Heads of the class

Promises by Pennsylvania school boards will cost taxpayers millions of dollars when superintendents leave for other jobs, retire or even die.

A Mirror analysis of 447 Pennsylvania superintendents’ contracts shows that those promises rarely are in the form of the already-publicized salaries.

Many costs occur after departure and while taxpayers compensate a new administrator. Notices of termination are rewarded with payment for hundreds of unused sick days and free health care in retirement.

The payment for unused sick days can exceed a teacher’s annual salary. The free or discounted access to health care comes at an age when most seek extra cash for coverage until Medicare. In addition to life insurance policies provided by taxpayers, free health care sometimes extends to spouses, even if the superintendent dies.

“I think there has been, in the last decade, a remarkable increase in compensation, and that is primarily a reflection of the market and the fact that many school boards recognize an investment in leadership is worth it,” said Stinson Stroup, executive director of the Pennsylvania Association of School Administrators.

The value of that leadership is cumbersome for the public to learn, the Mirror analysis shows. The value of sick day bonuses is not readily available for school districts not limiting the payment.

Contracts also refer to separate employment agreements.

Hurdles to get contracts

Obtaining some of the superintendent contracts was a challenge. Of the 501 requests made Aug. 1, about 50 Pennsylvania school districts are challenging or ignoring the request, along with a follow-up letter sent in November.

Altoona Area School District Superintendent Dennis Murray would receive about $58,000 for his 377 sick days if he retired today.

Murray said it makes more financial sense for a district to make the payment at the end of service.

“I don’t think you want to negotiate in front-loaded contracts anywhere,” Murray said. “You’re better off paying for the sick days on the back end than to front load them. You’re going to save money on them. Guys like me, you lose money on the back end.”

The school district will transfer Murray’s payment into a retirement account or a fund he can use for health expenses. Unlike other school districts, Altoona won’t pay for the former superintendent’s health care.

“That’s a good way to go broke,” Murray said of granting free health care beyond service.

Providing health care

The financial burden of sickness, even in retirement, is of little concern to some administrators. While residents pinch pennies for health care after employment, some also will pay for former superintendents to have free or cheap access to insurance until Medicare. That coverage could last many years because superintendents often qualify for early retirement programs.

The health benefit usually extends to spouses and dependents. In some cases, spouses are guaranteed coverage after the superintendent dies.

Forest Hills Superintendent Donald G. Bailey will receive free health insurance until age 65, minus cost increases. If Bailey dies before age 65, his spouse is guaranteed coverage.

Bailey said his predecessor had the same policy.

“I think I’m the last one that they are able to do that with,” Bailey said. “Times are changing in the health care industry.”

Taxpayers pay the health insurance premium for Garnet Valley Superintendent Anthony V. Costello and his wife until they die, minus the cost increases after his 70th birthday. The Delaware County school district has 4,600 students, making it about half the size of Altoona’s district.

Costello, 59, said that when he turns 65, the district will pay only for insurance that supplements Medicare. The district originally promised health coverage until age 65 but extended it when Costello delayed his retirement.

Costello said the longer he stays at the district, the less valuable the benefit.

“My motivation is not to double dip or triple dip,” Costello said.

Paying for insurance

Some superintendents also have access to cash reimbursements in the event their insurance doesn’t cover an expense. The issue is a potentially explosive one as school boards and administrators pressure teachers to share the cost of health insurance.

Northwest Area Superintendent Nancy Tkatch says her Luzerene County district pays $18,000 for each employee on a family insurance plan. Those teachers, like many others in Pennsylvania, don’t pay for health insurance.

Northwest is negotiating a new contract and hopes to implement a premium-sharing plan for less than 10 percent.

Tkatch brings a rare card to the bargaining table. She pays 25 percent of the cost of her coverage.

“You cannot expect the taxpayer to bear that complete burden,” she said. “I’m just glad they’re still willing to pay the other 75 percent.”

Tkatch is in the minority when it comes to sharing a significant cost of her health insurance.

Of the 447 superintendents who provided contracts, 64 have clauses in their employment agreement to contribute to the cost of their health care premium. Most of those contributions are less than 10 percent of the overall premium. Many will continue their coverage during retirement.

Compensation

Pennsylvania school boards are not trying to hide superintendent compensation, said Tom Templeton, director of school personnel services for the Pennsylvania School Boards Association.

The association works with districts seeking new superintendents.

He said boards trying to attract and retain administrators are attempting to create fair, reasonable and transparent compensation packages.

“I think the challenge that a school district faces is trying to develop a competitive compensation plan for all administrators, but in this case, the superintendent that kind of strikes a balance that maintains a competitiveness but respects the limited resources on the local level.”

The 447 contracts the Mirror received show that many districts pay superintendents’ tuition bills during employment, a few receive cars and others are promised monthly travel stipends in addition to the 48.5 cents a mile allowed by the Internal Revenue Service. Superintendents already are guaranteed a state pension subsidized by taxpayers, but many also receive annual payments for a separate retirement plan.

Then there are the sick days.

Even before employment, Pennsylvania superintendents transfer sick days from other employers and trade those days for cash on departure. Most have hundreds of days saved.

While some school boards cap sick day value at several thousand dollars, many administrators will leave their jobs with at least $20,000 dollars. Some receive that money in the process of taking a job with another district.

So why all the obscure ways of providing cash to these school administrators?

Administrators and associations from across the country say it’s the method used to retain good leaders while avoiding public backlash against pay hikes.

Voters revolted against Pennsylvania lawmakers in 2006 after a large pay raise, and board members are no exception when giving additional dollars to administrators already in power.

Despite the benefit to his members, PASA’s Stroup said the approach school boards are taking isn’t a preferred practice.

“I think they are very reluctant to give them the increase in salary to keep them from moving to another district,” Stroup said. “I think the healthier way to compensate people is in salary. I think it’s pay as you go, rather than have the obligation occur beyond severance.”

Few guidelines

There is little oversight or restrictions for superintendent compensation in Pennsylvania. When it comes to superintendents, most of the regulation involves hiring, termination or length of employment. School districts are not allowed to contract with a superintendent for more than five years. There are no limits on payment or the method of compensation.

“Our state is one of local control and that decision would be left to the local school district,” department of education spokesman Leah Harris said about a salary cap.

Some in Minnesota say the salary that state tried caused widespread use of creative compensation. The cap until 1998 limited compensation to 95 percent of the governor’s salary ($114,288). However, the creative compensation continued after removal of the cap.

Minnesota’s auditor general blasted the compensation trend after a 2003 investigation. The report likened the practice of granting extra sick days upon employment to a “large signing bonus” and encouraged school districts to move toward a more salary-based compensation plan.

“School boards are strongly encouraged to review the wisdom of offering compensation packages such as excessive severance and leave provisions that mask the true cost of the contract to taxpayers,” the report states. “School boards can, and should, pay the superintendent what they feel the individual is worth, but compensation should be laid out in a transparent and understandable manner.”

Charlie Kyte, executive director Minnesota Association of School Administrators, said there was some movement in his state toward a more salary-based compensation.

“The hardest thing for a school board in terms of salaries for top executives is having a person there doing the job and getting a significant salary increase,” Kyte said. “People see the $25,000 increase and beat up the superintendent and school board up over that.”

The public pressure to keep pay down makes retention difficult without benefits that don’t directly impact salary.

Kyte spoke of a Minnesota school district that successfully recruited a highly sought administrator with a mostly salary-based compensation package.

In lieu of the other perks, the salary was higher than normally paid at this district, which Kyte declined to name.

Three years later, however, the district was forced to offer other perks because of the possible outcry from a cash raise.

“I can see exactly why that board needs to do that,” Kyte said.