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Teachers cash in on 'early outs'

| Monday, June 10, 2002

Last week, Greensburg Salem school teachers Al Sanfilippo and Carl Mascia walked out of their classrooms for the final time.

An incentive offered by the school district helped to push these veteran teachers into retirement - Sanfilippo after 37 years as a teacher, Mascia after 35.

Although Greensburg Salem's package isn't as far-reaching as those offered by some other districts, it was enough to lure these educators - and others - out the door. The district will pay for Blue Cross Blue Shield health insurance, plus major medical and prescription drug coverage, until they are eligible for Medicare.

Many school districts are dangling this type of carrot in front of their most experienced teachers. By enticing them into early retirement, districts can cut payroll costs and hold down tax rates.

Mascia, 55, and Sanfilippo, 60, understand the reasoning behind the plans.

"The early '70s were the big hiring years," Mascia said. "Now all those baby boomers, if you will, are starting to become retirement age."

But critics argue that the savings offered in these plans is illusory. Some states have repealed early retirement incentives because of their costs. Critics also question the wisdom of encouraging the most experienced educators to abandon their careers.

Open 'window'

Incentives were especially popular in Pennsylvania in the 1990s, when lawmakers encouraged early retirement through a "window" that expired in 1999. One-third of the 25,556 Pennsylvania public school employees who retired between 1997 and 2000 left their jobs through that opening created by the state Legislature.

Today, local school districts are going it alone - without an assist from the state - as they try to woo veteran teachers out from behind their desks and into patio chairs.

A number of school districts in Westmoreland County offer "early outs" in their teacher contracts. Those plans may include cash incentives to help offset penalties imposed on employees who retire sooner than state retirement guidelines dictate. Under those rules, Pennsylvania teachers may retire without penalty at age 60 if they have 30 years of service; at any age if they have 35 years of service; and at 62 if they have at least one year of service.

Vincent Aiello, superintendent of the Jeannette School District, said the savings from early retirement plans look good - on paper.

"In the short term, it sounds great," he said. "You're replacing a high-end salary with a lower starting salary. But a couple of years down the road, those aren't starting salaries anymore."

Although it may seem like a good idea to hire new teachers with fresh ideas, "you lose some quality people," he said.

Jeannette offers teachers a modest incentive that few take advantage of, Aiello said. The plan has two options: It pays retirees $100 a month to continue hospitalization coverage until age 65, or pays $85 a month directly to retirees until they reach that age.

Dr. Alex M. Warren, superintendent of the Monessen School District, agreed that the savings aren't all they're cracked up to be.

"You can save money in the short run," he said. "But on the other hand, by the time you play that out to the fourth or fifth year, your savings aren't what they appear to be."

Yet other school districts continue to up the ante by offering teachers more cash to retire and extending their benefits if they do.

In April, Franklin Regional School District approved an early retirement package that administrators hope will save the district between $900,000 and $1.8 million. Incentive payments - which could be as much as $30,000 for eligible teachers - will be spread over a 10-year period. Superintendent Dr. Roseann Nyiri said that feature of the plan will lessen its impact on the district's budget.

The package also will provide retirees and their spouses up to 10 years of Blue Cross Blue Shield, dental and vision benefits, and a $5,000 life insurance policy.

The district estimates it will save about $30,000 per person by replacing its $69,778 top-tier salaried teachers with new hires who will start at $31,546 next year. Some 60 employees are eligible to retire during the next three years.

The Belle Vernon Area School District also boosted its incentive plan last month, offering veteran teachers an extra $17,000 in cash to retire. The district estimates it will save about $16,000 for each teacher who opts out. At least 35 teachers are eligible, making the potential savings $560,000.

The $17,000 will be paid out in annual payments of $3,400.

No takers

Some school districts aren't finding many takers for their offers - even with the extra cash. Teachers in the Hempfield Area School District rejected an early retirement incentive plan. The Norwin School Board spiked an early retirement package for teachers after the projected savings didn't materialize.

Hempfield Area teachers would have had their current dental, vision and life insurance premiums paid until age 65. They also would have been paid $25 for each unused sick day.

The Norwin plan would have allowed teachers with at least 30 years of service to retire with incentive payments as high as $25,000. The district also offered teachers 11 years of hospitalization benefits after retirement. School directors pulled the plug on the plan after learning that retirees might be excluded from the same hospitalization plan as active teachers, negating any projected savings.

Still, Norwin's two previous incentive packages "pretty much cleaned out the top end of the salary scale," said Richard Maier, business manager.

Waving some extra cash isn't always enough, said Kevin Palladino, business manager for the Kiski Area School District. That district's contract with teachers offers a cash incentive of between $6,000 and $15,000, depending on length of service - but educators aren't lining up at the exits.

"The cash is not a big deal. There has to be something extra from the state," Palladino said. That "sweetener" would lure more teachers into retirement, he explained.

In a perfect world, early teacher retirement plans would not be a good idea, said Darryl Figueroa, senior press officer at the 2.7-million-member National Education Association.

The new education bill signed by President Bush "requires a certified, high-quality teacher in every classroom, and we have a teacher shortage," she said. "But we recognize local budgetary constraints."

The teacher shortage, Figueroa said, is at "a crisis level." More than 2 million new teachers will be needed over the next 10 years, the U.S. Department of Education has said.

Greensburg Salem Superintendent Thomas Yarabinetz said he may have a hard time filling the positions of teachers who retire this year. "Foreign languages, technology, math, the specialty areas will be tough to replace," he said.

But Richard Bratkovich, business manager in the Penn-Trafford School District, said early teacher retirement incentives are necessary. And they are not unique.

"There are big-time buyouts in industry all the time, you just don't hear about them," he said.

Penn-Trafford last offered early retirement incentives seven or eight years ago, as a budget-balancing measure.

"It is the carrot," Bratkovich said. "There is substantial savings if you replace a $60,000 salary with a $35,000 salary."

Penn-Trafford has an early retirement provision in its teachers contract now, but it only pays for health insurance. A family plan costs the district about $500 per month.

Benefits key

Greensburg Salem's early retirement incentive does not include a lump sum payment. But Yarabinetz estimated the district would save between $55,000 and $80,000 per teacher over five years, depending on the anticipated increases in insurance premiums. Twelve teachers have accepted the offer.

A number of school officials said the key to these incentive packages is the hospitalization benefit, which can cost $3,000 a year for an individual and $7,000 a year or more for a family.

Some school districts are combining early retirements with attrition to help control their costs. Not all teachers who opt out early are being replaced.

In the Yough School District, 20 teachers accepted an early retirement offer that will include a lump-sum payment of $15,000 - or $25,000 if payments are spread over five years. Three of those educators will not be replaced.

"If we would remove retirements out of (the new) budget, we'd be looking at (a tax increase) between 3 and 4 mills," said Anthony Lovato, business manager.

Belle Vernon Area will not fill three of the positions vacated by recent retirements, and the Ligonier Valley School District plans to replace only five of the 12 teachers who will depart this year. Another teacher will work part time.

Greensburg Salem will not fill five or more of the positions lost to retirement, said Yarabinetz. That number could climb as high as eight, depending on the budget.

Carl Mascia said he'll "play it by ear" as he plans for the future. For Al Sanfilippo, though, retirement may be short-lived. He said he'd be interested in a part-time teaching job at the college level.

"I'm not burned out and will still be interested in education," he said.

Smith and Shannon are reporters for the Tribune-Review.

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