School Board to discuss post-retirement contracts
March 24, 2004
In response to proposed state legislation, the Steamboat Springs School Board will evaluate its policy on awarding post-retirement contracts to employees.
The Colorado Public Employees Retirement Association, or PERA, has asked lawmakers to revise a statute under which employers who rehire retired employees don’t have to pay their portion of the employee’s retirement benefits.
The proposal mandates that employers pay their portion of those benefits, which this year equals 10.15 percent of an employee’s salary. PERA says such a measure would generate $10 million a year.
The revision, if proposed and approved by lawmakers, would have a financial impact on districts including Steamboat. The Steamboat Springs School District has six teachers and one administrator working under post-retirement agreements this year. Those agreements result in annual savings of more than $30,000 to the district through nonpayment of PERA contributions.
Superintendent Donna Howell brought the proposed legislation to the School Board’s attention last week. Howell said the district needs to review its policy on granting post-retirement agreements, the intent behind awarding such contracts and the actual financial advantage of doing so.
“It’s a complicated matter,” Howell said. “I think the district needs to have that conversation so whatever they do, they do it consistently.”
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PERA spokeswoman Katie Kaufmanis said legislation permitting such agreements was passed decades ago, partly in response to fears that a large increase in the number of retirements would leave school districts devoid of experienced, quality teachers.
Under the law, PERA-affiliated employees who are eligible for retirement can retire and then be rehired under a post-retirement agreement. Employees usually return to work at their old salaries but also begin collecting their PERA retirement benefits. They don’t continue to make monthly PERA contributions.
The law was revised in 1986 to limit the number of days each year an employee can work post-retirement before their benefits suffer. After an employee reaches the 110-day annual limit, his or her retirement benefits are reduced by 5 percent each day. A reduction of more than 100 percent will decrease future months’ benefits.
Most districts use post-retirement agreements to help transition to a new teacher or administrator, but some districts continue to keep teachers under post-retirement agreements to save money, Kaufmanis said.
Howell said the Steamboat district wouldn’t end the practice of hiring teachers under post-retirement contracts for the 2004-05 school year. Instead, she said, the district must give employees at least a year’s notice before it changes its policy — if its policy changes at all.