Former Governor Roy Barnes, an attorney for the plaintiff, listens to Thomas Bundy present his rebuttal argument in June 1012 at a hearing on a lawsuit about the school district halting contributions to a supplemental employee retirement fund. BOB ANDRES / BANDRES@AJC.COM

Appeals court ruling could be costly for DeKalb Schools

Dropping retirement fund contributions breached contract, judges rule

The DeKalb County School District could be forced to pay some employees about a quarter of a billion dollars after the Georgia Court of Appeals ruled it breached a contract by abruptly ending annual contributions to a supplemental retirement fund.

Unless the school district appeals the ruling to the Georgia Supreme Court, Friday’s ruling sends the case back to DeKalb County Superior Court, which will decide whether employees can join the lawsuit as part of a class action, and how much each is owed.

“Ever since the district broke its promise to us in 2009, they have fought tooth and nail for almost ten years,” Elaine Gold, a retired teacher and a plaintiff in the original lawsuit, said in a statement released by Barnes Law Group. “The district’s decision to bully teachers instead of doing what was right has dragged this case out. We feel so happy that a court finally said that what the district has been doing is wrong and that the district has to keep its promises.”

The original lawsuit, filed in 2011 by Gold and school counselor Amy Shaye, contended the school district breached an agreement that said district officials would give employees two years’ notice before reducing contributions to the Georgia Tax Shelter Annuity Plan. Instead, the school district suspended contributions abruptly in 2009, citing a budget shortfall after a 3 percent state reduction in funding for all Georgia school systems. DeKalb would lose $20 million in funding in that reduction.

The district had annually contributed 6 percent of a participating employee’s salary. During the 2009-2010 school year, DeKalb was scheduled to pay $26.5 million into the plan. If it is found to be liable for that much for each year since, the district could be responsible for about $240 million, about a quarter of its annual operating budget. District officials are working to approve a $1.1 billion budget by the end of June. The district currently has $120 million in its general fund balance.

“The district received the decision of the Georgia Court of Appeals in the Gold case on Friday,” district officials said via email Wednesday. “The district is reviewing the decision carefully and considering its next steps.”

The annuity plan, established in 1979, was an additional benefit to educators and a Social Security alternative. The fund is separate from the state retirement fund and is paid into individual employee accounts, not taxed until withdrawn.

Former DeKalb County Board of Education Chairman Tom Bowen said after the lawsuit was filed that the board did not act improperly, adding that the board had the ability to amend its policies. The suit argues, though, the board voted to waive the two-year notice a year after contributions were suspended.

In 2015, DeKalb County Superior Court Judge Gregory Adams ruled the district did not breach a contract, saying there was no provision calling for a two-year notice before reducing the contributions. But the appeals court decision cites a “governmental promise” saying no changes would take place without two years’ notice.

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