Press Release

MAJOR BOOST TO RETIREMENT PACKAGE APPROVED BY BOARD

The Board of Education approved a plan last night (June 15) that makes retiring much easier.

The plan produces a higher monthly income for retirees and reduces restrictions for those who are eligible.

It also gives a raise to retirees.

The plan costs $200 million. Nearly half of the increased costs, which are possible due to the extremely healthy reserves in the retirement fund, will go to existing retirees.

In conjunction with the improved salary schedule being proposed by the Board of Education, said Board member Bennie Milliner, the enhancements to the retirement package represent a "visible, progressive" signal to instructional staff. "This is the bow on the package," he said. "Teachers are critical."

Board member Sharon Macdonald said the district was compelled to keep up with benefits offered by other plans, particularly the Public Employees Retirement Association of Colorado. "Our district needs to stay competitive to attract and retain the best teachers," she said.

The Board of Trustees of the Denver Public Schools Retirement System (DPSRS) brought the recommendations.

For current employees, the changes include:

• Increasing the unit benefit percentage factor from 2.25 percent to 2.5 percent. (This is a key part of the formula that produces the monthly income figure for retirees.)
• Dropping the penalty for retirement benefits for employees on or after age 50 who have earned 30 years of active service with DPS. (Penalties had been assessed up to age 55.)
• Adjusting the factor used in computing the reduction for "optional, early" retirement from 5 percent to 4 percent.
• Boosting enhancements for deferred retirement benefits.
• Providing options for beneficiaries of active members who die when eligible for "regular retirement" comparable to those available to "early retirement" beneficiaries.

For those workers who have already retired, the changes include:

• Providing a one-time adjustment to the monthly basic retirement benefit for members who retire prior to January 1, 2001, calculated as follows: Years of DPS Accredited Service x $25 ÷ 12.
• Compounding the Annual Retirement Allowance for retired members at the rate of 3.25 percent per year.

All changes will become effective on January 1, 2001.

The money required to fund the enhancements is generated by a series of adjustments, including a transfer from the benefit enhancements reserve ($35.1 million), a change in asset smoothing method ($92.8 million), using an actuarial surplus ($60.9 million) and using asset appreciation scheduled to be recognized effective 1-1-01.

An analysis provided by Chief Operating Officer Craig Cook and Chief Financial Officer Velma Rose projects that the number of retirements will increase 15 - 20 percent in the first year and an increase of 5 percent annual increase in the total number of retirements over a five-year period.