The school system in DeKalb County experienced a setback in a lawsuit brought by employees that could someday cost taxpayers tens of millions of dollars, yet a top official says he’s unaware of plans to set money aside in case the county is forced to pay.
Superior Court Judge Clarence Seeliger ruled in October against DeKalb’s claim that it was immune to a lawsuit over suspended payments to a supplemental retirement fund for teachers, bus drivers and other employees.
The case is on appeal, with hearings scheduled for April. If the school system loses the appeal, the lawsuit will continue in the DeKalb court system. So far, the case involves only two plaintiffs, but they are seeking class action status. If it is granted and if the county loses the case, taxpayers could be compelled to make back payments to the thousands of employees in the retirement plan.
The school system had been paying into the plan since 1979, but suspended payments in 2009 because of a budget shortfall. A teacher and a school counselor sued last March, charging the suspension was a breach of contract. They are demanding the restoration of all payments for three years and counting. It’s unclear how much the total could be.
The only calculation available in the court record is for the 2009-10 school year, when DeKalb was scheduled to pay $26.5 million into the tax-sheltered annuity plan.
Assuming the annual contribution — about 6 percent of each employee’s pay — didn’t change much, the total could exceed $50 million, said John Salter, the lead attorney for the plaintiffs
Yet school board Chairman Eugene Walker said he knows of no plan to save money for the possibility of a payout.
“Not to my knowledge,” Walker said, “because we anticipate success in the courts.”
Walker said the decision to cease payments was necessary to balance the budget.
The annuity plan, which supplements the state retirement plan, was established as an alternative to Social Security.
In a 1979 referendum, 70 percent of teachers and other eligible employees voted to substitute a private fund for Social Security. According to court documents, the vote came a week after the school board approved a reassuring resolution. It said that if the private alternative were selected, the payments to it would equal whatever would have been paid to Social Security.
It also said employees would be warned two years in advance of any reduction or termination of payments.
Salter, who filed the suit for teacher Elaine Gold and psychologist Amy Shaye, said their claim is simple: “This case is entirely about keeping promises.”
The school system countered in court that it had authority to cancel the payments at any time, without notice.