Tonight the Fort Worth school board will take its first vote on freezing a retirement bonus known as terminal pay for nearly half of all employees. Last year, discussions on altering the bonus became quite heated and trustees ultimately were split on the issue and delayed taking action until this year.
Officials have said they need to get a handle on terminal pay because of its ballooning liability for the district.
Essentially, the bonus is a lump-sum bonus based on a formula that includes an employee's ending salary, years of service and unused sick days (up to 20). The proposal would limit that bonus to what an employee has earned up to Aug. 31 of this year without further growth.
Only Fort Worth school employees hired before 2003 are eligible for terminal pay -- 4,896 staffers. Freezing the bonus would limit the cost to the district to about $47.3 million.
"If everyone eligible for the next 15 years all went evenly over that time, we're talking about $3 million a year in cost with that number continuing to grow," Chief Financial Officer Hank Johnson said. "It's a future liability that you want to slow down."
Last year, Johnson recommended freezing the terminal pay and changing the number of contract days from 183 -- the former state requirement for teachers to work -- to what an employee actually is working, which is generally 187 to 240 days. Increasing that number could have dramatically cut an employee's bonus because of the formula. However, that recommendation is not in this year's proposal.
Larry Shaw, executive director of the United Educators Association that represents area school employees, said most staffers will understand the need to freeze the bonus.
"When the Legislature is cutting budgets like they are, cutting something has got to go," Shaw said, indicating drastic cuts from state funding to schools. "About 80 percent of the district's cost is in salaries. While employees may not like it, they understand it."
The terminal pay policy must be voted on twice for it to be final.
Johnson also will update the board on the budget. The district is looking to cut $30 million to help reduce the expected shortfall, which is currently about $45 million next year.
Administrators will also go over a reorganization plan that aims to cut about $10 million from the budget. That plan includes cutting math and literary coaches at the elementary level and lead content teachers in secondary schools.
Such a bonus could be challenged as beyond the powers of that board to commit future boards. Also, as a constitutionally prohibited payment for other than services rendered.
Just cancel the bonus program and see what employee challenges come about.
Save $47 million dollars.
Posted by: Harry Stanford | February 28, 2012 at 04:44 PM