Last month the Michigan Supreme Court issued an opinion in Batista v. ORS addressing problems which have arisen in calculating some administrators’ retirement benefits under MPSERS. In defining “compensation” for the final calculation, law excludes from compensation “compensation in excess of the amount over the level of compensation reported for the preceding year except increases provided by the normal salary schedule for the current job classification. In cases where the current job classification in the reporting unit has less than 3 members, the normal salary schedule for the most nearly identical job classification in the reporting unit or in similar reporting units shall be used.” 

While the intent of the language was to help prevent pension spiking, the way it was written was problematic. ORS interpreted the language in such a way that they created a Normal Salary Increase (NSI) schedule for individuals who did not have a Normal Salary Schedule. Unfortunately, the NSI short-changed administrators who received increases greater than the NSI schedule contemplated.  

After a multi-year, multi-level, multi-hearing history, the Supreme Court held: 

• The NSI is unlawful because ORS lacked the legal authority to create and implement the Normal Salary Increase (NSI) schedule.  

• The Court clarified that school employee pensions should be based on an employee’s “Normal Salary Schedule” and that such a schedule could and should exist for employees outside of a Collective Bargaining Agreement. 

• Since the term “Normal Salary Schedule” is not defined in state law, the Court provided the following definition: “a written document established by statute or approved by a reporting unit’s governing body that indicates the time and sequence of compensation, and conforms to a norm, rule, or principle.” 

Ultimately, this means local districts and their Boards of Education hold the authority to determine and approve compensation for different job classifications. Because of this, districts can establish normal salary schedules as part of administrator’s individual contract. By doing this, districts can avoid having administrators leave, not because they want to, but because they must in order protect their retirement future calculations from being improperly diminished.  

If you have questions on this or other legal matters, you can contact MASB's Legal Services and Labor Relations team.