BREAKING NEWS: Will DCSS’s Default on the TSA Affect Your Retirement?

GOLD and SHAYE v. DEKALB COUNTY SCHOOL SYSTEM

In 2009, the DeKalb County School System (DCSS) stopped payment on a retirement fund for district employees.  Plaintiffs claim this was in direct violation of the contract the district agreed to and has resulted in a loss of millions of dollars for district employees.

DeKalb teacher Elaine Gold and school psychologist Amy Shaye filed suit against DCSS in June 2011.  Their suit seeks class action status, which would allow other DeKalb Schools employees to join the suit against the district.

The next hearing in the case will take place on October 14th and possibly on October 15th at 9:00am before DeKalb Superior Court Judge Mark Anthony Scott.  Judge Scott will hear oral arguments on various issues, including whether to grant class-action status to the case.

This hearing is open to the public.  For those unable to attend, please check back here for regular updates.

Those people who are interested in attending the hearing should plan to arrive very early. In addition to the interest generated by this hearing, a large number of potential jurors for other trials will be present.  Parking will be tight.  In fact, those who can should carpool or take MARTA.

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36 Responses to BREAKING NEWS: Will DCSS’s Default on the TSA Affect Your Retirement?

  1. Teachers: This is of utmost importance to each of you. Send a few representatives to report what is going on.

    Of course, this will be followed later this month by jury selection in the criminal trials of Dr Lewis, Pat (Pope) Reid and Tony Pope, beginning October 28. 750 people were sent a summons for jury duty hoping to find 12 who are impartial enough to serve on this trial in DeKalb Superior Court Judge Cynthia Becker’s courtroom.

    https://dekalbschoolwatch.wordpress.com/2013/10/06/looks-like-we-may-have-a-trial/

  2. Embarrassed Employee says:

    Well, the dates are “critical” days, but some of us should be able to make it.

  3. ZBS11 says:

    This Monday is not a critical day. It is a furlough day.

  4. dsw2contributor says:

    DSW, teachers and Assistant Principals have Monday off, so there had better be a big turnout for the hearing on Monday….

  5. Make a day of it – there are plenty of excellent restaurants on the square. My favorite is the Thai restaurant near the Raging Burrito. Cute shops all around too. Downtown Decatur is wonderful.

  6. howdy1942 says:

    I’m looking forward to the fact being presented in court so that we can all understand the details. Unless there are mitigating issues which don’t appear in the court documents filed thus far, I don’t think that it looks good for the Dekalb County School System. Commitments are commitments, contracts are contracts, and we need to do the right thing.

  7. Lorna Marchiolo says:

    The employees and former employees of DCSS are greatful to Elaine Gold and Amy Shaye for representing us.

  8. Mr. Chips says:

    My prediction is that DCSS will say that they won’t/can’t pay the missing 2 years because it wouldn’t be fair to go into debt for older teachers at the cost of keeping younger teachers from receiving any type of pay increase through elimination of furlough days and then step increases. It suits the palace MO, we’re not responsible for any downside, we are hampered by the lazy, ineffective teachers that were here when we arrived.

    Pit colleague against colleague? Absolutely. Even the misinformed or uninformed public believes that it is the teachers who are not doing their job and causing the problems.

    How to buy them off???? Let them wear jeans once a week, and annoyingly, it works.

  9. My prediction is that they will have to pay for the two years that they did not give notification per their own Board policy but not the years after. (Policy stated that they had to give two years notice that they planned to drop pension contributions.) Their hilarious defense is “we are the Board and we can change our policy at any time.” Tom Bowen is quoted in the media on this and Paul Womack has been known to say this to people’s faces. The judge won’t care one iota about their ‘ability’ to pay or the ‘fairness’ to the newcomers. In fact, hopefully, the judge will add on interest. At least, that’s what I would do if I were the judge…. lol!

  10. Concerned Dekalb teacher says:

    I sure hope they side with us. I want the money I am due.

  11. concernedmom30329 says:

    Mr. Chips

    The ability to pay never impacts a court decision. Collections is separate from verdict. However, the current fiscal situation will potentially make it impossible to settle.

  12. unknown says:

    Hopefully, the judge will give us all of the back pay up until today. Then the District will have to still adhere to the two year notification rule and notify the staff in addition to offering us the option of Social Security if the District is claiming they are out of money and can no longer fund these accounts.

  13. MarySF says:

    What about those of us who started in 2006, 2007, and 2008 who were not yet eligible for Dekalb TSA contributions? (One had to work in the county for 3 years before one could receive an account.) I now have a Dekalb TSA account with Fidelity but it carries a balance of $0. Also, what about those of us who were hired in 2009 and beyond? Unfortunately the school system I was with before Dekalb didn’t pay into social security either, so at this point I will never be able to draw SS, but I will not have an equivalent funding source from Dekalb– and neither will an entire generation of educators.

  14. @MarySF: Your situation is terrible. This is a poor reflection on the south – and feeds into the stereotypes of our bad schooling. I’m told that teachers up north and in the midwest make great money. Add to that they have unions and negotiating power.

    @Concerned Dekalb teacher: you may get a judgement for what you are due, but you may be surprised at what that is. We can’t say for sure, but we ‘think’ that the board, if ordered, will only have to pay for the two years that they did not honor their policy to give notice. The court could consider the March, 2011 decision by the Board as the ‘notice’ thereby you could only be due your missed contributions through March of 2013. Going forward, the board may not have to pay. That said, we don’t really understand how they can then also circumvent paying into Social Security.

  15. Weary worker says:

    Having them pay into Social Security would help me at this point in my career as I could could add the years into what I paid in before going into education. The irony of this issue is that with all the money going to lawyers the wooden headed leaders of this system just would not listen to reason and did whatever they wanted.

  16. Stan Jester says:

    TRS (Teachers Retirement System of Georgia) is the pension plan for teachers and staff in Georgia. It’s a defined benefit, so the retirement benefits are secure unlike a 401K. In companies participating in Social Security, employers and employees each pay 7.5%. In accordance with the TSA Contribution Rates, this year employers will pay 12.28% and employees will pay 6%.

    The Board TSA and the Optional TSA provide the opportunity for additional tax deferred investments for DeKalb School employees. July 27, 2009, facing difficulty balancing its budget, the Board suddenly declared an emergency meeting. Though not on the published agenda, CFO Marcus Turk suggested a temporary suspension of funding for the TSA and the Board agreed. August 1, 2009, funding for the TSA Plan was suspended and has not been restored.

  17. ZBS11 says:

    A point of correction concerning Mr. Jester’s post above. The link described as TSA Contribution Rates should have read TRS, not TSA. And to further clarify the point I think Mr. Jester was trying to make was in response to the question, “That said, we don’t really understand how they can then also circumvent paying into Social Security”. For the school system, the TRS alone is an adequate alternative to Social Security. That is why the system could cut the TSA for employees on TRS and not for employees on PSERS, because PSERS alone is not an adequate alternative for Social Security. Many school systems outside of metro Atlanta, and City of Atlanta Schools and Fulton County Schools do not have social security or any TSA type of plan, they only have TRS. Gwinnett has the TRS and something like the TSA, and Cobb and Decatur have the TRS and Social Security. The shell game the defense for the system is trying to play is that the TRS all along, or at least now, is a sufficient alternative to Social Security. However, the point of the lawsuit is not that the system began violating its Social Security obligation, but that it violated its obligation to provide two year’s notice before suspending funding in the TSA. It could have given the two year notice and suspended the benefits two years after the notice was given, and remain in compliance with Social Security laws, as long as the TRS remained. The confusion has been created because from its very inception until the funding was stopped, the system referred to the TSA, not the TRS, as an Alternative Plan to Social Security. It had previously participated in Social Security and the TRS and decided to opt out of Social Security (which, by the way, required a two-year notice), and replace it with the TSA. At the time the voting occurred to opt out of Social Security and replace it with the TSA, a concern was expressed about what would prevent a future board doing just what this board did, suddenly reduce or eliminate funding. The safeguard that was built into the scheme in response to this concern was to put into place the two-year notice (just like what they had to do to opt out of Social Security), the enforceability of which is the key issue in the lawsuit.

  18. Stan Jester says:

    ZBS11 is exactly correct … (thank you btw)

    TRS is a pension plan. As a percentage of earned income the district pays more into TRS than they would into Social Security. TSA is an optional savings opportunity that was advertised as a replacement for Social Security. It is misleading and is the source of half the confusion. The 2nd half of the problem is the board violated their own policy by suspending contributions to the Board TSA without the 2 year notice.

    So, the questions is “Is the board legally obligated to follow their own policy?”

  19. Thank you ZB. That is very helpful. It’s confusing because the darn terms are so similar – TSA and TRS.

    We also always like to point out the irony in the fact that Paul Womack was on the board years ago when they made the deal with employees to opt out of Social Security and go with the cobbled combination of TSA and TRS. Umpteem years later, when the board took away the additional contributions, Paul Womack was on the board again!

    Paul Womack giveth and Paul Womack taketh away…

  20. ZBS11 says:

    Please note that the hearing will continue tomorrow, for anyone interested in attending. Paul Womack had his fumbling day in court today. The team of four Sutherland lawyers will have yet another day to grasp at straws in their weak arguments, courtesy of our tax dollars at work.

  21. dsw2contributor says:

    At a retirement planning seminar I once attended, I was told that retirement is a 3-legged stool. That 3-leg stool consists of: (1) An Employer-Provided Pension, (2) Social Security and (3) Your voluntary 401K contributions. The instructor made the point that you needed all three; you couldn’t expect to live on social security or a company pension alone.

    At DCS, the three-legged school is (1) the TRS [the Pension], (2) the TSA [instead of social security] and (3) the Optional TSA [instead of a 401k or 457 plan]. DCS is not funding the TSA, so the three-legged stool is quite wobbly.

    I do not think DSW has ever posted on the *OPTIONAL* TSA. I am very bothered by the fund choices in it – according to this page (http://www.dekalb.k12.ga.us/human-resources/employee-benefits/tax-sheltered-annuity), DCS teachers can only choose from VALIC, ING, HARTFORD, and FIDELITY. I think all four are for-profit companies that charge investors heavy sales charges (loads) and have salespeople that work on commission.

    Smarter investors buy no load funds. For example, Emory (http://www.hr.emory.edu/eu/benefits/457b/eligibility.html) lets its employees participate in FIDELITY, TIAA-CREF and Vanguard. Vanguard and TIAA-CREF are awesome options – Vanguard was founded by John Vogle, the guy who invented low cost index mutual fund investing while TIAA-CREF is the “Teachers Insurance and Annuity Association – College Retirement Equities Fund”.

    Anyway, I suspect that the OPTIONAL TSA choices probably reflect salespeople
    working fraternity/sorority connections in the palace, instead of the palace doing what is best for DCS teachers.

  22. ZBS11 says:

    DSW2 made many very good points. To expand on them a bit, the original idea behind switching from Social Security to the TSA was that the TSA would be a better retirement vehicle than Social Security. A big piece to that puzzle, trying to replicate all of the moving parts of Social Security, was to create the optional TSA which teachers could elect to fund with their own pre-tax contributions, instead of the contributions they had been required to make to Social Security. Unfortunately, the importance of this element over the years was not stressed very much, and while some teachers did open optional TSA accounts, my impression is that many did not, whether by choice or by not knowing any better is not clear. The lesson to this story is that if anyone is serious about adequately funding their retirement, they should be contributing 5% to 6% of their gross income monthly to the optional TSA (despite the shortcomings noted by DSW2) or something comparable, like an IRA. Doing it as a payroll deduction would be a good course of action, as it becomes automatic and money that is never seen as disposable income. It would be best to review with a qualified financial planner what makes the most sense for your overall situation, but not starting such an account in some form or other may well come back to haunt you when it really matters. As DSW2 stated, this would be in addition to the TRS and the Board TSA.

  23. Dekalbite2 says:

    One of the main points in this conversation is that teachers in all of the other school systems have TSAs OR Social Security in addition to TRS. The exception is Atlanta Public, a system that pays thousands more in salary than any of the other metro systems – e.g. $44,312 first year teacher with a Bachelors as contrasted to $40,742 for first year teacher in DeKalb. $48,743 first year teacher with a Masters as contrasted to $43,184 for a first year teacher in DeKalb.

    1,000 teachers left DeKalb last year. This is an astonishing attrition rate! If we are to attract and retain high quality teachers in DeKalb, we must pay marketplace compensation.

    FYI – Much of the millions in savings Mr. Thurmond is producing probably is through hiring less experienced teachers and teachers with lesser degrees (i.e. More first year teachers who just need a few years experience until they can move on to a system that pays marketplace compensation and more teachers with just a Bachelors degree). Mr. Thurmond has never produced any documentation for the taxpayers that show HOW he is saving this money. Less experienced and less degrees teachers MUST be accounting for millions in that savings because highly experienced and highly educated teachers cannot be flocking to DeKalb. Is this a sound model for improving student achievement? Of course not, but it will make the financials look better. Improving student achievement SHOULD be the Return on Investment he is measured on, but sadly that has not been the case for Lewis, Tyson, or Atkinson.

  24. Dekalbite2 says:

    @ZBS11
    ” Many school systems outside of metro Atlanta, and City of Atlanta Schools and Fulton County Schools do not have social security or any TSA type of plan, they only have TRS. ”

    But we are not competing for high quality teachers with systems outside Atlanta. We must compete for highly qualified teachers in the metro area. If we pay less than marketplace compensation, we will not attract and retain highly qualified teachers. This is not opinion. We already saw close to 1,000 teachers leave DeKalb between January to June this year. This is totally unacceptable for students.

    The marketplace in Metro Atlanta has set the compensation rates for teachers INCLUDING salary AND benefits such as TSAs or Social Security contributions from the local Boards of Education. DeKalb is not exempt from the rules of the marketplace. If you pay total compensation at less than marketplace value, then you will experience less qualified applicants seeking jobs and a greater rate of attrition as so many of these employees will leave as soon as they get a better offer.

    Highly qualified and effective teachers are the MOST important factor for improving student achievement, most particularly for low income students. Improving student achievement, especially in our Title 1 schools, should be the driver of the compensation train.

  25. ZBS11 says:

    I agree completely with everything Dekalbite2 just said. My comment was in response to a question about how was it legal to eliminate the TSA and not have Social Security. The School Board should be looking to settle this case not just because of the legal arguments, but because of the other considerations Dekalbite2 quite rightly brings up.

  26. @Dekalbite: Really? 1000 teachers have left between January and June? Did you add this up from the HR reports? How many have been hired? How many teachers do we actually have at the moment? We have been waiting for the 2013 salary report to come out so that we can find out these numbers. If you have data to share, please send it to us via email. This would be a very interesting blog post on its own. Also, if you have info about the 300 or 600 (depending on if it’s Atkinson or Thurmond talking) Central Office jobs cut, we’d love to have that info as well. We’ve asked, but it’s just in the pile of 50+ Open Records Requests we’ve filed that have been ignored. (Or ridiculously priced, like our recent request for the accounting of sports spending. They tell us we need to prepay $2400 for them to access the info. Silly us, we assumed they kept books and could just click for a report – like I do with Quick Books for my business.)

  27. Interesting, relevant, but sad article:

    One NC husband who’s happy his overburdened wife is leaving teaching

    Read more here: http://www.newsobserver.com/2013/10/12/3277055/one-nc-husband-whos-happy-his.html#storylink=cpy

  28. Stan Jester says:

    According to the 08/05/2013 School Readiness Report, 700+ teachers were hired for this school year.

  29. Great post on school readiness Stan! So, we are down to 6,500 teachers — and 700 were recent hires – so that’s over a 10% turnaround. Minimum. Yikes!

    This used to be tracked on the old blog. There was a graphic that showed the dwindling number of teachers — down from 8,500 to 6,500 now!

    The cutting of teachers has been a BIG concern for quite some time …. Read on >>>
    http://dekalbschoolwatch.blogspot.com/2011/11/where-have-all-our-teachers-gone.html

    DeKalb Parent once did quite the investigative report on the subject — and compared our staffing to surrounding counties:
    http://dekalbschoolwatch.blogspot.com/2011/02/too-many-chiefs-and-not-enough-indians.html

  30. Augustus says:

    What is happening with this issue?

  31. We don’t know. No one from DSW could attend. We haven’t heard from anyone who did. If anyone attended and would like to report, please enter it in the comments or email it to us at dekalbschoolwatch@gmail.com

  32. ZBS11 says:

    The Judge will probably take 60 to 90 days to issue rulings on 1) whether the class will be certified; 2) whether the named class representatives are suitable/adquate to represent the class; 3) whether their attorneys are competent to represent the class; 4) on the Plaintiff’s Motion for Partial Summary Judgment (if favorable, l think liability will be established and the only remaining issue will be the amount of damages, but I’m not sure about that); 5) on the Defense Motion for Summary Judgment (if favorable, it could lead to the suit being tossed out of court). However the Judge rules, all of these issues will be appealed by whoever loses (by statutory requirement, the class-related issues are automatically appealed regardless of who loses) to the Court of Appeals, and whoever loses at the Court of Appeals will likely appeal to the Georgia Supreme Court. If the suit survives all of the appeals, it will be kicked back to the trial court for further proceedings consistent with the appellate rulings. This could include an eventual jury trial on at least some issues. it will likely take a total of 12 to 16 months for the above process to unfold.
    The class actions that I have heard about or read about that survive all of the appeals usually settle. I have never read or heard of a class action actually going all the way to trial, although it probably has happened sometime, somewhere.

  33. ZBS11 says:

    I just scanned through the Plaintiffs memo in support of their Motion for Partial Summary Judgment that is available at the Barnes Law Group site. What I said above appears to be correct; it is asking the Judge to establish liability, leaving open only the damages for jury determination. Among other filings made, it contains a good summary of the history and issues involved in the case. Despite the reams of paper that have been consumed, the hours of attorneys fees, and two and one half years of litigating so far, it really all boils down to whether the two year notice provision is enforceable and couldn’t just be eliminated by the Board.

  34. Thanks so much for the updates, ZBS11…

  35. Dekalbite2 says:

    Crawford Lewis promised to pay back the TSA in his 2009-2010 budget. He said it was only suspended. Ramona Tyson, recommended for the job by Crawford Lewis after he was under indictment, continued the suspension of the TSA as one of the largest areas of “savings” in her 2010-2011 budget recommendation to the BOE. In order to impact teachers and students as little as possible, this budget needed a scalpel. Instead it received an axe.

    See Ms. Tyson’s 2010-2011 budget that she recommended to the BOE. Note her final recommendation to the BOE called for a 100% reduction in the TSA rather than a 50% reduction. She was congratulated by Tom Bowen, BOE chair, for saving all of the jobs in DeKalb even as she eliminated hundreds of teaching positions that were left unfilled as teachers left the system:


    (Scroll down to a see Item numbers 35 and 36)

    This was the result of Ms. Tyson’s 2010-2011 budget on students:
    http://dekalbschoolwatch.blogspot.com/2011/11/where-have-all-our-teachers-gone.html

  36. Thanks! We heard that TSA contributions were cut only for teachers and schoolhouse employees like paras and clerical workers. We heard that TSA contributions continued for schoolhouse administrators (including some, but not all, charter schools) and all Palace employees. We have requested under the Open Records Act to see that portion of the budget, but have received nothing from DCSS.

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