By way of background, under Chapter 32 (retirement law), disability retirees can supplement their pensions by earning no more than a specific sum according to a formula in the law. Since PERAC adopted a broader definition of what should be considered earned income, some disability retirees found that they have supposedly earned too much under the formula.

The retirees first turned to the Contributory Retirement Appeal Board (CRAB) for relief from PERAC's broader definition. When we reported on this over a year and a half ago, disability retirees suffered their first setback when CRAB found in favor of PERAC's definition in a number of cases (November 2000 Voice).

And as we also reported then, some retirees appealed their CRAB decision to the courts. Included among them was Daniel Burke, a disability retiree from the Medford Police Department, whose case is the first decision on this controversy to be issued by the courts.

In Burke's case, the Superior Court ruled that PERAC acted properly when it included shareholder distributions, that he had received as the 50% owner of a business for which he was also an employee, as part of his earned income. A decision on an appeal to the higher (appeals) court had not been made by Burke at press time.

"It should be noted that the Burke ruling does not govern the decisions in similar cases now pending before other judges," comments Association Counsel Bill Rehrey. "Regardless one must assume that this decision will be brought to their attention and accorded proper weight in their deliberations."

In Burke, the court found that PERAC has the authority to overrule the decision by the Medford Retirement Board excluding his shareholder distributions from earned income. More importantly, the court upheld PERAC's broader definition of earned income since no other definition existed within the retirement law.

As part of its disability retirement bill (H4340), our Association has included a provision, which defines earned income more broad ly than PERAC. H4340 was reported favorably by Public Service and is currently before House Ways and Means.