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Suburban school districts offer cash bonus to some retired educators

Some Chicago-area school districts are quietly giving tens of thousands of dollars in bonuses to teachers and administrators who are already retired — payouts that come on top of multiple salary spikes given to educators as they head out the door.

From Deerfield to Arlington Heights to Berwyn, school districts are providing the post-retirement payouts at taxpayer expense, sort of a public version of golden parachutes that highly paid private sector employees might receive. The little-noticed bonuses are tucked into teacher and administrator contracts, and school officials acknowledge that payouts to individual educators are not always transparent or publicized.

What’s clear from a review of several labor contracts is that the bonuses are calculated in different ways, such as a flat amount; a set figure multiplied by an educator’s years of service; or a percentage of an educator’s annual salary — which can be lucrative in affluent districts that pay six-figure salaries to administrators and teachers alike.

In the Vernon Hills-based Community High School District 128, for example, one principal got 30 percent of her $200,000-plus base salary, leading to a post-retirement bonus of $64,228. Eligible teachers in the district can get bonuses of up to 25 percent of their final base salaries, records show.

Educators usually must reach a certain age and stay in a district for a set number of years to qualify for the bonuses, also called stipends, severance pay, service awards or other vernacular.

“It’s about honoring those employees who have stayed with the district for a long period of time,” said Superintendent Carmen Ayala of Berwyn North School District 98. The district gives a post-retirement bonus depending on years of service, starting at $10,000 for teachers who work 20 years and increasing to as much as $20,000.

‘Spirit’ of 20 percent raises

Besides rewarding long careers, the bonuses are also a way to boost educator earnings after the state reined in salary increases that had been inflating the pensions of suburban and downstate educators.

In decades past, it was common for educators to get one or more double-digit percentage pay increases as they headed into retirement. The bumps are significant because higher salaries generate higher pensions in the retirement formula.

But in 2005 and 2006, the General Assembly limited raises for outgoing educators as a way to control mammoth pension costs. Those laws require so-called penalties for districts that give more than 6 percent raises to educators in salary years that will be used to calculate pensions.

Districts responded to that cap by giving consecutive 6 percent raises to educators, sometimes four years in a row before retirement to help increase pensions.

The bonuses appear to be the latest twist aimed at rewarding retiring educators.

In Vernon Hills District 128, teacher union President Dennis Duffy said the bonuses are a way for educators to approximate the pay raises they were given near retirement — sometimes 20 percent in back-to-back years — before the law changed a decade ago.

“Our rationale was to try to recapture as close to possible the spirit of the two 20s (20 percent raises given in the past),” Duffy said.

The district has paid out about $420,000 in the last three school years on bonuses to a dozen teachers and administrators, almost all of whom were earning well above $100,000, according to data from the Teachers’ Retirement System of the State of Illinois (TRS). The bonuses averaged about $35,000.

The figures don’t include several educators who retired in 2015-16 but are scheduled to get their post-retirement bonuses in the current budget year, according to the district.

Duffy said the district is high-performing and families move to the area in part because of the quality of the education their children will receive.

He also stressed that the post-retirement bonuses do not affect pensions. “This is an important point to make; that the severance is not pensionable. And thus it is not a burden to the TRS system,” Duffy said.

$1 million in bonuses

In Deerfield Public Schools District 109, the district spent nearly $1 million in severance payments in the last two years alone, figures provided by the district show. One longtime teacher has gotten a payout of about $67,000 so far, and a final payment in 2017 will push her total post-retirement bonus to about $78,000.

Deerfield 109 teacher union President Dennis Jensen referred questions to Charlie McBarron, spokesman for the Illinois Education Association (IEA).

McBarron noted Deerfield is a high-performing district. “High-performing districts, often, when they can, choose to provide superior pay and benefits in order to attract and retain quality teachers,” he said.

Prior to 2005, district administrators in Deerfield 109 also got post-retirement severance, but those have largely been removed, according to Greg Himebaugh, the district’s assistant superintendent for finance and operations.

He said his district and others have been making efforts to cut back on post-retirement benefits that can come with a large price tag.

“I believe that given the new normal of the post-2008 economy, boards of education recognize that teachers have gained so much ground on salaries over the last 10 or 15 years that the old retirement benefits agreed to years ago are too generous and no longer in sync with economic realities,” Himebaugh said.

Some districts do not give post-retirement bonuses but instead help their retirees cover health-care premiums until Medicare age or longer, which can be a big-ticket item for school districts. In other cases, districts allow educators to cash in unused vacation or sick days at retirement.

The multiple 6 percent raises just prior to retirement are still considered common in suburban districts, but some districts are reducing the bumps to 5 percent or lower. Other districts are cutting back by basing the 6 percent raises on an educator’s base salary, not overall earnings that include stipends for coaching sports or overseeing extracurricular activities.

Chicago Public Schools teachers do not get automatic 6 percent pay bumps prior to retirement and do not get post-retirement bonuses, according to the Chicago Teachers Union. The only provision in CTU’s contract related to post-retirement is that educators can get a percentage of the value of their unused sick days to put into a retirement savings plan.

The Chicago Teachers’ Pension Fund does help subsidize retiree health insurance, spokeswoman Susan Rice said.

Officials at affluent districts including Adlai E. Stevenson High School District 125 and Hinsdale Township High School District 86 say they do not provide post-retirement bonuses, but help cover health insurance for retirees.

At least a dozen districts

It’s not clear how many districts provide the post-retirement bonuses across Illinois, though school officials in Chicago suburbs said they are aware of neighboring districts that do it. McBarron, from IEA, said the statewide union does not track the practice.

The Tribune found at least a dozen school districts with post-retirement bonuses by reviewing more than 20 labor contracts in Chicago suburban districts. School officials in Deerfield and Glenview said the bonuses are included in salary data available to the public, but they acknowledged the bonuses for individual educators are not broken out in a clear way.

In Libertyville School District 70, a retirement incentive program allows eligible teachers to get a bonus of 30 percent of their final salary, over a two-year period. That’s on top of up to four 6 percent raises prior to retirement.

Over the last five school years, the district has spent almost $600,000 on the bonuses for 38 educators, according to district spokeswoman Robin Smith Kollman.

Arlington Heights School District 25’s retirement plan allows educators to get four 6 percent raises prior to retirement, as well as a post-retirement stipend of $15,000.

Not all teachers can get those benefits, said Stacey Mallek, the district’s assistant superintendent of business, because they have to have at least 35 years of service, but less than 36 years, a small window. “We have maybe three people a year that actually end up qualified,” Mallek said.

Mallek said the bonus replaces the loss of big salary increases doled out in the past.

“You are bargaining with a teachers association, and they believe that they might have been getting whatever it was — 20 percent (raises) — and they see that as a loss in pay, going down to 6 percent,” Mallek said.

“Districts tried to negotiate a contract that could get ratified and tried to add some of those post-retirement benefits.”

drado@chicagotribune.com

Twitter @diane_rado