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Manhasset BOE Retirement Incentive Statement

At its June 29, meeting the Manhasset Board of Education, pursuant to Chapter 105 Laws of 2010, adopted the 2010 New York State Retirement Incentive for 15 teachers.   As a result of this action, the district will have net savings of $2,426,136 over the next five years.

In order to offer the incentive, the law required the district demonstrate a savings over two years of at least 50 percent in salary reductions directly attributable to this incentive.  This goal has been achieved by reaching an agreement with the Manhasset Education Association (MEA) to modify its existing contract.  This modification states that teachers hired in 2010-11 to replace the retiring staff will receive the salary equivalent to bachelor’s degree, step one, regardless of experience or degrees.  In 2011-12, those replacement teachers who do have a master’s degree will then receive a salary of master’s degree, step two.  In addition, only certain tenure areas were targeted for inclusion in the program and participation was further limited by seniority, both to ensure compliance with the 50 percent savings requirement.  Total salary savings over five years is projected to be $4,939,329.

The retiring teachers will receive up to three years service credit from the NYS Teachers Retirement System (NYSTRS) and the district will make a lump sum payment of $1,258,547 in fall 2011 to reimburse NYSTRS for the cost of these service credits.  The source of funds for the lump sum payment will be from the first year net savings of $1,103,747 and undesignated fund balance of $154,800.  With the concurrence of the district’s external auditor, the lump sum payment will be accrued as an expense in the district’s financial statements for the budget year 2010-11.  NYSTRS offered a five-year payment plan with interest at 8 percent.  However, the lump sum and accrual payment method was determined to be the least expensive way for the district to pay for the service credits.

Finally, unbudgeted incremental cost of healthcare for the 15 retirees is projected to be $250,929 in 2010-11 and $1,254,647 over five years. These costs have been factored into the district’s five-year analysis projecting a total net savings of $2,426,136. Health benefits for 2010-11 will be paid from undesignated fund balance.  After 2010-11, health benefits for these retirees will be part of the budget process for each year.

The board of education takes note of MEA’s participation in and cooperation with administration in achieving this contract modification that reflects a clear understanding of the financial pressure on the board to maintain a Manhasset quality education yet reduce costs consistent in direction with the current economy.

Submitted by the Manhasset School District