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DeKalb Schools settles lawsuit over on dropped retirement fund

DeKalb County Board of Education Chairman Marshall Orson and Superintendent Ramona Tyson watch a speaker during a public meeting on February 10, 2020 at DeKalb County School District headquarters. (AJC FILE PHOTO)
DeKalb County Board of Education Chairman Marshall Orson and Superintendent Ramona Tyson watch a speaker during a public meeting on February 10, 2020 at DeKalb County School District headquarters. (AJC FILE PHOTO)

The DeKalb County School District has reached an agreement that will see employees recoup millions in lost retirement contributions after a supplemental plan was abruptly halted in 2009, with district officials citing revenue shortfalls.

The settlement is subject to court approval.

News of the settlement has not been announced by the school district, but was posted on the website for Barnes Law Group, which is representing the plaintiffs, and DeKalb County Board of Education member Stan Jester's blog.

According to Jester, the district will pay $117.5 million over five years, with an initial payment of $27.5 million and subsequent payments of $22.5 million due a year from the date of the first payment. He added that those eligible to file as part of the class-action settlement are expected to be notified within 30 to 60 days with additional information on how to move forward.

“We hope it moves the district and the educators and the community down the road in a better way together,” Barnes Law Group attorney John Salter said on the settlement.

The original lawsuit, filed in 2011 by Elaine 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% state reduction in funding for all Georgia school systems.

The district had annually contributed 6% of a participating employee's salary. During the 2009-10 school year, DeKalb was scheduled to pay $26.5 million into the plan.

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, that the board voted to waive the two-year notice a year after contributions were suspended.

“Both sides believe this settlement turns the page on this longstanding dispute, ending almost a decade of litigation and further demonstrating the District’s commitment to its most valued resource: Its classroom educators and employees,” Barnes Law said on its website. “The parties hope this resolution allows for our collective focus to be on the critical mission of educating the wonderful children of DeKalb County Schools.”

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. The Georgia Court of Appeals reversed that decision last year, citing a “governmental promise” that no changes would take place without two years’ notice.

The Georgia Supreme Court issued an opinion last October upholding a Georgia Court of Appeals ruling that the district should have given employees two years' notice before making any changes to the annuity.

The district’s school board voted to opt out of social security in 1978, and currently is one of many across the state that does so. 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 contributions were paid into individual employee accounts, not taxed until withdrawn.