Are Retired Superintendents Taking All the Money in Texas?
Are retired school chiefs bilking fund?
By RICK CASEY
Copyright 2004 Houston Chronicle, September 15, 2004
Retired school superintendents around Texas are collecting untold thousands of dollars annually in illegal retirement benefits.
So says Rick Schneider, superintendent of the Pasadena Independent School District.
The scheme involves defining pay for unused vacation as part of the superintendents' salaries for pension purposes.
Schneider himself could have received what I calculate to be more than $11,000 a year for the rest of his life under such a scheme, but a small weekly Pasadena newspaper blew the whistle.
In 2002 the Pasadena school board passed a contract addendum drawn up by the district's attorney, David Feldman.
The addendum provided that for each of the school years ending last June and next June, Schneider would be paid $23,815 for unused vacation time that he had already accumulated.
The addendum also said the vacation days shall count as salary "for all purposes, including creditable compensation under the Texas Teacher Retirement System."
That's easy for the school board and its lawyer to say, but state law and TRS rules say something different. The rules are easily available in the retirement system's handbook, which is posted on its Web site. Page 7 features a section called "Creditable Compensation," which includes a list of "non-creditable" compensation.
On the "non-creditable" list are "most bonuses, fringe benefits, payments for unused vacation or sick leave" and other items.
In case some teacher or superintendent finds that hard to understand, the section concludes with bold type: "Non-creditable compensation cannot be used for the purpose of determining TRS benefits."
Unfortunately for Schneider, someone brought this rule to the attention of Marie Flickinger, owner, publisher and editor of the South Belt Leader, who put young reporter Colley Hodges on the story.
The result was that Schneider visited with TRS officials in Austin, who confirmed that no matter what his contract said, unused vacation pay did not qualify for calculating his pension.
Schneider, who earns nearly $279,000 this year, said he deeply regrets "that my contract has become an issue with some because this can defocus our primary mission, that of student achievement and learning."
He said the proposal was structured as a "win-win" for him and the district. In exchange for defining pay it already owed him as eligible for pension benefits, he forfeited as much as $30,000 in salary increases over three years.
But based on 30 years of service, the increase to his pension would have been a little more than $11,000 a year - somewhat less if he chose an option that would continue to pay to his wife if she survives him.
The Leader reported that Schneider, who is still in his 50s, has told school officials he intends to retire at the end of this school year. At his age he could look forward to decades of increased benefits, hundreds of thousands of dollars paid for by taxpayers and by teachers who contribute to the pension fund but follow its clearly stated rules.
Schneider said he accepts the ruling because it is "the right thing to do."
Lawyer Feldman did not return a call Tuesday, but Schneider explained the decision to try to get pension credit for the unused vacation in spite of the clear handbook language this way:
"Other school district attorneys in Texas have written the same or similar contract for other superintendents. These superintendents have retired, some as recently as June 2004, and are drawing retirement benefits on salary items that were stipulated in their contract; items just like those contained in my contract."
Schneider said TRS officials told him the agency "does not review the contracts of retiring clients because they don't have the staff to do so."
He said attorneys, knowing that other superintendents were counting unused vacation pay and assuming that TRS knew about it, took that as approval and precedent.
Howard Goldman, spokesman for TRS, said the agency "reviews individual contracts and compensation questions as requested and when made aware of a concern as to what is required by laws and rules."
So it is quite possible that Schneider is right. And once superintendents (and other employees) retire, the benefits they receive are not public information.
You can write to Rick Casey at P.O. Box 4260, Houston, TX 77210, or e-mail him at firstname.lastname@example.org.
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