DM’s supplemental retirement program to cost $230K in first year
By Marsha Sutton
Senior Education Writer
Of the $763,000 in Federal Education Jobs Funds given to the Del Mar Union School District, about $230,000 will go to implement a Supplemental Employee Retirement Plan.
The SERP offers 75 percent of current salary to anyone over age 55 who has worked at least two years in the district. It was reported two weeks ago that 17 DMUSD employees applied for the SERP. Since then, two more employees also took the SERP — one teacher and Susan Paul, principal of Torrey Hills School, who announced her resignation and retirement the week of June 11.
Although the resolution passed by the DMUSD school board at its Feb. 16, 2011 meeting states that one condition for eligibility for SERP is that a letter of resignation and the SERP enrollment package must be submitted by April 5, DMUSD assistant superintendent of human resource services Tim Asfazadour said the resolution included language authorizing the district’s assistant superintendent of human resources and the assistant superintendent of business to “execute any and all documents, including any amendment to the plan, necessary or proper to maintain a favorable determination of the plan.”
He said it was deemed a “favorable determination of the plan” to allow late SERP applications because “the more employees that participate in the SERP, the more savings to the district.”
Asfazadour said the timeline was created by Torrance-based Keenan Financial Services, the district’s SERP contract administrator, and “was not created to limit participation.” It was originally established “for those who might have second thoughts and want to pull out.” The goal, he said, “was to insure that the plan penciled out to be cost-effective.”
The total number of DMUSD employees taking advantage of the SERP is now 19, Asfazadour said – nine certificated teachers, eight classified employees and two principals. He said Keenan receives a commission amount based on a percentage of the total premium of 6 percent.
The SERP pays out benefits over five years. Cathy Birks, DMUSD assistant superintendent of business services, said the SERP’s first year cost of $230,000 will be paid with money from the Jobs Fund. After that, “we’ll be paying Years 2 through 5 from the savings that we’re getting” from the lower salaries to replace the retired employees, she said.
DMUSD superintendent Jim Peabody said the district will be saving about $320,000 after five full years.
Asfazadour said the five-year SERP offer won’t be available again for at least another five years. “While you’re saving money, you are having to pay over that five-year period for that program, so it’s not cost-effective to do it that often,” he said.
The board report for Feb. 16, 2011 when the SERP was approved states that Keenan’s proposal “is both advantageous to district employees and provides value for taxpayers. SERP is a program designed to create incentives that effectively increase and accelerate the retirement rate, in excess of the natural attrition rate.”
Keenan’s analysis reports that a minimum of five employees is needed to participate in SERP to be cost-neutral. To be cost-effective and realize savings, every employee past the first five who participate will create “a savings of approximately $43,354 over a period of five years.”
Keenan anticipated that at least eight of the 34 eligible certificated employees would participate, at a savings of $137,295 over a five-year period. For classified employees, Keenan predicted that at least seven of the eligible 35 employees would participate, for a savings of $42,425 over five years.
“With greater employee participation come greater savings,” the report reads.
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