Years down the road, Fulton County Schools’ pension fund will not have any issues regarding the amount of money allocated to it.
That was the message given by Doug Moses, a member/partner at Mauldin and Jenkins’ Atlanta office in the Galleria area, who presented an audit report on the school system’s finances Thursday night at the Fulton Board of Education meeting at Dunwoody Springs Elementary School in Sandy Springs.
“Your unfunded actual [long-term] liability on June 30, 2011 was $212 million,” Moses said of the end of fiscal 2011, the last fiscal year data was available. “You guys are still contributing more [to the pension plan] than you’re required to. It’s great that in 12 years, the actuaries say you’ll be fully funded.”
District 3 board member Gail Dean asked, “How will they [district finances] appear to the rating agencies?”
Moses replied, “You guys actually are in good shape … compared to other governments.”
Board president Linda Shultz, who represents District 1, motioned to approve the audit report and the board passed it 7-0.
“We feel good about the way our CFO [Robert Morales] is handling our finances,” Shultz said after the meeting. “This board feels good about making some difficult decisions years ago [to help fund the pension plan by making 1,000 personnel cuts and adding employee furlough days]. And we’re not out of the woods [yet], but we are doing better than other surrounding school systems.”
In a phone interview Friday, Morales said each year an actuary examines the district’s funds and employee files to determine how much the system should allocate to its pension fund. Criteria for determining the amount include the average age of each employee, their benefits, who’s receiving them, healthcare costs, when employees are expected to retire, how much the district was expected to bring in from tax revenue and how much it was expected to earn on its investments.
“The bottom line was the annual required contribution is going to $29.2 million,” Morales said of the actuary’s recommendation. “He gives us the amount and the school board has to find the funds to make that happen. They are always drawn from the general fund, part of $814 million in expenditures for fiscal 2013.
“Several years ago, when we removed a thousand positions, we had furlough days and those types of things, it was part of our issues, but the school board did not reduce the amount we paid the pension fund but paid the amount the actuarial wanted us to pay. … Our pension fund is funded at 56.7 percent. This is a very favorable percentage. Back in 2003, it was at 39.7 percent. So our funding position has increased to our pension fund to the point that our actuarial says if we pay the amount, a 100 percent funded ratio will be reached in 12 years if employee contributes are made with the consistent actuarial amount, and if his assumptions are realized. That’s unbelievable in this day and age because other public sector pension plans are within the 20 to 25 percent range.”
Based on federal laws, he said current district employees who started working there in or before 1962 can contribute 6.0 percent of their salary to the pension fund, and those hired in 1978 or later can contribute 6.6 percent.
In Moses' report, he also pointed out some problems the district has had. He said one school system retiree was owed a refund for his pension, adding another had the wrong retirement date on district documents.
“We recommend you make certain to maintain your management control,” Moses said. “We want to make sure all data is complete and accurate.”
In a phone interview Friday, he said the report found one employee was underpaid by $10,000 due to a clerical error.
“We took a sample of 60 benefit payments and on one benefit payment check from June 2012, we found this retiree’s amount was underpaid by $86,” Moses said. “We went back to 2002 where this employee was not given special cost-of-living adjustment.”
Also, last year Internal Revenue Service discovered that from 1998 and 2008, about 400 retirees were overpaid a total of more than $3 million, averaging about $7,500 per person. The district is in the process of collecting those funds.
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In other news, the board voted 7-0 to begin proceedings to close south Fulton’s Mount Olive, Tubman and Oak Knoll elementary schools, as part of a redistricting plan. They are aging schools and will be replaced by two new ones at the end of the 2013-14 and 2015-16 academic years, district spokeswoman Susan Hale said. The timeline on when each school will close has not been announced yet.
The board also had the first reading of proposed attendance boundaries for schools in south Fulton, depending on when new schools open there (in 2014 and 2016). The plan is in response to the opening of the new Banneker High School in August, to evenly enroll the other schools in the area and make the best use of its campuses.
Parents of students at Milton’s Hopewell Middle School, upset over how changes at the school have been handled, were expected to attend the meeting to talk to the board about the issues. But the only parent who did attend the meeting addressed the board about an unrelated bullying problem with a student there, Hale said.
Hopewell parents have been upset over the resignation of Assistant Principal Joey Robinson, despite parents’ objections, and about the way Principal Lenora Patterson changed Hopewell from a traditional class schedule to a block schedule right before school started in August.
They attended Tuesday’s community meeting hosted by District 2 board member Katie Reeves at Manning Oaks Elementary School in Alpharetta, and spoke to her about it then.