REA contract’s severance pay and insurance

This is the last in a series of posts directly concerning the Rockford Education Association contract, Article 33 – Early Retirement and Severance Pay.

With a minimum of 10 years service in the district, and upon retirement or severance from the District, the teacher shall receive a lump sum based on last daily rate of pay, times 20%, times the number of accumulated unused sick days in excess of 105.

Taking the highest salary in Appendix B of the REA contract for 2009/2010 of $76,670 for 185 days compensation equals an average daily rate of approximately $415 * 20% = $83 for the purpose of the lump sum calculation.

In Article 25, Allowance for Staff Absence – teachers are allowed 12 sick days each year for the first 20 years of service, and thereafter, 15 sick days each year. If a teacher is employed by the district for 30 years, the maximum lump sum would be calculated as 12 days times 20 years, plus 15 days times 10 years = 390 days – 105 days = 285 days max.

The maximum severance pay, although it’s highly unlikely that anyone would not be sick in 30 years, especially with some of the students that the teacher’s have to deal with, would be 285 times $83 = $23,655.

A teacher with a minimum of 10 year’s service and within 10 years of their 65th birthday may apply for early retirement providing they are eligible under the Illinois Teacher Retirement Act.

The Board will pay for an extension of their present life insurance program through the year in which the individual becomes 65 years of age. Further, staff members retiring on July 1, 2007 and thereafter, and their eligible dependents may enroll in a medical insurance plan provided by the Illinois Teachers Retirement System (TRIP HMO) and the Board will pay the full premium each year until the end of the school year in which the retiree turns 65.

Therefore, district taxpayers pick up the entire cost for up to 10 years of life insurance and the full premium for staff and dependent health insurance coverage for the TRIP HMO. The school board needs to investigate the number of staff taking advantage of these early retirement benefits and the costs of these plans.

There are premium costs for the teacher and dependents in a TCHP plan of up to one-half the premium costs in a calculated formula. If a retiree is the spouse of an active employee, the active employee has the right to cover the retiree as a dependent under any of the Board’s plans.

The contract is under negotiation at the present time and more bargaining sessions have been scheduled. The Board of Education is the taxpayer’s representatives in these talks. The size of the past school year deficit will be determined in an audit that will be finalized later this year.

The size of the deficit for 2012 is yet to be determined, but has been projected by the district to be $9.1M, although state aid and state grants for the district fluctuates every time the governor discusses educational funding.

There are many variables in the Association contract and the board must familiarize themselves with all of those that affect the bottom line. There are reserves available and there is no minimum balance required by board policy, but future borrowing to maintain district operations should not be an option.