State Attorney General after a disagreement
with the Board of Trustees of a similar public employees'
pension fund. See Gladden v. Bd. of Trs. of the Pub. Employees'
Ret. Sys., 171 N.J. Super. 363, 367-68 (App. Div. 1979). The
court suggests that the Attorney General could similarly have
advised the PFRS Board in these cases that its actions are
contrary to law and then pursued a remedy in this court if the
9 A-0083-11T2
Board refused to heed the Attorney General's advice. Ante at
___ (slip op. at 49-50).
The Gladden decision, however, only came before this court
for judicial review because the Board of Trustees in that case
decided the matter against the interests of the prospective
member of the pension fund, Gladden, and he filed the appeal.
Gladden, supra, 171 N.J. Super. at 367. Had the Board's
decision been in favor of Gladden, there would have been no
appeal and no judicial case in which the Attorney General could
have intervened to resolve a disagreement with the Board's
decision. In the absence of an appeal by a party that has the
right to appeal, I am unable to identify what procedural
mechanism the Attorney General might have employed to make a
direct application to this court, which is not normally a court
of original jurisdiction. See R. 2:10-5 ("The appellate court
may exercise such original jurisdiction as is necessary to the
complete determination of any matter on review.").
I also question the lack of any record in these cases
stating the reasons supporting the final rulings of the PFRS
Board of Trustees. The Division and the Board explained their
determinations when initially deciding these matters against the
interests of PFRS members. But the Board's subsequent rulings
in favor of PFRS members consist only of terse letters from the
10 A-0083-11T2
Board secretary stating the result without further explanation.
Not even a tally of the Board's vote is provided.
As the Legislature has devised the PFRS and its Board of
Trustees, there seems to be no opportunity for judicial review
when the PFRS member obtains a favorable decision from the PFRS
Board of Trustees and when the pension fund is thus obligated to
pay a higher pension. While that result may not be different
from the procedures applicable to other adjudicative boards,
these cases seem to differ in that the Governor and the
Legislative Branch have only partial control of appointments to
the PFRS Board of Trustees, see N.J.S.A. 43:16A-13(a)(2).
Consequently, the PFRS Board of Trustees seems to have powers
beyond that of other adjudicative boards within our State system
of governance.
I concur in the court's judgment because I agree that
the applicable statutes and regulations do not authorize the
Acting Director effectively to overrule decisions made by the
PFRS Board of Trustees by declining to implement them.
11 A-0083-11T2