“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/ rehire” — allowing an employee seamlessly to continue in the same job — I want to research why the18 month law was originally made and why, in 2000, it was changed.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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It’s Tough To Say “Goodbye” to My Teacher And Friend — Larry O’Donnell, “Mr. O”

This is tough.  On Thursday, I will attend a Mass of Christian Burial for my friend and teacher, Larry O’Donnell — “Mr. O”

I telephoned Larry last Thursday, January 7, and when I received no answer, I telephoned him several times more. We were to have breakfast together, where we always met, at George’s Restaurant in Northridge on Friday.

I was shocked to eventually learn that Larry had suffered a massive stroke on Thursday and that he had passed away Saturday.

Larry, as a young man, was my sophomore high school English teacher in 1963 at Northridge High School.  He stayed at Northridge his entire career, a proud Polar Bear, and retired with 39 years of service.

Larry -- with two hats -- and me at a Dragon's game last summer. Larry's Northridge Kiwanis had organized a group outing. Larry gave me the ticket.

Only in the last seven years, or so, did I reconnect with Larry, and with my other Northridge teachers — David Griesmeyer and Bill Howell — as well.  Now, shockingly, all three are gone and all at early ages.

I enjoyed having breakfast with Larry and did so two or three times each month.  He was a gracious, intelligent man with a keen sense of humor and we would stay at breakfast for several hours.

It is incredibly painful to me that he should leave so abruptly. I never told him so, in so many words, but I think he knew, that I deeply appreciated his friendship, his kindness, his spirit. We enjoyed each other’s company. I was looking forward to many more years of fellowship with Larry.  I will miss him very much.

It hurts to say:  Goodbye, my friend.

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Kettering Bd Of Ed Should Give Supt. Schoenlein A Pay Raise — Should Reject “Retire / Rehire” Plan As Unethical

The special meeting Kettering Board of Education is required by law to hold — in order to allow Superintendent Jim Schoenlein to retire and then be rehired —  will be this Thursday,  Jan. 13, at 8 a.m., at the district offices, 3750 Far Hills Ave.

This special meeting was originally scheduled for July 13, 2010, but was canceled because the retire / rehire decision was perceived as possibly discouraging Kettering voters from supporting the 4.9 mill Kettering School’s tax increase that was on the November ballot. That tax increase was approved by Kettering voters.

Now, the Kettering Board is going forward with the retire / rehire decision.  Jeremy Kelly of the DDN explains that approval of the the plan will mean, “Schoenlein’s salary would drop to $130,000 from $155,000 and the district’s contribution to his retirement would shrink, saving Kettering schools a total of about $40,000 annually.”

Schoenlein will draw $250,000 in total income — $130,000 in salary from the district and $120,000 each year in retirement benefits.  He will start a second retirement account based on his $130,000 new salary, and at age 65, he will be eligible for a cash settlement from this second retirement account.

In 2009, I was a candidate for the Kettering School Board and, though not elected, I did receive 4481 votes.  For anyone in the Kettering public who is paying attention, I am going on record here — If I were now a member of the Kettering Board, I would vote “No” on this retire / rehire proposal.

I appreciate the fact that, evidently, there is a consensus on the Kettering Board that Dr. Schoenlein deserves a big increase in compensation.  If other board members would make the case that, because of the merit of his work, Dr. Schoenlein deserves an increase in pay, as a board member, I would be open to increasing the superintendent’s salary, say, by $10,000 each year, to $165,000.  But, I could not support a retire / rehire plan because, in my view, because such a decision would appear ethically challenged, and would needlessly alienate members of the public.

Yes, by “retiring / rehiring” their superintendent, according to my calculation, the district would gain $44,000, but, in the big picture taxpayers will lose close to $55,000.  Dr. Schoenlein’s total compensation, under the retire / rehire plan, will increase by $95,000.  This $95,000 increase is almost all from tax money, and so the deficit to the taxpayers, is $95,000 less $44,000 or $51,000.

In this post, from June 22, 2010, I argue “Net Cost To Taxpayers Each Year Will Be $32,875” — giving credit to Dr. Schoenlein that some of the $51,000 in additional compensation derives not from general tax money from Dr. Schoenlein’s salary — his personal contributions to the retirement fund.  But, since then, I’ve discovered that Kettering administrators pay zero into their retirement account; the entire retirement contribution is paid for by the board.  On Schoenlein’s salary of $155,000, the district pays 14%  into the retirement account. The board pays 14% for teachers as well, but teachers, in addition, pay 10% from their own income into their retirement account. But in Kettering, for administrators, the district pays this additional 10% as well.

Kettering administrators have zero of their own money into the retirement account so, the net cost to taxpayers for the Schoenlein retire / rehire scheme will be closer to $51,000, rather than $32,875.   (The exact amount is impossible to determine without knowing how many years, before becoming an administrator, that Schoenlein picked up this 10%).

Yes, it is true, that if Schoenlein would retire from Kettering and find a new job as superintendent of another school district, he might have total compensation exceeding $250,000. Such a retire / rehire to another district would be an overall increase in cost to taxpayers and such a move would be legal. It, also, in my view, would be ethical. In order to enjoy increased income, it is generally considered ethical if one is careful to obey the letter of the law — regardless if the law is illogical or unwise. A public body, making decisions for the general good of the public and in need of maintaining public confidence must be guided by the intent of the law, not simply the letter of the law.  A public body has an obligation to keep its eye on, and to be guided by, the big picture.

But for the district, itself, to perpetuate the notion that Dr. Schoenlein has “retired” — when he will continue in exactly the same job, with exactly the same job description — is a move that I see as ethically challenged.  For a board to retire / rehire its superintendent is to game the system. It saves the district money, but overall drains money from taxpayers.  “Gaming the system” comes across as an “old boy network” ploy. It comes across as unethical.

The DDN in an editorial in December “Letting school bosses “retire” hurts pensions,” said:

This practice is controversial. Superintendents like Mr. Schoenlein really can’t be blamed for wanting to double-dip. It’s legal and allows them to make much more money — drawing both a salary and a pension …

But here’s the problem: The retire-rehire practice is so rampant among superintendents in Ohio it can only be harming the already fragile state of the State Teachers Retirement System. … When districts like Kettering look out for their own interests and cut special retirement deals with a few favorites, they contribute to perils facing the pension system.

It comes down to what the word “retire” really means.

In my post last summer — To Retire / Rehire Kettering Schools Superintendent Schoenlein Is Legal — But, Is It Ethical? — I write:  A board that must continually ask the public for a vote of confidence via requests for new property taxes might remember that the public, I think, has already rejected the notion that legality is more important than ethics. The public has rejected a point of view that says, “It depends on what the meaning of the word ‘Is’ is.”

I think that the intent of the law that allows “retire / rehire” is that after retirement — after closing the door and leaving one’s job — if an educator has opportunities to work in his or her profession, then he or she should be encouraged to do so. Such an intent makes good sense. But every law has unintended consequences.  The danger of this “retire / rehire” law to the education profession is that by encouraging retirees to cling on indefinitely, opportunities for talented newcomers are diminished.

The intent of the “retire / rehire” law was not that a board of education should have the opportunity to “game the system,” and, by so doing, drain $120,000 from the pension system — giving $95,000 to the superintendent and $25,000 to the board.

According to my calculation — which I intend to confirm with the school treasurer — in this new agreement, the school district saves $25,000 + $6000 + $13,000 or $44,000:

  • The district saves $25,000 in salary — $155,000 to $130,000
  • The district will not pay the 24% retirement amount on the $25,000 of Dr. Schoenlein’s salary that it previously paid– $155,000 to $130,000 — so 24% of $25,000 is a savings of $6,000.
  • Dr. Schoenlein will pay the 10% retirement of $130,000 of the new salary and the district will pay 14%. Previously, the district paid this 10%, so this is a savings an of an additional $13,000.

Giving Dr. Schoenlein a $95,000 increase in compensation, while, at the same time, saving the district $44,000 in total expense sounds like something too good to be true. This influx of money comes from an unwise transfer of tax money from the pension system to the superintendent and the district. For the sake of maintaining a vigorous pension system and for the sake of creating opportunities for the next generation of educators, the state legislature should re-write laws pertaining to retire / rehire.  Until such laws are re-written, local boards of education should act on principle, and, in the public interest reject retire / rehire proposals.


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