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.

Related posts:

  1. Del Mar school district employees accept supplemental retirement plan
  2. Del Mar school district appoints new assistant superintendent, business services
  3. Local school districts allocate millions in federal money differently
  4. How to resolve multiple issues within the DMUSD
  5. Solana Beach water district board asks staff to research cost savings

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Posted by Staff on Jun 30, 2011. Filed under News, Schools. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

1 Comment for “DM’s supplemental retirement program to cost $230K in first year”

  1. DMUSDParent

    I hope that the only financial analysis of the cost savings for the implementation of the SERP was not conducted by those who would benefit most – the district's broker, Keenan Financial Services!! Of course, they'd have to provide such an "analysis" as part of their sales pitch, but did anyone at the distirict do their own analysis and verify/audit these claims of future savings? It's disturbing to read that Keenan, who stands to gain 6% in commission for administering these retirement plans (do the math – that's a lot of money!), might be the only one who's done a financial analysis showing how beneficial it would be to the district. Talk about a conflict of interest. Did someone at the district audit/verify Keenan's analysis? Please let us know, Marsha.

    I wish Marsha Sutton would do a follow-up story in a year, and ask the district to do its own final financial analysis, after all these positions have been recruited for and filled, to see what the "real" savings are. And, DMUSD, don't forget to include the 6% commission to Keenan in the analysis! That's a nice chunk of change, and might even be the factor that tips the balance from "saving" the district to "costing" the district.

    Regardless of any "savings" such an analysis might show (and, as you can probably tell, I have doubts there will actually be any savings due to SERP at all), it is still an incredibly wasteful way to spend a nice Federal windfall like the Federal Education Jobs Fund. Spending such valuable funds on giving teacher/principal nice golden handshakes is really shameful, especially in this economy, and especially when we have temporary teaching positions, class size reduction plans and ESC programs that need to be funded.

    Once again, one has to wonder, what is/was the Superintendent and Board thinking??

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