Dennis Leone re: Rehired Retirees article in Lima News 9/5/06

From John Curry, Sept. 5, 2006

From Dennis Leone, September 05, 2006

Subject: Rehired Retirees

"This whole thing reminds of how happy everyone was when the 35-year/88% rule was adopted at STRS. It felt good when the change occurred. Everyone was smiling. No one wants to hear today how much it has cost our pension system and how much it has added to our unfunded liability. And no one, 20 years from now, will want to admit that the employment decisions of today were a factor in driving quality new teachers away from education. How many times do you think a brand new teacher will allow himself/herself to be passed over before he/she heads in a different direction?"

John -- I stated my feelings about this issue at the last STRS Board meeting and at previous Board meetings. I understand all of the reasons supts give for immediately rehiring retirees. I was "there" once myself. My decision to recommend the elimination of STRS health insurance for full-time rehired retirees, beginning in 2009, was driven by 2 factors:

1. Rehired retirees using the STRS health insurance plan turned in medical claims last year totaling $5.9 million, but they paid only $3.9 in insurance premiums. This means, black and white, that STRS has to eat the difference. I also was getting tired of school districts "using" our pension system to help solve their financial problems. STRS does not exist for this purpose.

2. While one can argue all they want about the advantages of hiring a more experienced, retired teacher, a continuation of this practice will cause our profession, in the long run, to become stale. It saddens me to see districts immediately rehiring retirees without even considering new teachers or laid-off teachers and administrators. It also bothers me that so many administrators apparently aren't even concerned about the long term impact of immediately hiring retirees. Many of them are doing it because it's easier and because they just don't want to be bothered with conducting interviews. I did it myself 2 years ago. It is one thing to rehire a retiring Latin teacher at the end of the summer after not being able to find anyone else. It is something else to instantly rehire a retiring 2nd grade teacher in April, thinking, I guess, that quality new teachers will still be around later if we need them..

This whole thing reminds of how happy everyone was when the 35-year/88% rule was adopted at STRS. It felt good when the change occurred. Everyone was smiling. No one wants to hear today how much it has cost our pension system and how much it has added to our unfunded liability. And no one, 20 years from now, will want to admit that the employment decisions of today were a factor in driving quality new teachers away from education. How many times do you think a brand new teacher will allow himself/herself to be passed over before he/she heads in a different direction?

Dennis Leone

STRS Board Member

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Retire-rehire of school employees common practice here

BY BETH L. JOKINEN

Lima News, Sep. 5, 2006

LIMA — Several administrators and teachers around the area have retired and then been immediately rehired, including at Bluffton schools, where the school board decided last week not to allow Superintendent Rodney Russell to do so.

Local school boards have been quick to approve retire-rehires, a legal and common practice among school districts around the state. They largely approve them because it is a savings to the school districts, while at the same time it keeps seasoned employees.

"It does not make any sense not to do it, if you are saving money and the person is doing a good job," said Shawnee schools Superintendent Paul Nardini, who retired and was rehired three years ago when he was still a middle school principal.

School employees can retire and start collecting retirement from the Ohio State Teachers Retirement System when they have 30 years in. They can collect 66 percent of the average of their top three salaries. If they wait until they have 35 years, they can collect 88 percent.

Employees can also begin receiving their insurance through STRS, even if they are rehired by the school district. Laura Eckler, of STRS, said between 70 percent and 80 percent of all retirees enroll in its health care plan.

The STRS board though, recently voted to direct officials to draft an administrative rule to require re-employed retirees to receive their health benefits from their employers. It would likely not be until 2009 when the provision is put in place.

Rick Dickinson, general counsel for the Ohio School Boards Association, said retire-rehires have become widespread around the state. He said Ohio has always allowed for retirees to collect retirement and go to work someplace else. About 10 years ago, the law was extended to allow school employees to return to work at the school.

"People started to realize that this was not helping the schools," Dickinson said. "We were losing good experienced people who economically found it desirable to retire and then go to work."

Dickinson said there was a fear then that there would be a shortage of administrators. He said there are a number of administrators nearing retirement today.

If Russell would have been permitted to retire and then be rehired, the school district would have saved about $13,000 a year. He would have taken his retirement from STRS and his annual base salary would have dropped from just more than $92,000 to $89,000.

Three board members voted against it, saying they were hearing concerns from residents. They said their decisions had nothing to do with Russell’s performance. People have questioned whether the district could save money by hiring someone with less experience, and said rehiring retirees makes it difficult for younger people to get jobs.

The move would have been a financial gain for Russell, who would have been able to draw 66 percent of his retirement, meaning he would receive about $5,000 a month. People have to wait two months after retiring to begin receiving payments. They only have to not work for a day.

"It is a financial thing for me personally," he said. "I’m going to draw my retirement and continue to work someplace. I would prefer to do that here. ... Every month I pass on this, is money I am losing in retirement."

Russell, who said he is looking at his options, spoke to the board about wanting to eventually retire and be rehired when interviewing for the Bluffton job three years ago. Two of the current board members were not members then.

Bluffton schools has four others currently working who had retired. They include teachers and a guidance counselor, who all fall under the teachers’ union.

Russell said when union members retire, they are brought back at the fifth-year of experience on the district’s salary schedule. With the insurance and the salary reduction, it is usually about a $24,000 savings to the district. Teachers also lose their spot on the seniority list, meaning if the district needs to cut staff, they are the first to go. Russell is the first administrator at Bluffton to ask to retire and be rehired.

Lima schools has just one administrator who has retired and then been rehired full time. Carin Doseck, director of career and technical education, did so last year. Treasurer Ryan Stechschulte said the district is saving $10,200 a year in not having to pay Doseck’s insurance.

While it is common for both teachers and administrators to be hired back at a reduced rate, Lima schools could not do that with Doseck because its administrators have a union.

Stechschulte said the school board does not have a problem with rehiring retirees as long as all other qualified candidates have been considered.

"They want us to look at the other candidates before we give the job back to the retirees," he said. "So we are still giving the younger staff member the opportunity to grow and/or be promoted."

Shawnee schools has been doing retire-rehires for a number of years. Nardini said both administrators and teachers in the district do it. Teachers are brought back at the five-year experience level and administrators’ salaries are reduced by 20 percent. A teacher could possibly drop from a $65,000 salary to $35,000. Many times they are teachers who would be hard to replace.

"In areas like chemistry, physics and math, there are just not applicants out there in those content areas," Nardini said.

School board President Jim Bronder said there has not been any issues raised about the board rehiring retirees.

"If we can save money for the district and save the taxpayers, while retaining someone with experience, then that is in our best interest," he said.

Perry Superintendent Michael Lamb’s salary dropped $20,000 when he retired and was rehired two years ago. It was during a time when the district was asking voters for new money. The district is also saving about $5,000 on Lamb’s insurance. Two teachers retired and came back this year, saving the district between $20,000 and $25,000 each.

"The benefit is that we keep a veteran teacher who knows the ropes at a greatly reduced salary," Lamb said.

Lamb said there are some risks to taking retirement at 30 years instead of waiting until 35, when people can draw 88 percent of their retirement. Lamb said the 66 percent is locked in when you retire, with the exception of some cost-of-living adjustments.

"You are rolling the dice that this will be enough to carry you through the rest of your lifetime," said Lamb, 53.

While there have not been issues at Perry, Lamb said he understands that some people don’t like the idea. He added that retire-rehire does not just happen in education, using an example of a person retiring from a company and then coming back as a consultant.

"At times it can be controversial," he said. "But it is no different than what takes place in the private sector."