The Distinction Between Policy and Procedure

By: Jeffrey T. Sultanik, Esquire, Chair of the Education Law Group, Fox Rothschild LLP

One of the most fundamental issues involving school boards is their policy-making function. Successful school boards are policy-driven.

However, in the quest to be policy-driven, many boards and districts struggle with the role of a board in dealing with procedures versus policy. A fundamental understanding of the distinction between procedure and policy is required in order for a board to appropriately ascertain its policy-making function.

What follows are the definitional differences between policy versus procedure, along with a series of bullet points that distinguish between policy and procedure in order to get a better grasp of the situation:


Policy:  The formal guidance needed to coordinate and execute activity throughout the district.  When effectively deployed, policy statements help focus attention and resources on high priority issues - aligning and merging efforts to achieve the district's vision.  Policy provides the operational framework within which the district functions.

Procedures:  The operational processes required to implement district policy.  Operating practices can be formal or informal, specific to a department or building or applicable across the entire district. If policy is “what” the district does operationally, then its procedures are “how” it intends to carry out those operating policy expressions.


The distinctions commonly drawn between policy and procedures can be subtle, depending upon the nature of the organization and the level of operations being described in the statements.  Nevertheless, there are common characteristics that can help discern policy from procedures (or the practices used to implement policy).  Here they are:

·                    Widespread application – Policy

·                    Narrow application – Procedure

·                    Changes less frequently – Policy

·                    Prone to change – Procedure

·                    Usually expressed in broad terms – Policy

·                    Often stated in detail – Procedure

·                    Statements of “what” and/or “why” – Policy

·                    Statements of “how,” “when,” and/or and sometimes “who” – Procedure

·                    Answers major operational issue(s) – Policy

·                    Describes process – Procedure

Emergency Service for Annuitants under the Pennsylvania Public School Employees' Retirement System (PSERS)

 By: Jeffrey T. Sultanik, Esquire, Chair of the Education Law Group, Fox Rothschild LLP

On April 30, 2010, the Commonwealth Court of Pennsylvania ruled against Dr. John Baillie, former Chester County Intermediate Unit Executive Director, in Baillie v. Public School Employees’ Retirement Board, No. 1306 C.D. 2009, on the basis that his alleged emergency return to service did not fulfill the requirements of the PSERS.

The case involved the September 2006 notification of the CCIU Executive Director that he intended to retire in January 2007. However, Dr. Baillie agreed to work under an emergency contract until the end of the school year. In light of the alleged challenges facing the Intermediate Unit and the perceived shortage of qualified candidates to replace Dr. Baillie, the CCIU Board voted in November 2006 to employ Dr. Baillie under an emergency contract until June 30, 2007. Dr. Baillie retired on Friday, January 5, 2007. After spending the weekend in retirement, Baillie returned to his job as Executive Director on Monday, January 8, 2007. In April 2007, Dr. Baillie began collecting a retirement annuity from PSERS effective January 2007 and simultaneously, he collected his salary from the Intermediate Unit for his work as Executive Director.

In April 2007, by email, the CCIU announced Dr. Baillie’s retirement on January 5, 2007, but explained that his last day at the CCIU would be June 30, 2007. A copy of the email was sent anonymously to the PSERS with the following handwritten notation: “Thought this was illegal? (Double dipping).”

The CCIU informed PSERS that exigent circumstances prompted its decision to employ Dr. Baillie on an emergency basis. PSERS concluded, however, that Baillie’s employment from January 8, 2007, to June 30, 2007, was not prompted by a genuine emergency but by astute planning by Dr. Baillie, with the agreement of the Intermediate Unit. Accordingly, PSERS recalculated Baillie’s final average salary based upon a retirement date of June 30, 2007. This recalculation also excluded from his final average salary per diem compensation Dr. Baillie had received from the CCIU for unused vacation days. As the result of this recalculation, PSERS ordered Baillie to repay PSERS $79,083.39.

Dr. Baillie attempted to argue that the CCIU had emergency conditions during the second half of the 2006-2007 school year. This was supported by the Board President of the Intermediate Unit, which indicated that “… recent legislation that required taxpayer approval of school district budget increases; contract negotiations to avert a threatened strike of support staff personnel; pending construction or renovation of four educational facilities; and the retirement of several persons in managerial positions at the Intermediate Unit …”

PSERS based its argument on Section 8346(b) of the Retirement Code, which authorizes public schools to employ a retired public school employee, who is collecting a retirement annuity, for up to six months when there is an emergency. In that case, the retiree is able to collect both his/her annuity and his/her salary for the emergency services rendered. However, PSERS did not believe that there was an emergency in Baillie’s case. PSERS sought to show that the “emergency” was one created by Baillie’s retirement, and it could have been solved by hiring a temporary or permanent replacement, instead of retaining him as Executive Director after a sham retirement. PSERS presented testimony from three of its employees that it did not constitute an emergency.

According to the case, PSERS examines two factors to determine whether an employer has abused its discretion when it hires a retiree on an emergency basis. First, PSERS determines whether the rehiring was planned before the retirement took place and, second, it determines whether the employer made a bona fide effort to fill the emergency vacancy with a non-retiree.

The Baillie decision stands as precedent of the emergency services provisions under PSERS. PSERS will vigorously investigate situations that they believe to be improper.

In such a situation, we suggest that any district write to Troy Peechatka at P. O. Box 125, Harrisburg, PA 17108 requesting an exception to Act 2004-63 due to an emergency situation. You will be required to provide substantiation of the situation of hiring a retired individual and what efforts the district made to fill the position with a non-retired individual.

Merely hiring someone as an independent contractor will not likely pass muster today due to the strict interpretation of independent contractor status that PSERS uses.  It is suggested that you work with your legal counsel carefully to protect the interests of all involved in these processes.


Pennsylvania School Districts Beware - Proper Planning is Necessary for a School District to Move Away from an Insured Core Health Benefit Plan to a Self-Insured Core Health Benefit Plan


By: Jeffrey T. Sultanik, Esquire, Chair of the Education Law Group, Fox Rothschild LLP

As part of the economic squeeze impacting school districts in the region, many school districts are looking to the benefits of going to self-insured core health benefit programs to save district dollars. There is quite a lot of evidence to indicate that going to a self-insured health benefit program may yield some substantive health benefit savings for the employer.

Looking at the decision on the savings issue alone, however, is not enough. There are number of additional factors that need to be addressed prior to moving to self-funding.

  • Bargaining Considerations – Fringe benefits, including healthcare coverage, are considered to be “wages” within the meaning of the Public Employe Relations Act and are, therefore, a mandatory subject of bargaining. The question that has been raised with respect to self-insurance is whether a change “related” to benefits but with no practical impact on bargaining unit employees triggers a bargaining obligation on the part of the district.

In 1995, the Pennsylvania Labor Relations Board in Palmyra Area Education Association v. Palmyra Area School District, 26 P.P.E.R. ¶26087 (March 21, 1995), involved the school district’s implementation of a self-insured plan with benefits identical to those available under the prior Blue Cross contract. The Labor Board nevertheless found that transitioning to a self-insured status, in and of itself, was enough to trigger a bargaining obligation. The Labor Board emphasized the fact that the district was no longer subject to regulation by the Commonwealth Insurance Department (as was Blue Cross), and the district’s position inappropriately “dismissed any significance placed on the reputation and track record of an insurance carrier or plan.”

The Palmyra decision, however, is not necessarily consistent with federal labor law under the National Labor Relations Act, which often is followed by the Pennsylvania Labor Relations Board. In Connecticut Light and Power Company, 196 NLRB 967, 969 (1972), the National Labor Relations Board reasoned: “The method used in processing of employee claims under a medical/surgical policy, the practices and procedures of the insurance carrier in allowing or disallowing claims, and the dispatch and efficiency of its personnel in processing such claims are facts connected with a carrier’s administration of a health insurance premium … It is difficult to accept [employer’s] argument that whereas an employer must bargain as to the benefits which may be provided under a health insurance program … bargaining [may] stop short of involving the actual selection of a carrier and leave that matter to its sole discretion.” In sum, the Pennsylvania Labor Relations Board has held that the bargaining was mandatory with respect to both the nature of the health benefits and the provider. The Second Circuit disagreed and refused to enforce the Labor Board’s decision and found that nearly every managerial decision impacts in some way upon wages, hours, working conditions, and that the employer was free to choose whatever carrier it liked to fulfill the terms of its bargained-for agreement with the union.

Fox Rothschild’s Labor and Employment Department has been successful in working out Memoranda of Understanding with various school districts regarding the implementation of a self-insurance program. This is something that needs to be addressed and discussed as part of the process.

  • Non-Discrimination Testing – The move to self-insurance would also trigger the requirements of Section 105(h) of the Internal Revenue Code. The district would then need to engage in benefits testing to make certain that highly compensated individuals under a self-insured medical plan would not be discriminated in their favor over non-highly compensated individuals, typically not covered by a collective bargaining agreement. In Pennsylvania, this often means that cabinet level employees and/or the Act 93 group who have a health benefit plan that requires a lesser employee contribution in premiums than what is provided to non-highly compensated individuals may have to report the value of the benefit as part of their taxes.

This may be an unanticipated tax consequence faced by many school entities that have recently moved to self-insurance.

These issues will become more prevalent by 2014 because under the recently passed federal health benefits legislation, these non-discrimination requirements will take effect as of then. In the meantime, districts face a risk of being audited by the Internal Revenue Service and having to undergo required benefits testing.

Fox Rothschild can assist your school district in engaging in benefits testing should this be an issue for your district.