TSA – Summary Judgement

In 2009, the DeKalb County School District stopped payment on TSA, a supplemental retirement fund for district employees. (Note: The TSA is separate and apart from the TRS) Plaintiffs claim this was in direct violation of the contract the district agreed to and resulted in the loss of millions of dollars for district employees.

What is TRS (Teachers Retirement System of Georgia)
TRS is a mandatory statewide governmental defined benefit plan established in 1943 to provide retirement security to those citizens of Georgia who choose to dedicate their lives to educating the children of Georgia.

DeKalb teacher Elaine Gold and school psychologist Amy Shaye filed suit against the district in June 2011.
DeKalb Schools is represented by LAWRENCE & BUNDY in this matter. In the 2016-17 school year alone, DeKalb Schools spent in excess of $2.5 million on this case.

The following details of the TSA case was distilled from the Summary Judgement made by the Honorable Judge Gregory Adams two days ago.
In 1977, the Board gave notice of its tentative intent to withdraw from participation in the Social Security program effective October 1, 1979, and to create an alternative program to Social Security.
At the time of the notice of tentative intent, all full—time School District employees were also participating in one of three different public employer—retirement systems established by the Georgia legislature:

  • the Teachers Retirement System of Georgia (“TRS”);
  • the Employees’ Retirement System of Georgia (“ERS”);
  • the Public School Employees Retirement System (“PSERS”).

DeKalb School Board passes the 1979 Resolution.
In May 1979, several months before the proposed withdrawal from Social Security became effective, the Board passed a resolution concerning its desire to develop “an alternative plan of benefits in lieu of Social Security” (the “1979 Resolution”).
The School District confirms withdrawal from Social Security.
On June 27, 1979, the Board confirmed that the School District would withdraw from Social Security. During the June 27, 1979 meeting, the Board made no reference to the 1979 Resolution or a two-year notice requirement.
During that same June, 1979 meeting, the Board failed to develop plans and specifications for the alternative plan.
In voting to remain out of Social Security, the chair of the Board noted that “he and the other Board members would have input in the specifications that are to be written and what will be placed out for bid, and the alternative plan would be the Board of Education plan.”
Further, “the Superintendent pointed out that at this point in time the concern is with plans and specifications that the Board of Education would be in complete control of.”
Board member David Williamson stated, however, that “I am also further convinced that future Boards will be faced with freezing if not cutting back on contributions to an alternate plan.”
VALIC TSA – Group Tax Sheltered Fixed Dollar Annuity
September 28, 1979 – The School District’s superintendent signed a Master Application to the Variable Annuity Life Insurance Company (“VALIC”) for a Group Tax Sheltered Fixed Dollar Annuity Contract. The resulting contract with VALIC, which took effect on October 1, 1979, constituted the entire contract between the parties and contained detailed provisions related to plan participants, beneficiaries, annuity Options, and contract modification.
The Board enacts the 1982 Board Policy.
Prior to June, 1982, the Bylaws and Policies of the DeKalb County Board of Education included a policy entitled “Social Security/Alternative Plan of Benefits,” which stated:

Social Security/Alternative Plan of Benefits
Employees of the DeKalb School System shall have the benefits of Social Security under the Federal Insurance Contributions Act, or an alternative plan of benefits of comparable cost in lieu of Social Security. Salary deduction shall be made for employees as required and the Board of Education shall provide the funds required to support Social Security or the alternative plan of benefits.

In June 1982, following the recommendation of the Chairman of the School District’s Employees Trust Fund Advisory Committee, the Board voted to amend “the ByLaws and Policies of the DeKalb County Board of Education” with a new policy entitled “Alternative Plan to Social Security” (the “1982 Board Policy” or the “Board Policy”), which stated as follows:

Alternative Plan to Social Security
The DeKalb County Board of Education shall provide all full-time employees with an alternative program to Social Security. The amount of funds placed annually in the alternative program shall equal the amount that the school system would have paid had the school system remained under Social Security. The Alternative Plan to Social Security shall include, as a minimum, the following:
1. Improvements to the survivor benefit life insurance plan in
existence in September, 1979.
The survivor benefit plan is designed to provide lump sum payments to beneficiaries and monthly income to eligible surviving family members upon the death of an employee.
2. Improvements to the long—term disability plan in existence in
September, 1979.
The disability benefits plan provides disabled employees a coordinated benefit for a specified period of time following an established elimination period.
3. Supplemental retirement plan paid for by the Board of Education.
The supplemental retirement plan provides retirement benefits through legally mandated and/or Board approved contributions and investment strategies.
The Board of Education shall give a two—year notice to employees before reducing the funding provisions of the Alternative Plan to Social Security.

July 1982 – Peat, Marwick, Mitchell & Company worked with the School District’s Trust Fund Advisory Committee in analyzing the alternative plan to determine whether a change in the funding arrangement was necessary. They issued a report addressing contemplated changes to the retirement plan component of’the alternative plan.
The report stated that the Board’s existing arrangement was with VALIC; that the contract could be terminated at any time; and recommended that the Board prepare its own plan document so that the Board could have more flexibility in the event of a contract termination.
Board TSA Plan
July 11, 1983, meeting, the Board established the “DeKalb County Georgia Board of Education Tax Sheltered Annuity Plan”. The 1983 TSA Plan was a defined-contribution plan, funded entirely by the School District as the employer and not permitting employee contributions. Under a defined contribution plan, employees receive a specific percentage of their compensation as tax—deferred retirement contributions at specified intervals of employment.
The 1983 TSA Plan expressly stated that “[t]his Plan may be amended or terminated by the Employer at any time. No amendment or termination of the Plan shall reduce or impair the rights of any Participant or Beneficiary that have already accrued.”
The 1983 TSA Plan contained no reference to the 1979 Resolution, the 1982 Board Policy, or a two-year notice requirement before plan funding could be reduced.
August 11, 2003 – The Board passed a resolution that amended and restated the 1983 TSA Plan. The 2003 TSA Plan also contained a provision entitled “Amendment or Termination,” which provided: “The Employer retains the right, in its sole discretion, to amend or terminate the Plan at any time. No amendment or termination of the Plan shall reduce or impair the rights of any Participant or Beneficiary that have already accrued.”
Board suspends certain contributions to the TSA Plan.
July 2009 – The Board decided to suspend “all legally allowable contributions” to the TSA Plan to “have as little impact on instruction as possible” and to “allow employees to maintain the same level of take home pay.”
The Board amended the 2003 TSA Plan, and that amendment read that the School District would not make contributions on behalf of employees who participated “in the Teachers Retirement System of Georgia or the Employees Retirement System of Georgia . . . for each payroll period
commencing after July 31, 2009.”

Plaintiffs’ claims in this case turn on their assertion that the 1979 Resolution and the 1982 Board Policy mandated two years’ notice to employees before the TSA Plan could be amended.
The record shows, however, that neither the 1979 Resolution nor the 1982 Policy formed an enforceable contract between Plaintiffs and the School District as a matter of law. Moreover, even if those documents could give rise to an enforceable contract, the record reflects that no breach of those documents occurred as a result of certain suspension of TSA Plan contributions in July 2009. The record further shows that if any contract does exist, it is the TSA Plan that forms the entirety of the contract during the period of time relevant to this litigation, and Plaintiffs can use neither the 1979 Resolution nor the 1982 Board Policy to modify or add to the terms of that TSA Plan. Rather, the Court must enforce the unambiguous terms of the TSA Plan, which allow the School District to amend or even terminate the contributions to the Plan at any time, without the advance notice that Plaintiffs seek.
The Court grants summary judgment to the School District for any one and all of these reasons.
There is an absence of evidence proving that a two-year notice provision was contained in a valid, enforceable contract under Plaintiffs’ statutory retirement plan theory.
Plaintiffs have no vested contractual right to uninterrupted TSA Plan
contributions under statutory retirement plan authorities.
Plaintiffs’ contract claims do not satisfy the elements necessary to create a statutory retirement plan.
Neither the 1979 Resolution nor the 1982 Board Policy formed a contract
under traditional contract principles.
Even if the 1979 Resolution or the 1982 Board Policy became part of Plaintiffs’ contracts of employment, there is an absence of evidence establishing a breach of those contracts.
The TSA Plan forms the entire contract between Plaintiffs and the School District, and the TSA Plan was not breached.

29 responses to “TSA – Summary Judgement

  1. It’s amazing that they got away with this. We harped and harped about it on the original DSW.
    Here’s a quote from our report on the May 10, 2010 board meeting: “The board also found out that the decision they made last year (per Dr. Lewis) to withhold contributions to teacher’s TSA accounts was against their own board policy. They voted to consider a change to the policy (it must lay for a month and will be voted on in June) and promised to go back and make the contributions that were withheld last year against policy when they have the funds. Going forward, after the policy change in June, TSA contributions will once again be withheld next year.” [Seems this was a big lie.]
    And here’s a post on the original lawsuit – filed in April, 2011!!
    FWIW — this is why we gave up the blog – we were reporting the same things over and over and over again – just under new ‘leadership’. (Old cronies are obviously still running the place and maintaining and protecting the jobs program.) Don’t believe me? Check out these still relevant old posts >>
    The long-ago buried audit that proved salary over-payments. This was the only forensic salary audit done … one has not been done since.
    http://dekalbschoolwatch.blogspot.com/2010/04/how-much-have-non-teaching-salary.html (Interesting to note: One of these overpaid employees is now our board chair.)
    We HAVE enough money >> we just waste it!
    Check out just how much Ramona Tyson alone is costing taxpayers (including her million+ dollar pension!)
    DeKalb county is not much better. A 2010 “study conducted by Georgia State University says DeKalb County’s government has too many managers and should lay off at least 909 employees.” Well, THAT never happened.

  2. Dear Jester,
    There was a promise to return that money. For the school system to take legal means not to honor their word is really a sad thing. I know that the school system cannot think that this makes them look good.
    DeKalb School Staff is supposed to be excited about a convocation.
    How is the staff suppose to trust any agreement with this school system?

  3. This and That

    If not TSA then what about getting Social Security again???

  4. Retired DeKalb teacher fed up with wasteful spending.

    They are breaking the law, must be. Not paying into Social Security nor teacher retirement. This can’t be legal. How do they get away with it, it is a cover up.

  5. Stan Jester

    It is impossible for Dekalb Schools to get back into Social Security.

  6. So, will this be listed as one of the reasons “I Love DeKalb Schools” in the new, “revolutionary marketing effort”?

  7. Ask Paul Womack — it was originally his idea to forgo Social Security in favor of this private retirement annuity back in the 70s when he was on the board. Ironically – he was also on the board in 2009 when it was all taken away!
    OR ask Tom Bowen – an attorney and board chair at the time who led the charge to change the board rules in order to cut the benefit. >>
    “School board chairman Tom Bowen said the board did not act improperly and has the right to amend its own policies. According to the suit, the board voted to waive the two-year notice in 2010, a year after the contributions were halted . . . “A board can waive or go against its own policy because the board is the policy-setting body,” Bowen said. ”
    To think that the school board and district continue to spend millions in defense of ripping off employees with their broken promise is reprehensible. But nothing new. Hey! They all heart DeKalb Schools though!!

  8. Here’s another one >>
    Monday, January 23, 2012
    Budget decisions can sometimes return to haunt
    It may be time to pay that piper.
    Read this article by Ty Tagami at the AJC:
    Suit could cost DeKalb millions

  9. We also suggested many ways to save the money that should be going to teachers and the classrooms >>
    Sunday, March 28, 2010
    Open Letter to the Board
    Greetings Board members,
    As you continue in your difficult endeavor to make the necessary, deep cuts to the school system budget, the online bloggers who converse and debate on the subject have gathered information and input we hope you will consider during deliberations.
    We have over 2,400 “unique” visitors and several thousand page loads every day at the blog. Many of these readers and contributors do their own research and post what they learn. Here are some of our suggestions:
    Read the rest here >> http://dekalbschoolwatch.blogspot.com/2010/03/open-letter-to-board.html

  10. The DCSD could’ve used the money they spent fighting this lawsuit to pay into the alternate retirement accounts as promised. The Georgia TRS is not and was not designed to be a substitute for social security. Isn’t it unlawful for the employer DCSD to not pay into an alternate retirement program if they opt out of social security?

  11. Stan Jester

    I think everyone would prefer the money went to the teachers instead of the lawyers. I can’t get into the specifics of the attempts at negotiations. TRS, the Teacher Retirement System, qualifies as the alternate program.

  12. If the school district participated in Social Security, they would have to cough up half of the total contributions (employers pay half and employees pay half of the 12.5% SS tax collected.) They don’t want to pay. They don’t want to pay anything for anyone. Crawford Lewis used to refer to teachers as a $60,000 budget liability. I actually can’t believe ANYONE would apply to DeKalb given that other districts not only pay more, but offer more benefits and Social Security.

  13. Don McChesney

    Let me attempt to add some clarity (I hope) to the issue. Back in the 1970’s teachers in DeKalb took a vote and voted to get out of Social Security. I was a teacher in the system then. I voted no thinking we might arrive at the place where we have. The TSA was given as an alternative. I took my Social Security money and dropped it in the TSA every year. I came out smelling like a rose. During my time on the BOE I asked Marcus Turk once at a meeting how many teachers were participating in the TSA. My recollection is that he said less than 10%. Instead of putting money away for their future the majority put it in their pockets. I was surprised at such a lack of participation. When the BOE voted on removing the TSA we were not happy about it. In fact we really only did it because it helped us avoid furloughs for a short time. We knew that deficits were coming because the tax collections were beginning to slide. We asked the administration what we could do that would impact the teachers the least in the way of salary. We were advised to stop the TSA. Of course no one on the staff ever mentioned the two year notice thing. Even our legal people said it did not matter. It was a benefit that we did not have to provide. The state required that BOE maintain a retirement contribution. That is the TRS or pension plan. That was maintained and no payments were ever missed.
    My point is to say that the BOE was not cavalier in removing the TSA. Everyone, to a person , was less than happy about our choices. We also wanted to restart it as soon as we could, but the recession took care of that.

  14. @ Don – I had to disagree with this statement. “During my time on the BOE I asked Marcus Turk once at a meeting how many teachers were participating in the TSA. My recollection is that he said less than 10%. Instead of putting money away for their future the majority put it in their pockets.” So, when did it change that employees could not put money into the TSA anymore? Or did Mr. Turk give you a wrong answer?
    When I was a teacher in DCSD (1998 – 2015), we could not make a contribution to the TSA account, only the county. You also had to employed with the county either 3 or 5 years before they started the account for you. I loved it when I got my statement in July every year for several years, it was a little bonus that you were not expecting.
    You could contribute to a 403 B account, which is separate from the TSA, if you wanted to, but many teachers had a decision to make, provide for their classrooms, provide for their families or make an extra contribution to a 403 B. With salaries being so low in DCSD at the time, and still are, option 3 was not a good decision for many.
    I hope that clears things up for many who read this blog.

  15. http://dekalbschoolwatch.blogspot.com/2010/06/dekalb-schools-forfeit-millions-in.html
    DeKalb forfeits Millions in State Dollars.
    I am sure Cere will remember this. The link was to an article done on the School Watch Blog from 2010.
    I hope everyone will look at it.
    Unless things have changed, people don’t put extra funds into social security each month but companies continue to pay into it.
    I only know Don to be a good and hard-working man. Don may remember that the staff was told that the funds would be returned.

  16. @Don >> And you believed Marcus Turk? I have never, ever heard that story before – that only 10% participated. The math of it doesn’t add up. If only 10% of teachers were contributing, then how could it save the system $9+ million a year to drop it? At the time there were about 8,000 teachers. So 800 of them were saving over $9 Mill?
    From the AJC >> “Last year, the DeKalb board halted contributions to all school employees’ tax-sheltered annuity. By continuing with that cut, the board will save $9 million for the rest of the school year, Lewis said.”
    @Joy >> Yep. I remember that one. Turning in proper paperwork on time is not a top skill of DCSD. It has also cost us millions in construction dollars.
    I am sticking to my original point that cuts should and can be made to administration. We reported on this for years. These numbers need to be updated by ‘somebody’ … (From May, 2010)
    “I don’t want to get into the debate about how many bodies you need to run a central office because people sit on different sides of the fence. I believe that schools need support and that’s what we’re here for.” – Gloria Talley
    Cobb County
    106,079 Students
    $34,470,248 spent on General Administration

    DeKalb County
    96,907 Students
    $49,159,245 spent on General Administration

  17. Cere,
    I still appreciate the great information that you provided. I am sure it was like having an additional job.
    I think Don must have met matching funds. We had no choice but to contribute to the TSA. It was taken directly out of our check. It hurt once the school system ended it. I know that we lost educators because of it. In just my school, there were 2 excellent teachers that left to go to other school systems. They were mid-career teachers. They were concerned that without social security or TSA that this put them at a disadvantage. That this would only grow as time passed. They went to a system that paid into social security.
    Shortly after that we had a young male para educator. He got certified in special education. He left and went to Gwinnet. Gwinnet has a supplemental retirement for their educators.
    It is very hard to find qualified educators. I am not sure how a bill board and a “pep rally’ can compete with a supplemental retirement plan.

  18. Valid points Joy. It’s sad that the administration doesn’t get this — or apparently care. They will never get the best and brightest teachers with what they offer (or at least get them to stay). With over a billion dollars to spend every single year, I can’t figure out why DeKalb’s leadership continues to be unable to focus spending on teachers and students. There is plenty of money, but it is wasted at the top. Ramona Tyson alone is costing us the same as at least three teachers – and that’s not counting her lifetime pension. What exactly does she do these days? These ‘leaders’ have never even been able to meet the state’s minimum of 65% spent in the classroom – not without trying to label administrative jobs as ‘in the classroom’ somehow. And no, a pep rally doesn’t cut it. Not in any way. But it does highlight those who are truly valued in the system — the administrators. If the superintendent and his minions could just begin their days with a mirror and modicum of humility and empathy, they may be able to make some bits of progress. But the annual big pile of money equates to big power and is far too tempting to spend on oneself and bolstering one’s inner circle.

  19. Don McChesney

    Guys. I was referring to teachers putting a portion of money into their own TSA account. That was available to all certified employees as far as I remember. It would have been a responsible thing to move whatever a social security funds might have been taken and put it into your own account or at least a portion of funds. I was in Gwinnett and I had a county TSA just like DeKalb’s and also a private TSA thru the county. I was also doing this when Gwinnett was making less money than DeKalb. Of course Marcus could have been fibbing to me. It was not unusual for us to ask a question and get a completely fabricated answer. My point is that I learned as a youngster growing up that you pay yourself first, especially retirement. I am not trying to say that losing the TSA was not hurtful because it was and I was not happy with the few alternatives we had when the deficit numbers were getting so large. Benefits are indeed a reason people seek employment in certain places.

  20. @Don >> I think we are referring to the matching funds the district had to deposit into the TSA accounts of teachers who participated. This was promised as an alternative to Social Security (which takes 12.5% of your paycheck – half paid by you and half paid by your employer — or all of it paid by you if you are self-employed.) NOW – the district is only paying into the state teacher’s retirement systems. (TRS). NO TSA annuity. No Social Security. I’m not sure of the percentages, but I don’t think TRS is at the level of Social Security. But this pension does have a ‘windfall’ effect on those who do collect SS in retirement from another job, reducing those benefits.
    One of our bloggers wrote an in-depth account of how it all works in retirement. A ‘must-read’ for those in the TRS.

  21. And if you question why we always insist that we have enough money to educate our 100,000 or so students, read this report, which essentially shows the same thing as our very first report on the blog. There is enough money – it’s just not distributed to the schoolhouse as it should be. [May, 2011]
    And here is our very first report on spending [Feb, 2009] >>
    And here’s one as recent as 2015 >>

  22. And … if anyone is wondering just how long Stephen Green has left on his contract [unless the Board has updated it behind the scenes], click here >>

  23. This blog has been truly enlightening! I regret that neither my wife, nor I (both former DeKalb County Schools educators) have been as involved as we could have been in this discussion. I discovered that in addition to the two lost years of TSA funds, there is another concern that has not been addressed in this thread. My wife will be turning 65 in November and was recently denied Medicare benefits due to insufficient credits. It seems that when the county opted out of Social Security in 1979, the county did not deduct Medicare taxes during those years either. Deductions for Medicare taxes were reinstated in 1986, but many teachers hired between 1979-1986 are finding themselves in a dilemma regarding state supplemented insurance at the age of 65. Without sufficient credits and/or spousal benefits, the price of Medicare Part A is approximately $600 and Part B is $134 monthly – not even mentioning Parts C and D! What a surprise! Can anyone offer insight regarding whether the transition to Medicare at 65 was even considered during the entire process of transitioning from Social Security to TSA? Additionally, why were teachers hired during that time span (1979-1986) not included when the county reinstated taxes being deducted for Medicare?

  24. @Michael
    No one ever discusses anything about this situation. Since the school system fought not to pay people back, I think that they don’t want to draw any attention to the problems that may face people in the future. Mr. Jester may be the only BOE member who has raised concerns about the TSA not being paid back. When you look at the cost of Medicare without the Social Security Credits, it is another reason why the TSA money should have been returned.
    Unfortunately, I don’t think that many people realize the ramifications until they retire. More than 30 people have left my small school in the last three years. Most of them were mid-career educators. Some of them expressed concerned about the TSA being stopped and on top of that no social security. I know that my school is not the ony school that has lost large numbers of people. If you have followed the blog, you know that the numbers given by HCM are often hard to follow.
    I am glad you mentioned this. I hope every one who is getting close to retirement will check on their status for Medicare. You must be vested in Social Security to get it.

  25. Michael, A number of school districts don’t pay into Social Security. I haven’t considered how that affects Medicare. I’m glad you brought this up. I’d like to know more about it.

  26. The Federal Insurance Contributions Act (FICA) is the federal law that requires you to withhold three separate taxes from the wages you pay your employees. FICA is comprised of:
    * a 6.2 percent Social Security tax;
    * a 1.45 percent Medicare tax (the “regular” Medicare tax); and
    * beginning in 2013, a 0.9 percent Medicare surtax when the employee earns over $200,000.
    I believe the school district has always paid Medicare taxes.

  27. Michael Howard

    According to my SSA statement and my wife’s statement, they did not! I was fortunate, I left the County in 1987 and transferred to Gwinnett County where taxes were being deducted. Unfortunately, my wife’s entire career (28 years) was spent in Dekalb. Therefore she does not have enough credits accumulated to be eligible for Medicare. After speaking to a representative in Dekalb’s Human Capital Management Department, she indicated that that the County restarted deducting Medicare taxes for hires after April 1, 1986, but did not include the people hired from the date they ceased paying into Social Security until April 1986. This could be an isolated situation, but I doubt it. As I’ve stated before, we only became aware of this situation recently. As a matter of fact, after becoming aware of this situation, my wife called one of her friends who she worked worked with back in 1987 and advised her to look at her SSA statement. She is in the same situation -no taxes deducted. I am really concerned that this has or will affect a large number of employees on the verge of turning 65.

  28. According to the AARP (as you may know) … you need to have earned about 40 “credits” or “quarters” by paying Medicare payroll taxes while working — equal to about 10 years of work — in order to get Part A services without paying premiums.
    Not having worked long enough or earned enough credits means only that you can’t receive benefits for Medicare Part A (hospital insurance) without paying premiums for them. But you most likely qualify for Medicare Part B (which covers doctors’ services, outpatient care and medical equipment) and for Part D (prescription drug coverage) because these have nothing to do with how long you’ve worked.
    I’d like to know more about when DeKalb Schools stopped and started paying Medicare taxes.

  29. Yes…the information you have is consistent with our findings. If Medicare taxes were not deducted and you do not qualify for Medicare benefits, the cost of Medicare Part A is, according to SSA, approximately $600. The addition of Part B, C, and D will increase the cost close to $1000 dollars. In order to qualify for the subsidized SHBP plans, you have to qualify for Medicare Part A. Otherwise, the non-subsidized plans range from $1600 being the highest to a $570 Kaiser plan. Back to the SSA statements. I worked in Dekalb starting in school year 1984-1985. My wife started in Dekalb in 1980 and retired in 2011. My wife’s statement does not show any taxed Medicare earning during her duration as an employee. My statement does not show taxed Medicare earnings during the time I worked for Dekalb, but does show taxed Medicare earnings for the time I worked for Fulton and Gwinnett Counties. I hope to speak with the someone from DCSS Human Capital Management this week.