Double pensions boost retirement of Gwinnett educators

J. Alvin Wilbanks (center), superintendent and CEO at the state’s largest school district, Gwinnett, could wind up making 98 percent of his final salaries: $449,000-plus a year in retirement.
J. Alvin Wilbanks (center), superintendent and CEO at the state’s largest school district, Gwinnett, could wind up making 98 percent of his final salaries: $449,000-plus a year in retirement.

Credit: JASON GETZ / JGETZ@AJC.COM

Credit: JASON GETZ / JGETZ@AJC.COM

Comparison of pension plans — Gwinnett and Fulton school districts

(Note: By law, all public school districts must be in the Teacher Retirement System of Georgia)

Examples of potential retirement benefits from Gwinnett County Public Schools

1) A Gwinnett public school teacher who retires with 30 years service at age 60 with a final annual salary of $59,312 will earn:

TRS pension of $35,484 (about 60% of final earnings)

GRS pension of $16,128 (about 27% of final earnings)

Total pension of $51,612 (about 87% of final earnings)

2) A Gwinnett public school teacher who retires with 10 years service at age 60 with a final annual salary of $42,113:

TRS pension, $8,300 (about 20% of final earnings)

GRS pension, $4,445 (about 10% of final earnings)

Total teacher pension of $12,745 (about 30% of final earnings)

3) A bus driver who retires with 30 years service in both the Georgia Public School Employees Retirement System (PSERS) and GRS at age 65 with a final annual salary of $38,757:

PSERS pension, $5,310 (about 14% of final earnings)

GRS pension, $14,138 (about 36% of final earnings)

Total bus driver pension, $19,448 (about 50% of final earnings)

*Full-time Gwinnett County Public Schools support employees who are not eligible for TRS are required to be members of the Georgia Public School Employees Retirement System. Each PSERS eligible employee contributes either $4 or $10 per month during the school year to the plan. Gwinnett County Public Schools does not make an employer contribution to PSERS.

**GRS pensioners receive an automatic 3 percent increase each year.

Source: Gwinnett County Public Schools

Examples of potential retirement benefits from Fulton County Public Schools

1) A Fulton County public school teacher who retires with 30 years service at age 60 with a final annual salary of $59,312 will earn:

TRS pension of $35,484 (about 60% of final earnings)

Safety net benefit of $103 (for teachers were hired in the district before June 30, 1988)

Total pension of $35,587

2). A Fulton County public school teacher who retires with 10 years service at age 60 with a final annual salary of $42,113:

TRS benefit of $8,300 (about 60 percent of earnings)

Safety net pension of $123 (assumes employment in the district before June 30, 1988)

Total pension (which cannot be collected until age 65) of $8,423

Example 3: 3) A bus driver who retires with 30 years service at age 65 with a final annual salary of $38,757:

Total annual pension from the county: $23,256

Source: Fulton County Schools

Gwinnett retirement plan costs

Since 2006, Gwinnett school district has paid more than $325 million to fund its local pension plan. When investment returns suffer, as they did during the recession, the district had to contribute more money to maintain the pension’s funding level.

2012: $44,519,000

2011: 39,586,000

2010: 55,197,000

2009: 53,696,000

2008: 50,488,000

2007: 43,840,000

2006: 37,743,000

TRS payments

These are the amounts that Gwinnett school district also contributed to the Georgia Teacher Retirement System:

2012:$81,585,678

2011: 83,580,510

2010: 82,179,417

2009: 76,509,828

2008: 73,223,422

2007: 67,797,937

2006: 61,253,414

The Gwinnett County school district is spending tens of millions of tax dollars every year to offer their educators the Cadillac of retirement plans — allowing some career employees to draw almost a full salary through their golden years.

Across the nation, most teachers, government workers and even private sector employees would be green with pension envy. Gwinnett teachers who put in 30 years can bring home 87% of their final pay, with a promise of a little annual boost.

And J. Alvin Wilbanks, superintendent and CEO at the state’s largest school district, could wind up making 98 percent of his final salaries: $449,000-plus a year in retirement, based on district information.

That’s because Gwinnett educators are getting two pensions, the mandatory state pension and a rare, second pension. A combination of employee contributions and state and local tax money supports their participation in the Teacher Retirement System of Georgia.

But the second, local pension is funded 100 percent by the district — and thus Gwinnett taxpayers — at a cost of $139 million in the past three years alone. The district does not, however, contribute to Social Security for its employees.

According to information from the state Department of Audits and other financial reports, no other Georgia school district has a pension plan like Gwinnett’s.

It’s even helping the bottom line of current workers. The district boasts on its website that employee take-home pay is 5.2 percent higher than if the district were participating in Social Security. Employees pay only 1 percent of their earnings to support the district’s long-term disability fund.

Rick Cost, chief financial officer for Gwinnett County Public Schools, described the local pension plan as a “valuable tool in attracting and retaining outstanding teachers and support staff during times of fiscal austerity.”

With teachers’ salaries stagnant for about a decade, “a secure retirement program” has become “increasingly important,” Cost said.

Wilbanks said the pension is smart business. “Every good employer takes care of its people,” he said.

To Steve Ramey, though, using taxpayer money for the local pension plan “sounds extremely excessive.”

“That’s not to say that teachers don’t work hard and deserve a lot of money. They do,” said Ramey, with the Founding Fathers Tea Party in Gwinnett. But he said this appears to be continuation of what’s “been a long history in Gwinnett of abuse of taxpayer money.”

A ‘moral’ obligation

In the private sector, less than 20 percent of workers are covered by traditional pensions, according to the Bureau of Labor Statistics. Instead, companies may offer employees retirement saving accounts, such as 401(k)s, and may match a portion of employee’s tax-deferred contributions. But there’s no guarantee how much a worker will get in retirement. The balances in those accounts can go up or down with the stock and bond markets.

Most workers expect to get by in retirement, in part, on Social Security. But the average Social Security benefit for a retired worker is meager: under $15,000 at the beginning of 2012. The maximum benefit for someone at full retirement age is about $30,000 a year.

Keith Brainard, research director with the National Association of State Retirement Administrators, said Gwinnett educators have pension benefits well above the national norm for public employees not participating in Social Security. With both plans, their retirement check is about 30 percent higher than their counterparts nationwide, he said.

A Gwinnett teacher with an end-of-career salary of $59,312 will receive $51,612 a year in retirement, according to the district’s own estimates. And that amount will go up each year; Gwinnett’s local pension provides for automatic annual cost-of-living increases of 3 percent.

Wilbanks, 71, will be able to draw in retirement 80 percent of his salary from TRS, as a 40-year member of that plan. In addition, he’ll receive 18 percent of salary from the local plan which he’s been in for 30 years, or since its inception, district officials said.

He earned $503,622 last fiscal year, and $413,997 the year before, according to district records, making him one of the nation’s highest-paid superintendents.

Tim Callahan, spokesman for the Professional Association of Georgia Educators, said he was surprised to learn that Gwinnett employees can draw two pensions.

“Wow, that’s awfully good,” he said. “That might give Gwinnett a competitive edge in recruiting teachers.”

But it’s not clear that the local pension is widely known outside the district. “I can’t say I’ve ever heard an educator say they want to get into Gwinnett because they have a better pension,” Callahan said.

Cost said there is evidence that some Georgia school districts are spending more than Gwinnett for employee retirement benefits, because they are in both Social Security and TRS. He notes Social Security mandates employers to pay a tax of 6.2 percent of salaries, while Gwinnett pays about 5 percent into its local pension plan currently. That amount fluctuates. In recent years, it was almost 6 percent, records show.

Cost also said that other districts supplement their TRS benefits with matching contributions to employees’ retirement savings accounts.

“I think there are more systems that are paying for a Ferrari and only getting a Volkswagen when they retire,” he said.

Social Security is more complex than that, though. The tax only applies to a portion of the salary of highly paid workers. This year, the tax applies only to the first $113,700 of pay. There’s no Social Security tax on earnings above that. Gwinnett had about 100 employees earning over that amount.

Another difference is that districts in Social Security aren’t liable if the plan runs short of money. If Gwinnett’s plan, currently now well funded, runs short, taxpayers are on the hook.

In metro Atlanta, DeKalb, Fulton, Clayton and Atlanta school districts do not participate in Social Security. Cobb is among ones that do.

Of the state’s 180 school districts, 56 offer retirement savings accounts that are similar to a 401(k), according to the Georgia Department of Audits. But not all offer an employer match. Some expect their employees to get by in retirement on their TRS checks.

Wilbanks said he’s been firmly committed to the local pension plan, even during tough times and state budget cuts that forced the district to furlough employees, eliminate jobs and increase class sizes. This year, the district also raised property taxes for the first time in years.

“You can’t go back on something you promised employees would be there,” Wilbanks said, adding that he considers the pension’s continuation a “moral” obligation.

Different approaches

Local pension plans have proven to be headaches.

In 2011, state auditors found that Atlanta Public Schools had the worst underfunded large pension plan. APS had assets at the time to cover about 17.4 percent of its pension promises. Many experts agree that a pension plan should have 80 percent to 90 percent of the money it is obligated to pay out. It is short more than $554 million.

The plan in Fulton County Schools is only about 50 percent funded and needs about $224 million to close the funding gap, according to information from state auditors.

The legacy plans in both Atlanta and Fulton are no longer open to new teachers, as the districts struggle to pay off promised benefits.

Fulton’s plan is open only to new bus drivers and other non-educators. The same is true in rural Polk County in west Georgia.

By contrast, Gwinnett’s plan is well funded. It had $1.5 billion in assets at the end of 2012, more than 100 percent of its forecast obligations. That year, the plan paid $43,971,624 in retirement benefits and $2,520,171 in long-term disability benefits.

Even Gwinnett has seen the need to rein it in a bit, though. Last year, the school system changed the rules of its local pension plan so that 10 years of service, not five, are required for an employee to be eligible — matching the eligibility requirement of TRS.

As of Oct. 31, the district had 19,725 employees on staff who could be eligible for pensions with 10 or more years of service. About 6,000 retirees and their beneficiaries are receiving pensions under the plan, and another 3,099 former employees are vested but have not starting drawing benefits yet, according to data provided by the district.

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