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Bulger v. Contributory Retirement Appeal Board

Massachusetts Supreme Judicial Court
447 Mass. 651 (2006)
ELI5:

Rule of Law:

For the purpose of calculating a state employee's pension, "regular compensation" includes recurring, ordinary cash payments intended as remuneration for services, regardless of their label. However, employer contributions to an employee's annuity fund are excluded unless the annuity contract is a specific type explicitly authorized by the governing statute.


Facts:

  • William M. Bulger served as the president of the University of Massachusetts from 1996 to 2003.
  • As part of his compensation, Bulger received his base salary and a monthly cash housing allowance of $2,419.
  • The housing allowance was intended by the university's trustees as an enhancement to Bulger's compensation to motivate him to remain in his position, with full awareness that he would continue living in his own home.
  • The university also made monthly contributions, equal to seven percent of Bulger's base salary, into a Vanguard 401(a) Executive Retirement Plan in his name.
  • Bulger's employment agreements after January 5, 2001, described these annuity contributions as part of his "regular compensation."
  • During his employment, the university did not take pension deductions from either the housing allowance payments or the annuity contributions.
  • Upon his retirement, Bulger sought to have both the housing allowance and the annuity payments included in the calculation of his superannuation retirement allowance.

Procedural Posture:

  • William M. Bulger applied to the State Board of Retirement (board) to calculate his pension benefits.
  • The board denied his request to include his cash housing allowance and annuity payments in the calculation.
  • Bulger appealed the board's decision to the Contributory Retirement Appeal Board (CRAB).
  • An administrative magistrate for the Division of Administrative Law Appeals (DALA) recommended reversing the board's decision.
  • CRAB adopted the magistrate's findings of fact but rejected her conclusion, ruling that the payments were not regular compensation.
  • Bulger sought judicial review of CRAB's decision in the Superior Court, which is a state trial court.
  • The Superior Court judge reversed CRAB’s decision, ordering that the housing allowance and most annuity payments be included.
  • CRAB, the appellant, was granted its application for direct appellate review to the Massachusetts Supreme Judicial Court, the state's highest court.

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Issue:

Does the term "regular compensation" under G. L. c. 32, § 1, for purposes of calculating a state employee's retirement allowance, include (1) a monthly cash housing allowance and (2) employer contributions to a 401(a) annuity account not specifically enumerated in the statute?


Opinions:

Majority - Greaney, J.

No as to the annuity contributions; Yes as to the housing allowance. Recurring, ordinary cash payments for services, such as the housing allowance, qualify as "regular compensation," but contributions to an annuity plan are only included if the plan is one of the types specifically authorized by statute. The court reasoned that the statutory definition of "regular compensation"—"salary, wages or other compensation in whatever form"—is broad and intended to include all forms of recurring payments for an employee's services. The housing allowance was recurrent, regular, and intended as compensation, not reimbursement. The failure to take payroll deductions was not dispositive, as the statutory language governing post-1945 compensation does not require it. Conversely, the statute provides a precise and exhaustive list of which annuity contract premiums are included as regular compensation (those authorized by G. L. c. 15, § 18A, or G. L. c. 71, § 37B). Since Bulger's 401(a) plan was not one of those types, the payments are excluded, and the parties' characterization of the payments in the employment contract cannot override the clear statutory definition.



Analysis:

This decision clarifies the boundary of "regular compensation" for Massachusetts public pension calculations, establishing a bifurcated analysis for non-salary benefits. For cash-based benefits like allowances, courts will look to the substance of the payment—its regularity and purpose as remuneration—over its label or administrative handling. For statutorily defined benefit categories like annuities, however, the court adopts a strict textualist approach, refusing to expand the list of included benefits beyond what the legislature has explicitly enumerated. This ruling limits the ability of public employers and employees to contractually define compensation for pension purposes and reinforces the legislature's role in controlling pension system liabilities.

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