Mich. Comp. Laws » Michigan Compiled Laws / Chapter 38 / Act 300 of 1980
Michigan Compiled Laws

Mich. Comp. Laws § 38.1304 (2026)

Definitions; C to M.

✓ current as of July 2026
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THE PUBLIC SCHOOL EMPLOYEES RETIREMENT ACT OF 1979


Act 300 of 1980


38.1304 Definitions; C to M.

Sec. 4.

    (1) "Compound interest" means interest compounded annually on July 1 on the contributions on account as of the previous July 1 and computed at the rate of investment return determined under section 104a(1) for the last completed state fiscal year.

    (2) "Contributory service" means credited service other than noncontributory service.

    (3) "Deferred member" means a member who has ceased to be a public school employee and has satisfied the requirements of section 82 for a deferred vested service retirement allowance.

    (4) "Department" means the department of technology, management, and budget.

    (5) "Designated date" means September 30, 2006.

    (6) "Direct rollover" means a payment by the retirement system to the eligible retirement plan specified by the distributee.

    (7) "Distributee" includes a member or deferred member. Distributee also includes the member's or deferred member's surviving spouse or the member's or deferred member's spouse or former spouse under an eligible domestic relations order, with regard to the interest of the spouse or former spouse.

    (8) Beginning January 1, 2002, except as otherwise provided in this subsection, "eligible retirement plan" means 1 or more of the following:

    (a) An individual retirement account described in section 408(a) of the internal revenue code, 26 USC 408.

    (b) An individual retirement annuity described in section 408(b) of the internal revenue code, 26 USC 408.

    (c) An annuity plan described in section 403(a) of the internal revenue code, 26 USC 403.

    (d) A qualified trust described in section 401(a) of the internal revenue code, 26 USC 401.

    (e) An annuity contract described in section 403(b) of the internal revenue code, 26 USC 403.

    (f) An eligible plan under section 457(b) of the internal revenue code, 26 USC 457, which is maintained by a state, political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such eligible plan under section 457(b) of the internal revenue code, 26 USC 457, from this retirement system, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to a surviving spouse, an eligible retirement plan means an individual retirement account or an individual retirement annuity described above.

    (g) Beginning January 1, 2008, except as otherwise provided in this subsection, "eligible retirement plan" means a Roth individual retirement account as described in section 408A of the internal revenue code, 26 USC 408A.

    (9) Beginning January 1, 2007, "eligible rollover distribution" means a distribution of all or any portion of the balance to the credit of the distributee. Eligible rollover distribution does not include any of the following:

    (a) A distribution made for the life or life expectancy of the distributee or the joint lives or joint life expectancies of the distributee and the distributee's designated beneficiary.

    (b) A distribution for a specified period of 10 years or more.

    (c) A distribution to the extent that the distribution is required under section 401(a)(9) of the internal revenue code, 26 USC 401.

    (d) The portion of any distribution that is not includable in federal gross income, except to the extent such portion of the distribution is paid to any of the following:

    (i) An individual retirement account or annuity described in section 408(a) or 408(b) of the internal revenue code, 26 USC 408.

    (ii) A qualified plan described in section 401(a) of the internal revenue code, 26 USC 401, or an annuity contract described in section 403(b) of the internal revenue code, 26 USC 403, and the plan providers agree to separately account for the amounts paid, including any portion of the distribution that is includable in federal gross income, and the portion of the distribution which is not so includable.

    (10) "Employee organization professional services leave" or "professional services leave" means a leave of absence that is renewed annually by the reporting unit so that a member may accept a position with a public school employee organization to which he or she belongs and which represents employees of a reporting unit in employment matters. The member shall be included in membership of the retirement system during a professional services leave if all of the conditions of section 71(5) and (6) are satisfied.

    (11) "Employee organization professional services released time" or "professional services released time" means a portion of the school fiscal year during which a member is released by the reporting unit from his or her regularly assigned duties to engage in employment matters for a public school employee organization to which he or she belongs. The member's compensation received or service rendered, or both, as applicable, by a member while on professional services released time shall be reportable to the retirement system if all of the conditions of section 71(5) and (6) are satisfied.

    (12) "Final average compensation" means the aggregate amount of a member's compensation earned within the averaging period in which the aggregate amount of compensation was highest divided by the member's number of years, including any fraction of a year, of credited service during the averaging period. The averaging period shall be 36 consecutive calendar months if the member contributes to the member investment plan except for a member who contributes to the member investment plan and first became a member on or after July 1, 2010; otherwise, the averaging period shall be 60 consecutive calendar months. A member who contributes to the member investment plan and first became a member on or after July 1, 2010 shall also have an averaging period of 60 consecutive calendar months. If the member has less than 1 year of credited service in the averaging period, the number of consecutive calendar months in the averaging period shall be increased to the lowest number of consecutive calendar months that contains 1 year of credited service.

    (13) "Health benefits" means hospital, medical-surgical, and sick care benefits and dental, vision, and hearing benefits for retirants, retirement allowance beneficiaries, and health insurance dependents provided pursuant to section 91.

    (14) "Internal revenue code" means the United States internal revenue code of 1986.

    (15) "Long-term care insurance" means group insurance that is authorized by the retirement system for retirants, retirement allowance beneficiaries, and health insurance dependents, as that term is defined in section 91, to cover the costs of services provided to retirants, retirement allowance beneficiaries, and health insurance dependents, from nursing homes, assisted living facilities, home health care providers, adult day care providers, and other similar service providers.

    (16) "Member investment plan" means the program of member contributions described in section 43a.

History: 1980, Act 300, Imd. Eff. Oct. 31, 1980 ;-- Am. 1982, Act 197, Imd. Eff. July 1, 1982 ;-- Am. 1985, Act 91, Imd. Eff. July 10, 1985 ;-- Am. 1989, Act 193, Imd. Eff. Aug. 25, 1989 ;-- Am. 1995, Act 177, Imd. Eff. Oct. 17, 1995 ;-- Am. 1996, Act 268, Imd. Eff. June 12, 1996 ;-- Am. 1996, Act 488, Eff. Mar. 31, 1997 ;-- Am. 1997, Act 143, Imd. Eff. Nov. 19, 1997 ;-- Am. 2002, Act 94, Imd. Eff. Mar. 27, 2002 ;-- Am. 2003, Act 17, Imd. Eff. June 10, 2003 ;-- Am. 2007, Act 15, Imd. Eff. June 6, 2007 ;-- Am. 2008, Act 354, Imd. Eff. Dec. 23, 2008 ;-- Am. 2010, Act 75, Imd. Eff. May 19, 2010

Compiler's Notes:

    Section 2 of Act 488 of 1996 provides:

    "Section 2. If any section or part of a section of this act is for any reason held to be invalid or unconstitutional, the holding does not affect the validity of the remaining sections of this act or the act in its entirety."

    Enacting section 1 of Act 75 of 2010 provides:

    "Enacting section 1. If any section or part of a section of this act is for any reason held to be invalid or unconstitutional, the holding does not affect the validity of the remaining sections of this act or the act in its entirety."

PopularName Notes:

Act 300
Notes of Decisions
Cited in 13 cases (3 in the last 5 years), 1984–2024 · leading case: Adrian Sch. Dist. v. Michigan Pub. Sch. Employees' Ret. Sys., 582 N.W.2d 767 (Mich. 1998).
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Adrian Sch. Dist. v. Michigan Pub. Sch. Employees' Ret. Sys., 582 N.W.2d 767 (Mich. 1998). · cites it 6× “§ 38.1304(1); M.S.A. § 15.893(114)(1) [6] : "Compensation" means the remuneration earned by a member for service performed as a public school employee.”
Studier v. Michigan Pub. Sch. Employees' Ret. Bd., 698 N.W.2d 350 (Mich. 2005). · cites it 2× “MCL 38.1304(4). 20 therefore, reverse the Court of Appeals determination on that point.”
Dignan v. Michigan Pub. Sch. Employees Ret. Bd., 659 N.W.2d 629 (Mich. Ct. App. 2003). · cites it 2× “See MCL 38.1304(12) and MCL 38.1303a(2). The pac is determined by averaging the retiree’s compensation for the last thirty-six months of employment.”
Musselman v. Governor, 545 N.W.2d 346 (Mich. 1996). · cites it 2× “MCL 38.1304; MSA 15.893(114) of the Public School Employees Retirement Act defines "compensation" as "remuneration earned by a member for service performed," but specifically excludes "hospitalization insurance and life insurance premiums, [and] other fringe benefits paid by and…”
Jurva v. Attorney Gen., 351 N.W.2d 813 (Mich. 1984). · cites it 2× “[2] MCL 38.1304; MSA 15.893(114), first added to the predecessor Public Retirement Act by 1963 PA 102 , MCL 38.”
Ronan v. Michigan Pub. Sch. Employees Ret. Sys., 629 N.W.2d 429 (Mich. Ct. App. 2001). “” MCL 38.1304(1). 2 The majority opinion in Adrian School concluded that weekly worker’s compensation benefits qualified under this statutory definition.”
Sch. Dist. for the City of Adrian v. Michigan Pub. Sch. Employees' Ret. Sys., 556 N.W.2d 524 (Mich. Ct. App. 1996). · cites it 4× “See 1996 PA 268 , amending, in part, what was formerly MCL 38.1304(1); MSA 15.893(114)(1). Petitioners first assert on appeal that respondent board erred in interpreting the Public School Employees Retirement Act, as amended, MCL 38.”
Patricia Batista v. Off. of Ret. Servs. (Mich. 2024). · cites it 2× “A member’s “final average compensation” is defined under MCL 38.1304(12) as, in relevant part, “the aggregate amount of a member’s compensation earned within the averaging period in which the aggregate amount of compensation was highest divided by the member’s number of years,…”
City of Adrian Sch. Dist. v. Pub. Sch. Employes'Ret. Sys., 556 N.W.2d 524 (Mich. Ct. App. 1996). · cites it 4× “§ 38.1304(1); M.S.A. § 15.893(114)(1). Petitioners first assert on appeal that respondent board erred in interpreting the Public School Employees Retirement Act, as amended, M.”
Patricia Batista v. Off. of Ret. Servs. (Mich. Ct. App. 2021). “” MCL 38.1304(12). With respect to the term “compensation,” MCL 38.”
Patricia Batista v. Off. of Ret. Servs. (Mich. Ct. App. 2021). “” MCL 38.1304(12). With respect to the term “compensation,” MCL 38.”
Alberta Studier v. Michigan Pub. Schl Emp Ret. Bd (Mich. 2005). “MCL 38.1304(4). 20 therefore, reverse the Court of Appeals determination on that point.”
Show all 13 citing cases →
— Mich. Comp. Laws § 38.1304(1) — 4 cases
Adrian Sch. Dist. v. Michigan Pub. Sch. Employees' Ret. Sys., 582 N.W.2d 767 (Mich. 1998). “§ 38.1304(1); M.S.A. § 15.893(114)(1) [6] : "Compensation" means the remuneration earned by a member for service performed as a public school employee.”
Ronan v. Michigan Pub. Sch. Employees Ret. Sys., 629 N.W.2d 429 (Mich. Ct. App. 2001). “” MCL 38.1304(1). 2 The majority opinion in Adrian School concluded that weekly worker’s compensation benefits qualified under this statutory definition.”
Sch. Dist. for the City of Adrian v. Michigan Pub. Sch. Employees' Ret. Sys., 556 N.W.2d 524 (Mich. Ct. App. 1996). “See 1996 PA 268 , amending, in part, what was formerly MCL 38.1304(1); MSA 15.893(114)(1). Petitioners first assert on appeal that respondent board erred in interpreting the Public School Employees Retirement Act, as amended, MCL 38.”
City of Adrian Sch. Dist. v. Pub. Sch. Employes'Ret. Sys., 556 N.W.2d 524 (Mich. Ct. App. 1996). “§ 38.1304(1); M.S.A. § 15.893(114)(1). Petitioners first assert on appeal that respondent board erred in interpreting the Public School Employees Retirement Act, as amended, M.”
— Mich. Comp. Laws § 38.1304(12) — 5 cases
Dignan v. Michigan Pub. Sch. Employees Ret. Bd., 659 N.W.2d 629 (Mich. Ct. App. 2003). “See MCL 38.1304(12) and MCL 38.1303a(2). The pac is determined by averaging the retiree’s compensation for the last thirty-six months of employment.”
Patricia Batista v. Off. of Ret. Servs. (Mich. 2024). “A member’s “final average compensation” is defined under MCL 38.1304(12) as, in relevant part, “the aggregate amount of a member’s compensation earned within the averaging period in which the aggregate amount of compensation was highest divided by the member’s number of years,…”
Patricia Batista v. Off. of Ret. Servs. (Mich. Ct. App. 2021). “” MCL 38.1304(12). With respect to the term “compensation,” MCL 38.”
Patricia Batista v. Off. of Ret. Servs. (Mich. Ct. App. 2021). “” MCL 38.1304(12). With respect to the term “compensation,” MCL 38.”
O'Brien v. Pub. Sch. Employees'Ret. Bd., 782 N.W.2d 768 (Mich. 2010).
— Mich. Comp. Laws § 38.1304(4) — 2 cases
Studier v. Michigan Pub. Sch. Employees' Ret. Bd., 698 N.W.2d 350 (Mich. 2005). “MCL 38.1304(4). 20 therefore, reverse the Court of Appeals determination on that point.”
Alberta Studier v. Michigan Pub. Schl Emp Ret. Bd (Mich. 2005). “MCL 38.1304(4). 20 therefore, reverse the Court of Appeals determination on that point.”
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