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School Pension Board closes 'loophole'


That benefited some retiring employees



March 05, 2014
ATLANTA – Employees nearing retirement with the Fulton County School System (FCSS) have lost a loophole in the benefit plan that rewarded some for retiring before their contract ends.

Beginning March 1, benefits will be calculated based on the end of the contract, not the actual retirement date. Pensions are based on the three highest paid years of continuous service. By retiring in April, prior to the contract end in May, some employees were able to include two summer payouts in their final year – boosting their salary in their final year.

In a letter to employees, pension officials explained "pension benefits will be calculated as of the last day of the work calendar, even if the last day of work was earlier."

The change impacts current employees with contracts of less than 235 days and who are covered under the Fulton Pension Plan. This includes non-instructional staff (bus drivers, maintenance, custodial, cafeteria and other staff) and teachers who have been with FCSS prior to 1988. Teachers hired after July 1, 1988, are covered under the state Teachers Retirement System (TRS).

Pension board officials say the revision was simply a revised interpretation of the plan, and necessary to ensure all employees are treated uniformly. Fewer than 40 people took advantage of the "loophole" last year, so the change should not have widespread impact.

"It's about treating people equally," said Robert Morales, chief financial officer for FCSS and a member of the Fulton Pension Board. "As a pension board, we have a responsibility to do that and not have winners and losers."

However some employees say it breaches the promise made to employees last year when the once-independent pension board came under the management of the superintendent and Fulton Board of Education. At that time, the promise was made no changes would be made to benefits.

One teacher, who asked not to be identified, said the change creates a hardship so close to retirement and penalizes many who based their retirement plans on information received from pension counselors.

"For many of us, this will be anywhere from a $150 to $250 a month difference. Take that and multiply it by our life expectancy in retirement and you come up with a huge amount of money," said the teacher.

She added it was "morally and ethically wrong" to make the change, especially after the promise last year that benefits would remain the same once the Fulton School System took over the plan.

Morales explained the school system funds the vast majority of the pension plan, contributing nearly $30 million a year to the plan to cover retirement benefits for approximately 5,600 current employees and retirees.

He bristled when a teacher representative on the pension board argued employees should have access to any "opportunity" for additional income in retirement.

"[A few years ago], the school board cut 1,000 positions, but we met our obligations to the pension fund," said Morales. "We met the obligations, but people lost their jobs and we have to consider that if we want the bonus to be continued."

Figures were not released on the cost of maintaining the "loophole" moving forward.

The pension plan is still absorbing a $3 million shortfall that occurred when overpayments were made to more than 400 retirees over a 10-year period due to a miscalculation. That was the impetus that caused the Fulton Pension Board to come under the control of the school system last year.

The seven-member pension board approved the changes on a 6-1 vote to go into effect March 1. A motion to make the change effective with the 2014-2015 school year died from lack of a second.

MH 03-05-14

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