Tuesday, November 18, 2014

Say NO to the Voluntary Separation Incentive Program Payout!

Monday morning November 17, 2014, I sent an email to the Fox C-6 School Board, CFO John Brazeal and board secretary Debby Davis regarding the proposed Voluntary Separation Incentive Program (VSIP) payment to Assistant Superintendent Andy Arbeitman. I stated my concerns regarding the removal of the 10 Years of Service with the Fox C-6 School District that just somehow happened to no longer apply even though it's in our current school district policies, including the most recent version that was posted for review on the district in March 2014.

Later that morning I received an email from Fox's CFO John Brazeal with a PDF attachment explaining the history of the Voluntary Separation Incentive Program explaining what changes were made and when over the past 9 years. I have included the district's response below. Much of the language in the response appears to be responding to my concerns in recent articles regarding the issue.

On Tuesday November 11, 2014 I wrote an article about this issue after reviewing the Tuesday November 18, 2014 Fox C-6 board meeting packet. In that board packet, there was a request to approve paying Andy Arbeitman a $67,747.50 for voluntarily departing from the district early.

My article spurred a news story on KMOV Channel 4 by Russell Kinsaul due to the fact that after only 2 years of service at Fox C-6, the taxpayers are being asked to approve paying $66,747.50 for Mr. Arbeitman for leaving early. Not so fast!

For years, Fox C-6's policies/regulations have required a minimum of 10 Years of Service in the Fox C-6 School District as explained in the district's response.

It's pretty apparent that many taxpayers and school employees are not happy about the decision to offer this early payout after only two years of service. Fox's board approved new changes to the VSIP at the November 3, 2014 school board meeting that required employees to sign an agreement stating that they would not sue the school district if they took the Early Incentive Pay.

Vested in the Public School Retirement System
It's Fox C-6 taxpayer dollars that are being used to buy out anyone that wants to take the early out. It's not Public School Retirement System (PSRS) money. The rules requirements have been changed so that an employee simply had to be vested in the PSRS in order to receive the Early Incentive Pay. You must read the response from Fox to see how this has all come about.

Board Minutes and Packets Void of Changes
Over the weekend I reviewed board meeting minutes and school board meeting packets looking for the changes that had been made over the years in regards to the Voluntary Early Retirement Incentive Program. Neither the board meeting minutes nor the board packets had any documentation pertaining to the removal of the 10 Years of Service requirement.

The response from the district states that "a vote that should have been taken in open session was taken in closed session" with regards to the changes that were made.

Not voting or discussing this issue during the Public Session or even providing documentation to the board in their board packets is a serious problem. It warrants being reviewed by the State Auditor as well as the Attorney General.

You must question why these changes weren't discussed during Public Session. The public should have been made aware of the changes. It's somewhat explained in the district's response below.

There is a Fox C-6 school board meeting this evening Tuesday November 18, 2014 at 7PM at the Fox C-6 Service Center. I encourage everyone to attend and voice your concerns to the Fox C-6 school board regarding this issue prior to them giving another hand out of cash.

According to both the current school district policy and the newly revised version posted March 2014 version "For Review", Mr. Arbeitman is not eligible for the incentive which requires 10 years of service with the Fox C-6 School District. Mr. Arbeitman began working for the district on July 1, 2013.

Below is a copy of the response I received from Fox's Chief Financial Officer (CFO) John Brazeal on this issue. It's imperative that you share this explanation with your friends and neighbors in the Fox C-6 School District. After all, it's your money that the district keeps handing out!

You can also download a copy of the original PDF version of the document I received from here:

DATE: November 17, 2014
TO: To Whom It May Concern
FROM: John Brazeal, CFO
RE: Recent history of Voluntary Separation Incentive Program
This is a review of the Voluntary Separation Incentive Program, also known as the Voluntary Early Retirement Incentive Program, or the Voluntary Leave Program, or the Voluntary Incentive Program. 
Policy vs. Regulation/Procedure
Generally, policy setting is the purview of the board. Policies must conform to law. Generally, establishing regulations/procedures is the responsibility of administration. Regulation/procedure must conform to policy, and therefore also to law. Anytime a regulation/procedure spends money, that regulation/procedure should be board approved rather than approved administratively. 
Regulation 4740.1 titled Voluntary Early Retirement Incentive Program was initially adopted in November 1998, with subsequent re-adoptions in April 2000, July 2000, July 2003, September 2004 and July 2005. As of the date of this report, this Regulation was still posted on the District website. 
The last re-adoption of Regulation 4740.1 in July 2005 coincides with the start of Dianne Brown/Critchlow’s tenure as District superintendent. Since that time, the incentive program has operated with a variety of modifications as described herein. Also since that time, policy and regulations/procedures generally have not been kept current.
Program Eligibility
The incentive program set forth in Regulation 4740.1 defines program eligibility to include: 
     1. Minimum of 10 years full-time service as a District employee; and
     2. Minimum of 20 years of service credit in the pension system (PSRS or PEERS), but not more than 31 years of service credit. 
For many years, courts have held that the upper eligibility limit of “not more than 31 years of service credit” to be discriminatory. 
In an email dated February 17, 2009, Dianne Brown announced changes to program eligibility for the 2008-2009 year to be as follows: 
     1. Qualify under current policy/regulation 4740.1; or
     2. Have more than 31 years of service credit in the pension system; or
     3. Have 20 years service credit in the pension system and minimum of 6 years employment with the district; or 
     4. Have meet Rule of 80 provisions with the pension system; or
     5. Be age 60 or greater with a minimum of 6 years employment with the district. 
If these changes were board approved, that fact has not been confirmed. 
In an email dated January 13, 2010, Todd Scott announced that for the 2009-2010 year, program eligibility would be as stated in Regulation 4740.1. 
In email dated February 15, 2011, Todd Scott announced program eligibility for the 2010-2011 year as: 
     1. Minimum of 10 years of full-time employment with the district; and
     2. Minimum of 15 years service credit with the pension system. 
The discriminatory upper limit was removed. If these changes were board approved, that fact has not been confirmed. 
In an email dated February 14, 2012, Todd Scott announced program eligibility would remain the same for 2011-2012 as the prior year of 2010-2011. Again, if this variance from the regulation was board approved, that fact has not been confirmed. 
In an email dated January 7, 2013, Todd Scott announced program eligibility would remain the same for 2012-2013 as the two previous years. Again, if this variance from the regulation was board approved, that fact has not been confirmed. 
In an email dated January 23, 2014, Todd Scott announced program eligibility for the 2013-2014 would match the eligibility requirements of the regulation as: 
     1. Minimum of 10 years full-time service as a District employee; and
     2. Minimum of 20 years of service credit in the pension system (PSRS or PEERS), but not more than 31 years of service credit. 
That action did not stand long. On February 19, 2014, an email was distributed announcing program eligibility for both the 2013-2014 and 2014-2015 years to be: 
1. Employee must be vested (5 years service credit) in the pension system.
The announcement of this change indicated “at the February 18th Board of Education meeting the BOE made changes to the Voluntary Early Retirement Program.” 
Program Benefits
Regulation 4740.1 indicates that eligible program participants will: 
     1. Receive a payment equal to 50% of the applicant’s final year’s salary; and
     2. Be required to provide 35 hours of service to the District during the year following the end of District employment. 
Fewer changes were applied to these provisions, however, there were a couple changes through time. 
In an email dated November 30, 2012, Dianne Critchlow wrote: “I am excited to announce that the district is offering, A ONE TIME ONLY, addition to our early retirement incentive. For the first time in Fox C-6 history, we are not only offering to pay half of you highest year’s salary, we are offering 2 years of Board paid health insurance.” 
In an email dated January 7, 2013, Todd Scott announced “employees will no longer have to put in time of service after they retire.” 
February 2014 Events
On February 3, 2014, the Board met to discuss budgetary issues and also entered closed session to discuss “negotiations.” 
In closed session, the presentation to the board showed a history of the declining fund balances, and an action plan that stated: 
     1. Limit or greatly reduce spending
     2. Offer Voluntary Incentive Program
     3. Limit/freeze hiring
     4. Freeze salary schedules 
In regards to the voluntary separation incentive program, and under the heading “Things We Have Discovered,” the following statements were displayed: 
     1. We can no longer use the term “Early Retirement Incentive”
     2. The VIP (Voluntary Incentive Program) is due to PSRS by April 1
     3. Can no longer put a cap on number of years – discriminatory 
Two options were suggested by the superintendent to the board: 
Option A: Increase the incentive to 65% of final salary to employees separating in 2013-2014; 60% of final salary to employees separating in 2014-2015; and 55% of salary to employees separating in 2015-2016. 
Option B: Keep the incentive at 50% of final salary, but add 2 years of district paid health insurance to employees separating in 2013-2014; add 1 year of district paid health insurance to employees separating in 2014-2015; and no health insurance to employees separating in 2015-2016. 
The proposal stated “employees must be vested in the retirement system to be eligible,” but made no mention of minimum employment with the district or any other minimum amounts of service credit with the pension system. 
On February 18, 2014, the Board held its regular meeting and also entered closed session to discuss “negotiations.” 
The minutes of the close session state: “After discussion Mrs. Hermann made a motion and was seconded to approve the recommendation from the committee to continue the Voluntary Leave Program for the 2013-2014 and the 2014-2015 school year as presented. After the 2014-2015 school year the District will no longer offer the Voluntary Leave Program.” The motion was approved 6-1. 
Directors voting in favor of the motion: Palmer, Hermann, Laughlin, Nash, Holloway and Smith. Directors voting against the motion: Kroupa. 
Motive And Intent
It is impossible to fully assess motives and intentions, but here are a few observations. 
The concept of incentivizing higher cost staff to separate employment as a method for lowering payroll costs can have merit. However, by offering an incentive every year, the program had become more of a retirement bonus with major cost to the District rather than an incentive with cost savings to the District. 
As the District’s financial condition deteriorated, Dianne Critchlow sought to boost the incentive, while members of the Board sought to end the costly program. Some back and forth pushing on the issue exposed some motives. 
When Board members attempted to end the program sooner than later, Dianne Critchlow vehemently objected, potentially due to her own pending retirement date. With her retirement date already announced, she pushed for boosting the program benefits and pushed for expanded eligibility. 
The push for expanded eligibility coincides with the planned separation for Jamie Critchlow. The push for increased benefits coincides with the planned separations for both Jamie and Dianne Critchlow. 
November 2014 Events
I joined the Fox District in July 2014. As the program parameters had been set in February 2014 and announced to staff, I did not attempt to modify the either the eligibility criteria or the program benefits. However, upon noticing that the district was not receiving any benefit from the employee in return for the incentive payment, I did propose there be a separation agreement wherein the separating employee would waive any and all claims that person might have against the District. In this way, the District gains protection from potential employment related liabilities. 
Due to the fact the plan would be ending after the 2014-2015 school year, the program was finally an incentive. In an effort to boost participation and enable employees to leave before they otherwise might, I did propose paying the incentive payment before employment ended so that this payment could be used to purchase service credit in the pension system. 
At the November 3, 2014 board meeting, the program was modified to include payment of the incentive at an earlier date and require a waiver of claims in exchange for the incentive payment. No proposal was made regarding eligibility since that had already been announced to staff as being applicable for the current school year. 
Open Session vs. Closed Session
The discussion and action related to the incentive program took place in closed session during February 2014. The closed session topic was listed as “negotiations.” It is acceptable for the Board to enter into closed session to discuss negotiations in relation to negotiating with employee groups. Normally, the negotiation matters discussed by the Board in closed session proceed to the negotiating table with employee representatives. Later when agreement has been reached between the parties, the resulting agreement is presented to the Board in open session for approval. 
During February 2014, the Board was within its rights to take up the topic for discussion in closed session. Dianne Critchlow contended that a decision was required prior to April 1, 2014. Thus, a vote that should have been taken in open session was taken in closed session. Additionally, the topic was never taken to the negotiating table, which eventually convened in May 2014. 
Policy/Regulations/Procedures on Website
Obviously the objective of posting policy/regulations/procedures on the website is to provide a public resource and public notice of District policies and procedures. Naturally, when a policy is revised, there can be a delay between Board adoption of new policy and posting of the revised policy on the website. This delay should be minimized. 
According to Debby Davis, Custodian of Records for the District, she was instructed to leave the unrevised version of Regulation 4740.1 on the website, despite its revision in February 2014. Please note, the incentive program had been revised almost annually, without revised posting to the website. That should not have been the case. If things have been handled correctly, the revised program would have been posted promptly after each revision. 
As pointed out early in this memo, this matter and many other policy matters appear to be out of date. Policy requires almost constant attention and revision in order to avoid obsolesce. Dianne Critchlow allowed many policy matters to go stale. 
The incentive program exists in its current form until it is changed or ended. The incentive program is an offer from the District to employees. Eligible employees are entitled to accept the offer as it exists or is modified from time to time. The Board should be the only entity with authority to authorize the incentive program and/or modification to an existing incentive program.