Boards seeks to entice teachers to retire early
Superintendent says additional cuts will still be needed
February 18, 2014
The Carroll Community School District board of education voted Monday night to offer a lucrative early-retirement package this year in an effort to limit cuts to the 2014-15 general-fund budget. There will be no early-retirement package offered next year.
The district is offering 60 percent of an educator's salary with a maximum set at $35,000. This offer is up from the 50 percent salary with a $20,000 maximum that was offered last year. The offer is also available to any teacher with 15 years of continuous experience with the district, down from the 20 years that was required last year.
Though administrative officials have yet to give an estimate of the deficit facing the general fund, superintendent Rob Cordes said a "considerable amount" will need to be cut, stating during the January board meeting that staff reductions will be "necessary." The deficit is primarily due to decreased enrollment and cuts in state funding.
The general fund can be used to cover staff, administration, utilities and maintenance. About 80 percent of this spending covers salaries and benefits. The management fund can be used only for early retirement, insurance costs and unemployment pay. Though the district is facing a general-fund deficit, it has a "good balance" in the management fund, said business manager Gary Bengtson.
Under current law, if a teacher retires after age 65, the retirement benefits are paid out of the general fund. If a teacher retires early, those costs can be paid from the management fund.
The savings to the general fund are multiplied by the district's ability to replace a retiring teacher with a younger teacher whose starting salary is lower that of the retiring teacher, explained Cordes.
Though he says general-fund cuts cannot be avoided even if all of the eligible teachers retire early, Cordes estimated that the district could see 35 to 45 percent savings, even if every vacated position was refilled.
To take advantage of the early-retirement package, teachers must be at least 55 years old. Cordes said this age requirement does not eliminate individuals who would otherwise retire early because employees generally cannot draw benefits from the Iowa Public Employees Retirement System until their age and total years of employment add up to at least 88.
According to Cordes, 17 individuals qualified for early retirement prior to the board's policy change, which he estimated would make an additional six or more teachers eligible.
As of Monday night, only two teachers had agreed to retire early. Those teachers will receive the same deal proposed at the board meeting.
The board also voted unanimously to take the option of early retirement off the table next year to encourage individuals to take advantage of the opportunity now.
Better to be "more aggressive" with the early-retirement package, said board member Duane Horsley, than be forced to make "deeper cuts" later in the budget process.
"There is a dire need this year," agreed board member LaVerne Dirkx.
According to Cordes, the increases to the package amount to about one additional year of insurance. Cordes and Bengtson said this cost is the most significant concern voiced by teachers considering early retirement.
The Carroll district early-retirement policy is to deposit the lump sum into an annuity account in the employee's name, easing bookkeeping for the district and giving the employee complete control on when to withdraw the money and how to spend it.
Early-retirement requests are due by 5 p.m. March 15.
In other action, the school board voted to award the construction contract for the high school projects, including a wrestling-room addition and an administrative-office addition and renovation, to Badding Construction.
Badding Construction's bid for $1,449,000 was about $200,000 less than those from Dean Snyder Construction, Lueder Construction Co. and Rotert Construction.
Representatives from Frevert-Ramsey-Koves Architects-Engineers Inc., the design firm hired by the district, and Badding Construction will meet at the end of March 28.
The wrestling addition, slated for the southeast corner of the building, is expected to be finished by the end of October, in time for use for the 2014-15 season.
The completion date for the administrative addition, which will greet visitors as they enter the school, is set for next spring, at which point the administrative employees will relocate and the existing administrative offices will be remodeled. The renovation project is slated to wrap up in the summer of 2015.
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