## Facts

- A teachers’ association represented eight retired public school teachers seeking higher retirement benefits.
- Collective bargaining agreements between the association and a school district included a provision allowing eligible teachers to have employer-paid health-insurance premiums “counted as if they were salary.”
- Under the arrangement, the district added the employer-paid premium amounts to teachers’ paychecks, increasing reported W-2 wages.
- The teachers then reimbursed the district for the premium costs and for both employer and employee shares of related payroll taxes and retirement contributions attributable to those premium amounts.
- The teachers’ net economic position did not increase; the arrangement primarily increased the compensation figure reported to the New Hampshire Retirement System (NHRS) for benefit calculations.
- NHRS investigated after receiving a copy of the contract provision, determined the payments were not “earnable compensation” under RSA chapter 100-A, and adjusted the teachers’ retirement records.
- After a multi-day administrative hearing, a hearing examiner recommended affirmance of NHRS’s position; the NHRS Board of Trustees adopted the recommendation.
- The association petitioned the New Hampshire Supreme Court for a writ of certiorari to review the Board’s ruling.

## Issues

1. Whether the NHRS Board erred as a matter of law or unsustainably exercised its discretion in concluding that the challenged payments were not “earnable compensation” under RSA chapter 100-A.
2. Whether amounts paid to teachers as “salary” but fully reimbursed to the employer, and tied to recharacterized fringe benefits, qualify as pensionable “earnable compensation” for retirement benefit calculations.

## Decision

- The court denied the petition for certiorari and affirmed the Board’s decision.
- The court held the Board did not act illegally or abuse its discretion in excluding the payments from “earnable compensation.”
- The court accepted the Board’s determination that the arrangement was not bona fide compensation for services, but a method of increasing the reported compensation base for retirement purposes.
- The court rejected the argument that federal tax reporting treatment controlled the statutory meaning of “earnable compensation.”

## Legal Principles

- On certiorari review, the court considers whether an agency acted illegally, exceeded its authority, failed to observe the law, or exercised discretion unsustainably or arbitrarily.
- Courts give substantial deference to a retirement system’s reasonable interpretation of the statutes it administers, while statutory meaning remains a question of law.
- “Earnable compensation” under RSA chapter 100-A is aimed at genuine compensation for services, not amounts that are effectively returned to the employer and used to increase pension calculations without a real increase in pay.
- Taxable-wage reporting and labels in collective bargaining agreements do not control whether a payment is pensionable; substance governs over form.

## Conclusion

The court affirmed NHRS’s exclusion of reimbursed health-insurance premium “cash-out” payments from “earnable compensation,” holding the Board reasonably treated the arrangement as a non-compensatory device to increase pension calculations rather than true salary for services.


Petition of Farmington Teachers Ass’n, NEA–New Hampshire (N.H. Ret. Sys.), 157 N.H. 728, 969 A.2d 422 (N.H. 2009)