“Retire / Rehire” Has No Negative Impact On Retirement System — Says STRS Spokesperson

In my post — Kettering Bd Of Ed Should Give Supt. Schoenlein A Pay Raise — Should Reject “Retire / Rehire” Plan As Unethical — I explain that if I were a member of the Kettering School Board, I would vote “No” on “retire / rehire” for Dr. Jim Schoenlein, the superintendent, and quote an article from the DDN concerning the negative effect such practice has on the retirement system (STRS).

In response, Dr. Schoenlein sent me an e-mail saying, “There are absolutely no statistics or data that indicate retire/rehire hurts the STRS.  The DDN claimed so, but the paper was dead wrong.  In the editorial, the editorial board stated “Surely retire/rehire is bad for the STRS” and “Retire/Rehire has got to be bad for the STRS.”  So, the paper had no data, just a guess or a gut feeling.  They were and are just flat wrong.  My retire/rehire will save the Kettering City School District over $50,000.”

So, I telephoned STRS and eventually was connected to an official spokesperson, Laura Ecklar. I was surprised to learn, according to Ms Ecklar, STRS, more or less, agrees with Dr. Schoenlein.  Ecklar informed me that it is the official position of the STRS that the practice of retire / rehire has no negative impact on the STRS. I couldn’t budge her.

Ms Ecklar didn’t have a good answer for why the STRS web-site implies there is some negative effect in its posted statement:  “Reemployed retirees do not have any appreciable negative impact on the solvency of the pension fund or the separate health care fund.” Nor did she venture an opinion as to why the retire / rehire law was changed in 2000, making the practice more widespread.

In 2000, the law stated that if rehired to the same position, the employee would lose 18 months of retirement benefits if he or she returned to the same job during that first18 months after retirement. The law was changed from 18 months to 2 months.  It seems obvious that the 18 month requirement was designed to discourage “retire / rehire” — allowing an employee seamlessly to continue in the same job — I want to research why the18 month law was originally made and why, in 2000, it was changed.

Regardless, according to Ms Ecklar, my conclusion that retire / rehire would  “drain $120,000 from the pension system” is unfounded.  Ms Ecklar has taken some wind from my sails.  Gaming the system, subverting the meaning of the word “retire,” not showing transparency to the public — all risk eroding public support.  But, in light of Ms Ecklar’s revelation, I overstated the matter by calling such actions “unethical.”

My opposition to “retire / rehire” of Dr. Schoenlein, however, did not arise from my concern for the financial status of the STRS. I think it makes sense as a public policy to encourage educators to continue in their profession after retirement, and, in my view, if there is a cost to STRS for doing so, such cost is worthwhile. My opposition to retire / rehire is based on the concept that a public body, such as a school board, has an obligation to the public, different from the obligation of an individual to simply follow the law.

The question is how should a publicly elected body make decisions.   A publicly elected body has a different standard of ethics, transparency, and concern for the public good than that expected of an individual.

If the goal is to keep Dr. Schoenlein as Superintendent of Kettering Schools, then, in my view, a better choice than “retire /  rehire” would be a salary increase. I imagine Schoenlein would agree to $30,000 more each year — after all, retirement payment is based on the average of the salary for the top three (maybe that rule has been changed to five) years.

I think it is good public policy to establish the fact that the district wants top talent in its top position and is willing to pay top dollar to attract that talent.  The best candidate for superintendent might be an ambitious and visionary 45 year old, years away from retirement.

I never had doubt that the school board on Thursday would approve retire / rehire for Dr. Schoenlein. As a recent school board candidate, I thought it fair that I should take a public position. Now, I’m not so sure I would vote “No.” As a board member, I would take the position that of more importance than the monetary part of a new contract, is how the board should define Dr. Schoenlein’s job description and how the school board should outline his goals as superintendent.

As a board member, my goal would be to keep the big picture in mind — according to the view I gave to the League of Women voters:

Public education needs a big leap in quality — including a big leap in cost effectiveness. We need a ten year process of transformation that will result in a 21st century system of education. Community consensus is needed. Leadership is needed. The biggest challenge for the Kettering School Board is to lead the community in creating a shared vision of the future, and, in creating a well-thought out, long-term plan to bring that vision to reality.

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One Response to “Retire / Rehire” Has No Negative Impact On Retirement System — Says STRS Spokesperson

  1. Bryan says:

    Just because something is legal, doesn’t make it right.

    Retire/rehire stirs up negative public sentiment for a reason. The reason is the combined benefit to the employee in the R/R status using public funds is far, far, far beyond what most people consider reasonable.

    I hear the official STRS position loud and clear, but respectfully disagree. The funding problem is that more money is expected to go out than come in over time. While it may be hard to quantify the r/r impact, it has to be a non zero number by its very nature. 1 more person collecting with 1 less person paying in. R/r surely doesn’t put STRS in a BETTER financial position!

    I’m wholly support your idea that it is more reasonable and appropriate to increase his pay $30/year to keep a valued leader than to condone retire/rehire. Legal or not, it is ethically questionable, sets poor precedent, and is ultimately a hard to quantify drain on public pension systems.

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