The cash-strapped DeKalb County school system could face a budget-busting bill if it loses a lawsuit that the Georgia Supreme Court has sent to trial.
Two employees are suing the system over unpaid retirement funds, and if a DeKalb judge grants the suit class action status the school system could be on the hook for $50 million, about 7 percent of the current budget, both sides say.
The two teachers, Elaine Gold and Amy Shaye, sued after the school board suspended payments in 2009 to a tax-sheltered annuity plan established in 1979 as an alternative to Social Security.
They argue that DeKalb was required to give two years warning before halting payments.
The promised contribution was between 5 percent and 6 percent of each teacher’s salary, or a few thousand dollars apiece, said John Salter, a lawyer for the plaintiffs.
But, Salter said, the amount owed all of DeKalb’s teachers and other eligible employees comes to tens of millions of dollars a year. “We contend the freeze violated the legal rights of not just Elaine and Amy, but thousands of teaching personnel,” Salter said in a written statement.
DeKalb Superior Court Judge Clarence Seeliger issued several orders, including the denial of a school system motion to dismiss a breach of contract claim. The school system appealed, and the Georgia Court of Appeals issued a split decision in November. Crucially, the appeals court upheld Seeliger’s decision on breach of contract.
The DeKalb system then appealed to the Georgia Supreme Court, which this month announced it would not hear the case. Seeliger’s decision on the breach of contract issue stands, and the case returns to his court.
School system lawyers said through a spokesman that they disagree with the plaintiffs’ assessment of DeKalb’s liability and that they have “significant factual and legal defenses” against the contract claim. “We look forward to presenting these defenses to the trial court,” the lawyers said in a written statement.
At a meeting with teachers at Cross Keys High School Monday night, interim school Superintendent Michael Thurmond acknowledged the financial stake the system has in the case.
Several employees, including Terrell Worthem-Spruill, who teaches art at Sequoyah Middle School, said it was unfair to end the payments to their retirement accounts. “It seems like it should be illegal,” Worthem-Spruill said.
Thurmond said he couldn’t comment, but said, “the potential exposure at this point is between 40 (million) and 50 million dollars.” He said the lawsuit was “one of several legal issues hanging over the district that has to be resolved.”