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IASB JOINT ANNUAL CONFERENCE


2005 JOINT ANNUAL CONFERENCE

Attorneys explain use of Tort Immunity Fund

School districts need to develop a written plan to cover any intended use of the Tort Immunity Fund to pay for risk management activities, according to Chicago attorney John J. Murphy, of Scariano, Himes and Petrarca, Chtd. Murphy — who is currently defending schools against lawsuits arising from some controversial uses of tort fund revenue — emphasized the need to put everything in writing. Murphy made the suggestion during a presentation at a pre-conference law seminar.

He appeared at the 19th annual school law seminar on Friday, Nov. 18, at the Hyatt Regency Chicago. The event was sponsored by the Illinois Council of School Attorneys, which is affiliated with Illinois Association of School Boards and the National School Boards Association. The event provides Illinois school attorneys with an opportunity to discuss key legal issues facing their school clients, including questions, as well, on new Early Retirement Option (ERO) legislation.

Regarding the proper use of the tort fund, Murphy told the audience that a sound school district risk management plan should, at a minimum, encompass:

  • A comprehensive overview and analysis of "loss exposure faced by the district;"
  • A reflective statement on the thinking behind "selection of the method chosen to respond to the loss potential;" and
  • A methodology for monitoring tort fund expenditures on risk management costs, "including a method to implement necessary changes."

Schools are authorized by Illinois law to collect tort fund revenue under a special property tax earmarked to cover legal costs. Such funds are intended to protect school operating budgets from unexpected legal costs, such as lawsuit settlements.

Nearly one in four school districts use some tort-tax funds to help pay relevant salaries. But Murphy, who is also a member of the Glenview CCSD 34 Board of Education, noted that districts must be careful when using tort fund revenue in that way. Specifically, schools must not consider time spent on risk management duties as the sole factor in figuring the amount of salaries to be paid for from the tort fund, he said.

"Where a taxing district allocated any portion of the pay[ment of salaries] to its tort immunity levy simply on the basis of time spent by employees in maintaining safety or in performing duties in a safe manner, rather than as a consequence of a formal process of risk management, the use of the Tort Immunity Fund is improper," Murphy stated.

A subsequent presentation revolved around school leadership proposals for amending a new state law that restricts the ERO under the state Teachers Retirement System (TRS). The legislature adopted major pension legislation last spring in S.B. 27 [now P.A. 94-4] altering many provisions governing TRS and early retirement.

The new law "dramatically increases the cost to school boards for early retirement," according to J. Todd Faulkner, an attorney who has been scrutinizing the new TRS law. Faulkner, a founding partner of Franczek Sullivan, P.C., listed six changes in the law that he said are needed "to correct some of the negative issues stemming from S.B. 27." The six proposed changes Faulkner listed were:

1. National Board of Professional Teaching Standards. Those teachers who complete the National Board of Professional Teaching Standards (NBPTS) process earn a $3,000 stipend, payable from the federal government. This money is paid to school districts, which is then passed along to the teacher and added to his or her salary. According to TRS, this stipend is subject to the 6 percent penalty cap. School districts should not be required to make an additional payment to TRS because a teacher earned "master teacher" status.

2. Education advancement/horizontal movement on the salary scale. When teachers go back to school and take additional coursework or earn an advanced degree, they are compensated for it. We want quality teachers in the classroom and encourage them to continue their education. Under SB 27, teachers and school districts are penalized for fulfilling requirements to maintain highly qualified status.

3. Seniority advancement/vertical movement on the salary scale. It is not good public policy to penalize a school district for allowing teachers to move through the negotiated and established salary schedule based on their years of experience as it unfairly targets longevity and stability in a school district.

4. Part timers in SURS and TRS. The current 6 percent rule is particularly harmful to part-time teachers or staff at community colleges. For example, an instructor might teach three classes one year and four classes the next year, increasing salary beyond the 6 percent cap. The university, community college, or school district should not be penalized for this increased workload.

5. Extracurricular duties assigned in final four years of employment. Frequently, administrators ask veteran teachers to return to an activity that they previously supervised. S.B. 27 will discourage administrators from seeking senior staff for extracurricular assignments, since that action would undoubtedly penalize the district by pushing the teacher beyond the 6 percent penalty cap.

6. In-district promotions. When a teacher is promoted to a department head or administrator, additional coursework is often required. Teachers receive an accompanying pay increase for extra duties they assume. SB 27 discourages promotions from people within the district as no exemptions exist in the bill from the 6% penalty cap for those who are promoted.

The biggest issue remaining to be resolved, however, is "the definition of salary for purposes of penalty," according to Charles Rose, who is a partner in the firm of Franczek Sullivan, P.C. But Rose added one major caveat: "my big concern is that TRS' financial condition may continue to erode and be funded by school districts."

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