LAWSUIT MAY AID SCHOOLS

A lawsuit filed by a group of Missouri school districts could lead to a reduction in benefits for as many as 10,000 retired Missouri teachers, according to an attorney for the Public School Retirement System of Missouri, defendant in the suit.

An attorney for the school districts said such reductions would not be automatic and are not the issue in the case.

The suit could also mean thousands of dollars in retirement benefit refunds for school districts in the state.

"It's probably a benefit for districts and a burden for teachers," said Nathan Nicholas, an attorney for the Public School Retirement System. "The districts will get money back and they won't really lose anything. The majority of teachers will lose more in benefits than they will gain in refunds."

A judge will hear arguments in the suit in September. The suit was filed by eight Missouri school districts in 1988, led by the Savannah school district in northwest Missouri. The Savannah school system has 2,200 students.

The outcome of the Savannah School District suit will affect all Missouri school districts and teachers who pay into the mandatory Public School Retirement System (PSRS). The system is a form of social security for teachers, in which 50 percent of the benefits are paid in by the employee and 50 percent by the employer.

The suit challenges the system's practice of collecting retirement benefits as a percentage of fringe benefits, such as health insurance. It contends that retirement benefits should be figured as a percentage of salary only. It asks that districts and teachers be refunded for contributions based on fringe benefits made as far back as 1983.

An attorney for the Savannah school district, Craig Johnson, said the suit is only challenging the system's collection practice, and a favorable ruling won't automatically mean a reduction in retirement benefits.

"Reducing retirement benefits is not an issue in this suit at all," Johnson said. "A lot of people have been speculating about the ramifications of this suit, but this lawsuit only has to do with the (PSRS's) funding issue."

Johnson said he anticipated opponents of the suit would regard it as an automatic reduction in teacher retirement benefits. He said he doesn't believe that action would necessarily follow if the judge rules in favor of the districts.

"I would hate to see the suit get tied up in a non-issue, or one that is not included in the lawsuit," Johnson said.

If the districts win the suit, it would be PSRS's decision whether or not to reduce retirement benefits, Johnson said. "That could very well be the subject of another lawsuit."

But Nicholas, with the PSRS, said if the school districts win the suit, it is likely the PSRS board of trustees will decide to reduce retirement benefits in order to balance revenues and expenditures.

"I don't think there's any way the board can avoid reaching that conclusion," he said.

"How much benefits would be reduced is a question that remains to be answered," he said. "It depends on the individual person and how long they have been paying into the system."

Nicholas said, "We feel a majority of teachers will lose more in benefits than they will gain in refunds."

Teachers across Missouri were notified this week by mail about the suit.

Kent King, executive director of the Missouri State Teachers Association (MSTA), said if the suit does not affect retirement benefits, it won't be harmful to teachers.

But, he said, "If those people who have been living on a fixed income suddenly find that reduced, that's going to be difficult. The MSTA is concerned about those individuals who are going to be impacted negatively by this."