Hamilton County: School system may offer buyouts

More than 500 Hamilton County Schools employees soon could be eligible for buyouts or risk possible termination, according to a proposal unveiled Tuesday.

Hamilton County Schools’ Chief Financial Officer Tommy Kranz laid out a multi-tiered “retirement incentive” to members of the school board’s Finance Committee as one way to chip away at the district’s projected $20.2 million deficit.

“At $20 million, that is a large number, and when you divide that by $55,000 a head, that’s a lot of people (to cut),” he said. “We don’t believe (the buyout plan) is going to be enough to balance the budget.”

If 65 percent of the 526 eligible employees took advantage of the plan, the pay-out would cost the district about $2.1 million, which could be paid from the system’s fund balance, Mr. Kranz said. Hamilton County also would save about $3 million annually because the salaries of new hires would be lower than those of the retirees they would replace, he said.

About 12 school principals and 15 librarians are eligible and would have to be replaced, Mr. Kranz said.

Members of the Finance Committee said they believed the buyouts were a positive first step that offered options to some long-time district employees.

“This first thing would be voluntary,” said school board member Chip Baker. “The second thing (personnel cuts) is going to be a lot more gruesome.”

Employees with 30 or more years working for the school system would be eligible for a one-time payment of 20 percent of their annual salary. Those with 29 years of service plus one year of accumulated sick leave could purchase one year of service from the Tennessee Consolidated Retirement System and be eligible for the same 20 percent bonus.

Certified employees, such as teachers and principals, who are at least 55 years old and have at least 20 years of service but less than 30, could receive a one-time payment of 10 percent of their annual salary. Classified employees 55 years of age and older with between 15 and 29 years of service also could receive the 10 percent one-time payment.

Employees who plan to take the buyouts must be eligible for retirement as of June 30, 2009. They would need to notify the district of their retirement no later than Feb. 1, so officials could finalize the budget and any other necessary cuts, Mr. Kranz said.

Finance Committee members agreed to discuss the proposal at Thursday’s board meeting. But if all members cannot agree, they’ll call a special session in early January to vote on the measure, they said.

“Up front I like it, but I want to think about it,” said board Chairman Kenny Smith.

The longer the board waits to decide on the proposal and begin offering buyouts, the longer it takes to replace retirees, leading to a potential logistical nightmare, said Connie Atkins, the district’s associate superintendent of human resources.

“It puts us into a position where next fall we start schools without some teachers,” she said.

The last time the district offered similar retirement incentives was in 1997, according to Nolan Elementary Principal Ken Barker, a longtime system employee and member of the teachers’ union bargaining team.

Although there is no way to know how many employees would take advantage of the buyouts, Mr. Kranz said the plan would cost the district $2.1 million if 65 percent of eligible employees took the first two buyout options and 35 percent chose the second two.

But Sharon Vandagriff, president of the Hamilton County Education Association, said Mr. Kranz’s estimates on the number of employees who would take the buyouts was high. A third-grade teacher who is eligible for a buyout, she said she did not plan to take the incentive.

If the district makes personnel cuts to balance next year’s budget, it is possible that employees who turned down the retirement incentive still could be terminated, and Finance Committee Chairwoman Linda Mosley said she was afraid employees’ decision would be based on a “fear factor.”

For such employees, and those ineligible for the buyout who are terminated, Mr. Kranz also proposed a layoff health care plan that would allow former employees to continue participating in the district’s health care plan at the employee rate.

Employees with less than five years of service could continue paying employee health care rates for six months; those with five to 15 years could participate for one year; and employees with 15 or more years of service could continue on the health care plan at the employee rate for up to two years, Mr. Kranz said.

“This would be just for this year,” he said of the proposed health care plan. “But we have to be careful because this kind of becomes a precedent.”