Tens of millions of taxpayer dollars could be at stake in a DeKalb County lawsuit that went before the Georgia Court of Appeals on Wednesday.
DeKalb school officials want to dismiss a claim by two employees who say the school system must pay into their supplemental retirement accounts.
In 1979, the DeKalb County School District started funding its employees' tax-sheltered annuity plan to supplement state pensions. Then, in 2009, the district suspended payments because of a budget shortfall.
Teacher Elaine Gold and psychologist Amy Shaye sued last year, alleging the suspension was a breach of contract. They are demanding the restoration of all payments and back payments. One of their lawyers, John Salter of Marietta, said they will seek class action status if the case makes it through this appeal. He said DeKalb owes its employees at least $50 million.
"It is about broken promises, and it is about keeping your word," he told the three-judge panel Wednesday.
DeKalb Superior Court Judge Clarence Seeliger ruled in October against the school system's claim that it was immune to the suit. That is among the issues that the appeals court is considering.
The district also contends there was no contractual obligation to pay into the supplemental retirement fund, but the plaintiffs claim that the policy to do so was tantamount to a contract. The school board decided in 1979 to opt out of Social Security and instead pay into the annuity plan. The board adopted a policy that said the system would notify employees two years prior to canceling payments, which it did not do when it stopped paying in July 2009.
One of the three judges, Stephen Louis A. Dillard, had some observations Wednesday about the shift from Social Security.
"When you opt out of a federal program, I would think there are certain requirements that you have to meet," Dillard said at one point in the hearing. Later, he said, "I just don't see how that's an alternative to Social Security if you're not funding it."
Thomas Bundy, a Washington, D.C., attorney representing the DeKalb school system, said payments into the annuity are not mandatory because it's just one element of the supplemental retirement plan. Life insurance and long-term disability benefits are also included. He said the two-year provision applied to the entire package.
After the hearing, former Gov. Roy Barnes, an attorney for the plaintiffs, said the school system was "trying to split hairs" with the definition of a contract.
It typically takes several months for the appeals court to rule.
If the case is allowed to continue, school officials could face another big strain on a budget with a projected deficit next year of $73 million.
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