The Georgia Supreme Court has upheld a Georgia Court of Appeals ruling that the DeKalb County School District breached a contract by abruptly ending annual contributions to a supplemental retirement fund for employees.
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.
Other employees may soon be able to join the lawsuit as a class action.
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. If it is found to be liable for that much for each year since, the district could be responsible for more than $250 million, just more than 20% of its annual operating budget. District officials recently approved a $1.2 billion budget for the 2019-2020 school year. The district currently has about $100 million in its general fund balance.
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 The fund is separate from the state retirement fund and is paid into individual employee accounts, not taxed until withdrawn.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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