MADISON METROPOLITAN SCHOOL DISTRICT HUMAN RESOURCE POLICIES AND PROCEDURES
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1 MADISON METROPOLITAN SCHOOL DISTRICT HUMAN RESOURCE POLICIES AND PROCEDURES Subject: RETIREMENT AND ESCROW BENEFITS Policy #: 8.05 Source(s): See Guidelines to Section 8; Human Resources Policy ; 8/14/89 Memorandum of Understanding Between MTI and MMSD Regarding Retirement Insurance; and subsequent approval by BOE for Administrators (see minutes of Board meeting, May 6, 1991) I. Wisconsin Retirement System A. Eligibility RETIREMENT AND ESCROW BENEFITS An employee is included as a participant in the Wisconsin Retirement System if s/he is expected to work at least one-third of full time in one year, or actually works at least one-third of full time for one year. Fulltime employment is considered 440 hours for teachers and substitute teachers and 600 hours for nonteachers. All those eligible are automatically enrolled as part of the employment process. B. Benefits A booklet entitled Your Benefit Handbook, available through the Department of Human Resources, provides a description of retirement, death, disability and separation benefits available. II. Administrators' Retirement Plan The individual administrator who may desire to retire early, or who may desire to make a career change, will benefit from a monetary incentive making such a decision more possible. This monetary incentive would be a reward for long term service to the District. A retirement program has certain essential elements: 1. That the individual administrator receives timely information and counseling regarding retirement plans. 2. That the individual administrator commits some personal funds to the plan. 3. That the District commits specific contributions to the plan. The plan will offer pre-retirement counseling which has the potential of encouraging retirement. The retirement plan will reward all administrators who agree to participate in and meet the criteria of the plan. It will provide monetary incentives for some administrators to retire early. Program Objectives
2 1. Administrators shall be rewarded for long term service to the District. 2. Pre-retirement counseling shall be made available to administrators. 3. Administrators shall be provided with information about regular retirement provisions. 4. Financial incentives may make early retirement possible for administrators. 5. Financial incentives may make career changes possible for administrators. Eligibility Rules 1. After seven years of administrative service* with the Madison Metropolitan School District, an administrator will be eligible to begin making personal contributions to the plan. To qualify for full participation in the plan-of-benefits, the administrator must be at least 55 years of age by August 30 of the year of retirement and meet the minimum requirement of the following formula: Age of the administrator + administrator's years of administrative service* (including at least five years of contribution to the plan) = at least 70. a. Leave of absence periods will not be included in determining administrative years of service. b. Administrators must be on active payroll and employment status to be eligible to begin participation in this plan. Administrators who declare their intention to retire from an approved Administrative Leave of Absence or under the provisions of Wisconsin Statutes 40.63, entitled Disability Annuities, shall be eligible to participate provided they meet the other criteria listed herein. c. Part-time employees will be eligible for this plan with plan payment at retirement being prorated for the actual contract amount. These employees must qualify as all other employees. Credited service will be earned with one year of service given for one year of work, regardless of FTE. Example: An administrator having a 50% contract must work 7 years to be eligible to enroll in the plan. This administrator must then work an additional 5 years to qualify for benefits, assuming that they meet the other criteria outlined in this plan. Upon retirement, the ARP payment would be 50% of the amount that a full-time employee would receive. * Administrative service is equal to years as an administrator plus credit for years worked in another capacity in the District without interruption. This credit will be calculated as a 3:1 ratio with a maximum of 5 creditable years. Rounding is in.5 year increments rounded downward. 2. Contribution to the Plan means the participant must contribute a minimum of $50/month for five (5) years to a District authorized 403(b) plan and continuously thereafter until leaving the District. If the employee contributions are withdrawn by the employee prior to resigning, the employee shall not be eligible for the District contribution under this plan. 3. In order to be eligible to receive the benefits under this plan, administrators who declare their intention to retire from the District shall be either on an approved Administrative Leave of Absence or on active payroll and active employment status. Administrators must declare their intention to leave the District by January 15 of the year in which they intend to leave. If the annual limit of retiring administrators under Section IV is not met by January 15 of a particular year, subsequent applications shall be accepted after January 15 up to the total District limit until May 1 of each year. Such notice must be in writing to the Human Resources Office. 4. Individual contributions to the plan may begin on the first pay date for a new fiscal year contract. Future enrollments will be effective with the first paycheck of a new fiscal year contract.
3 SPECIAL RULES FOR TEACHERS WHO BECOME ADMINISTRATORS OR PROFESSIONALS (added July 1, 2012 and July 1, 2014) In the event a District employee, who is a member of the teacher bargaining unit, is hired into an administrative or professional position, such employee shall be eligible for inclusion in the Administrators Retirement Plan and considered an administrator under the terms of the Plan. For purposes of determining the employee s years of administrative service the employee shall be deemed to have been an administrator commencing as of his/her seniority date in the teacher bargaining unit. The employee will have all the rights and benefits of an administrator with the same years of service. If the employee has more than seven years of service at the time he/she is hired in an administrative or professional position, he/she must immediately enroll in a 403(b) plan, if not already in a plan, under the guidelines set forth herein. Failure to enroll in a 403(b) plan in a timely manner will result in the employee forfeiting his/her right to any benefits under the Plan. The Number of Participants Commencing Benefits in Any One Year May Be Limited By the District The Board may limit the number of administrators who retire under ARP to four in any given year. If the Board decides to limit the number of participants to four administrators per year and there are more than four applicants during that year the decision on which four administrators shall be allowed to receive the Board contribution during that year shall be based on the largest sum of the formula set out in Section III, Paragraph 1 above. If the sum of the formula is the same for more than one administrator, the administrator with the earliest date of hire shall be chosen. The School Board may allow more than four administrators to participate in the plan in any given year depending on the availability of funds. Benefits Plan 1. As of July 1, 2013 twelve years of administrative service (including 5 years of employee contribution to the program) will result in a $39,299 Board of Education contribution (prorated for part-time employees). However, the Board of Education s contribution shall be limited to no more than the administrator s annual salary for the year prior to retirement if that salary is less than $39,299 (prorated for part-time employees). The value of the payout shall be increased by 2% (calculated from the 21-year amount) annually on July 1 of each year. 2. If the employee does not resign after the 5th year of participation in the plan, the Board of Education shall contribute an additional $ (prorated for part-time employees) to the plan each year to a maximum of $48,299 (prorated for part-time employees). The additional $ (prorated for part-time employees) Board contribution is conditioned on continued employee contribution. 3. Benefit payments from the District's contribution shall be placed into the administrator s 403(b) plan with one-half of the payout placed into the fund on or about July 1 following retirement and one-half of the payout placed into the fund on or about January 1 following retirement. 4. Benefits shall continue to heirs on death of participant if the participant dies after the effective resignation date. 5. Insurance Continuation Program The use of personal sick leave accumulated will be permitted for use in the payment of District insurance premiums for insurance continuation. One hundred percent (100%) of the balance of sick leave of the first 200 days and fifty percent (50%) of all additional days over 200, as of the last day worked, will be applied to the continuation of payments at the daily rate in effect on the last day worked.
4 6. The district shall provide pre-retirement counseling. Procedural Rules All contributions will be governed by the following rules: Each eligible employee must have a Retirement Plan Agreement accepted in writing. In addition, an Individual 403(b) Salary Reduction Agreement providing for monthly payroll deduction of fifty dollars or more must be signed by the administrator. The initial salary reduction agreement (after the first year the plan is offered) must be filed at least twenty working days prior to the date for the first contribution. Thereafter, all 403(b) program rules and procedures will apply. 1. The Retirement Plan Agreement must set forth all of the conditions: a. Years of service to be in the plan. b. Employee contribution conditions. c. No vesting, other than employee contributions. d. Non-competitive clause - This plan is intended to allow an administrator to retire or to change careers. Therefore, an administrator shall not accept employment in a similar administrative capacity in any K through 12 public school program while the administrator is receiving benefits under this program. 2. For the employee contribution, this plan shall be in a 403(b) plan under a District designated carrier and shall be included in any maximum allowable exclusion allowance. Consultation Services In consideration for the benefits afforded under this policy, administrative personnel selecting this policy shall perform consultation services on behalf of the District of the type and amount determined to be the most advantageous to the School District by the Superintendent. The District and the administrator shall enter into a written contract for these services. The work performed as a consultant is to be commensurate with the value of the School District's contribution received by the administrator under this policy and shall be based on the experience and expertise of the retiring administrator. Such work will have a duration of at least twenty (20) days of consulting service. The consultation contract agreement is to be entered into prior to the administrator becoming eligible for the benefits under the plan. The payment of the employer contribution under the plan after the first two years shall be contingent on satisfactory completion of consultation services as required under the consultation contract. The Superintendent shall decide whether the services have been satisfactorily completed and a record shall be kept by the District of all services performed under this policy. If after the plan commences, an individual is unable to complete the consultation requirement provision of this policy due to death or medical disability, the benefits provided under this policy shall continue to be paid to the administrator or the administrator's heirs. The School District Superintendent, in consultation with the administrator's doctor, shall determine whether a medical disability shall excuse the administrator from performance under the consultation contract. III. Teachers' Early Retirement Program (TERP)
5 The District offers an early retirement plan which gives incentives to teachers between the ages of 55 and 61 to retire early. For details, see the current special Memorandum of Understanding between the District and MTI. For further details concerning eligibility, contact the Department of Human Resources or refer to the appropriate collective bargaining agreement. IV. Administrators (Not Retiring Under Administrator s Retirement Plan) Eligibility Administrators who retire after reaching age 55 and who have 10 years of service in the Madison Metropolitan School District are eligible to continue their insurance through the use of sick leave accumulation. Insurance Continuation Program The use of personal sick leave accumulated will be permitted for use in the payment of insurance premiums for insurance continuation. Ninety percent (90%) of the balance of sick leave to a maximum of 200 days, as of the last day worked, will be applied to the continuation of payments at the daily rate in effect on the last day worked V. Escrow Benefit When employees retire at the age of 55 or older, they can convert a portion of the value of their accumulated personal illness leave into an escrow amount to pay District group insurance premiums. For further details concerning eligibility, contact the Department of Human Resources or refer to the appropriate collective bargaining agreement. If a retiring administrator is entitled to the use of a personal illness leave escrow account, the following options will be available to him/her: 1. Immediate use of the escrow account for insurances in force at the time of retirement. 2. Defer use of the escrow account until a later date for purposes of providing health insurance coverage, provided the employee retains continuous coverage with a District health insurance plan. An employee may likewise defer use of the escrow account for the purpose of providing dental insurance, provided the employee maintains continuous participation in the District's dental insurance plan. 3. Transfer obligations for the payment of health insurance premiums to the retired employee's/spouse's remaining account when the employee's personal illness leave escrow is exhausted. 4. If a retired administrator dies, his/her spouse will continue to receive health and dental benefits for the period of time for which the employee was eligible. 5. If an administrator retires and his/her spouse continues to be employed by the District, the retiring administrator may be covered under the spouse's family health and dental policies. At such time as the spouse retires/resigns from the District, both individuals may access their escrow accounts. Revised: June 2015
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