Finding Funds During These Difficult Pandemic Times

Categories: Early Retirement Incentives,National Developments,PARS News
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CAPSS Leader’s Report by Dr. Ben Tantillo, PARS Consultant

As a former superintendent of 17 years, I have always strived to provide the best education in the most fiscally responsible manner wherever I have been fortunate to lead a district. We always have to consider what is best for the students’ education and juxtapose that to what our town can allocate to the district. Often, this brings tensions as we seem to always have a contingent of taxpayers who believe that schools cost too much regardless of rankings and school community positive perceptions of our districts.

As a school leader I have always tried to save a dollar here or a dollar there. Regardless, of the socioeconomics of my districts, we were always charged with trying to do more with less. I can only imagine the angst affecting superintendents and school committees during this most trying Covid-19 pandemic. In reading articles from across the country, school districts not only have to face a level or decreased spending budget due to decreased state revenues; but have the burden of adding the expenses necessary to address the pandemic.

Because we are in the people business, the reality of trying to find additional funds is that we have to look at personnel costs. Since personnel costs are the largest line item on the budget, level funding does not address contract obligations, etc. for our municipalities. Layoffs are never pleasant. Usually, it is the last hired who are the first to be let go. By doing so, the district is left with fewer teachers at higher salaries. In addition, due to the pandemic, the teachers most likely to lose their positions, are the ones most apt to favorably address the needs of online learning and the associated technology. These “digital native” teachers are difficult to replace and cost a lesser amount of professional development for the necessary technology usage.

What’s a superintendent to do?

Years ago, I belonged to NCERT, a national superintendents group comprised of superintendents from across the country. From that group, I learned about a group from that works with districts to offer voluntary separation incentives. The group is known as Public Agency Retirement Services (PARS). They have facilitated thousands of voluntary separation incentives with school districts throughout the country since the 1980’s, mostly in the west and Midwest states. They are now offering their services in Connecticut.

As stated before, personnel is really the place where a meaningful savings can be found. As a superintendent I was always looking to see how much we could save through salary breakage. Some districts offer staff a set dollar amount to let them know they are leaving in advance. Other districts sometimes offer a lump sum for staff to separate.

The difference with PARS is that they can work with districts to offer customized incentive payouts through an employer-only contributed 403(b) vehicle. If a district pays a straight cash payout, the staff member has to pay taxes on it. Plus, the district has to shell out the entire incentive at once. Working with PARS however, districts can cover the incentive over five years and do not have to pay payroll taxes. This makes the separation agreement much more palatable for a district’s finances.

To me, the voluntary separation agreement is a win-win for both the district and staff members.

A key advantage of PARS’ approach is that the firm will conduct an exhaustive analysis to determine the financial impact and feasibility of any incentive you plan to offer. This analysis takes into account your actual workforce demographics and is currently being offered at no cost in Connecticut. PARS has built its reputation on fairness and transparency.  After the analysis, they will present the outcome and discuss whether a separation incentive will save your district enough in personnel costs to merit offering one to your employees.

As a superintendent, I don’t see a downside of conducting the analysis. If you have a need to save funds and think a voluntary separation agreement with your staff might assist you in meeting your financial needs, please contact PARS Senior Consultant, Kathryn Cannie at (617) 549-6555 or kcannie@pars.org.

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