The Daily Courier

Prescott Unified School District’s buyout of eligible teachers and staff may have saved the districts close to $4 million. But, some say, those savings in dollars may have cost the schools in years of teaching and administrative experience.   There has been much talk recently about the recent implementation of the district’s buyout plan. Just how cost-effective has it been for the district, and into whose pockets are all those extra pennies being poured?

The dollars and cents saga began more than a year ago when voters defeated the override. Up until that time, the need for a cost-saving early retirement. They suggested a plan in which they would get $3,000 a year if they gave notice of ending their employment at the end of the school year.

"The plan was beneficial to the staff, not for the district," explained Carpenter. "That $3,000 didn’t engender many early retirements. It was not so much a financial benefit to us, as a way to help us plan ahead to see who was retiring. The defeat of the override meant that there would not be enough money in the school budget to cover the salaries of all teachers and support staff employed by the district.

"We needed to come up with a new plan," Carpenter said. She detected a glimmer of one last spring when she attended a personnel conference with Kevin Kapp, director of personnel, and saw a presentation for a buyout plan. A buyout plan, very simply, offers staff members, including teachers, administrators and other support personnel, a financial incentive to exit the company or school where they are employed earlier than they might have considered. According to Carpenter in a school district such as Prescott’s, the plan encourages teachers in more experience and, hence, bigger salaries, to retire earlier. In doing so, the teachers are guaranteed an income for several years.

"The plan appeals to people over age 50 or so who are not yet ready to retire, but want to move on from teaching," said Carpenter. "The buyout give them a steady income for the next eight years. "New teachers with less experience are then hired, saving the district money, said Carpenter. While a veteran teacher might make up to $38,000, a new teacher earns the base salary of $23,000. "Of course, money is not the only consideration in hiring teachers," superintendent Jim Howard said. "We look at ability and experience. We try to hire the best candidate in spite of the budget."

Howard chose to implement a buyout plan through Educators Preferred Corporation, a firm based in Southfield Mich. The firm had a good track record, having prepared buyout plans for school districts all across the United States, including 14 in Arizona. "The buyout program was developed in the late 1980s," said Sean Kelly, managing consultant with the corporation. "The program provides employees at or near the top of the pay scale to retire or resign early." Kelly pointed out that while on occasion a younger candidate might elect to take a buyout, usually, those who are eligible for retirement participate in it.

According to Kelly, a buyout plan can be tailored to fit the needs of a particular school district. Amount of payment to participants and length of time for that payment vary from district to district. "We do a feasibility study to see if the buyout plan will help a district save money," said Kelly. "We want to keep a good reputation. If a buyout plan won’t save money, we will not advise it." Howard said that much consideration went into the adoption of the buyout plan for Pescott Unified School District. He and his staff worked closely with Prescott Education Association and Prescott Classified Employee Association.

According to Carpenter, the plan that the district finally adopted requires that participants meet one of three criteria:

According to the terms of the buyout, a participant receives an eighth of his final salary with the district, every month for eight years. He or she is required to give 10 days of service in the district per year. "We want to capitalize on those 10 days as best we can," said John Competh, president of the school board. "We’ve lost some extremely talented people to the buyout. Kelly said that although some buyout plans do not impose a cap on these payments, PUSD elected to install a cap of $6,000 per year, or $500 a month to keep the costs down.

Sean Kelly,

managing consultant,

Educators Preferred Corporation

Carpenter said the district saves money through the plan because when the higher paid teachers leave, the district no longer has to pay their salaries. "We replace them with teachers with less experience and/or years with the district, so the salaries are less," she said. In most cases, the replacement teachers are those who were fired, or let go, last year because of the override defeat. Carpenter said that the buyout enabled the district to hire back all but on of the 23 fired teachers. This can amount to some $10,000 to 15,000 a teacher. Howard put the total cost savings at up to $4 million.

"Prescott Unified School District was more successful in terms of money saved than our original feasibility study for the district forecast," said Kelly. The buyout savings are sometimes hard to grasp when one thinks about all those monthly payments being made to the exiting school personnel. "After we approved the budget, I was thinking about teachers and lower staff. I never thought it would be used for top administrators," said Barbara McCreary, a PUSD board member. For example, Raymond Polvani, who served as assistant superintendent, was with the district just five years. When his position was eliminated in 1995 due to budget cuts, he had reached the top of his salary range.

According to the terms of the buyout, Polvani was eligible for the plan and did, in fact, elect to participate in it. He wound up drawing in a monthly salary of $500 a year for eight years.  McCreary said that there is not a set pay scale for administrators as there is for teachers. How was it that Polvani rose in just five years to the top of his range? "When Ray came to the district, we paid him X amount of dollars," said Howard. "The next year he got a 2 percent raise, but after that his salary was frozen. He had no higher to go." Despite his salary cap, Polvani stayed with the district three more years, until he was forced out by the elimination of his position. And because he was at the top of his pay scale, he was a legitimate buyout candidate. While Polvani’s $500 dollars a month may seem steep, both Carpenter and Howard point out that that amount is still less than what the district would have to pay for his yearly salary. "We wan the top salaried people to leave," said Carpenter. "We’ll save more money by not paying their salaries." "We needed that money to survive," he said. "Without the buyout, we would have had to cut more teachers."

Cometh agreed with Howard’s assessment. "It’s a two-edged sword," he said of the buyout. "You’re losing some good teachers, but on the other hand you’re lowering more cut backs." "If you look at any school budget, you’ll see that 80 percent goes to payroll," said Kelly . "You can turn the lights off, cut the number of buses, but that only affects some 20 percent of the budget." Kelly said that without the buyout option, budget-strapped districts would be forced to fire teachers to stay afloat. "How can you fire teachers?" he said. "We need them for our children."