Two weeks ago the DDN reported, in “Kettering sees no reason not to retire-rehire Schoenlein,” that the Kettering Board of Education proposed to retire the school district’s superintendent, Jim Schoenlein, and to immediately rehire him at less money. The board argues that this is a win-win: by retiring and rehiring, the superintendent would make more money — $250,000 per year in salary and retirement — and, at the same time, the district would save $40,000 each year.

The district might save $40,000 each year, but, it seems to me that the retire-rehire strategy represents a total net cost to the taxpayer — not a net savings. The DDN indicates that of Schoenlein’s $250,000 total annual compensation, about $125,000 will come from the State Teachers Retirement System (STRS). Of this $125,000 yearly retirement amount, 41.7% comes from Schoenlein’s contributions and 58.3% ($72,875 each year) comes directly from tax money contributed, over the years, to the STRS on Schoenlein’s behalf, by the schools districts where he has been employed.

If Kettering Schools save $40,000 in tax money each year in this retire-rehire strategy, but $72,875 in other tax money is needed in order for the district to save $40,000, then to retire / rehire Schoenlein, there is a net cost to taxpayers of $32,875 each year. The school district may come out ahead, but in the long run, taxpayers will need to pick up the tab.

And, STRS is asking for more tax money. In January, the DDN reported, “STRS has proposed that both teachers and the districts that employ them increase their pension contributions by 5 percentage points — 2.5 more from teachers by 2016 and 2.5 more from the district by 2021. The proposal also calls for raising the retirement age.”

Here is how I calculate the 41.7% / 58.3%  division of individual contribution / general tax fund contribution. Out of every Ohio educator’s paycheck, 10% is deducted and sent to the STRS. But, boards of education send STRS not only the 10% of the pay of each educator, but also an amount equal to 14% of each educator’s pay. This 14% is tax money that comes from the school district’s general tax fund and this 14% represents a significant part of every district’s budget. So, for every dollar an educator earns, 24 cents is sent to the STRS; 10 cents of the 24 cents, or 41.7%, comes from the earnings of the individual educator; 14 cents of the 24 cents, or 58.3%, comes from general tax revenues received in the school district’s general fund.

I’ve not seen this 10% / 14% distinction made in the DDN articles. One person writing in the DDN, on the “pro” side, defends double dipping as, “This is no different than a private employee retiring, collecting on his investments (401(k), IRA) and getting another job. These people invest in the pension system just like others invest in a 401(k). Most of it is their money.”

Another person, arguing for the “con” side, writes, “With 401(k)s, you put in a certain amount and only get out what you and your employer put in, plus investment growth. A public pension is a defined benefit. Regardless of how much you and your employer put in, you always get a set amount back until you die. Defined benefit plans are unsustainable.”

Schoenlein, himself, in the original DDN article, defends the “pro” side by saying, “School employees build up a retirement fund over their entire career, and that’s that individual’s money.” But, most of the money in the STRS is tax money contributed by local districts out of the general fund — the 14% of total salary paid by local districts for each educator — not money contributed out of individual educators’ paychecks.

The 10% the individual educator contributes to the STRS is, as Schoenlein says, “the individual’s money.”  If a person quits teaching after a few years, he or she can “cash out” the 10% accumulated deduction. But he or she cannot cash out the 14%. STRS makes a distinction between the fund composed of the 10% contributed by the individual from his or her paycheck and the fund composed of the 14% contributed by the employer out of the general fund.

What a retirement deal that Ohio educators have!  They are exempt from paying Social Security and instead have a system that gives them many advantages not available to Social Security retirees. This retire-rehire controversy increases public attention to the fact that one reason Social Security is facing shortfalls is that educators are not making any contributions to it.

If Dr. Schoenlein wants to take advantage of Ohio’s generous laws dealing with retiring / rehiring public school educators, then, of course he should do so.  Who wouldn’t want to increase one’s annual income by $95,000?  But, the Kettering Board of Education should not be part of the scheme.  Legal, does not mean ethical.  The retire / rehire proposal seems like the good old boy network at work.  Taxpayers realize that if a public employee receives $250,000 in annual compensation, however it is sold, taxpayers are somehow picking up the bill.

Allowing Superintendent Schoenlein to “double dip” in Kettering, I believe, will further undermine the confidence of Kettering voters in the board’s leadership, and a loss of confidence in leadership is sure to result in a loss of votes for future Kettering school tax levies. As the DDN editorial said, Double-dippers invite voters to rise up

The Kettering Board, in its proposal to retire and rehire Jim Schoenlein as Superintendent, acknowledges that one day the Superintendent will be paid at an annual rate of $155,000 and the next day, doing the same job, he will be paid at an annual rate of $250,000. This whopping $95,000 annual increase, the Board says, is a win-win — a big bonus for a Superintendent they want to reward, and, at the same time, a savings in the school budget of $40,000 each year.

According to the requirement of Ohio Revised Code, there must be a public hearing concerning this retire and rehire decision. The hearing is set for July 13.

In my view, this retire / rehire practice is ethically challenged and, it seems to me, retiring and rehiring Superintendent Schoenlein, as a win-win money scheme, will make it more difficult to keep the public’s support for Kettering Schools.

Yes, there are many retired teachers, principals and superintendents who retire, leave their place of employment, and are rehired by some other school or district. These retirees receive their pension from their first career and, in addition, a new salary from their post-retirement career. This “double dipping” is legal and a great deal for the person involved.

If Dr. Schoenlein were to retire from Kettering Schools and be immediately hired as superintendent of some other district, then, his $250,000+ annual income would be in keeping with the rules of the State Teachers Retirement System rules. It is a generous system.

But, the Kettering School Board is proposing that Superintendent Schoenlein “retire,” and then, the next day, seamlessly continue to do the same job. Some Kettering voters will not appreciate the fact that Schoenlein’s “retirement” is a fraud — what, no retirement party? no gold watch? — some voters will see it as an insider scheme to deliberately sidestep the intent of STRS rules. It seems to me the ethical dimension of retire / rehire scheme should be carefully evaluated by the Kettering Board and the board should consider the impact this decision may have with the public.

Evidently, since they are going forward with the July 13 hearing, the Kettering Board sees no ethical problem with this retire / rehire proposal and agrees with the view expressed by Superintendent Schoenlein, quoted in the DDN: “School employees build up a retirement fund over their entire career, and that’s that individual’s money. At some point, when you’re eligible, you say, I’m going to start collecting. Whether you’re working or not doesn’t matter.”

According to the STRS web-site, it does matter, but only a little bit. If you are re-employed by the same employer, you must forego two months of retirement benefits.

Scheonlein’s comment raises some questions. Yes, educators contribute to their own retirement account. They are exempt from contributing to Social Security and when they retire they can withdraw, if they choose, all of their contributions to the system. But if the retiree takes a lump sum settlement, he or she has no claim on the bigger part of his or her retirement package. Most of the money in the STRS does not come from the individual educator, but from tax money paid by the school district that employs him or her. Individual educators pay 10% of their income to STRS and the school district pays uses tax money to contribute to the STRS system a sum equal to 14% of each educator’s income. This is an important part of every school district’s budget.

Schoenlein’s statement fails to explain that most of the money contributed to an educator’s retirement fund comes from tax money. In retirement, the first retirement monthly checks is the money the retiree himself or herself has put into the system. If the retiree suddenly dies before exhausting his own contribution, his or her estate can claim the balance of the retiree’s contribution. But most retirees, in receiving their monthly checks, soon exhaust their own contributions and live out their retirement from the 14% contributed by tax payers. Schoenlein, with a normal life span, could be collecting a retirement based on this 14% tax contribution many years after his own contributions are exhausted. The fact that retirees are quitting earlier and living longer has put a big strain on the STRS system and this fall it looks like new STRS rules will be implemented to shore up the STRS fund.

The retire / rehire scheme proposed by the Kettering Board is a strategy to game the system — setting up Superintendent Schoenlein to receive much more tax supported retirement benefits than he otherwise might receive. The attitude of “it doesn’t matter, because the local system is saving $40,000 each year” seems short sighted. The problem is, the tax money to fund this gaming of the system must come from somewhere — and, in the end, it must come from taxpayers. This retire / rehire scheme runs the risk of annoying a lot of voters by making them conclude that Kettering Schools is under control of an educational establishment clique — not under the control of the general public.

Superintendent Schoenlein is correct, according to STRS rules, a person receives retirement benefits when he or she is “eligible.” But, one condition for retirement benefit eligibility is that the person first “retire.” So here is the question, is there an ethical limit, to get what you want, to how far one can stretch the meaning of the word “retire,” or any word? 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 love this exchange from “ALice in Wonderland”

“I don’t know what you mean by ‘glory,’ ” Alice said.
Humpty Dumpty smiled contemptuously. “Of course you don’t—till I tell you. I meant ‘there’s a nice knock-down argument for you!’ ”
“But ‘glory’ doesn’t mean ‘a nice knock-down argument’,” Alice objected.
“When I use a word,” Humpty Dumpty said, in a rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master that’s all.”

David Esrati, who is seeking nomination in the July 13 special primary to be the Democratic candidate for Ohio’’s 3rd Congressional District posted a You-tube video on his web-site, his first “stump speech,” showing David addressing Warren County Democrats.

In his remarks, David disparages the other two Democratic candidates — Joe Roberts and Guy Fogle — and says, that he, Esrati, is “the only one who can go and even give it a shot at this late time.”

David’s message is that he intends on hammering the theme that the incumbent Republican congressman for the 3rd District, Mike Turner, should be defeated for an additional term because he is “as corrupt as they come.”

David’s message is that, unlike Turner, he will not take special interest money and, as a congressman, he would work to stop the “greatest shift of money from the poor to the rich of all times.” He says, “We have to put Americans back to work.”

Here is an excerpt of Esrati’s remarks:

I know Mike Turner inside and out and there is nobody who makes Mike Turner more nervous to have in the room than David Esrati. Because it was David Esrati who uncovered the slush fund that was paying off his wife on the no bid contract on the Dayton Development coalition, the one who uncovered the company called “Q-Base” was getting donations — $1000 from 17 people in one week — of people who all worked for the same company, who, again, was a client of Turner’s wife.

This has got to stop. It’s going to take perseverance, it’s going to take grassroots support. And it’s going to take someone who understands the web and who can get the message out cost effectively.

Now there are three candidates running in this special expensive primary. The reason it is so expensive is because of the gerrymandering. Three candidates: One is a 25 year old who nobody knows. There is a TV personality. And that’s great if you are Jesse Ventura or Arnold Schwartzennegger. But this is a local TV guy and the newspaper pretty much dug a hole for him yesterday. And there is me. I have the signs. I have the web-sites. I have five years worth of positions on my web-site. I have 1000 readers a day reading Esrati.com to see what is going on in Dayton Ohio. I am the only one who can go and even give it a shot at this at late time. …

I am ready to go. I am fired up. … We have to put Americans back to work…
We are seeing the greatest shift of money from the poor to the rich of all times. If this is allowed to continue there will be only three kinds of people in this country — the very rich he very poor and the government employee. And that is it. that has to stop. … Mike Turner is as corrupt as they come. And if you don’t believe that, go look at who is giving him money, because it is not the people of this district.

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