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FRED L. KELLAMS ET AL. v. PUBLIC SCHOOL EMPLOYES' RETIREMENT BOARD (10/12/78)

decided: October 12, 1978.

FRED L. KELLAMS ET AL., PLAINTIFFS
v.
PUBLIC SCHOOL EMPLOYES' RETIREMENT BOARD, DEFENDANT



Original jurisdiction in case of Fred L. Kellams et al. v. Public School Employes' Retirement Board.

COUNSEL

John Melvin Jones, for plaintiffs.

Raymond Kleiman, Deputy Attorney General, with him Robert P. Kane, Attorney General, for defendant.

President Judge Bowman and Judges Wilkinson, Jr., Mencer, Rogers, Blatt, DiSalle and MacPhail. Judges Crumlish, Jr. and Craig did not participate. Opinion by Judge Wilkinson, Jr.

Author: Wilkinson

[ 38 Pa. Commw. Page 102]

This matter is before us on cross motions for Declaratory Judgment. As we see it there are three questions to be answered.

1. Does the Public School Employes' Retirement Code of 1959 (Code), Act of June 1, 1959, P.L. 350, as amended, 24 P.S. § 3101 et seq., authorize the calculation and payment of benefits based on the salary earned out-of-state in that component of the benefit formula known as "final average salary"?

2. If the Code does not so authorize, if retirees, before retirement, were misinformed by the Retirement Board that out-of-state salaries would be a component of the formula, and in fact were a part of the

[ 38 Pa. Commw. Page 103]

    formula when the plaintiffs retired and until 1973, may the Retirement Board recompute the formula, eliminating the out-of-state salaries and reduce plaintiffs' ongoing retirement benefits?

3. If 1 is answered in the negative and 2 is answered in the affirmative, may the Retirement Board demand reimbursement from plaintiffs for the sums received by them in excess of the properly computed amounts? The stipulation indicates this sum could vary from a low of $26.34 to a high of $24,037.06 and an average of $2,277.45. The average age of the retirees in question at the time of retirement was 63.

The answer to the first question is relatively clear -- the out-of-state salary may not figure in the computation of the "final average salary." Section 207(1) of the Code, 24 P.S. § 3207(1), clearly provides for credit for years of service in states, territories or areas under the jurisdiction of the United States other than this Commonwealth. Section 102(23), 24 P.S. § 3102(23), is equally clear, when read with the other subsections, that final average salary is to be computed only on compensation received as an employee of a public school within this Commonwealth. Counsel for the Retirement Board candidly stated at oral argument that he was at a loss to account for the error in interpretation but that there was no reason to suppose that plaintiffs participated in making the decision. Indeed, there can be no doubt that they were misled by it and, in reliance thereon, in many if not all cases, have been placed in a more precarious financial position than they would have been if they had not relied on the incorrect information.

Having thus answered the first question, we move on to the second as to whether the Retirement Board was correct in recomputing plaintiffs' benefits in the proper manner. Under the decisional law in this ...


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