4.03.00: Normal Salary Increases (NSI)

As provided under section 3a of the Public School Employees’ Retirement Act, MCL 38.1303a, only compensation increases that fall within a normal salary schedule are reportable for retirement purposes.  Any increases in excess of a normal salary schedule are not reportable.  In cases where a job classification has fewer than three members (superintendents, assistant superintendents, administrative assistants), ORS applies a normal salary schedule for the most nearly identical job classification in similar reporting units.  To determine what constitutes a normal salary schedule for these job classifications, ORS has aggregated salary data for each classification and has calculated the annual average increases, which resulted in the Normal Salary Increase (NSI) percentage tables provided below.

For each of the respective job classifications, similar reporting units are grouped into one of four categories based on payroll size.  For each grouping, the annual average salary increase percentage is calculated and doubled to allow a more generous and flexible deviation of ‘normal.’  Annual increases in compensation for a particular job classification are reportable if they are within the NSI percentages for a given year. Increases in excess of the NSI are excluded.

Because the Public School Employees’ Retirement Act requires that all compensation increases fall within a normal salary schedule, any portion of salary above the applicable NSI in a given year will remain subject to the NSI in subsequent years.  This is because the NSI included for one year becomes the base salary upon which the next year’s allowable increase is calculated.  Thus, any otherwise reportable compensation in excess of the allowable NSI excluded in one year may be included as reportable compensation in the following year to the extent that it falls within the applicable NSI for that year. 

Note: Sometimes employees take a pay reduction or pay freeze due to poor economic conditions, and that reduction or freeze is restored in a subsequent school year. If the reduction or freeze and restoration was clearly defined and documented in their contract, ORS will consider the reduction or freeze when applying the NSI, so that the resulting calculation will not be less by virtue of the reduction or freeze. Depending on actual payments received, some wages may still be calculated as being above the NSI. ORS will require documentation of the pay reduction or pay freeze along with the contract restoring the reduced or frozen pay.

The allowable Normal Salary Increase (NSI) percentages are identified in the following sections.

Please note: reportable and nonreportable “compensation” is defined in MCL 38.1303a and only applies to active MPSERS members. For information on reporting earnings for retirees please see section 9.01: Earnings of Retirees Who Return to Work.

Last updated: 11/1/2018