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Tax watchdog group targets DROP program

By Staff | Jul 19, 2018

A local watchdog group has a suggestion for Lee County School District officials who say the district is facing a severe shortage of funds and so is in need of a half-cent sales tax: Stop DROP.

The Taxpayers Action Group says participation in the state-approved Deferred Retirement Option Program costs the district money that could be redirected if retiring employees were replaced with freshly trained, recent graduates at a much lower salary.

The group is bringing DROP program costs to the community’s attention because the school district claims it cannot find additional ways to meaningfully cut its budget and so is asking voters to approve the new sur tax, said Dave Jaye, Taxpayers Action Group.

“By eliminating the program we would save over $32 million a year (in salary). It’s how much it costs,” he said. “If we replaced every one of those positions with a brand new individual, we would save $20.8 million, which reduces the need for more than half of the sales tax proposal.”

According numbers provided by the School District, there are 483 employees participating in the Deferred Retirement Option Program as of June 20.

DROP allows key retiring government employees in the state of Florida to continue working for up to five years with the benefits they would have earned held in a special account that the employee then receives upon retirement.

It’s not as easy as saying “The District won’t take part,” a teacher representative said.

“There is no forced retirement and teachers can teach for as long as they wish. There are also contract protections and federal discrimination laws that do not allow for letting people go due to their age,” said TALC President Kevin Daly.

Nor is it easy to find entry-level replacements for retiring teachers, he said.

“While it is true that newer teachers are less expensive than more experienced teachers, there is currently a teacher shortage in the United States and universities are not producing graduates at a large enough rate to cover the shortage,” Daly said. “So, allowing more experienced teachers to work in DROP helps keep classrooms staffed with experienced employees. More experienced teachers also serve as mentors to the newer teachers in the district. Their institutional knowledge of pedagogy and real-world experiences can help a newer teacher survive in the first few years, which are critical for continued success.”

Ron Pure, also a member of the Taxpayers Action Group. said it is time for the program to go.

“It has been 40 years or longer since these double dipping school bureaucrats earned their college degrees,” he said in a prepared statement. “Students, employers and the taxpayers would hugely benefit from having fresh, newly educated and trained entry level employees. Think about how much technology, finances, business and training has changed over the last 10 years and many of these Lee School bureaucrat double dippers haven’t been in college since 1978.”

Daly said he cannot think of any benefits to wholesale replacement of experienced teachers with new-to-the-profession educators.

He believes that the benefit to the employee is the opportunity to continue to work in a position they love for additional time.

“Teaching is a career many people enter at a young age and reach retirement, based on experience, at a fairly young age when compared to other industries,” he said. “The DROP program allows them to continue to teach for a specified length of time. Monies that would be normally put into an employee’s FRS account are placed in an interest-bearing account that the employee receives when they leave DROP.”

The program is voluntary and staff are not required to stay enrolled in the program for the full five years, he said.

Jaye said a majority of DROP employees are not teachers and the savings could – and should – be put in the classroom

“Only 13.6 percent, 66 out of 482 are traditional classroom teachers,” Jaye said. “The rest are bookkeepers, cooks, janitors, bus drivers, secretaries, mechanics and bureaucrats.”

Daly said Florida law restricts the use of capital dollars for operations, but allows for operation dollars to be used for capital, which the district already does.

“I think there are savings to be found in any budget, from the kitchen table to Washington D.C. However, I’m not sure they can find the level of savings in operations to deal with the current and future capital shortfalls,” he said. “Some of our local Legislative delegation have also suggested that restoring impact fees and an increase in millage would also be a solution. These fixes combined do not provide enough dollars to cover the shortfalls of a growth district.”

DROP, a voluntary retirement program, is made available to FRS Pension Plan members who qualify for normal retirement. Participants of the Deferred Retirement Option Program begin accumulating their retirement benefits while delaying their termination for up to 60 months from the date they reach their normal retirement date.

While an individual is in the DROP program they simultaneously earn a salary, as well as their monthly retirement benefits, which are held in a FRS Trust Fund. In addition, their monthly retirement benefits accumulate in the FRS Trust Fund and earn tax-deferred interest as they continue to work.

The Florida Retirement System states that if the individual’s DROP begins on, or after July 1, 2011, they receive a monthly interest at an annual rate of 1.30 percent.

According to the Florida Retirement System, once the employment is terminated at the end of the DROP participation period, the individual receives their DROP payout, as well as their monthly retirement benefit, as well as any cost of living increases.

Daly said the money that they receive at the end of DROP is only the amount the district sets aside for them, plus any interest accrued during their time in DROP.

“Florida pensions are based on an average of a ‘high five’ for annual benefit. DROP freezes the amount of money used to calculate the pension amount to the salary of the employee when they enter DROP,” he said. “This lowers the amount of the pension the employee receives when compared to the amount received if they employee did not enter DROP and worked those additional five years as a regular employee.”

An individual receives his or her DROP accumulation in one of three ways – a lump sum payment with 20 percent withheld for federal income taxes; a direct rollover to an eligible retirement plan, or a combined partial lump sum payment and direct rollover.

Pure said the taxpayer group has been on the war path for a long time as far as the DROP program is concerned.

“If we keep the folks hanging around beyond regular pension date where they can start collecting it (money) that precludes younger people from coming on board with starting salaries that have fresh ideas just out of college,” he said. “It’s costing us a lot of money. Clearly it would offset if we say, ‘Look you earned your pension and we will see you again at the supermarket, or the beach.”

He said the district should be able to fill vacated positions with qualified personnel.

“With the state of Florida having a population of 20 to 22 million people, the talent pool is pretty large at this point,” he said. “If we had to fill those jobs that are now occupied by people in the DROP program there would be a significant savings of money.

“It’s savings that could be used for where the school board has reported a potential shortfall,” Pure added.

The Taxpayers Action Group has other suggestions as well.

Jaye said he has spent more than eight months putting together a document that includes more than $266 million of budget cuts and budget reforms.

Some of the potential cost saving measures include adjusting bell schedules so buses are not sitting idle and not allowing employees to cash out unused sick days.

Another area where the district could save money lies within the 13 pay grades and 18 step increases. He said the Lee County School District respects, honors and compensates for job seniority where the highest pay step increase is approximately 62 percent higher than the entry level.

“It’s imperative that citizens try to put our public servants under a request that they tighten their belt, that the tax increase is less than 4 percent of the budget,” Jaye said.