The Wilkes County Schools Board of Education is joining Johnston County Schools in a pair of lawsuits against the State Retirement System, after it, too, was given a bill to help pay for the pension of its newly-retired school superintendent, which also exceeded a recently created state cap.
An updated list of government agencies that owe the retirement system for the high pensions says Wilkes County Schools has the second highest bill at $583,000 and Johnston County Schools has the fourth highest at $435,913. The UNC Health Care System, which was handed the highest bill, owes $1.07 million.
“That is totally beyond the scope of what that statue was intended to prevent,” Fred Johnson, Wilkes County school board attorney, said.
The two school systems owe that money because their outgoing superintendents’ pensions exceeded a recently created state cap designed to keep high-earning employees from boosting their pensions as they neared retirement. The retirement system says Wilkes County Schools and Johnston County Schools gave their outgoing superintendents salary boosts near the end of their careers. And when they retired, those boostsdid not catch up with their contributions to the state retirement system.
The bill represents the amount above what the state can pay the retired superintendents under the new cap.
For Johnston County in particular, retirement officials have said because former superintendent Ed Croom’s contract allowed him to convert roughly $44,000 in benefits to salary, his pension spiked.
He also received two $25,000 annuity payments before he retired. However, he has given that money back. It is unclear whether the payments had an effect on the bill. State Retirement officials declined to comment, and Johnston County officials could not provide proof that it didn’t. However, the bill was lowered after Croom gave payments back.
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.
The number of governmental agencies on the hook for pension bills continues to rise. As of May 20, 46 agencies were charged. Twenty-nine have paid their bills, while 17, including Johnston County Schools and Wilkes County Schools have not.
Some, who were charged, say the billings have nothing to do with sneaky pay increases to boost pensions, and were actually the result of promotions from within the agency.
That is what Johnston County Schools is also arguing in its lawsuit. Throughout Croom’s career he had moved up through the ranks, starting as a teacher. In 2008, Croom was promoted from associate superintendent to superintendent. His total compensation increased from $149,565 as associate superintendent to $228,573 as superintendent.
But his contract also allowed him to convert his benefits to salary.
The school board announced last month that it had filed two lawsuits against the state retirement system. One was filed in the Office of Administrative Hearings. The school board believes that the Retirement System did not follow correct procedure and “acted arbitrarily and capriciously” in its assessment of the Johnston County Schools.
The other was filed in Wake County Superior Court. The school board claims the retirement system violated the state’s Administrative Procedure Act when it set the formula for determining the cap on retirement benefits.
The school board has said that the law was put in place after it had given Croom his contract, and that it should not be subject to a penalty.
Brad Young, a spokesperson, with the State Treasurer’s Office declined to comment, citing pending legal matters.
With Wilkes County Schools joining the lawsuit, Johnston County Schools is now paying $13,338 in legal fees to Tharrington Smith LLC, half the bill.