NJ Appeals Court: Refusal to Implement Final PFRS Board of Trustees Determination Is Ultra Vires

A New Jersey appeals court recently decided a case involving nine appeals filed by five municipalities and four police and firefighter unions. While traditionally on opposite sides of labor disputes, the plaintiffs all challenged the Acting Director of the Division of Pensions and Benefits’ decision to refuse to implement the final determination of the Board of Trustees of the Police and Firemen’s Retirement System (PFRS Board of Trustees), which found certain senior officer and longevity pay provisions in the collective bargaining agreements were creditable compensation for pension purposes under N.J.S.A. 43:16A-1(26)(a).

NJ Appeals Court: Refusal to Implement Final PFRS Board of Trustees Determination Is Ultra Vires

The case, I/M/O Town of Harrison and Fraternal Order of Police, did not address the PFRS Board of Trustee’s determination, but rather the Acting Director’s legal authority to refuse to implement it. The Appellate Division ultimately concluded that the Acting Director lacked such authority. As further explained by the appeals court:

Only this court has the legal authority to overturn a final decision of the PFRS Board of Trustees in the context of an appeal filed by a member of the PFRS. The action taken by the Acting Director in the cases before us lacked statutory or regulatory authority and was therefore ultra vires, without legal force or effect.

In reaching its decision, the court highlighted that, under the statutory and regulatory scheme established to administer this pension system, the PFRS Board of Trustees is the only administrative body authorized to make a final administrative determination regarding what can be considered “creditable compensation” for pension benefits under N.J.S.A. 43:16A-1(26)(a) and N.J.A.C. 17:4-4.1.

The Appellate Division also found that the Acting Director’s unprecedented refusal to implement the final decision of the PFRS Board of Trustees was not supported by any statutory or regulatory authority. Moreover, it “undermines the complimentary role the Division is obligated to play by providing the staffing support necessary to enable the PFRS Board of Trustees to carry out its role as the final administrative arbiter of what constitutes creditable compensation for purposes of pension benefits.”

With regard to the correct path to challenge the PFRS Board of Trustees’ determination, the court noted that the Attorney General should have formally advised the PFRS Board of Trustees of the proper legal interpretation of creditable compensation for pension purposes under N.J.S.A. 43:16A-1(26)(a). Had the PFRS Board of Trustees’ then refused to abide by the Attorney General’s opinion, the Attorney General could have petitioned the court to compel the PFRS Board of Trustees to abide by the Attorney General’s legal opinion.

For more information about the court’s decision or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group

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