Because Jerry Sandusky was not an employee of Penn State University (PSU) when he committed the criminal acts for which he was convicted, the State Employees’ Retirement Board (Board) cannot forfeit his state pension, an en banc panel of the Commonwealth Court has held in Sandusky v. Pennsylvania State Employees’ Retirement Bd., __ A.3d __ (No. 60 CD 2015, filed Nov. 13, 2015). Jerry Sandusky began his career at PSU in 1969 as a football coach and athletic instructor and was eventually promoted to tenured professor. Sandusky ended his employment after the 1999 football season with 30 years of service credit. He withdrew his accumulated deductions and began receiving a monthly annuity providing his wife with a 50% survivor annuity benefit. Immediately after his retirement, PSU rehired Sandusky on a 95-day emergency basis to continue coaching through the end of the season. He also entered into a “Retirement Perquisites” Agreement (Agreement) with PSU which provided him with a lump sum payment of $168,000, complimentary season tickets to PSU football and basketball games, free access to PSU fitness and training facilities, and office space. PSU also agreed to work collaboratively with Sandusky to promote his community outreach program, The Second Mile.
In 2012, Sandusky was convicted of indecent assault and involuntary deviate sexual intercourse for acts he committed between July 2005 and December 2008. Following his convictions, SERS advised Mr. and Mrs. Sandusky that his retirement benefit and her derivative benefit were forfeited pursuant to the Pension Forfeiture Act, 43 P.S. §1313(a), because Sandusky was an actual or de facto employee of PSU from July 1, 1999, through December 31, 2008. Sandusky appealed and, following a hearing, a hearing examiner recommended that his pension be reinstated because Sandusky was not in fact a “school employee” when he committed the crimes. The Board disagreed and upheld the pension forfeitures, finding that Sandusky was a PSU employee because the Agreement was an employment contract and the perks constituted “regular remuneration.”
On appeal, the Commonwealth Court rejected the Board’s analysis and ordered the pensions restored. Writing for the unanimous en banc panel, President Judge Pellegrini first found that Sandusky was not a “school employee” after 1999 because the consideration he received under the Agreement was neither “remuneration” nor “regular.” The Court explained that the $168,000 lump-sum payment was a severance payment, not salary, and the access to PSU facilities and sporting events were perks routinely given to retired and former professors and coaches. There was no evidence the perks were provided to Sandusky in exchange for services rendered after 1999. The Court also concluded that, regardless of the remuneration issue, Sandusky did not maintain an employer-employee relationship with PSU after 1999. “Simply because Mr. Sandusky ‘worked collaboratively with’ PSU in his capacity as a leader of The Second Mile does not mean that he worked ‘for’ PSU, nor does the fact that the two entities maintained a strong, mutually beneficial relationship,” the Court reasoned. The Court remanded the case to the Board to determine the amount of interest due to Mrs. Sandusky.