In a sweeping decision that could cost the financially embattled Buffalo school district millions of dollars, the state's highest court Thursday made it easier for longtime teachers to retroactively become members of a public retirement system.
In a year when Buffalo school officials failed to include any money in the contingency fund for such unexpected expenses, the district faces losing as much as $9 million as a result of the decision by the Court of Appeals.
The ruling, which involved four school districts, including a case filed by a former Buffalo teacher, sets a statewide precedent for hundreds and possibly thousands of pending cases involving teachers who claim they were wrongly delayed from joining the retirement system.
While many Western New York school districts were assessing the court's decision or indicating it would not affect them much, Buffalo, which already has its share of financial difficulties, appears poised to take the biggest hit from the ruling.
Lawyers from the Buffalo corporation counsel's office said the district has about 150 cases pending, involving current and former teachers who claim the district failed to inform them that they could join the teachers' public retirement system when they started as part-time teachers instead of waiting until they became full-time.
With Thursday's court ruling, it appears likely that the district could lose most, if not all, of those 150 cases.
With each person, on average, owed between $40,000 and $60,000 in missed contributions to the retirement system that the Buffalo district should have been making all those years, the district faces losing from $6 million to $9 million, when interest is added.
And for some of those 150 teachers, it could mean receiving a lump sum check now -- not in their retirement years -- from the city schools to make up for the lost contributions.
Buffalo school officials were still assessing the ruling Thursday evening.
"Certainly it is something we didn't anticipate having to deal with this soon," said Andrew Maddigan, a school district spokesman. "We certainly want to consult with our attorneys . . . And whether we have to deal with it this budget year or next, there's still many things to consider."
He could not confirm that the district could face a loss of $6 million to $9 million.
"It's obviously not what we wanted," said Assistant Corporation Counsel Patricia Pancoe, who represented the school district in the case.
But teacher union representatives said school districts were at fault, particularly back in the 1970s, for not adequately ensuring that part-time and substitute teachers knew they could join the teachers' retirement system.
"This is a very far-reaching decision, and it's also right," said Philip Rumore, president of the Buffalo Teachers Federation.
The dispute centers around teachers who started out on a part-time or substitute basis; full-time teachers automatically belong to the retirement system. Before the mid-1980s, school districts weren't required to make sure they notified part-time teachers that they could join the retirement plan.
In later years, part-timers who became full-time teachers learned that they could have joined the retirement system sooner.
An earlier membership in the system would have meant not only more money in their pension accounts but also other benefits not available under later retirement plans, such as being able to retire at an earlier age.
For years, thousands of these teachers went to the State Legislature to get special bills passed giving them the earlier membership. But the Legislature in 1993, to cut down on such bills, gave all such teachers around the state three years to apply for retroactive membership.
Many school districts, such as West Seneca, simply approved the applications of teachers during that period. But others, like Buffalo, fought many of the cases, resulting in the lawsuits that led to Thursday's ruling.
The court decision will be particularly expensive for school districts because of the way the public retirement system is structured. There are four levels, or tiers, in the system. Each teacher's starting date determines what tier they are in.
In many cases, Thursday's ruling will change the tier membership of potentially hundreds of people.
That is costly because in the oldest tier, school districts paid 100 percent of an employee's retirement plan contribution. As a result, the schools will have to reimburse teachers who all along should not have had to pay into their retirement plan at all.
Such is the case of Joseph Scanlan, whom the Court of Appeals sided with on Thursday.
Scanlan began teaching in the Buffalo schools in early 1972. But he didn't become a full-time teacher and a retirement system participant until the fall of 1973. Scanlan, now a principal at a school outside Rochester, sought to get retroactive membership in Tier I -- the older and more lucrative retirement level.
But in what the court said was an "arbitrary and capricious" decision, the Buffalo schools rejected him.
Scanlan maintained he was never told in 1972 that he could join the retirement system at Tier I. But when he became a full-time teacher in 1973 and learned he could join the system, he joined at a lower level and had to contribute to the plan all these years, while he maintains he belonged in Tier I, which is 100 percent employer-funded.
After all the years, Buffalo officials could not offer any specific proof that they had told him about the plan.
In siding with Scanlan, the Court of Appeals, in essence, placed the burden on schools to prove that they informed teachers -- in some cases as far back as the 1960s -- about the retirement system.
As a result of the ruling, Scanlan will be getting $60,000 from the Buffalo district, according to his Rochester lawyer, Irving Pheterson.
Pheterson said he has heard there are about 10,000 of these cases pending statewide, although a state teachers union official put the number in the hundreds.
Officials with the New York State School Boards Association, which was part of the case, did not return calls seeking comment.
Rumore, the Buffalo teachers union president, said he believes that while the teachers are owed the money, the school districts shouldn't be held totally accountable.
Since the ruling came as a result of the 1993 law giving teachers three years to apply for retirement membership, Rumore said, "We would hope that because of the costs involved in this, the Legislature would find a way of reimbursing the school districts for this expense."
Linda Rosenblatt, a spokeswoman for the New York State United Teachers union, said the group is "glad the court recognized a pension is important enough that you do everything you can to make sure a person is aware of their rights and what they're entitled to."