The future of a longstanding incentive pay policy for eligible Henrico County Public School system retirees was the topic of a budget debate at the School Board’s Feb. 24 work session.

The school system’s post-retirement employment program (PREP) currently offers eligible retirees 24 percent of their annual retirement-day salaries each year for as long as seven years, provided they spend at least 24 days annually working in the school system. Eighty percent of that time must be spent in a classroom.

But because of budget cuts, the program is scheduled to be trimmed in the 2011-12 budget, dropping pay for program participants to 20 percent of their retirement-day salaries. The move would save $1.4 million directly and another $717,000 through expected program attrition. The board is scheduled to vote on the proposed $401.25-million budget later this month.

Brookland District School Board member Linda McBride made an impassioned statement urging the board to restore funding to 24 percent if new money becomes available, as is expected. The board anticipates receiving nearly $10 million through a federal grant.

“[PREP] serves as a very important tool to recruit and keep employees,” McBride said. “Some recent [retirees] feel we’re pulling the rug out from underneath them.”

To qualify for the program, a retired school system employee must have at least 16 years of service as part of the Virginia Retirement System (VRS) and must have worked for HCPS for at least 10 consecutive years prior to retirement. Currently, 488 retirees are serving and collecting payments through PREP.

Tuckahoe board member Lisa Marshall said that trimming the program’s funding wasn’t desirable but was necessary, given the current financial status. And, she said, PREP participants earn significant pay when compared to standard substitute teachers (as much as $578 per day, compared to the standard substitute rate of $83 per day).

“It’s hard to explain to a constituent a daily rate of $578,” Three Chopt District board member Diana Winston said, “when I have constituents who don’t have weekly rates of $578.”

Marshall and several other board members said they’d prefer to spend any extra money on raises for current full-time teachers – who haven’t had one in the past two budget years and who are not scheduled to receive one in the 2011-12 budget – instead of returning the PREP program to its existing level of funding.

Winston cited growing class sizes at some middle schools and high schools in the county as examples of the challenges full-time teachers currently face. Nearly a quarter of classes at Deep Run High School, she said, contain 30 students or more.

PREP is a separate program from the VRS payments for retirees, which would not be affected. Winston said she’s concerned that the perception among some retirees is that the board wants to cut their retirement pay.

Varina District board member John Montgomery said he would consider all possibilities before forming an opinion. Fairfield district member and board chairman Lamont Bagby suggested that officials poll teachers to see whether they’d prefer raises now or the knowledge that the PREP opportunity would exist at current funding levels later.

Winston argued that the proposed funding cut would be minor and said that many PREP participants already work other jobs – including some other part-time jobs within the school system – and would not feel significant financial impact. She said that she held two other jobs while she was part of the PREP program for seven years after her retirement from full-time employment with the school system.

When the board raised the service requirement for PREP participants from 20 days of service to 24 days last year, 22 PREP participants opted not to continue, Finance Director Kevin Smith told the board.

Bagby and McBride agreed that the board should determine if it is committed to maintaining PREP into the future, so that current teachers know what to expect and don’t feel the need to worry about becoming victims of a bait-and-switch plan.

Superintendent Pat Russo told the board that during normal economic times, he wouldn’t have sought to trim the program.

“But ladies and gentlemen, these are not normal times,” Russo said. “We have cut 100 teaching positions, we have cut 62 Central Office positions, we have made significant reductions of over $30 million in this school division.

“When I spoke to some of these PREP individuals, the biggest thing they said was, ‘Please keep something that would maintain the integrity of the program.’”