One of Georgia’s largest school districts could owe hundreds of millions of dollars to employees after the state Supreme Court ruled it stopped making retirement contributions without proper notice.
The 7-0 decision, released Monday, finds the DeKalb County district broke its bylaw requiring a two-year notice before ceasing contributions, upholding an earlier ruling from the Georgia Court of Appeals.
A teacher and a school counselor sued the district in 2011, but the suit will likely become a class-action covering the more than 10,000 affected employees.
The Atlanta Journal-Constitution reports that in 2009-2010, the last year DeKalb County funded the benefit, it paid $26.5 million. If DeKalb County is found liable for that much in each year since, the 97,000-student district could be ordered to pay more than $250 million, about 20% of its $1.2 billion annual operating budget.
DeKalb County started putting away 6% of an employee’s salary, with no employee match required, after the district withdrew from contributing to the federal Social Security system. The school board adopted a bylaw calling for the notice before ending payments but waived that bylaw when it stopped contributions amid recession-driven state budget cuts.
But justices ruled the bylaw was part of an employee’s contract and couldn’t be waived.
“Here, the record shows that (the school district) offered their employees a retirement benefits plan, and also promised to provide two years’ notice before reducing any of the funding provisions of the benefits plan,” Chief Justice Harold Melton wrote in the opinion. “In exchange, the employees agreed to begin to work or continue to work for (the district), and to wait until their retirement to collect these funds.”
The school system started a less generous retirement fund in 2015, contributing 2% of employee salary if employees match that amount. Employees also get a state pension.
A DeKalb County Superior Court judge will now determine if other employees can join the suit in a class action, and then award compensation.
“Although we would have liked to see a different outcome, we will move forward with the next phase of this process,” Superintendent Steve Green said. “We value the hard work of all DeKalb County School District employees. Despite the disposition of this case, we remain committed to our teachers and employees.”
Former Georgia Gov. Roy Barnes, an attorney for the plaintiffs, said a class-action suit would “ensure that everyone who was impacted by the district’s unlawful action is fairly compensated.”
“The district says it wants to retain good teachers in the classroom,” said plaintiff Elaine Gold, now a retired teacher. “But breaking this promise has hurt everyone — the students, the community and especially the classroom teachers.”