The WTHR report says in part:
The administrators' severance policy, in place for more than a decade, includes free health insurance and roughly a year's pay in addition to their pensions.
For many administrators it wasn't a tough choice. Retire now with full benefits or retire later and receive less generous benefits similar to what teachers receive now.
Stinson expects board members to discontinue the special retirement benefits and he intends to replace only two of the retiring administrators, saving roughly $750,000 a year, about equal to their one-time retirement costs.
The 'Stinson' referenced is, of course, Don Stinson, Superintendent of MSD Decatur Township.
But, surprise, surprise - the retirement benefits policy signed by then School Board President, Larry Taylor, and Secretary, Judy Collins, on May 11, 2004, emphatically contradicts Don Stinson, and clearly eliminated nearly ALL of the items in the retirement packages Stinson supplied to Jeff Baer, Gary Pellico, Dave Rather, Pat Jones, and Janet Larch.
Totaling well over $800,000 for the first year, and including paid health insurance for an unnamed number of years going forward (which can easily total $100,000 per year), these retirement packages are just one more extravagance Stinson is bestowing upon Administrators. This level of expense could have covered all other RIFs forced upon other employees in the District. RIFs continue, as well, in case you hadn't heard. For perspective, $800,000 could fully fund 15 young teachers for a year.
A little background - back in the early 2000's, the State Legislature finally acted to get ahead of the unfunded retirement benefits looming to become budget busters in Indiana schools. These unfunded mandates were obligations set up by employment contracts for certain items to be included in retirement packages, but for which no money was being set aside by the Districts. The State enacted a window of time during which school districts could float bonds to pay for unfunded pension obligations from the past. MSD Decatur School Board approved this type of bond issue in the amount of $8 million at its September and October, 2003 Board meetings. The September, 2003, minutes state:
Dr. Baer, Assistant Superintendent of Business, explained that the purpose of requesting the additional appropriation was to purchase bonds to cover the School Corporation’s unfunded retirement or severance liability.
All School Board members voted in favor: Larry Taylor, Don Huffman, Judy Collins, Cathy Wiseman, and Herb Bazemore. Huffman, Collins, and Wiseman continue on the Board to this day and should certainly remember the changes in retirement benefits.
The retirement benefits policy, ""Metropolitan School District of Decatur Township Administrators' Employee and Retirement Benefits (July 1, 2004)", sets in motion the change from unfunded retirement benefits for Administrators to fully funded benefits. The fiscal impact would be to put money away each year, according to the commitments in the Teachers Contract and the Administrator's addendum to that contract, instead of trying to come up with money from operating funds in future years after these administrators retired. To achieve the change, the previously contractual obligations had to be appraised for their monetary value, that money invested in appropriate retirement accounts set up for each individual administrator, and future contracts written in keeping with these changes. The 2003 bond was to be used to pay for these buyouts.
The administrator addenda for the 2009-2010 school year for Jeff Baer, Gary Pellico, Dave Rather, Pat Jones, and Candace Milhon-Baer, are all consistent with the new retirement benefits laid out in this 2004 Board policy. I do not have a copy of Janet Larch's latest contract. Don Stinson's contract, however, has several additional retirement benefits, including:
10. A retiring Superintendent shall have the option of remaining in his/her selected corporation health insurance program until qualifying for Medicare, if the minimum requirements of the insurance plan are met. The Corporation shall pay an annual amount equal to the full employee/spouse premium.
11. There will be no limit on the number of accumulated personal illness leave day. [sic]
and a rather long item 18 that invests part of Stinson's 2004-2005 benefits buyout into a series of $15,500 annuities in each of 5 years. The total value of this item is $77,464 - part of the value of Stinson's retirement benefits buyout that resulted from this 2004 Board policy. Other Administrators may very well have recieved as large a buyout as Stinson.
According to the July 1, 2004 Board policy on Administrator retirement benefits, a company named Educational Services Company, was to determine the value of each Administrator's unfunded retirement benefits, and how much money should be deposited into each of the new retirement accounts set up for each individual Administrator. You can read all of these details at your leisure and according to your interest in such things.
The policy states (page 1; emphasis is mine):
Any rights to retirement and severance pay, including, but not limited to, amounts payable following termination of employment for years of service, accumulated sick leave or health insurance from any policy, contract, or addendum to a regular teacher's contract... currently held by an Administrator are terminated and shall not apply to any Administrator retiring or severing employment with the School Corporation on or after the Effective Date. In replacement, the Retirement Benefits of the Administrators employed by the School Corporation as of June 30, 2004 shall be bought out and contributed to the 401(a) Plan and VEBA, as described below.
The policy describes the annual contributions that the District will make to a 401(a), 403(b) and a VEBA retirement accounts (begins page 6). The last is an account designed to purchase health insurance and pay for health related costs after retirement.
The policy requires Administrators to pay for their own health insurance after retiring (page7):
Following retirement, an eligible Administrator and spouse shall be allowed to remain on the group health, dental and vision plans then maintained by the School Corporation, if any, at their own expense until the first day of the month following their eligibility for Medicare.
An Administrator may carry forward a maximum of 30 vacation days each year (page 7) and any in excess of 30 are turned into personal illness days. They may carry forward no more than 5 personal business days each year (page 8) and can cash in the extra for $100 a day, or they will turn into medical illness days.
The policy states (page 8):
Upon retirement, an Administrator's unused and accumulated person illness (sick leave) and personal business leave days shall be forfeited and not otherwise purchased by the School Corporation.
According to this policy and the lack of anything to the contrary in the contracts for Baer, Pellico, Rather, or Jones, they are not entitled to severance payments for service years, leave days, 30% of base salary, compensation for any more than perhaps 30 days of vacation accumulated, and no buyouts for additional years toward the Indiana State Teacher Retirement Fund. Most of the $800,000 in these severance packages are not in accord with Board policy nor are they contractual obligations. Any future payment by the School District for health insurance through the District's health plan, are also strictly forbidden by this policy and is not in their contracts.
Let me go back to Rich Van Wyk's report:
The administrators' severance policy, in place for more than a decade, includes free health insurance and roughly a year's pay in addition to their pensions.
For many administrators it wasn't a tough choice. Retire now with full benefits or retire later and receive less generous benefits similar to what teachers receive now.
Stinson expects board members to discontinue the special retirement benefits and he intends to replace only two of the retiring administrators, saving roughly $750,000 a year, about equal to their one-time retirement costs.
The Board policy does not include free health insurance nor roughly a year's pay upon retirement. The Board already discontinued the old, unfunded, retirement benefits 6 years ago. When you figure in the buyout of their retirement benefits in 2004-2005, some of whom could easily have seen as much as the $77,000 + obtained by Stinson, AND the fact that taxpayers have been contributing to several retirement plans for these Administrators since 2004, it becomes double or triple dipping. This is entirely a give away, far better than a gold watch, using taxpayer money that could have been used to save jobs in the District instead of further feathering nests that did not need to be further feathered.
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