Proviso Township High School District 209 bit the bullet and paid $260,340.88 in fines, Sept. 30, accrued by giving teachers and administrators salary raises higher than 6 percent before they retired.
The so-called “Early Retirement Option” fines were passed by the Illinois General Assembly to discourage school districts from handing out bonuses during the last years of a retiring educator’s career.
The fines in question date back to 2009 and earlier, District Financial Director Todd Drafall told the school board at a joint meeting between the board and the Financial Oversight Panel, Sept. 26. Drafall said the Teachers Retirement System allowed districts to pay the bill over several years but charged 5 percent interest. Financial Oversight Panel Chairman Craig Schilling said the payoff was the right thing to do to save money on interest costs.
The penalties are charged when districts pay out raises of more than 6 percent over one year. Illinois legislators made the change so districts would be accountable for the future costs of pension salary bumps near the end of teacher and administrators’ careers.
The amount the district pays in fines is a one-time contribution of 14.4 percent of salary for every year the member is under age 60 or for every year the member’s creditable service is less than 35 years, whichever is less, according to the Illinois State Board of Education website.
Salary bumps for two teachers and two administrators triggered the biggest fines. The district received a $51,522 fine related to the retirement of former Proviso West Principal Alexis Wallace. In 2010, Wallace was given a $23,639 pay boost from $55,113 to $79,152 (42 percent) when she was promoted from assistant principal, according to a state employee oversight website, www.opentheBooks.com. The district ousted the 30-year-veteran Wallace during the middle of the school year in January 2011. Similarly, TRS fined the district $35,243 for former Proviso West Principal Milton Patch, who jumped in district pay from $151,864 to $180,183 (or 19 percent) between 2008-2009, according to Open the Books. In the 2011 shakeup, Patch was demoted from principal at Proviso East to athletics activities coordinator. Patch retired this spring.
Large early retirement penalties were also charged for two teachers. TRS charged the district for two separate fines totaling $43,005.87 connected with longtime Proviso East English teacher Phyllis Warr, who retired in spring 2013. Warr retired with a total payment from the district of $100,070. Warr got a $15,347 increase in payments in 2009-2010, which was a 16-percent increase, according to www.Openthebooks.com. She also got a $7,616 retirement payment in 2011 which represented an 8 percent raise, according to the ISBE website.
Proviso West home economics teacher Marlene Alcorn’s retirement triggered a $28,858.66 fee from TRS. Alcorn got a $15,531 raise between 2009-2010, when her payments from the district rose from $97,520.32 to $113,051.80. When she retired in 2012, the district paid her $117, 953.
Drafall told the board that procedures had been put in place to monitor teacher raises and prevent TRS penalties and fines. “Somewhere, things weren’t tracked,” he acknowledged of his predecessors. To some extent, though, he said, it was out of the district’s control.
“If a teacher gets a promotion and jumps two lanes and a step, and then leaves the district, we’ll get a bill for that 10 years later when she retires.”
Drafall said he felt confident fines from the TRS would not slip through the cracks because of lack of oversight in the future.
“We’re making sure we don’t have a structural flaw,” he told the board.