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Retirement Incentive Plan for Huron City Schools: Maximizing Benefits and Savings

The Huron City Schools is implementing a retirement/resignation incentive plan offering eligible employees 85% of their base pay for the years 2005-06. Employees can choose to retire or resign by June 30 or August 31, 2006, with payments structured over five years. This plan assists with STRS medical insurance payments, supplements retirement income, and allows for tax-deferred contributions. By controlling retirement timing, the district aims for positive cash flow and significant savings, particularly critical due to upcoming reductions in property tax revenue.

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Retirement Incentive Plan for Huron City Schools: Maximizing Benefits and Savings

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  1. Retirement/Resignation Incentive Plan

  2. Plan Design • 85% of Employee “Base” Pay for 2005-06 • Retire or Resign by 6-30-06 or 8-31-06 • Payments to 403(b) • Payments over 5 Years • Current Contract Sick Day Severance also over Five Years

  3. Advantages to Employee • Provides Assistance in making STRS Medical Insurance Payment • Supplements Retirement Payment • Allows Tax Deferred Payment

  4. Advantages to Huron City Schools • Controls Timing of Retirements • Positive Cash Flow to the District EVERY YEAR • Saves Money for the District

  5. Participants • 9 Teachers • 1 Administrator

  6. Annual Savings • Assumes: New Hires will be at BA 3 New Hires will progress through BA Scale All new Hires will be at MA 8 in FY 12

  7. Why FY 12 is Critical • HB 66 begins the phase out of reimbursement for lost Personal Property Taxes • Huron will lose $200,000 that year in Personal Property Tax Revenue • This helps replace the loss without going to voters

  8. Problems with Normal Attrition • Average less than two per year • Teachers are staying longer • Negative Cash flow consequence in year following retirement • We do not control the process

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