1. November 21, 2006www.psers.state.pa.us1 What is PSERS?

2. November 21, 2006www.psers.state.pa.us2 What is PSERS? PSERS is a governmental, cost-sharing, multi-employer, defined benefit pension plan established in 1917 to provide retirement benefits to public school employees within Pennsylvania PSERS ’ operations are governed by the Public School Employees ’ Retirement Code (PSERC), 24 Pa.C.S. §8101-9102, a state statute The PSERC literally acts as the pension system's plan document

3. November 21, 2006www.psers.state.pa.us3 What is PSERS? The PSERC vests PSERS with the responsibility for administering a mandatory retirement system for all public school employees who render service in a public school What does all this have to do with community colleges since they are not K-12 schools?

4. November 21, 2006www.psers.state.pa.us4 Does the PSERC apply to Community Colleges? Community

5. November 21, 2006www.psers.state.pa.us5 Does the PSERC apply to Community Colleges? Notwithstanding being institutions of higher education, community colleges are still deemed to be “public schools” by the PSERC Under the PSERC, “ school service ” is defined as service rendered as a school employee (24 Pa.C.S §8102) A “ school employee ” is any person working for a public school (24 Pa.C.S §8102)

6. November 21, 2006www.psers.state.pa.us6 Does the PSERC apply to Community Colleges? A “ public school ” is defined as “ any or all schools … conducted under the order and superintendence of the Department of Education, including … state-owned colleges and universities, [PSU], community colleges, area vocational technical schools intermediate units, …” 24 Pa. C.S. §8102 Bottom line: Community colleges are employers under the PSERC and thus are subject to the provisions of the PSERC as they apply to active and retired members of PSERS

7. November 21, 2006www.psers.state.pa.us7 How does the PSERC: Impact the employment of retired PSERS members working at a Community College?

8. November 21, 2006www.psers.state.pa.us8 Retired Member Impact Under the PERC, PSERS must stop the annuity of any PSERS retiree who returns to public school service 24 Pa.C.S. §8346(a): “ If an annuitant returns to school service, … any annuity payable to him under this part shall cease effective upon the date of his return to school service … and … the present value of such annuity … shall be frozen as of the date such annuity ceases. ” This includes service at a community college since, as noted previously, a community college is deemed to be a public school under the PSERC

9. November 21, 2006www.psers.state.pa.us9 Retired Member Impact Why does the PSERC have this rule? IRS Tax Qualification requirement You cannot retire and then return to work for the same “employer” while still receiving a pension from that employer In this context “employer” is used collectively in the broad sense It means any individual employer under the PSERC and thus includes community colleges E.g. if the member retires from PSERS employer X and returns to service at Community College Y, it is deemed a return to service with the same employer IRS

10. November 21, 2006www.psers.state.pa.us10 Retired Member Impact There are three primary exceptions to the general rule that PSERS must stop the annuity of any PSERS retiree who returns to public school service: 1)Return to public school service in an emergency 2)Return to public school service in an extra- curricular capacity 3)Enrollment by the retiree in either the State Employees’ Retirement System (SERS) or an alternative approved pension plan offered by the community college, i.e. TIAA-CREF

11. November 21, 2006www.psers.state.pa.us11 Retired Member Impact Exception #1*: Return to school service in an emergency Under the PSERC a PSERS’ retiree can return to service without interrupting his or her pension if: An emergency exists that creates a serious impairment of service; or There is a shortage of subject-certified teachers The emergency exception can extend only for the length of the school year *24 Pa.C.S. §8346(b)

12. November 21, 2006www.psers.state.pa.us12 Retired Member Impact Exception #2*: Return to school service in an extracurricular position The PSERC allows a PSERS’ retiree to service in an extracurricular position without interrupting his or her pension if: The retiree is employed under a separate contract The extracurricular position is primarily performed outside the regular instructional hours and is not part of the mandated curriculum For example: A not for credit adult education classes taught at night *24 Pa.C.S. §8346(b.1)

13. November 21, 2006www.psers.state.pa.us13 Retired Member Impact Exception #3*: Enrollment by the retiree in either SERS or another approved plan The PSERC allows individuals working for a community college to choose one of three retirement plan options: PSERS SERS Another approved employer plan, i.e. TIAA-CREF *24 Pa.C.S. §8301

14. November 21, 2006www.psers.state.pa.us14 Retired Member Impact If a returning PSERS’ member chooses SERS or TIAA-CREF, PSERC’s return to service restriction does not apply So what’s the problem? A returning member cannot always elect SERS or TIAA-CREF Why? The member may not be eligible to elect another plan or, An election is not offered by the community college

15. November 21, 2006www.psers.state.pa.us15 Retired Member Impact In the latter case, returning member will default into PSERS thereby triggering the PSERC return to service provisions In the former case, the default occurs because the returning member does not work enough hours to qualify for either SERS or TIAA-CREF To elect SERS, an employee must work at least 750 hours in a calendar year To elect TIAA-CREF, an employee must work a minimum number of hours which varies from community college to community college, e.g. 1000 hours

16. November 21, 2006www.psers.state.pa.us16