Districts still spend millions on pensions

How many get pension pickups:

Pension pickups, or the amount paid by a district that an individual employee would have paid toward his retirement plan, are part of the compensation packages of many area districts. Here is a look at how many of the Dayton area’s public school districts address pension pickups and how much they cost each of them, rounded to the nearest thousand, for fiscal year 2012. Some districts, such as Kettering and Oakwood, have eliminated pickups but have increased salaries to address the change. Springboro is phasing out its pension pickup over three years, and is offering days off in lieu of salary increases.

Ohio school districts still find themselves defending their decision to pay administrators’ share of retirement contributions, more than six months after Ohio voters rejected Senate Bill 5’s collective bargaining reforms.

In the Dayton area, these “pension pickups” amount to more than $2 million, with many districts spending hundreds of thousands of dollars each year, according to an analysis by the Dayton Daily News.

Senate Bill 5, defeated in the November election, would have eliminated pension pickups for all public workers.

School districts employ pension pickups as part of compensation, most often for district administrators. The pickups are used to attract and retain talent.

“We want to stay competitive with our administrators’ compensation,” said Mitch Biederman, Centerville City Schools treasurer. “When we compete against other schools to get the best administrators, they look at the whole package.”

However, some critics believe that administrators should pay their own retirement contributions and that pension pickups enable administrators to be paid more than their salaries reflect.

“I think they should be eliminated in their entirety because they’re not transparent to the voter,” said Mark Landers of West Carrollton. “I think districts are not being up front about the pickup, but I also believe there are a lot of people who just don’t understand it.”

How it works

Ohio school districts are required to pay 14 percent of an employee’s salary into the School Employees Retirement System or the State Teachers Retirement System. That employee also is required to contribute 10 percent of his salary toward that fund.

Pension pickups apply to the part of this 10 percent paid by the district.

Nick Treneff, spokesman for the STRS, said the pension fund covers some benefits while teaching, as well as retirement, survivor benefits, disability benefits and some optional health care benefits.

Treneff said it is much more common for school districts to pay the pension pickup for administrators than for teachers.

“We have about 1,100 employers, and there are maybe 60 or 70 that have pension pickup in place for teachers — and for most of those it is not the full pickup; more like 2 percent,” he said.

Treneff added that 719 STRS employers offer pension pickups to superintendents, while 526 provide them for their administrators statewide.

Pickups part of pay

If Issue 2 had passed, pension pickups would have been eliminated and districts would have cut costs by reducing administrators’ salaries.

“That’s, in effect, what it is,” said Kevin Philo, Oakwood City Schools treasurer. “If you eliminate the pickup, it’s cutting salaries.”

However, many districts said, these pickups initially were instituted in place of pay.

“Our administrators, back 10 years ago when we started this, did not get raises for three consecutive years in lieu of picking this up,” said Rusty Clifford, West Carrollton superintendent. “It’s part of their compensation. They earned this 10 years ago.”

Miamisburg treasurer Tammy Emrick said her district’s administrators and nonbargaining members, including psychologists and secretaries, also chose pension pickups over raises in the early 2000s.

Emrick said this has become increasingly important, since Miamisburg hasn’t given base raises in four years and has frozen step raises for fiscal years 2012 and 2013.

Clifford said pension pickups, which are not taxed, can be more economical for a district than pay.

“For districts that do this like we do, it’s less expensive to pay the pickup than to give them an increase in salary,” Clifford said. “If you give them an increase in salary, the board is still required to pay 14 percent of their salary. Fourteen percent on a smaller (salary) is better than 14 percent on a higher salary.”

Last year, in the shadow of Issue 2 and Senate Bill 5, three area school districts elected to cut or phase out pension pickups.

Kettering and Oakwood no longer offer pickups, but each rolled the amount it would have paid into the affected administrators’ salaries.

Treasurer Steve Clark said Kettering had been phasing out the pickup for new hires before it made the switch.

“The whole idea was to not cost the board and taxpayer any more,” Clark said.

Neither Kettering nor Oakwood saves money on administrator salaries by eliminating this pickup, but salaries more directly reflect compensation.

“It’s like matching 401(k)s,” Philo said. “In our business, it’s the taxpayers’ dollars and we can show them how we spend every single one of them. We don’t try to hide anything, but we also try to have competitive salaries.”

Philo noted this makes his district’s salaries look inflated by comparison.

“People should remember when they see an article on Oakwood salaries that there’s not a pension pickup in there,” he said.

Springboro Community City Schools decided to phase out pension pickups over three years after that was recommended by the Ohio State Auditor’s Office during a performance audit. The district, which had been paying 10 percent at a cost of roughly $167,000 per year, is paying 6.33 percent in 2012 and 3.33 percent for 2013 and will not offer pension pickups as of 2014.

This will save the district thousands because, instead of increasing salaries, Springboro offered administrators five to seven more unrestricted days off.

Solutions vary

Kevin Liming, Bellbrook-Sugarcreek treasurer, said a performance audit by the state a couple of years ago suggested that his district not eliminate its pension pickup program, but that it tweak the system slightly for a savings of about $12,000 to $15,000 per year.

Eliminating or phasing out pension pickups is not always recommended to districts as a way to cut costs.

“It depends on the situation for each district,” said Carrie Bartunek, press secretary for the state auditor. “In general, the areas we look at for the schools are human resources, facilities, transportation and food service — those are the biggies.”

Liming said he believes having a pension pickup is better than rolling that compensation into an employee’s salary.

“Currently, these pension pickups are not taxed,” Liming said. “In my opinion, that’s why this was done in the first place.”

Staff writers Lawrence Budd and Jeremy P. Kelley contributed to this report. Contact this reporter at (937) 225-7325 or jkelley@Dayton DailyNews.com.