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Helmut Schmidt, Published December 11 2012

Fargo School Board votes to scale back payouts on sick-leave buyout program

FARGO – The Fargo School Board voted 7-2 to drastically scale back payouts in the next few years on a sick leave buyout program for retiring staff, teachers and administrators.

Most of the nearly 100 teachers packing the boardroom Tuesday to overflow seemed stunned by the vote and many appeared grim as they filed out of the room after a nearly two-hour debate.

“I think it’s inescapable that teacher morale plummeted with that vote tonight,” teacher Sherry Warner Seefeld said.

“We’ve spent 10, 15 years planning our finances (for retirement) based on this policy. Maybe those who are able to retire, maybe this doesn’t change a lot. … But there is a certain group that is going to be really crunched by that choice. It’s sad. It just makes me sad.”

The sick leave buyout, also called the longevity policy, is meant to reward employees who stick with the district for 15 years or more and don’t call in sick a lot, which is important for students’ educations.

Still, without changes, the unfunded liability for the longevity policy would be a budget busting $26.6 million for the 126,000 days accumulated, paid at the current $211.43 for most of the recipients, board member Rick Steen said.

The district also has a Paid Leave System liability, which is about $3.7 million after two years, Steen said. Employees in the PLS system will be paid 50 percent of their daily salary at retirement for accrued sick leave.

The old longevity payout will stay in effect for teachers and other non-administrative staff retiring this school year. They can cash in up to 180 days of unused sick leave at $211.43 per day, which means a payout of up to $38,057 for the full 180 days. Administrators are paid for sick leave at $247.34 a day, for a potential payment of up to $44,521.

The new plan approved by the board goes into effect for those retiring at the end of the 2013-14 school year, with the sick leave cash-in rate for teachers, staff and administrators going to $200 per day, for a potential payout of up to $36,000, board documents show.

In 2014-15, the payout drops to $150 per day, with a maximum payment of $27,000.

In 2015-16, the payment drops to $100 per day, with a maximum payment of $18,000.

In 2016-17 and beyond, the payment would drop to $50 per day, with a maximum payout of $9,000.

Overall, the new longevity plan has a price tag estimated at $7.2 million between now and the end of the 2017-18 school year, according to documents supplied by district staff and the board’s Planning Committee.

The estimated cost for 70 teachers to retire at the end of this year school year is nearly $2.4 million, documents show.

With the new plan, after 15 years in the district, a retiring employee would get 80 percent of the total possible payment, then 2 percent more each year through the 25th year of service to bring the payment to 100 percent.

The plan includes a “grandfather clause,” that allows employees eligible for full retirement benefits under the Teachers Fund For Retirement or the state Public Employees Retirement System as of July 1 to have payouts at the $200 per day level when they finally retire from the district.

The board agreed to consider restructuring the grandfather clause because of the potential for payouts that vary by thousands of dollars for people whose work histories may only differ by a year or two. Those talks will take place between now and September.

Board President Jim Johnson said he was satisfied with the deliberations.

“I’m sure we have some staff that’s disappointed at this time,” Johnson said. “But like many of our budget items, at the end of the day, they all have to work together to make the district work.”

Fargo Education Association President Kim Belgarde said Tuesday’s vote “most definitely” hurt teacher morale.

Belgarde said the vote could mean “a negative start” for contract talks, which begin in January.


Readers can reach Forum reporter Helmut Schmidt at (701) 241-5583