Saturday, August 12, 2000

Hundreds of Minnesota school districts – Austin among them – may owe retired teachers and other staff millions of dollars in severance pay, insurance benefits and interest because of contract language a federal office considers illegal.

In letters many superintendents received this month, the U.S. Equal Employment Opportunity Commission (EEOC) informed districts that early retirement clauses in place more than a decade are discriminatory. The provisions make it more attractive for the employees to retire at age 55 than when they get older.

The EEOC wants the affected districts to pay some recent retirees, who received reduced severance or health benefits, double the amount they lost plus interest. Districts that reject this approach may be sued.

"Austin could be affected," Superintendent James Hess said on Friday. "We received a letter from the EEOC which essentially offered us two options: a conciliation agreement or to litigate, go to court. The conciliation agreement has some provisions that I believe are totally unacceptable for our district."

At a school administrators conference Thursday, Hess asked the state to help settle the dispute.

Hess told state officials that the Austin district already operates on a lean budget, having cut nearly $1 million last year.

"This would be devastating at this time for us," Hess said. "We have no cash balance."

In its letters, the EEOC said the retirement clauses violate the federal Age Discrimination in Employment Act of 1967 because they "adversely affected all persons age 56 and over who have received, or will receive, reduced benefits based on their age."

The precise number of districts, employees and dollars in question is unclear. As many as 300 districts received letters, but some have determined they have little or no liability, said Bob Lowe, an official with the Minnesota School Boards Association.

Hess said at this time the Austin district has sent a reply to the EEOC asking for an extension to allow staff time to investigate what their options are.

"These early retirement incentives were part of the negotiated agreements between districts and their employees," Hess said. "We want to do the best we can for both the district and our employees."

The EEOC action revives on the federal level an issue that played out earlier in state courts.

In 1986, the Legislature approved a law allowing school districts to give $10,000 in benefits to teachers who retire at age 55. The amount decreased for those who retired at age 56 or older. The law was repealed in 1987, but many districts and unions had already agreed to put such language in their contracts.

Initially a response to declining enrollment, districts used the early retirement clauses as incentives for older, higher-paid teachers to make way for new teachers on the low end of the salary scale.

But an employee in White Bear Lake sued to have the approach declared discriminatory. The case reached the Minnesota Supreme Court in 1995 and justices ruled that no state laws were violated. Lowe said school districts felt the ruling affirmed their contracts.

Faribault Superintendent Keith Dixon said if estimates from other school districts of similar size are any sign, his district could be asked to come up with $400,000 to settle claims. Lowe said Brainerd and Rochester are two districts that appear to have the greatest liability, possibly up to $500,000.

Hess said he didn’t think the issue would be on Monday’s School Board agenda because the district hasn’t had a reply to its extension request yet.

"I hope there won’t be any further developments until we reach an agreement with the EEOC," Hess said.

Brian Bakst of the Associated Press also contributed to this story.