The Johnston County school board will appeal a judge’s decision last month to dismiss a lawsuit it filed against the State Retirement System for issuing it a $436,000 bill for its retired superintendent’s pension. It will also request a declaratory ruling from the retirement system in regard to the second lawsuit it filed for the same matter.
Appealing the lawsuits will add onto the $19,202 the school system has already spent in legal fees. And if the case is dismissed again, or the judge rules against the lawsuit, then it’ll have to pay those fees, on top of the $436,000 bill it still owes.
School system officials have not said where the money to make the pension payment would come from.
The legislature gives governmental agencies up to 12 months to pay the full amount owed. Ed Croom retired as superintendent on March 1, so the school board now has less than five months to pay the $435,913 bill.
But in less than a month, at least two new members will be named to the Johnston County school board. Current school board members Keith Branch and Donna White are giving up their seats to run for the Johnston County Board of Commissioners and N.C. House, respectively. Another seat could open if Larry Strickland, the board’s chair, is successful in his bid for the General Assembly.
Peggy Smith and Mike Wooten are both running for re-election for the school board.
The school board sued the State Retirement System in April. One lawsuit was filed in the Office of Administrative Hearings. The other was in Wake County Superior Court. Both were dismissed last month.
The school board was issued the bill following the retirement of Croom, for exceeding a state cap created to keep governmental agencies from spiking pensions of highly-paid employees.
Johnston County Schools claims that it did not do anything that would cause Croom’s pension to spike. The retirement system argues otherwise.
The retirement system says Johnston County owes it $435,913 because additions to Croom’s salary and benefits in recent years triggered a new state pension cap designed to keep high-earning employees from inflating their pensions as they near retirement.
School districts in Wilkes, Cabarrus and Union counties faced similar situations because of their superintendents’ contracts, and have made the same arguments. The bills sent to those school districts range from $208,400 to $590,690.
Those bills represent the amount above what the state can pay their superintendents under the new cap, according to the retirement system.
So the school districts sued the retirement system, claiming the amount was unreasonable, among other allegations.
Croom, who was 50 at the time of his retirement, was allowed to convert roughly $44,000 in benefits to salary and also received two $25,000 payments as part of a contract extension the school board approved in late 2014.
Those increases, plus a $36,600 payout for unused vacation and bonus days in his final month on the job, and the fact that he retired at a relatively young age, triggered the new state pension cap, according to the retirement system.
His current monthly pension is $11,954, or $143,436 a year. He will also be paid a one-time 1.6 percent pension supplement.
Most state and local pensions are based on an employee’s four highest consecutive years of employment. A 2013 News & Observer series, “Checks Without Balances,” showed some community college boards had converted tens of thousands of dollars in perks to salary for college presidents as they neared retirement. As a result, their pensions were inflated.
Such moves are not illegal but do result in the rest of the state and local employees and their governmental employers subsidizing those pensions. The series prompted state officials to pass a law that shifts the pension burden for those spikes to the governmental agency where the employee worked, which is what the counties are objecting to.
Nearly 50 other governmental agencies were also sent bills. The majority have already paid.