By Michele Harmon
Demand for teachers is at its highest level, and school districts cannot fill the jobs. Districts also need experienced teachers. Why not try and hire more retired teachers to work full-time? It is expensive, and the taxpayer will indirectly pay the surcharge, which is defined as a tax, to the Teacher Retirement System of Texas (TRS) by way of a surcharge/penalty/tax assessed to school districts for hiring back each retired educator. Are you confused yet? The rules are very complicated and seem to change without notice, as they did during one of the multiple Texas Legislative sessions in 2021.
The current costs for school districts and public universities to rehire a TRS retired educator are much higher than hiring a beginning teacher. Not only because the base pay is lower for a beginning teacher but because of the surcharge/penalty/tax, the school districts must return to TRS. Is this starting to sound like another Robinhood? The taxpayers are paying these surcharges.
The two largest employers in Ector County and Midland County are the school districts that struggle to be fully staffed. Both school districts have learned to be flexible by taking advantage of various programs and grants to provide them the ability to hire degreed but not certified educators while the new teachers are getting their certification.
Retired educators returning to work would be a wealth of knowledge and experience to improve student outcomes and mentor new teachers. We need to get retired educators back.
Many have had a change of circumstance or have found that they cannot live on their retirement checks? Inflation is at a 40-year high, 7.5%. The current return to work penalty is a 15.75% surcharge on the gross salary plus a $535 per month surcharge on medical coverage. If the educator has 25 years of experience and makes $75,000 per year, the return-to-work penalty is $11,812 per year surcharge on a 12 – month employee plus a medical coverage surcharge of $6,420. On a ten-month employee, typically a teacher, the districts would pay the surcharges for ten months.
Suppose a retiree returns to work and is over 65. In that case, they will be personally paying for Medicare tax from their gross pay in the school district plus their standard Medicare fees to Medicare plus the TRS Medicare supplement fee paid to TRS from their retirement check.
Additionally, via our tax dollars, the school district is paying another $535 per month for the medical surcharge on the retiree to TRS. Would the financial surcharges/penalty/tax being paid to TRS be better spent in our local educators’ pockets?
School districts also need substitutes so a retired educator can be hired as substitutes but not in a vacant teaching position for more than a specified number of days. Substitutes usually make around $100 per day and pay taxes out of the gross. The number of retirees substituting has dropped with COVID. Is that a surprise?
The State of Texas does allow school districts to hire retired educators without the financial penalties for the next couple of years if they are solely paid from federal dollars to address COVID-related student gaps. There is also no penalty for educators that retired in 2004 or before. How many of those are still around?
Oh, what a tangled web we weave. The state’s system to rehire retired educators on a temporary or permanent basis is very complicated and confusing at best. Overall, people want more pay and benefits, not less, to remain or return to work. In the non-governmental world of work, the good news is that the IRS has altered its rules regarding hiring retired staff without penalty to the retiree or the company. TRS and the Texas Legislature need to catch up. With the tremendous shortage of teachers in Texas, will TRS change its rules?
Michele Harmon, Ed D, MBA, MEd, BS, is a UTPB College of Business senior lecturer.
