Earnable Compensation – Stipends Paid by School Districts and SAUs

Feb 23, 2015
  • Employers

For Immediate Release: December 5, 2014
Contact: Mark F. Cavanaugh, Esq., Associate Counsel and Compliance Officer, [email protected]

CONCORD, N.H. – The New Hampshire Retirement System (NHRS, the retirement system) is issuing this notice to participating school employers to clarify the reporting of Earnable Compensation relating to certain stipends.

In August, 2008, the statutory definition of Earnable Compensation was revised to eliminate the term “other compensation.” Therefore, after that date, compensation that is not characterized as part of the “full base rate of compensation paid, as determined by the employer” can be reported as Earnable Compensation only if it falls within one of the categories of compensation that are specifically enumerated in RSA 100-A:1, XVII. Two such categories commonly used by school districts and SAU’s are “overtime” and “compensation for extracurricular and instructional activities.”

During the course of recent audits of school districts and SAU’s, NHRS has become aware of stipends that are paid to teachers for such work as participating on committees, acting as a department head, mentoring other teachers, curriculum development, facilitator pay, “CPI Instructor pay,” “Web classroom content manager,” “Bluff Planning,” “Core Mapping,” “Focus Grants,” and many others. If the employer characterizes these types of payments as being part of either the “full base rate of compensation paid” or “overtime,” they can be reported as Earnable Compensation. However, if the employer does not characterize these types of payments as being part of the “full base rate of compensation paid” or “overtime,” then they only can be reported as Earnable Compensation if they are “compensation for extracurricular and instructional activities.” In this regard, NHRS has been reviewing whether activities that do not directly involve students can be properly characterized as “extracurricular or instructional.”

The August 2008 change to the definition of Earnable Compensation is currently being challenged in the New Hampshire Supreme Court. Because the outcome of this litigation will directly impact whether “other compensation” is restored as a type of Earnable Compensation for some or all NHRS members, NHRS has determined that it is best to wait until the litigation is resolved before moving forward to resolve the issue of payments for activities that do not directly involve students as explained above. It is anticipated that the Court will issue a decision on this matter in the next 3-6 months. Until further notice from NHRS, all employers should continue to report compensation that takes the form of such stipends in the same manner as they have been. If such compensation is discovered upon audit by NHRS, this will be noted in the audit report but no further action will be taken until after the pending litigation is resolved. Upon resolution of the litigation, NHRS will revisit the subject and issue guidance consistent with the Court’s ruling.

In the meantime, NHRS welcomes any comments or input from employers with regard to the central issue of what constitutes “compensation for extracurricular and instructional activities” and whether the direct involvement of students is a necessary component of such activities. Please direct any such input to Mark F. Cavanaugh, Esq., Associate Counsel and Compliance Officer, 54 Regional Drive, Concord, NH 03301 or by email to [email protected].

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