Public Pension Transparency Legislation (School Districts)



We are writing to advise you that a bill was recently signed by the Governor that amends various sections of the Retirement and Social Security Law (“RSSL”) and Education Law (“Educ. Law”). The new law is intended to provide transparency and to prevent abuse by professional service providers with respect to the public retirement system.

(1)   Changes Related to Waivers for Employment of a Retiree (RSSL § 211)

RSSL § 211 sets forth the circumstances under which an employer can obtain a waiver permitting retired public employees who are under the age of 65 and receiving a pension to return to work in the public sector. By obtaining a waiver pursuant to RSSL § 211, a retiree under the age of 65 may earn an amount exceeding the statutorily set cap of $30,000. There are no earnings limitations for individuals 65 or over (RSSL § 212).

Pursuant to the amendments to § 211(2)(b), an employer’s written request for a waiver must provide the following information:

(a)  that the retiree is qualified, competent and physically fit and, if certification is required, that the retiree is properly certified;

(b)  the employer’s detailed recruitment plan to permanently fill the position;

(c)  that the employment of the retiree is in the employer’s best interest; and

(i) that the retiree, who is to be hired on a non-permanent basis, is needed because there is an “unplanned, unpredictable and unexpected” vacancy in a position and not enough time to find another qualified applicant;


(ii) the employer engaged in “extensive recruitment efforts” and has found no available non-retired persons qualified to fill the position.

With respect to the need to undertake “extensive recruitment efforts,” both the Governor’s Approval Memorandum 46 (“Approval Memo”) and the Civil Service Commission Guidelines For Approval Of Requests Pursuant to Retirement and Social Security Law Section 211 state that the recruitment plan will be analyzed based on the specific circumstances of each case and that frivolous recruitment efforts will not be required.

The new amendments also preclude an employer from hiring, for a period of one year, a retiree pursuant to a § 211 waiver for “the same or similar position” that the retiree held immediately prior to his or her retirement. The Approval Memo states that this provision should not “be read to bar an employer from hiring a recent retiree under a 211 waiver merely because the same types of skills are required for the new position and the work the individual previously performed.” A determination of what constitutes a “same or similar position” will be made on a case-by-case basis. Below is a quick reference chart for employers to use to determine when the one-year restriction is potentially applicable pursuant to the new law:

Under 65   65 and Over 
$30,000 and UnderNo one-year restriction (RSSL § 212) No one-year restriction (RSSL § 212)
Over $30,000One-year restriction if same or similar position (RSSL § 211)   No one-year restriction (RSSL § 212)

The new bill contains a “grandfather” clause pursuant to which the new amendments to RSSL § 211 do not apply to any individual for whom a § 211 waiver was in effect prior to October 7, 2008.

(2)   Related Changes to Commissioner’s Regulations (§ 80-5.5)

Pursuant to § 80-5.5 of the Commissioner’s Regulations, the Commissioner must approve the employment of any retired person in the unclassified service in any school district, Board of Cooperative Education Services (“BOCES”), or county vocational education and extension board (“VEEB”). Section 80-5.5(2) specifies the documentation that must accompany each written application for a waiver. This section was repealed and replaced this year on an emergency basis and was recently adopted on a permanent basis. The new § 80-5.5 largely mirrors the recent changes to RSSL § 211. In addition, § 80-5.5 requires that the following must accompany each written request:

(a)  a copy of the board resolution authorizing employment of the retiree, subject to the approval of the commissioner; and

(b)  a recruitment plan that sets forth the way that the employer plans to replace the retired person with a certified and qualified person by the conclusion of the approved temporary employment period (this plan must set forth the selection criteria, the media outlets that will be utilized to recruit applicants, and contingency plans for expanded recruitment if the initial recruitment procedures do not procedure applicants).

If a district is seeking approval for employment of a retired person to be the superintendent of schools, the district must also certify that the “retired person may participate in, but shall not lead the review and selection process for a permanent candidate” (8 NYCRR § 70-5.5(c)(3)(iii)).

Pursuant to § 80-5.5(d), the Commissioner can grant a waiver for up to one school year. The waiver may be renewed once for an additional school year, “but only in instances of demonstrated extreme hardship or other unexpected and unforeseen circumstances beyond the control of the district or board” (8 NYCRR 80-5.5(d)).

Section 80-5.5(e) requires that all districts, BOCES, and VEEBs notify their resident taxpayers of the following: (a) that the Commissioner has approved the employment of a retired person pursuant to RSSL § 211; (b) the retired person’s compensation package; and (c) the retired person’s right to receive a pension while employed by the district or BOCES.

(3)   Reports Regarding Employment of Retirees

A new RSSL § 217 has been added that requires school districts and BOCES to report to the applicable retirement system all money earned by a retiree employed by the district or BOCES in excess of $30,000. In addition, each district or BOCES employing a retired person must make a yearly report to the applicable retirement system and the Comptroller consisting of the (1) retiree’s name, (2) date of birth, (3) place of employment, (4) current position, and (5) all earnings.

(4)   Newly Required Content of School Budgets (Educ. Law §§ 1608, 1716, 2601-a)

Each year the board of education of all common school districts, union free school districts, and small city school districts must prepare a budget that is presented in three components: (a) a program component; (b) a capital component; and (c) an administrative component. Sections 1608(4), 1716(4), and 2601-a(3) of the Education Law were amended to specify that the administrative component must include the following:

All compensation, salaries and benefits of all school administrators and supervisors, including business administrators, superintendents of schools and deputy, assistant, associate or other superintendents under all existing employment contracts or collective bargaining agreements.

In addition, the budget must now be made available “at the school district offices, at any public library or free association library within the district and on the school district’s internet website, if one exists” to residents during the 14-day period prior to the annual meeting and election (§§ 1608(2) 1716(2)).

(5)   Employment Status of Professional Service Providers

The addition of §§ 2050-2054 to the Education Law makes it clear that any attorney who receives compensation from a school district or BOCES in exchange for legal services cannot “simultaneously be an independent contractor and an employee … for the purpose of providing legal services” (§ 2051(1)). In addition, an attorney who is not an employee of a district or BOCES cannot “seek to be or be considered, treated or otherwise reported … as an employee … for purposes of compensation, … health insurance, pension[,]” or any other employment related benefit (§ 2051(2)).

(6)  New Penalties For Attempts to Defraud Pension Systems (Educ. Law §§ 525, 2052, RSSL §§ 111, 411)

Education Law Section § 525 (Teachers’ Retirement System) and RSSL §§ 111 (employees’ retirement system) and 411 (policemen’s and firemen’s retirement system) were amended to enhance the penalties for defrauding the pension systems. Previously, any person who was found to have made a false statement, falsified a record, or permitted a record to be falsified in an attempt to defraud the system was guilty of a misdemeanor. Now, a fraudulent act that results in a member or beneficiary receiving a benefit that is greater than the amount to which (s)he would be entitled is a Class E felony if the member or beneficiary receives more than $1,000 to which s(he) is not entitled and a Class D Felony if s(he) receives more than $3,000 to which s(he) is not entitled (Educ. Law § 525(2); RSSL § 111(2)(b); RSSL § 411(2)(b)).

Similarly, newly enacted Education Law § 2052 sets forth penalties for similar acts of fraud by and for professional service providers. Pursuant to § 2052(2), if an act of fraud results in a service provider receiving a benefit in excess of $1,000 more than that to which (s)he would have been entitled, the person committing the act of fraud will be guilty of a class E felony.(7) Obligation to File a Report Regarding Provision of Legal Services to School

(7)   Each district and BOCES must file a report which provides the following information: (1) all lawyers who provide legal services to the District or BOCES; (2) whether the lawyers were hired as employees; and (3) the compensation and benefits paid for the attorney’s legal services. This report must be filed with the Education Department, the Comptroller, and the Attorney General on or before the 45th day after the start of each fiscal year.


© Lamb & Barnosky, LLP, 2008