The Johnston County school board says it will challenge a new state law that prevents highly paid employees from using the state retirement fund to spike their pensions.
County taxpayers are on the hook for a $520,000 pension bill after the school board wrote a contract in 2011 that allowed retiring superintendent Ed Croom to convert $44,000 in benefits to pension-eligible salary.
Those benefits included a $15,000 annual car allowance, phone allowance and health care. That conversion pushed his pension above a recently created state cap that is intended to prevent such spiking as high-earning employees near retirement.
Since Croom, 50, is retiring March 1 at a relatively young age, the cost of the changes is expected to be significant, and the bill goes to the county.
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On Tuesday, Croom called the law “flawed legislation.” On Wednesday, the school board issued a written statement citing a News & Observer story last week and saying it will explore a possible legal challenge.
“Based on recent media reports, it is the position of the Johnston County Board of Education that the interpretation of the Anti-Spiking Law is flawed and should not impact a pre-existing contract that has been in effect with no changes since 2011,” the board’s statement said.
The board also said that the law was not effectively communicated to school boards and other governmental entities across the state.
The board also objects to paying any liability based on the life expectancy of a retiree. If Croom does not reach his calculated life expectancy, for example, the county would not be repaid any funds sent to the retirement system as a result of the anti-spiking law, it said.
“The Board feels that it must diligently and vigorously explore all of its legal options and remedies before any funds are paid to the retirement system based upon Dr. Croom’s retirement,” the statement says.
Efforts to reach board chair Larry Strickland were unsuccessful. On Tuesday, he put his hand out and told a reporter that he would not talk further about the county’s bill for the pension. Strickland hasn’t responded to multiple calls.
A $25,000 increase
The board said that Croom’s salary has not gone up. But his pension-eligible compensation has risen sharply because of the conversion of his benefits.
And he received a $25,000 increase in compensation in November 2014 “to reflect the changes in the retirement law and amendments thereto as set out by the 2014 North Carolina General Assembly,” Croom’s contract says.
Public Information Officer Tracey Peeden Jones said that $25,000 had been paid to Croom once in 2015. But it is unclear whether it will be paid to him again.
A database of pay from the state treasurer shows Croom received $236,376 in pension-eligible pay in 2015.
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.
That prompted the legislature to pass the anti-spiking law in 2014. It said that local agencies would be responsible for the cost of such increases.