Santa Cruz County Grand Jury • 2009-2010

Supplemental Employee Retirement Plans at Pajaro Valley Unified School District

6 pages

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⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.

Findings 15 findings

On March 12, 2008, PVUSD Board Agenda item 13.4 reports that the district will not have the funding to meet the current budget. Due to the State’s financial crisis, PVUSD would be $9,400,000 short for 2008-2009 and $17,500,000 short for 2009- 2010 if cuts and adjustments were not made.

PVUSD hired Keenan and Associates, a financial planner, to conduct a Fiscal Cost Analysis to analyze the potential savings of offering a SERP. The report was prepared and submitted to the district on June 6, 2008. It established plan assumptions, benefit options, demographic analysis, SERP cost analysis, and benefit data sheets for three employee groups in the district. PVUSD staff stated that offering a SERP to management employees could generate a cost savings of approximately $159,000 depending upon the number of employees who took advantage of the opportunity. The proposal identified twelve managers as potential candidates for the incentive.

Three months before Keenan and Associates submitted the Fiscal Cost Analysis, PVUSD Board of Education approved Resolution 0708-22 on March 12, 2008, offering a SERP for management employees. The criteria set forth by the Board requires that the employee: • is a certificated or classified management employee • will be at least 55 years of age by June 30, 2008 • has at lease five years of continuous service with the district by date of retirement • submits a letter of resignation and SERP enrollment package by May 9, 2008 • is eligible to retire from State Teacher Retirement System (STRS) or Public Employee Retirement System (PERS) • retires from the district as of June 30, 2008 • will not be eligible for reemployment in the district other than as a substitute

The PVUSD SERP offered eligible employees 95% of current salary to be paid according to the option selected by the employee. The terms of payment varied from a monthly payment through the remainder of life or a five to ten year distribution.

The Associate Superintendent of Business and the Interim Superintendent prepared the SERP Resolution 0708-22 and the agenda item for the PVUSD Board. The resolution was approved in open session and the public had the opportunity to see the item on the agenda prior to the action taken by the board. Both the Interim Superintendent and the Secretary of the Board signed the resolution according to district procedures.

PVUSD Board Members did not have a copy of the Fiscal Cost Analysis prepared by Keenan and Associates and were not privy to the information in the document except what was reported to them by staff prior to approving the SERP.

The district SERP administrators were the Associate Superintendent of Business and Assistant Superintendent, Human Resources. Keenan Financial Services served as the contract administrator to assist in implementation of the plan.

Following the approval of the SERP by the PVUSD Board, an announcement flyer was prepared and distributed to all management employees in the district.

Twelve employees submitted the proper paperwork and met the established criteria to receive the retirement incentive. A Tale of a SERP

F10

Eleven of those employees, the Associate Superintendent of Business and the Assistant Superintendent of Human Resources were subordinate to the superintendent and they reported directly to the superintendent.

F11

One of the employees was directly evaluated by the PVUSD Board and had a specific written contract that stipulated all terms and conditions of employment including compensation and benefits. The contract did not provide authorization for a SERP. In addition, this employee had previously retired from the district and was serving in an interim capacity.

F12

Keenan Financial Services estimated cost savings of $159,000 if all eligible management employees took advantage of the SERP. Interviews with the PVUSD officials revealed that the SERP savings was approximately $46,000, $113,000 less than projected.

F13

A financial analysis of the projected savings compared to the actual savings was not shared with the Board of Education.

F14

PVUSD stated that the County Office of Education was informed about the SERP. However officials at the county office stated they were not involved in the SERP offered by PVUSD and would only be involved if the SERP was part of a fiscal recovery plan or a payment agreement with employee bargaining units.

F15

County Office of Education officials weren’t aware of a SERP being awarded to a retired employee serving as interim administrator for a district. County officials stated the practice of awarding a SERP in that situation was unusual and they had never heard of it happening before in the county. Conclusions

Recommendations 8

R1

PVUSD administrators should provide the PVUSD Board with all documents related to projected cost savings prior to approving a SERP.
R2

PVUSD administrators and the PVUSD Board should analyze the potential savings from a SERP and develop a calculation to verify the actual savings versus the projected savings.
R3

PVUSD administrators and the PVUSD Board should thoroughly analyze the benefit options of a SERP such as dollar amount given and years of service to ensure the district is getting the most savings possible from the plan.
R4

PVUSD Board should analyze the practice of awarding a SERP to a retired interim employee to determine if this practice is the best use of public funds.
R5

PVUSD Board should develop a board policy regarding any future practices of awarding a SERP to a retired, interim employee.
R6

PVUSD Board should include all benefits and compensation, including a SERP, as part of a contracted employee’s employment agreement.
R7

PVUSD Board should eliminate the procedure that allows a subordinate employee to authorize a benefit for a supervisor.
R8

PVUSD and the Santa Cruz County Office of Education should discuss the SERP process and clarify the roles of each agency prior to, during, and after implementation.