Tax Sheltered Annuities (TSA's) have worked their way into the ECASD Administrative compensation system over the last several years. TSA's are completely legal and offer employers a method to compensate certain employees that result in cost savings (lower employment taxes) for both the employer and the employee. It is a compensation method that is used widely in other private companies to both attract and retain employees that are highly sought after in the recruiting process. For example, a TSA for $10,000 per year saves the employer their portion of FICA and it saves the employee their portion of FICA, state income tax, and federal income tax. For many highly compensated individuals in the higher tax brackets, this makes a $10,000 TSA worth nearly $15,000 in regular taxable compensation.
(This discussion of TSA's refers only to those annuity contracts that are paid by the employer rather than other TSA's that are offered to virtually all employees as a way to defer current income.)
The ECASD as an employer must be competitive to attract and retain the best employees. This includes teachers as well as Administrators. I am not an expert in compensation analysis and I do not have the data to say that any of our employee groups are over or underpaid in comparison to their counterparts in other parts of Wisconsin or other states. That is a separate discussion and I invite others with more knowledge to inform the rest of us.
However, I think that the use of TSA's and their cost to taxpayers should be disclosed and understood by our community. In my experience, TSA's are negotiated at the time an employment contract is being made. They should be specific to an individual, the requirements of the position and the experience and value to the organization of the future employee. The ECASD has a few of these types of TSA's in use currently:
Former Supt. Klaus negotiated one for $10,926 for the 2006-07 school year
Dan Van de Water negotiated a TSA for $11,453 for 06-07 to be in lieu of a payment to the state retirement system
Jim Kling negotiated a $21,437 TSA for 06-07 to be in lieu of both a retirement contribution and to cover dental and health insurance costs that are not being paid by the ECASD
My comments are extremely blunt about this:
If former superintendent Klaus was threatening to leave the ECASD unless this compensation "bonus" was paid, the BOE should have handed him his hat and wished him well. I don't know how long this TSA has been in his contract but the BOE should have saved it and either negotiated for a top notch leader with energy and ideas or hired a good reading specialist for a classroom.
My experience with Mr. Van de Water is a perfect illustration of how a TSA should ideally be used to hire a well qualified and experienced person who, without the TSA in his contract, would have sought and found other work opportunities in another district. He is worth every penny for the contributions he has made to the district in terms of putting together a budget and financial projections in a way that has not been done in the past.
I have not worked directly with Mr. Kling but have heard other comments that lead me to believe that his experience and contribution to the district merit a negotiated TSA since the ECASD is saving dollars that would otherwise be paid for retirement and health care costs.
However, there is another aspect of the use of TSA's in the ECASD Administrative compensation that I find to be questionable. That is the automatic inclusion of a district paid TSA in the compensation for certain POSITIONS, not individual employees. Currently, there are 8 such TSA's in the following amounts that are included in the following positions NO MATTER WHO IS IN THE POSITION AND NO MATTER WHAT THEIR PERFORMANCE IS.
$3,500 for the Deputy Superintendent
$2,700 for the Exec. Director of Information Technology
$2,700 for the Exec. Director of Student Services
$2,700 for the Exec. Director of Personnel
$2,700 for the Exec. Director of Business Services
$2,700 for the Principal of North High School
$2,700 for the Principal of Memorial High School
$3,000 for the Assistant/Secretary to the Superintendent
Again, I do not know if this is standard and comparable to other Administrative compensation packages but it is troubling to me to see TSA's used in a way that is not for attracting, retaining or rewarding individuals based on performance evaluations.
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5 comments:
I don't know how this will come through, since you can't really format a comment.
Administrative salary data is here.
Here are the top 20 ranked by total compensation, Klaus is 14th. He made $137,636 in salary, $53,434 in fringe. I would love to calculate a rate per hour spent at work but I don't have the data for that and I suspect that few of his many personal days were recorded.
Administrators at the two largest cities are at the top as you might expect. Ring suburbs of Milwaukee are the largest group.
Madison Metropolitan, Arthur Rainwater, $237,370.00
Milwaukee, William Andrekopoulos, $224,987.00
New Berlin, James Benfield, $204,315.00
Nicolet UHS, Elliott Moeser, $203,762.00
Whitefish Bay, James Rickabaugh, $201,001.00
Greenfield, Louis Birchbauer, $200,428.00
Waukesha, David Schmidt, $200,177.00
Hamilton, Kathleen Cooke, $196,213.00
Racine, Thomas Hicks, $195,550.00
Wausau, Stephen Murley, $194,072.00
Cedarburg, Daryl Herrick, $193,097.00
Appleton Area, Thomas Scullen, $192,697.00
Greendale, William Hughes, $191,930.00
Eau Claire Area, William Klaus, $191,068.00
Janesville, Thomas Evert, $189,575.00
Shorewood, Blane Mccann, $187,238.00
Whitnall, Karen Petric, $186,406.00
Mequon-Thiensville, Robert Slotterback, $186,025.00
Oak Creek-Franklin, Sara Larsen, $184,441.00
West Bend, Patricia Herdrich, $184,408.00
Kenosha, Richard Pierce, $184,339.00
None of this is surprising, as our schools are adamantly opposed to merit pay at every level. Rather than a sense of earned job security and commensurate salary increases, we have a sense of entitlement which starts at the top. If our teachers do not have merit pay, than neither shall our administrators. Salary negotiations seem solely to be about seniority and silence - making sure the public doesn't really understand how the system works.
Add to this, Dr. Butler's surprising (NOT!) return to the ECASD, and we have more of the same in terms of salary shenanigans.
Bob's figures have ramifications for the current superintendent search. This spring the Wheaton, Illinois, area school district recruited a superintendent from a northern Milwaukee suburb who had just the kind of credentials Eau Claire might want. The cost was a $200,000 base salary (not counting perks)
I've got a dumb question. Are the amounts listed here contributions to an annuity or are these what the annuity would pay out?
(e.g. to get a $10,000/year payment you'd
need to initially put in 5-10x that
amount)
My understanding is that the $ amounts are the contributions made by the ECASD on an annual basis INTO an annuity contract. Because they are not considered to be "wages" these dollars avoid being taxed in the current year. When the $'s are withdrawn at a future date they are considered taxable income.
Maria
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