The media coverage of Fresno Superintendent Larry Powell's decision to reduce his annual pay from $290,000 a year to $31,000 a year has been laudatory, depicting the man as a saint who is providing extra funds to a hard-pressed public school system. It keeps getting better -- he now says he will give the 31K to charity. Powell's decision probably stems from honest motives, but as Pension Tsunami editor and pension critic Jack Dean told me, "This is a bit of a con job." All Powell has done is figure out a way to shift the bulk of his enormous salary from the school district to the retirement system. Few of the news stories mention that his pension is north of 200K or that in giving up health benefits, he will simply get them from his school-principal wife, which doesn't really save much money. There no doubt are huge tax benefits for him in donating his new salary to charity and his wife, by the way, also receives a large payment from the district.
I don't want to cast aspersions, and certainly don't want to criticize government employees who choose to give up some of their excess income, but all we really have here is a school official who would like to work a few more years and a pension system that's so generous that it basically forces people to retire too early. This story also highlights the absurd pay and benefit packages received by school superintendents. Powell is no doubt a good, public-spirited man, but I'm not quite ready to see him nominated for sainthood.
I don't want to cast aspersions, and certainly don't want to criticize government employees who choose to give up some of their excess income, but all we really have here is a school official who would like to work a few more years and a pension system that's so generous that it basically forces people to retire too early. This story also highlights the absurd pay and benefit packages received by school superintendents. Powell is no doubt a good, public-spirited man, but I'm not quite ready to see him nominated for sainthood.
I too noticed this as soon as it said he was "retiring". When you've reached full retirement age in a generous Public Sector Plan, the increase in the "value" of your pension (by delaying retirement for another year), i.e., the present value if the increased annual annuity for staying the additional year, can be almost offset by the forgone pension payments for that year.
As stated in this article, the confluence of facts that leads to this is only common in Public Sector retirement Plans: low full retirement ages, and a very generous pension formulas.
Yes, the school BUDGET may be saving a bundle, but only by way of an almost equal ADDITIONAL payout form the retirement system.
Essentially, this superintendent want to works, and either way the incremental value of continuing to work ... in this job ... is very minimal.
You do have to give him credit thought as he is donating the small salary he will get. More so, he didn't push (as some have done) to retire and be rehired as a "Contract Employee" at full pay in addition to a full retirement pension.