18th 2008
“Deferred Compensation” for K-12 Employees Needs a Lot of Piggy Banks

Posted under Denver & Independence Institute & Principals & Research & School Finance & Teachers

I’m pretty smart for a 5-year-old. But sometimes I wander into a topic that’s just over my head. That doesn’t mean it’s not important, but it’s probably just best if I let the big people talk about it themselves.

My friends in the Education Policy Center released a new Issue Paper today, called Deferred Retirement Compensation for Career K-12 Employees: Understanding the Need for Reform (PDF). It was researched and written by Dr. Michael Mannino from the University of Colorado Denver.

Rather than try to explain the paper myself, here’s the summary from the Independence Institute website:

To improve understanding of public K-12 retirement compensation, this Issue Paper provides historical estimates using a substantial sample of retiree characteristics and salary histories. Deferred retirement compensation from a hybrid defined benefit plan is defined as the difference between an employee’s estimated retirement account balance and the greater pension value she expects to receive. When accounting for K-12 employee compensation, large amounts of deferred compensation should be included. For the 846 Denver Public Schools retirees in the sample, average lump sum deferred compensation is $627,570.

Wow, it would take a lot of piggy banks to put that much money in. But I think I get it a little bit now. One of the main points is we could definitely do a much better job of how we pay our teachers, principals, and the other people who work in our public schools. The current system isn’t cutting it, at least not in the best interest of students like me who our schools are supposed to serve.

If you don’t have time to read the report, or you have read it and need some clarification, you really ought to listen to this podcast conversation with Dr. Mannino:

The author has some good, reasonable recommendations to make. Isn’t there a way we can fix this?


2 Responses to ““Deferred Compensation” for K-12 Employees Needs a Lot of Piggy Banks”

  1. Kathy Hansen on 18 Dec 2008 at 8:36 pm #

    This is a copy of a post submitted to the Schools for Tomorrow website, just FYI:

    I have now digested the article and want to comment as follows:
    1. The reference to CRS 24-50-104 is not pertinent (footnote 17). School district workers are not part of civil service. Note in this regard that I so believed classified workers were intended to be, that I sued DPS about this in 2001. At that time, state AG counsel for the personnel system implied I might very well be right but there was not enough money in the budget to pursue the issue (!!!!).
    BAD NEWS: I went to the Court of Appeals on the issue and lost.
    GOOD NEWS: I did not seek a supreme court writ of certiorari so that somebody LOTS BETTER THAN ME (just about everybody is probably better than me) can try again, and I hope they do.
    School district workers who do exactly the same thing as state workers do, maintaining the physical properties owned and supported by state taxpayers in educational institutions, were intended to be controlled by and regulated under 24-50-101 et seq. It is plainly hazardous for people to be inside state buildings, especially school buildings, without a strong mechanism of hiring, maintenance and evaluation. Imagine a janitor on a rampage or a payroll clerk with unlimited access to funds, both unregulated in a routine manner intended to capture potential risks and reward extraordinary accomplishments — is this what Colorado voters had in mind when they enacted the constitution?
    2. Instead, classified workers at DPS are held to “union” contracts with a series of “bargaining associations” who act as the workers’ sole and EXCLUSIVE representatives whether they choose to become members or not. Typically these “unions” are not elected by workers either initially or by way of renewal, they just exist, and “unfair business practice” acts that would be in violation of the NLRA and Colorado’s labor peace act are not a breach of any state or federal law. Thus, there is nothing to prohibit the officers of these “unions” from being promoted into DPS administrative positions after selling out workers they exclusively represented in their union capacity. While it’s well known that teachers can and do strike, classified workers are held to a Board resolution preventing strikes and allowing for the “decertification” of their “representative” if they do. Again, is this what Colorado voters had in mind when setting up the public school districts through the state constitution?
    3. As a matter of actual fact, many classified workers are earning less than they would in private enterprise, and since 24-50-104 does NOT apply to them there is exactly nothing they can do about it. The longer they are at DPS, the more they have to lean on the prospect of the anticipated retirement in order to even out this factor. For instance, after serving DPS over 20 years, my own husband was earning $30,000.00 as a classified warehouse worker. While two years later the rest of the “union-represented” workers were earning about the same, BOTH of the administrators in his department had experienced enormous earning increases and then retired.
    4. I’m fascinated to see that my projection of the differential between ADMINISTRATIVE retirees and CLASSIFIED members is correct. I wish the article had gone on to explore how many of the former BOUGHT years of service in DPSRS as opposed to the latter — and how many years of service were actually dedicated to the district (maybe that data is there, and I missed it?) by the administrative, as opposed to classified, members. This is of interest to me because of rumors circulating around DPS in the late 90′s that a series of newly-hired admins would receive “full retirement benefits after five years of service,” and brought years in from other plans that could only be activated by being linked to a plan such as DPSRS. Naturally I’ve been keen to know whether or not there was truth to those rumors. :-)
    5. I’m alarmed for the millionth time to see the incredible amount of motivation that DPS has to make conditions harsh for longtime classified workers nearing retirement age. Please let me emphasize that these people have no civil-service protections nor statutory mechanism akin to teachers….much less the Inside Power of the DPS administrator. They are purely “at will” workers whose funds AND FUTURES are dedicated to this plan.
    If it can find a way to terminate these people or get them to quit — by making it clear they are no longer welcome, appreciated or wanted — it hits the Jackpot. It gets to keep all the earnings made on the workers’ annual contributions (in excess of the minimal amount it declares owed to the worker), all of its own contributions to the plan over the years, AND all of its obligations in future.
    For people who dedicated a lifetime of service to the Denver school district — NOT for an early retirement benefit but in order to actually SERVE CHILDREN, which unfortunately the article did not address — employment at the district can be the most disappointing, hostile endeavor imaginable, resulting in the loss of many years of productive career service elsewhere AND the promised retirement benefit from DPS. As I say, if they can get you to blink….however briefly, after however long a time….they GOTCHA and if you think they will ever so much as TALK to you again without Patrick Mooney at their side…think again.
    After 23 years’ dedicated service to DPS, all of this is a Reality to us here in Bailey, as my poor husband has been treated as though he stole from the district or assaulted a child. What DID he do? He blinked one day, and quit. “GOTCHA!!!!!!!!!” :-)
    I have been infinitely more active about these issues than my dear husband himself ever dreamed of being — or than I would ever have been on my OWN behalf. We tend to be embarrassed about work issues, but in this instance failing to be candid would prevent Denver from appreciating how the figures posted and digested by the Institute are actually reflected in working conditions at the district.
    In addressing potential reform, there is another reason to seriously consider proposals such as that presented by the Institute: The District is motivated to be harsh to longtime workers nearing retirement, because of its existing pension design.
    We don’t have to ask ourselves whether Colorado voters intended that well-paid administrators would be the main beneficiaries of a public pension fund. I think we KNOW they did not.

  2. Ed is Watching » As DPSRS-PERA Merger Looms, Come March 20 to Independence Institute to Learn About K-12 Pension Compensation on 09 Mar 2009 at 11:56 am #

    [...] this article didn’t delve into the costly problem that University of Colorado at Denver professor Michael Mannino highlighted in his recent [...]

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