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Herndon responds to LORP questions

SoVaNow.com / November 01, 2012
Halifax County Superintendent of Schools Merle Herndon, responding to demands for more information on the cancellation of the LORP early retirement incentive plan for school employees, issued a response yesterday arguing that the program “collapsed under its own weight.”

Herndon offered a lengthy point-by-point response to questions posed to the School Board on Oct. 11 by Dave Strom, whose wife, a retired high school teacher, lost her LORP benefits with the decision by the trustees to terminate the program.

LORP stands for Local Option Retirement Plan; under the program, long-time school employees were encouraged to retire early, with the promise of receiving a portion of their old pay in exchange for providing part-time work to the system. The plan was originally touted as a means to allow the school division to replace higher-paid veteran employees with younger, less expensive hires.

Herndon, in her response, notes that Halifax County was one of only a few school divisions in the state to offer LORP benefits, based on a questionaire submitted to 59 school divisions. She also noted that Halifax was the only division to offer health insurance benefits to LORP beneficiaries; Pittsylvania County, which has the closest equivalent incentive plan, does not pay retiree health costs, she noted.

She reiterated her contention that LORP’s cancellation saved the school division money, pegging its 2011-12 cost at $1,736,104. She did not offer an estimate for the payroll savings that may have resulted from replacing higher-paid, retiring staff with younger employees.

The omission was noted by Strom, who said the response “was just what I expected. I got no additional information and I felt that nowhere did she show the other side of the story, which is the amount of money saved by hiring younger, less expensive employees to replace the LORP retirees who were making considerably higher salaries than their replacements.”

The School Board directed Herndon to develop a reply to Strom with the assistance of the School Board director of finance and executive director for administration. His questions are listed below in bold, followed by Herndon’s responses:



1. With what you know now, did LORP save the Halifax School system money?

NO


PLEASE NOTE: Even though the LORP program is terminated, Halifax County Public Schools is still paying an individual health insurance benefit of $6,090 for sixty-eight retirees which totals $414,120 for the 2012-13 school year.



2. What was the reason(s) LORP was terminated?



As more and more people were added to the program over the years and more benefits were added (health insurance), LORP collapsed under its own weight. LORP total costs from its beginning in July 2006 to the planned additional seven years (June 2019) would have had a payout of $12,870,723, with the majority of the money ($8,933,226) to be paid out from July 2012-June 2019. The bottom line was that this money was being taken away from the needs of students and teachers/programs.

There was a disproportionate amount of money being provided to “end of career” benefits (LORP) as opposed to “beginning of career” ( e.g., lower beginning salaries/no signing bonuses) and all other employee salary benefits (e.g., no raises, lower salaries).

Further study of the actual savings for essential positions (substitutes for teachers, bus drivers, paraprofessionals, secretaries, custodians, and food service) showed that many LORP participants were being paid on a per diem basis for non-essential work (e.g., consulting, “projects”).

Fifty-nine cities and counties responded to a survey sent out from VASS (Virginia Association of School Superintendents). Forty-seven had no form of LORP/ERIP. (NOTE: A number of the divisions had ERIP but discontinued the programs.) Twelve had some form of LORP/ERIP. (NOTE: The only county offering a program similar to Halifax is Pittsylvania County which does NOT provide insurance.)

The retirement data from a sample of school systems similar in size that do NOT have LORP/ERIP are as follows: (ERIP stands for Early Retirement Incentive Plan)



COUNTY OR CITY 
(No. of Students / No. of people [with NO LORP/ERIP] who retired last year)

Mecklenburg 4,791 26 people

Dinwiddie 4,453 40 people

Henry 7,463 30 people



(Note: These were divisions noted in Prismatic study who were considered “peer divisions.”)

HCPS had twenty-nine people retire last year. The data above delineates that people will retire without incentives.



3. Terminating LORP supposedly saved $1.4 million. Where did that money go?

Money was needed for essential staff, programs and benefits which included, but is not limited to the following. The original budget for 2012-13 had a principal paired for Meadville/Sinai and another paired at Clays Mill/Scottsburg. Thus, the budget did not reflect replacing two retiring principals. Additional special education paraprofessionals and teachers needed to be hired. Several teachers needed to be hired due to the K-3 initiative to keep lower pupil/teacher ratios. The coordinator for food services had been cut from the budget and was an essential position. There was no consideration for a person to coordinate instructional technology. The testing coordinator needed to work during the summer months when testing data needed to be compiled. LAN managers needed to continue to work with students. Insurance costs needed to be considered and over $174,000 needed to be paid for retirees who elected to have their vacation/sick days paid out over July and August.



4. $360,000 was allocated to rehire the school LAN managers that wasn’t included in the budget. Where did that money come from?



See response to question 3.



5. There was a $1.1 million “unanticipated expense” in increased health care insurance costs that was given as part of the rationale for the termination of LORP. Later it was said that the administration “found” $900,000 plus to cover that expense. Where and how was it “found?” Where was that money originally included in the budget? Where did the other $200,000 for the insurance come from?



LORP was being discussed at the beginning of the school year and weeks later health care costs were discussed. The termination of LORP was not discussed as “part of the rationale” for paying increased health care costs. Upon discovering the health insurance cost increase, Mr. Covington assisted in finding excess actual revenues received over budgeted revenues. Also, a supplemental county appropriation of $250,000 will be used to defray a portion of the insurance increase. Mr. Covington further assisted Mr. Camp in showing him some of the more fluid categories such as the Rural Schools Grant and salary savings.



6. Is there anything being done to determine if there are other unallocated monies in the budget or school system to be “found?”



With Mr. Covington’s assistance [former finance director Bill Covington] alluded to in question 5 above, excess revenues from the county board of supervisors are in the process of being reallocated.



7. It appears that the budget is being largely ignored. Certainly many of the expenditures are not in line with it. What are both the school administration’s and the school board’s responsibilities with regards to operation within the approved budget?



The 2012-13 budget is not being ignored…however it is flawed. The budget under the supervision of the previous administration did not reflect the increase in insurance, supplied inaccurate information regarding LAN managers and the actual impact of financing LORP. Once these issues were clarified in July, the board made a fiscally responsible decision to terminate LORP.

Monthly financial statements and budget comparisons are currently produced and distributed to board members for their monthly school board meetings. School board members review them and are subsequently approved.



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Comments

Blah blah blah. She did not like the idea of this program and so she dropped it. Political appointees can make anything sould they way they want it to sound. I don't believe her answer to question 1 that it did not save money. I would love to see the figures to back this up. I belive that we should be paired with Pittsylvania Co. Who has a LORP program. I still hope that these retired teachers sue the county, even if they don't win, it will make the county spend the money on the program that the board voted to give them for at least one year.

Comments

There is a flaw in Dr. Herndon's hypothesis that employees would have retired with out the LORP. I retired two years ago and the LORP incentive played a big part in my decision to retire after 36 years. I would still be in the classroom if not for that promise.

Comments

Dr. Herndon is either forgetting or ignoring the fact that she is in the same age group as the retirees. In fact, she's older than quite a few of them. Yet her own retirement wasn't inevitable based on her age. However, she too was presented with an 'incentive'; continue as Superintendent of HCPS, which includes a raise and a substantial benefits package. When she retires (probably from HCPS) this offer won't be unexpectedly pulled out from under her.

Comments

Would someone please tell us why the supt. Is allowed to take our tax $$$ in salary but still lives across the river??? If u r going to hang around this trough, you should live here especially when you r the number one honcho!!!!!

Comments

JoeBlow, you are absolutely right. It's as if the school system is being deliberately ran in the ground - with all of this drama. Who comes in and in three months time completely turns the school system upside down? It's embarrassing and shameful. Claims to help "the kids," but thusfar has shown to be a major distraction to the education process. In all of the years of the Halifax County School system,there has never been this much discontent,disruption and most of all,disharmony. Leaders shouldn't alienate people or make them fearful of thier positions as teachers and educators. While someone may be an outsider, the people of Halifax County and it's educators won't treat you like an outsider -- unless you act like you're one. And as far as this retirement issue, dozens of people can't be wrong. Something to think about.

Comments

when did a lan manager become a vital part of a childs education. If so then hire ones with a education certificate or education degree. They keep them because they are cheap.

Comments

This is situation is really a shame. How can a person who is not a part of this community come in and in a matter of months bring so much confusion, disharmony and distrust to not only its employees but to the school board. Someone should take a good look at this person, she is not the one we need to move our schools forward.


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