Category Archives: Retirement

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.