The Payson School Board felt like haggling.
But not too seriously.
So when the company that provides retired teachers and administrators at a bargain price to the district wanted to boost the already-negotiated price by about $900 — the school board pushed back.
The board directed staff to dispute the $900 extra charge — but also voted to extend the contract, no matter how Smart Schools responds.
The dispute involves a program that allows teachers to retire, collect their full benefits and come back to work doing pretty much exactly what they were doing before they retired.
The district ends up saving about $20,000 on benefits for that employee and the teacher or administrator ends up making 30 or 40 percent more money for the same job, with benefits provided by the state retirement fund. This savings is based on the employee paying for their own insurance and the district not paying into state retirement.
The district pays roughly 75 percent of their salary and the private company acting as the middle man keeps about 3 to 4 percent.
“This in many ways is no different than law enforcement or military retiring and going back to work with the same job for a different company,” said Superintendent Greg Wyman.
Payson had negotiated a slightly lower rate — saving about $873, the board learned at its last meeting. However, well after the contract took effect Smart Schools intervened, saying subsidiaries couldn’t offer lower rates. The contract covers three district employees, including chief financial officer Kathie Manning.
Wyman said Smart Schools isn’t making much money on the district and covers multiple costs from its share of the contract.
“It’s a very cost-effective way as a general rule to get things done,” he said.
But school board members didn’t like the idea of the claw-back on an already signed contract.
“This is retroactive?” asked board member Shane Keith.
“We entered into this contract as a Mohave bid award, then they gave us prices that were lower than the awarded bid (to Smart Schools),” said Manning.
“Is there anything in their contract that would say they may have a price increase due to blah, blah blah? A contract is a contract,” said board member Joanne Conlin.
Keith said, “It’s the retroactive piece that bothers me. It seems this should be on them and not on us.”
“I should probably disengage here,” said Manning, “because I’m a Smart Schools employee.”
Rehiring retired teachers and administrators offers an income boost for employees and some savings for schools, especially when seeking to retain hard-to-find teachers in the sciences and other subjects.
In the past, state retirement system officials have expressed qualms about the program, fearing a shrinking number of working teachers will be paying into the retirement system that supports them all.
“Several years ago this issue was resolved when school districts were required to pay an additional alternate contribution rate (ARC). The ARC was designed to ensure the stability of the retirement system by providing additional funding for employees utilizing this program,” Wyman said.
The separate retirement system for police officers and firefighters has suffered big problems due to relatively generous policies that allowed public safety personnel to collect retirement benefits after 20 years on the job — no matter their age. A drop in the value of the retirement fund during the recession prompted the retirement system to demand a huge increase in employer contributions, after judges who are also part of the system overturned efforts to curtail benefits. Payson, for instance, now pays about 50 percent of each officer’s salary into the state retirement system. The state retirement system for teachers provides roughly 50 percent of salary for life for fully-vested retirees.
A teacher becomes fully vested at age 65, at age 62 after 10 years of service, at age 60 after 25 years of service and at age 55 after 30 years of service.
Teachers pay about 12.11 percent of their salary for health and disability benefits and have access to health coverage in retirement.
Government workers are among the few left who still have any kind of pension. Only 18 percent of American workers now have “defined benefit pensions,” according to the U.S. Bureau of Labor statistics. That compares to 35 percent in the early 1990s. The steady drop in union representation in the workforce accounts for a big chunk of the reduction.