- Last Updated on 06:48 AM 08/10/12
- BY Tiffany Hudson
The Halifax County School Board’s recent decision to end the Local Option Retirement Plan will save the school system more than $8.93 million over the course of the next seven years.
Superintendent Dr. Merle Herndon said savings to the school system for the 2012-13 school year total $1.85 million with the savings swelling to $8.93 million for the seven-year span.
The savings factors in the expense of FICA taxes and insurance costs for the 145 individuals that were participants in the program when the program was terminated.
Participation in the LORP program was available to retirees for a period of seven years. The employee’s share of social security, federal income tax and state income tax was deducted from LORP pay.
School system officials provided the documents to The Gazette-Virginian after the newspaper filed a Freedom Of Information Act request last Friday.
Herndon said Thursday discussions have begun on how to use the LORP savings.
“We already decided to give the employees the five percent increase all at once in their salary to go toward the VRS,” said Herndon.
“We’re going to look at salaries. We need to look at raises, we have a lot of work to do,” she added.
Two of the school system’s top officials, former Superintendent Paul Stapleton and former Deputy Superintendent Larry Clark, retired this past school year and were participating in the program that would have cost over the span of the next seven years a total sum of $387,155.80.
Stapleton signed a contract with an annual salary of $152,624 and received a 3.5 increase in salary along with all school employees in the 2008-2009 school year. The raise increased Stapleton’s salary to $157,967. According to Herndon and Donna Henderson of the school system’s finance department, that was the last time employees received a raise.
According to the superintendent, Stapleton received $33,404.16 of accumulated vacation, sick leave and personal days when he retired effective June 30 leaving the school system with an overall compensation of $273,923.90. That amount includes the above vacation, sick leave, personal days, base salary, health insurance, dental coverage, travel expense and a retirement account.
Although no names were released with LORP documents the benefits were set to work out 20 percent of the individuals’ salary at the time of retirement. According to salaries, Stapleton would have received $221,153.80 with an annual payment of $31,593.40 and Clark would have received $166,600.00 with an annual payment of $23,800 over the seven-year duration from LORP benefits.
LORP benefits were based on 20 percent of the final contracted salary earned before the effective date of retirement, with the school board reserving the right to change the percentage annually.
Participation in the program was available for not more than seven years, and the employee’s share of social security, federal income tax and state income tax was deducted from LORP pay.
Although terminating the program was not a favored choice, some school board members commented they agreed they didn’t all “feel good” about their decision to terminate the program.
“I don’t feel good about it. I remember when they closed Washington-Coleman and I had to read about it in the newspaper, so I feel what these retirees are going through,” said ED-3 trustee Kimberly Farson.
LORP was put into place as an extra incentive for tenured employees to retire early. This year 29 employees were signed up for participation in the program and will be the first of the retirees not to benefit a year from the LORP since the duration of the program.