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Fort Worth ISD Considering Changing Employee Payout Plan

By Joel Thomas, CBS 11 News
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Arlington Heights High School in Fort Worth. (credit: Tom Pennington/Getty Images)

Arlington Heights High School in Fort Worth. (credit: Tom Pennington/Getty Images)

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FORT WORTH (CBSDFW.COM) – In its long list of sometimes unpopular ideas for cutting the budget, Fort Worth ISD is now looking at one of the most controversial: changes to its Terminal Pay program, which planners say could eventually save tens of millions of dollars.

“Terminal pay is a big financial issue for Fort Worth ISD,” said district spokesman Clint Bond. “This was a program started about 40 years ago when teachers didn’t make much money. This was an attempt to keep teachers in the teaching profession.”

Terminal pay gives a retiring teacher, administrator or staff member a one-time cash payout. The higher their salary when they retire and longer they work, the bigger the payout.

Budget planners told school board members the projected unfunded liability of terminal payments could reach $50 million by 2025 if left unchecked.

As part of the formula for figuring the payout, the district now wants to freeze salaries used to calculate payouts at today’s levels. That means if a teacher retires ten years from now their payout would be based on their salary this year.

Also included in figuring the payout is how many days a year the employees work. The salary is divided by 183 days, no matter how many days a year the person works.

Under the new proposal, the person’s terminal pay would be divided by the actual days worked. A teacher is given 187 days a year; administrators work 240 days a year; while a custodian logs 260 days. The more days worked, the less the terminal pay will be.

According to district figures, an administrator making $50,000 a year after 30 years with the district would receive a terminal pay sum of $13,661 today. Under the new plan he would make $10,417.

A 30-year teacher making $50,000 would retire with a payment of $13,661 now and $13,369 under the proposal.

And a custodian making $25,000 after 30 years service would receive $6,831 now and $4,808 under the new plan.

“Some of them could save up to $10 or $15 thousand by taking retirement now as opposed to waiting a year or two,” said Larry Shaw, Executive Director of the United Educators Association of some of the district’s employees.

“That’s something we wish people would take a look at and cause some discussion among families about what their futures might hold,” Bond said.

There are more than 1,200 employees eligible for the retirement payout now. About 700 are teachers and about 400 are managers and administrators. The remainder fills various other jobs.

“Why change it now?” Shaw asked. “We’ve had this in place 40 years and all the sudden you’re going to punish me by changing the multiplier. That’s how most of the employees see it.”

Also presented to board members Tuesday night: a 10 percent reduction in stipends, travel and auto allowances would save the district $407,244.

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