TRS findings question superintendent’s retirement status

The Ennis School Board has some further explaining to do to the Montana Teachers’ Retirement System regarding superintendent Doug Walsh’s employment from 2001 through today.

In a preliminary findings letter written June 9 and sent to the school board, the Montana TRS claims that Walsh should have been considered a regular employee under the TRS and both he and the school district should have been paying into his retirement plan rather than Walsh receiving retirement benefits from TRS for the past 10 years.

The preliminary findings come after an 11-month investigation by the TRS into Walsh’s retirement and current employment.

“These are preliminary findings,” stressed David Senn, Director of the Montana TRS. “The retirement board is waiting for a response (from the Ennis School Board) before issuing a final decision.”

The letter TRS sent to the school board outlines four preliminary conclusions reached in their investigation. All four conclusions support the overarching finding that Walsh wasn’t eligible for retirement benefits from TRS since he officially retired in the summer of 2001.

The school board has 30 days to respond to TRS’s preliminary findings.

Walsh retired as Ennis superintendent back in July of 2001. A month later he was hired back as a one-third-time superintendent and then as a consultant to the school district. This consultant contract was for two-thirds of his previous superintendent’s salary.

In 2005, the school district added transportation responsibilities to his contract and in 2008 the school district gave him a contract to be bus supervisor rather than consultant. The bus supervisor contract continues today.

What TRS claims in their preliminary findings is that Walsh’s retirement in 2001 wasn’t legitimate because he didn’t take enough time away from the school district. But even it he had taken enough time, the work he’s been doing for the school district since then basically falls under the duties of a superintendent and not a contractor. Therefore Walsh should have continued to be enrolled in the TRS.

“Mr. Walsh continued to be employed by the school district from and after June 30, 2001, as superintendent,” reads TRS’s letter to the school board. “Further, TRS believes Mr. Walsh’s employment by the school district from July 1, 2001 to present, as a ‘consultant’ and then as ‘bus supervisor’ was also employment in positions in which Mr. Walsh was required to participate in the retirement system, and were improper divisions of Mr. Walsh’s job functions and responsibilities as superintendent intended to circumvent the earnings limitations applicable to TRS retirees.”

Essentially, under Montana law strict guidelines must be followed if a person collecting TRS benefits is rehired, Senn said. If those guidelines aren’t followed, then the person can’t receive TRS benefits and the employer and employee must pay in to the TRS.

The main TRS stipulations at issue here seem to be that a retiree can’t collect retirement benefits and be employed more than part time and receiving more than one-third of his previous salary.

Walsh declined to comment on the letter. As of Tuesday afternoon he had not been presented with a copy of the letter by the school board and said he hadn’t seen it.

However, TRS’s findings come as a surprise to Ennis School Board Chairman Marc Glines.

He believes that in 2001 the school board made sure that Walsh was unemployed by the school for the requisite 30 days before being hired back as a part time retiree. Also, the school board has sought approval from TRS on Walsh’s contracts.

“Doug’s contracts and his previous contracts were all approved by TRS, so yes (the letter) was kind of surprising,” Glines said.

However, Senn said the TRS wasn’t consulted.

“We have not approved any of Mr. Walsh’s contracts,” he said.

Prior to the onset of the investigation last summer, Senn remembers looking at one of Walsh’s contract in 2008.

“We ask districts to send us contracts on all of the retired members who are employed on a retired basis and Ennis did not send us those contracts that Mr. Walsh was employed under until just a few years ago,” Senn said.

It’s not that unusual for people retired under the Montana TRS to be hired back on part time contracts, he said. Retired teachers will do it as long-term substitutes and in the university systems professors commonly come back on a part time basis after they retire.

“The university system will very often hire a retiree back for a one-third contract for up to three years,” Senn said.

He was reluctant to comment much on the preliminary findings because they are preliminary and he’s hoping the school district can provide more information to shed light on the situation.

But if the preliminary findings are right, both Walsh and the school district could owe the TRS  – Walsh could owe money for benefits he’s received since 2001 with additional 7.75 percent interest, the school district could owe the TRS for benefits it should have been paying on Walsh’s salary for the last 10 years.

However, the preliminary findings didn’t address how much money this could mean for either Walsh or the school district and Senn wouldn’t speculate.

“That will depend on how they reply to the preliminary findings,” he said. “If they can provide documentation that he was entitled to the (retirement) benefits, he may not have to repay TRS anything.”

In addition to the potential financial repercussions from the TRS findings, the letter also indicates the TRS staff were misled.

“The apparent facts and circumstances of this matter indicate to TRS staff that misrepresentations were made to TRS regarding his (Walsh’s) termination of employment with the school district as of June 30, 2001, and his continuing employment with the school district from and after July 1, 2001,” the letter reads. “Such misrepresentations may constitute fraud or negligent misrepresentation on the part of Mr. Walsh and/or the school district. Further, actions in inducing the retirement system to pay retirement benefits to which Mr. Walsh was not and is not entitled may constitute violation(s) of the Montana False Claims Act.”

Senn was reluctant to comment about this portion of the letter until the school district has a chance to respond.

“At this point I don’t know what the final outcome will be or the next step until I see their reply to the preliminary findings,” he said.

The best possible outcome is the school district or Walsh will have some information to clarify what happened, Senn said.

“That would be the best possible outcome all around for everyone obviously,” he said.

However, he’s asked for all the information he needs to come to these conclusions.

“Nothing (more) I know to ask for,” Senn said. “It may be there. Hopefully they’ll have something more to provide us.”

The TRS letter will be addressed at a special school board meeting next Tuesday at 5 p.m., said the school board’s attorney, Elizabeth Kaleva in an email Tuesday. The meeting and discussion of the TRS letter will be open to the public, the email stated.

At the meeting the school board will also decide where to transfer their excess general fund balance.

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