Former Governor Roy Barnes, an attorney for the plaintiff, listens at an appeals court hearing in 2012 on whether teachers in DeKalb County should be allowed to sue over the school system’s suspension of supplementary retirement accounts. BOB ANDRES / BANDRES@AJC.COM

DeKalb pays teachers less in replacement for former annuity

As a battle waged in court in 2015 over a suspended retirement contribution to some DeKalb County School District employees, then-Superintendent Michael Thurmond made an announcement that seemed to suggest the district would “re-establish” the discontinued benefit.

Instead, after his departure, the district set up a new plan, driven by an employee contribution, that provides significantly less.

Michael Bell, the district’s chief financial officer, said about $9 million of the $10 million set aside in the 2015-2016 budget has now been used, with employees opting into a 403(b) retirement plan that guarantees a 2 percent match from the district if they put the same amount into it.

The suspended plan, a tax-sheltered annuity, had contributed 6 percent of a participant’s salary, with no matching funds from the employee, to the tune of about $25 million a year. The district suspended contributions in 2009.

In 2015 Thurmond said, announcing the new retirement benefit, “We have been working diligently for the past two years to find ways to help our loyal employees, who have been the victims of a bad economy and poor management decisions in years past.”

A teacher and a school counselor filed a lawsuit in 2011 contending that the district’s suspension of the annuity was unlawful, as two years’ notice was supposed to be given before ending it. The 6 percent contribution was a substitute for Social Security.

A recent Georgia Court of Appeals decision ruled that the district was at fault for abruptly ending the contributions, which means the district could be on the hook to affected employees for about $240 million in lost benefits since then. District officials have not said yet whether they will appeal the decision. Otherwise, it will be decided in DeKalb County Superior Court whether employees can join the lawsuit as part of a class action, and how much each is owed.

Attorneys on the case declined to comment on the benefit. Thurmond, now DeKalb County’s CEO, did, too.

At the end of the 2015 school year, Thurmond’s last year leading the district, economic conditions were still improving, and the district had clawed its way from a $14 million deficit and management woes that saw Gov. Nathan Deal step in and replace most of the school board. Under Thurmond’s leadership, which lasted just over two years, the district also had done away with teacher furlough days, used to help cut costs, and given raises and cost-of-living increases.

Bell said there were never plans for the $10 million set aside in 2015 to go specifically to those affected by the 2009 TSA suspension.

“Michael Thurmond was getting to the end of his term, we had a fund balance of about $90 million … and (Thurmond) was getting buttonholed by a lot of people in the district (about the retirement plan),” Bell said. “We went through the last budget of his and (the $10 million) was put into revenue. It was never stated it was for some particular revenue group.”

The $10 million benefit has come up several times this year, including when the district’s bus drivers attempted to negotiate about their pay and benefits, with some suggesting they did not benefit from how those funds were used after Thurmond left. Bell said once Superintendent Steve Green joined the district, talks began over how to use the $10 million set aside. Bell and former human resources chief Tekshia Ward-Smith presented the 403(b) with the 2 percent match to the school board, which accepted the recommendation. Not all district employees were eligible for it. Some, Bell said, still received a TSA contribution that had not been suspended in the school board’s 2009 decision.

The district’s school board opted out of Social Security in 1978, and DeKalb is one of many districts across the state that does so. In neighboring Gwinnett County, which also opted out of Social Security, career school teachers can receive nearly their entire salary annually after retirement because of two retirement plans funded mostly by state and local tax money.

Bree Sharper said that when she joined the DeKalb County School District as a teacher in 1997, she was told it did not provide a Social Security benefit. Officials pushed the existing 6 percent TSA contribution as better option.

“They said it would be more stable,” said Sharper, who is leaving the district after 21 years to work for Atlanta Public Schools. “It was touted as a benefit for DeKalb teachers.”

The district’s announcement that it was cutting the benefit came at a time where teachers were experiencing furlough days, losing health care cost subsidies and seeing class-size increases. When the 403(b) benefit was announced, she jumped at it.

“It was something. It was … a step in the right direction,” she said. “But you went through eight years (with no benefit). You were making less money than you were in 2007 … in 2014.”

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