Golden Handshake or Take the Money and Run?

Several months ago, a credible source told me that President Blake intended to offer a Supplemental Retirement Plan (SRP) and that she planned to take it. An item on the July 9th Governing Board’s consent agenda validated that Blake was indeed pursuing a SRP for the College. She has not publicly announced whether she intends to take the SRP herself.


SRPs in the public sector are similar to a private sector “golden handshake,” but with the caveat that they can only be offered if they save the institution money. A SRP can save a district money by replacing long-serving staff and faculty members with new employees who earn less per year. Savings are also realized when the District does not fill vacant positions for a period of time. This puts a workload strain on staff who remain behind. Typically , there are little to no savings when administrators take a SRP as they are often replaced by people who earn essentially the same amount, and sometimes even more.

Accurately predicting whether or not a SRP will save a district money is complicated. In order to make the SRP profitable to the District, the savings from early staff and faculty retirements must be greater than the costs associated with the payouts (and keep in mind that any payouts to administrators are costs). In determining profitability, lots of factors come into play. For example, if a person who was going to retire anyway (or who was going to retire next year) takes the SRP, the district may not realize any savings at all. The feasibility study must offer a reliable analysis of whether the SRP would actually result in a cost savings to the district. A poor or compromised study could result in serious fiscal problems for the district.


President Blake hired a company called Brightpath Consulting Services, Inc. (BCS) at a fee of $20,000 to perform this analysis. BCS is a three-year-old, insurance brokerage firm with only a handful of full-time employees and no apparent background or experience in performing a SRP feasibility analysis. In the past, the district used Public Agency Retirement Services (PARS) to perform these studies. PARS - with 35 years of experience in SRP analyses - is the industry standard. Unlike BCS, PARS does the analysis at no-cost.

Blake denied the Board and the public from weighing in on this significant and controversial decision by using the consent agenda to hide the hiring of BCS . Notably, the BCS contract was actually signed seven weeks before it was even brought to the Board for approval. Because this contract was on the consent agenda, nobody (including trustees) had timely access to the contract itself.

Both trustees Miyamoto and Deerfield voiced concerns about the fact that such a dubious and substantial contract was placed on the consent agenda instead of the regular agenda. This, of course, fits Blake’s pattern of hiding controversial items on the consent agenda. Blake didn't address the concerns of the trustees, but rather only commented that she needed the information for an upcoming budget workshop and had to proceed quickly due to time constraints. However, emails dating back to April 22nd contain a preliminary contract showing that discussions were well underway nearly three months prior to the July 9th Board meeting. The final contract was signed on May 21st. There were Board meetings on April 9th, 15th, and 23rd and another one on May 14th. In other words, there were plenty of opportunities to place the item on the regular Board agenda for discussion and public scrutiny prior to signing the contract. If there were time constraints then why wasn’t the item put on an April or May agenda for discussion and public scrutiny prior to signing the contract?

SRPs are intended to save a district money, not provide a profitable exit for an already well-compensated top administrator. In addition to the financial considerations, an ill-timed SRP can have disastrous consequences in terms of staffing (classified staff are still feeling the burdensome effects of the 2015 SRP), and a comprehensive analysis should take this into account as well. If the process of analysis is incomplete, abused, or manipulated, it could have dire consequences for the financial stability of Palomar College.

 

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