A year after learning of $3 million in pension overpayments to educators, Fulton school board members have yet to decide if roughly 400 retirees should pay the money back or taxpayers should pick up the tab.
On average, the retirees were overpaid $8,870, though one collected $79,330.
The overpayments started as far back as 1988, according to Fulton County Schools Employees’ Pension Plan documents. They were discovered by pension board staff in August 2011 and confirmed by an outside accounting firm audit in December 2011. To fully replenish the fund, $3.2 million is due, including interest.
The retirees’ pension payments come from both the Teachers Retirement System of Georgia and from the Fulton County Schools Employees’ Pension Plan. How much the Fulton plan pays depends on what the state pays. There are 2,761 retirees who collect benefits from the Fulton pension.
The 400 retirees were overpaid when the Fulton pension plan failed to adjust their payments after the state increased the size of its monthly checks.
Thirty-five retirees who were underpaid a total of $135,000 were sent lump sum checks.
Those who were underpaid and overpaid in te past also are now receiving correct monthly checks, said Margaret H. Bryant, executive director of the Fulton County Schools Employees’ Pension Fund. Bryant said that, if the school board repays the money, “the affected retirees would not be responsible for this repayment of the overpaid amounts.”
Government pension experts say that would be unusual.
“I’ve not heard of an instance where taxpayers would be required to pay for an error in a benefit calculation,” said Keith Brainard, research director for the National Association of State Retirement Administrators, an association of 80 directors of statewide retirement systems that serve about 15 million current and retired employees, including most Georgia teachers.
School Superintendent Robert Avossa told the school board last month that, “in the regular part of the world, if I was overpaid, then I’d need to pay it back.
“We want to be sensitive to that,” Avossa said.
Avossa said this week he has to balance his commitment “to our retirees and their contributions to this school system” against his obligation to be a good steward of “taxpayer dollars.” He said he doesn’t know how it will be resolved and who will pick up the tab.
“I can’t say how the board of education will want to address this issue as we are still working with the IRS to assess the options,” he said. “The situation makes one thing clear to me – the entire pension board process and structure needs to be reviewed so it never happens again.”
All of the retirees who were overpaid are now getting monthly pension checks that are, on average, $104 smaller. But there were extremes on both ends, with one pensioner seeing a $963 a month drop and one a loss of 10 cents a month, Bryant said.
The average payment last March to the 35 pensioners to correct the underpayments was $3,857. But again there were wide swings in what was paid. One retiree received $35,377 and one 87 cents Bryant said.
Barbara Atchley, a retired teacher, hopes the pension board, school board and others can work amicably on a fair solution. Forcing her and other retirees to repay the money would “difficult for all of us, but devastating for some,” said Atchley, who retired in 2001 after 30 years with the school system.
She said she has spent many restless nights concerned that she might have to repay several thousand dollars to the pension system.“I hope they will pay serious and compassionate attention to the retirees who knew nothing about the error,” Atchley said.
Avossa said one outcome could be that pensioners don’t have to repay any, or just part of their overpayments.
Brainard said in cases he’s aware of where errors were made, the pensioners are held responsible. Most pension plan participants sign a statement acknowledging that potential. They did in Fulton’s case, “but obviously there are special circumstances here,” Bryant said.
Linda Schultz, school board chair, said there’s concern about taking money from the school system — and hence taxpayers. The school board attorney is negotiating with the IRS to come up with solution that will be “fair to everybody — the pensioners, taxpayers and the school board,” she said.
It will be a tough choice with the budget already tight. “Is this the time to take $3.2 million out of the general fund to replenish the pension fund when that money could be used for other things, classrooms, and things like that?” Schultz said.