Union Stipend Included In Pension Calculations

Bruce Edwards, Joseph Sarkis, and Joseph Kovel were all Pennsylvania state troopers and members of the Pennsylvania State Troopers Association. In 2008, an arbitration decision produced a new union leave clause in the Association’s contract with the State. The clause reads:

“Upon written request by PSTA, Union officers shall be released from duty. Union officers released from duty pursuant to State law shall be paid by the Commonwealth at the amount designated by PSTA Board of Directors, not to exceed the rate of the highest ranking member of the bargaining unit with appropriate longevity. Any amount paid by the Commonwealth, including the cost of all benefits, shall be reimbursed by the PSTA to the Commonwealth, in accordance with law.”

The State challenged the arbitration decision, but the Pennsylvania Supreme Court held that the union leave clause did not violate the State Employees’ Retirement Code. The State complied with the award for a while, with the result that Edwards, on full-time union officer leave from January 2007 through January 2012, was paid at the rate of a major even though he held only the rank of sergeant; Sarkis, on full-time union officer leave from October 2009 to January 2012, was paid at the rate of a captain even though he only held the rank of corporal; and Kovel, the Association’s president, was paid at the rate of a sergeant, even though he only held the rank of corporal. The union stipends increased pay substantially – Edwards was paid an extra $29,052.88 in 2011, Sarkis was paid an extra $25,667.12 in 2011, and Kovel was paid an extra $6,838.08 in 2012.

Although the Commonwealth paid the three troopers at the union rate of pay, it did not report the union stipend as retirement-covered compensation or deduct pension contributions based on the higher amounts. Instead, the Commonwealth reported only the regular rate of pay as retirement-covered compensation and deducted pension contributions accordingly.

PSTA then asked that the arbitration panel be reconvened to deal with issues arising from the implementation of the union leave provision. The dispute wound through several other channels, and eventually ended up before Pennsylvania’s Commonwealth Court.

The Court found that the relationship between the two different statutes made the arbitration decision enforceable and the union stipends pensionable. The Court noted that “the central issue of this case is the proper interpretation of two relevant and related provisions of the retirement law – the definition of compensation and the creditable leave provision. As SERS members, the troopers’ retirement benefits are calculated using a formula that takes into account both the amount of credited service and the amount of compensation paid during such credited service. Compensation is defined, in pertinent part, as ‘pickup contributions plus remuneration actually received as a State employee excluding refunds for expenses, contingency and accountable expense allowances; excluding any severance payments or payments for unused vacation or sick leave; and excluding payments for military leave.’ PSP officers, such as the troopers, who take full-time union officer leave are entitled to retirement credit for such leave ‘provided that the employer shall fully compensate the member, including, but not limited to, salary, wages, pension and retirement contributions and benefits, other benefits and seniority, as if he were in full-time active service.’

“Although it is questionable whether union officer leave would be considered State service without these statutes, they explicitly provide that such time shall be credited to a State employee ‘as if he were in full-time active service.’ Thus, the salary received by those on full-time union leave is considered the salary received by a State employee. It is clear that the salaries received by the troopers while on full-time union leave do not fall into any of exclusions listed in the definition of compensation, and the State makes no such argument. Thus, the remuneration received by PSP officers on full-time union leave is retirement-covered compensation.”

Office of Administration and Pennsylvania State Police, 47 PPER ¶ 65 (Pa. Cmwlth. 2015).