W HAT ’ S ON THE T ABLE ? E ARLY R ETIREMENT ! United School Employees of Pasco Please Turn Cell Phones to Silent or Vibrate.

A GENDA Introductions Why have an Early Retirement Benefit? What is the Early Retirement Benefit? History of the Benefit Why Is this on the Table? What is the Current Proposal? Questions and Open Discussion Advice for USEP Bargaining Teams

W HY HAVE AN E ARLY R ETIREMENT B ENEFIT ? Allows employees with longevity in the District to retire early with a reduced FRS penalty. This provides employees with peace of mind, similar to a group insurance plan—not everyone will need it. Provides a option for employees to retire who may not be as effective in their jobs, which allows for better education opportunities for students and reduces administrative time and documentation. Allows the District to replace higher-paid employees with newer, lower-paid employees. Florida Statutes recognize the need and allow Districts to implement early retirement options.

W HAT IS THE B ENEFIT The benefit is a negotiated benefit for employees in the FRS Defined Benefit Plan. Makes up some to all of the penalty imposed by FRS for qualified employees who retire prior to having 30 years in FRS or who are not yet 62. The District must set aside money each year to fund those who are currently receiving the benefit and for those who will use the benefit in the future as determined by an actuary. Even in the years when there were no raises, the District funded the plan. Current District annual cost is $1.66 million.

W HO QUALIFIES ? All District Employees who meet the criteria. Teachers who have at least 12 years in Pasco, with the last ten years being continuous service. SRP who have at least 12 years in Pasco, with the last ten years being continuous service and who are at the top step. Administrators and Non-bargaining employees who meet similar criteria. Are at least 50 years old Have 25 years or more of creditable FRS service Retire from the Defined Benefit Plan

W HAT ’ S THE FRS E ARLY R ETIREMENT P ENALTY ? FRS imposes a penalty based on AGE for anyone who has less than 30 years FRS service and who is less than 62 years old. (There is no penalty once you have 30 years FRS service regardless of your age!) The penalty is 5% reduction of the total FRS retirement benefit for each year the employee is less than 62 when retiring. Age 61 = 5% penalty Age 60 = 10% penalty Age 59 = 15% penalty Age 58 = 20% penalty Age 57 = 25% penalty Age 56 = 30% penalty Age 55 = 35% penalty Age 54 = 40% penalty Age 53 = 45% penalty Age 52 = 50% penalty Age 51 = 55% penalty Age 50 = 60% penalty

S O W HAT ’ S THE B ENEFIT ? For employees who are 55 – 61 years old, the District will provide the employee with a monthly benefit that makes up the entire FRS penalty. For employees who are 50 – 54 years old, District will provide the employee with a monthly benefit that makes up the difference from the FRS penalty to a maximum 35%. Age 54 = 40% - 35% = 5% penalty Age 53 = 45% - 35% = 10% penalty Age 52 = 50% - 35% = 15% penalty Age 51 = 55% - 35% = 20% penalty Age 50 = 60% - 35% = 25% penalty The penalty is actually determined by multiplying.417% for each month. An employee who is 50 years, four months old would have a 58.34% penalty. The amount of the monthly benefit the District provides does NOT get increased annually like the FRS benefit.

O THER L ESS -K NOWN O PTIONS If the benefit has a present value of less than $5,000, the District will provide a lump sum instead of a monthly benefit. The District may purchase out-of-state or other creditable service (military) to equal 30 years of FRS service so the employee can retire without any FRS penalty if the purchase is more economical to the District. For many employees, this is preferable because it allows them to retire with full benefits that will be increased annually by FRS.

A LITTLE H ISTORY Legislature authorizes Districts to negotiate Early Retirement benefits and sets the age range but not the amounts. In the early 80’s, The legislature allowed Districts to provide early retirement benefits for employees aged 55+. District and Union negotiated a monthly benefit or lump-sum pay out that made up full penalty. State funding was strong. In 1991, after the legislature lowered the age for early retirement to 50+, the District and union negotiated a monthly benefit or lump-sum pay out that made up the full penalty.

H ISTORY CONT. In 1997, after years of financial difficulties, the District and union negotiated a 5-year phase-out that reduced the benefit to those who were 50 – 54 to 35% and capped lump-sum payouts. In exchange, the District committed to pay retiree healthcare premiums for qualified employees until employees are Medicare eligible. (Employee must be 50+, have 20 years Pasco Service and at least 25 years of FRS service.) DROP program reduced the demand for early retirement as did the advent of the FRS Investment Retirement Plan. Currently provides annuities to 200+ employees, but has benefited many more over the years.

W HY N OW ? Only a handful of Districts still have an early retirement benefit. The retirement benefit has remained unchanged and fully funded even during the recent recession. Shortly after being elected, the Supt. indicated he wanted to limit “legacy” costs. Last year the Supt. sought to eliminate the early retirement benefit and use money for raises. Instead, USEP agreed to joint committee to review the benefit and costs and make recommendations. Committee met and found the fund healthy. Committee could not agree to eliminate the plan, and instead recommended certain changes.

W HAT ’ S ON THE T ABLE N OW ? Eliminating the plan is a priority of the Supt and Board and have proposed eliminating it effective January 1, District sources state that eliminating will increase salaries by one half of 1%. District is also seeking major payroll changes, delaying payment of supplements, etc…. USEP has not agreed to such changes and is working on counter proposals.

W HAT ELSE ARE WE HEARING ? D ISTRICT SOURCES STATE : Supt and Board are willing to take to impasse. District willing to phase out over a maximum of three years. District will eliminate for Administration and non-bargaining and give them a larger % raise than teachers and SRP. District will “permanently” set aside amount of contributions and apply to salary increases in the future.

L ET ’ S HEAR FROM YOU!!! Questions? Comments? Opinions? Advice? Thank you!