Sunday, November 27, 2005
School Districts and retirement systems better beware of discriminating against older teachers and faculty: 8th Circuit finds that Des Moines' School early retirement plan violated ADEA because it arbitrarily denied some early retirement beneifts to those 65 years of age or older; the ADEA exemption for bona fide retirement plans did not save the systemBoone County Iowa News Republican Early retirement plans have become a problem for school districts around Iowa after the 8th Circuit Court of Appeals held that age limitations on when a person can qualify for early retirement are illegal. The current policy of Boone Schools states that to qualify for early retirement, a person must be between the ages of 55 and 62. Also, to qualify, they must meet the "rule of 74." This stipulates that the years of the employee's service when added with their age must equal 74. Seitz went on to explain that a recent court decision holds such requirements are illegal, even though 29 U.S.C. § 623(f)(2)(B)(ii) purports to exempt bona fide retirement plans from ADEA if they do not defeat the purpose of the Age Discrimination law. In an Eighth Circuit Court of Appeals case, Jankovitz v. Des Moines Ind. Comm. School District, the 8th Circs decided that an early retirement plan that sets a maximum age for receipt of a monetary stipend violates the Age Discrimination Employment Act (ADEA). Enacted in 1967, the ADEA makes it unlawful to discriminate against a person age 40 or older because of their age in respect to any term, condition or privilege of employment. Therefore the Jankovitz case, decided on Aug. 29, accorded that it was discriminatory to bar anyone age 40 or older from being able to qualify for early retirement. The salary of school teachers is based on seniority. A teacher in their 60s with 20 years of service under their belt is paid substantially more than a teacher fresh out of college with little experience. Early retirement has been a way of encouraging that highly paid, experienced teacher to choose to leave. If they did not, they would miss out on this incentive. But now the law must allow more teachers - those age 40 to 55 - to participate in early retirement. That holding may make the program too expensive to continue. Seitz says that there are boards that are completely doing away with early retirement for this reason. Iowa law states that levy funds pay for early retirement for retirees between the ages of 55 and 65. Any retiree whose age falls outside that range has to be compensated through the general fund. General fund money goes toward teachers' salaries, school supplies and so on. That budget is tight as it is. If those funds must be used to pay for early retirement for a number of people, the staff may have to be reduced to foot the bill. Currently, this concern is not bearing down on the Boone School with any kind of urgency since the district has no teachers over the age of 65. They have at least one more year to consider the issue before deciding it. "They are not going to get hit with it, at least not immediately," Seitz said. In Nebraska the State runs the school retirement plan for all districts except Omaha's. The Nebraska system employs a "rule of 85" for retirement and allows early retirement apparently though with out arbitrary age cutoffs that the Iowa districts employed.
Posted by stan_sipple at 11:10 AM