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On January 29, 2001, the NCTR Legislative Committee recommended approval of the following resolution.  It has been referred to the Resolution Committee for further action.

Regarding Effect on Retirement Systems of

Policies that Encourage Veteran Educators To Remain in Workforce

            WHEREAS, a teacher shortage in certain geographic areas and in certain disciplines has prompted discussion about ways to retain veteran educators; and

            WHEREAS, school districts may wish to encourage veteran teachers to remain in the workforce to expand the available labor supply; and

            WHEREAS, veteran educators may wish to work after retirement or, alternatively, transition from full-time work to retirement by reducing hours and/or responsibilities; and

            WHEREAS, under current law, some employment provisions act as incentives while others create barriers to veteran teachers remaining in the workforce; and

            WHEREAS, some state laws provide an incentive by allowing retired teachers to return to work without losing retirement benefits, although such laws usually impose a limit on the amount of earnings or hours worked; and

WHEREAS, other state laws allow individuals who have retired to remain on the job through deferred retirement option plans (DROPs); and

            WHEREAS, federal law creates a barrier to veteran educators transitioning from full-time work to retirement through reduced hours and/or responsibilities because the “in service distribution” rule prohibits an individual from drawing a pension while continuing to work unless he/she has reached normal retirement age; and

            WHEREAS, the issue has been discussed in relation to its potential effect on school districts and veteran educators, but not on the funding of the retirement systems that serve teachers; and

            WHEREAS, consideration of any policy that encourages teachers to remain in the workforce must include the effect on retirement system funding; and

WHEREAS, without such consideration, policies could be adopted that raise retirement system costs without adequate funding being made available;

NOW THEREFORE BE IT RESOLVED, that the National Council on Teacher Retirement is concerned about the effect on funding of any proposal that encourages veteran educators to remain in the workforce because of the possibility of drawing down retirement system assets without any provisions for the funding therefor; and

BE IT FURTHER RESOLVED, that the National Council on Teacher Retirement recommends that an actuarial study be conducted as a precondition to considering any such proposal; and

BE IT FURTHER RESOLVED, that such a proposal be adopted only if it is determined that it will either have no actuarial impact on the retirement system’s funding or adequate funding is available to mitigate such impact.