Washington State agencies admit knowledge of illegally denying benefits to thousands of part-time faculty
by Noah Roberts
AT LEAST TWO state agencies have known for more than a decade that part-time community college instructors in Washington were illegally denied retirement benefits.
Audits conducted in 1989 and 1990 by the state Department of Retirement Systems found that every public two-year college failed to credit the retirement accounts of part-time instructors who were entitled to the benefit.
The errors, made largely because payroll administrators did not know they were required to report the hours to the state, affected 669 instructors in one year alone.
But instead of going back and compensating all the part-time faculty, the state agencies made a deal to correct the records only of those still teaching.
Those no longer working for the colleges were never informed of the error and never got credit for hours worked. The amount of money in lost benefits has not been established, partly because of different individual circumstances and uncertainty over the total number of employees affected.
The audits resurfaced this year as part of a lawsuit filed by several part-time community college instructors against the state and the agencies involved: the Department of Retirement Systems and the State Board for Community and Technical Colleges, which oversees 33 campuses.
The lawsuit, filed in King County Superior Court in December 1998, encompasses retirement benefits up to the present. The suit argues that, for a number of reasons, part-time faculty were unlawfully denied benefits for more than 20 years. The case has yet to go to trial.
The audits address only a portion of that time period, but are significant because they demonstrate how long there have been problems with the administration of retirement benefits. The audits were critical in broadening the class-action suit to include any part-timers who worked since 1977.
The 669 part-timers whose benefits weren’t credited represent just those identified in audits for the 1988 fiscal year. But documents related to the audits also show that on more than one occasion, state officials worked to limit the amount of money they would have to pay out in benefits — leaving hundreds, perhaps thousands, of part-time community college instructors out in the cold.
“They knew there were these problems, and they failed to do anything about them,” said Steve Festor, one of the attorneys for the part-time instructors. “It just raises the egregious factor.”
Lawyers for the state contend there was nothing illegal in how either of the state agencies conducted themselves during the 1989 and 1990 audits.
Lisa Sutton, an assistant attorney general working on the case, declined to comment in detail. She said the state community college board and the individual colleges audited believe they took “appropriate action to address the matters that were raised by those audits.”
Phone calls to administrators at the two state agencies were referred to the Attorney General’s Office.
For the part-time faculty, some of whom have been fighting for more than a decade for more equitable pay and benefits, the audits are important because they bolster their argument that the state has repeatedly treated them unfairly – and possibly illegally -solely to save money.
The lead plaintiff in the part-timers’ 1998 lawsuit, Eva Mader, has taught German at North Central Community College since 1978, but she was never told she might be eligible for retirement benefits.
“When I was hired, I was told what I would get in terms of salary and in terms of health insurance, and I just figured that’s all I was entitled to,” Mader said. “It sounds very naive, but that’s how it was.”
Even after teaching two classes a quarter for more than two decades, Mader won’t get a penny in retirement benefits from the state when she retires. Mader’s lawyers – who led the legal charge to win benefits for Microsoft temporary and contract employees – argue Mader is entitled to a lot more.
“This whole thing has been terribly unfair,” Mader said. “One tends to look at all of this so much from the point of view of administration and government and red tape, totally forgetting in the meantime that there are actually people involved.”
The use of part-time faculty in the state’s 33 community and technical colleges has expanded rapidly in recent years. In the fall of 1990, part-time faculty taught 34 percent of all community college courses. By fall 1998, they were teaching 40 percent.
On average, part-timers would earn $17,300 if they taught the same number of courses as a full-time faculty member. By comparison, the full-timer would earn $40,500.
The documents show that decisions on benefits were made without any apparent comment from the part-timer ranks. Union representatives weren’t included in the correspondence between the State Board for Community and Technical Colleges and the Department of Retirement Systems as they agreed on a solution to audit findings.
In 1989, the Department of Retirement Systems began a series of audits to make sure the community colleges were accurately reporting the hours worked by all of their employees, including faculty.
The agency administers pension and retirement savings plans for every state employee – seven plans in all. The agency must follow guidelines set forth by the Legislature.
Auditors from the state retirement agency found that every two-year college was not reporting the credit hours for part-time instructors who were already enrolled in the Teachers’ Retirement System, best known for covering primary and secondary school teachers. Most had worked in the public schools in the past, and their retirement accounts were supposed to be credited with the hours they worked in colleges as well.
The retirement plan pays out benefits based on salary and years of service, so the colleges’ failure to report part-timer hours meant the retired instructors got less money.
The Spokane Community Colleges topped the list of worst offenders, not reporting hours for 117 part-time community college teachers.
In addition, some colleges were not telling part-time faculty members when they had worked enough hours to become eligible to enroll for the first time in the retirement plan.
Olympic College in Bremerton, for example, was reportedly sending a notice with the first paychecks distributed to part-time instructors stating that they were not eligible for retirement. Pierce Community College reportedly was enrolling only full-time faculty in retirement plans.
In the midst of the audits, an assistant director at what was then called the State Board for Community College Education, Gil Carbone, wrote a memo to his staff stating the audits were finding significant numbers of eligible employees for whom contributions were not being made to retirement plans.
“The cost of the errors could be considerable,” Carbone wrote in the March 1989 memo. “I think we should have a plan ready. . . .”
The state board formed a committee to look into the matter. By May 1990, Carbone had written another memo, outlining the state board’s plan to convince the Department of Retirement Systems that “corrective actions would be limited to providing error-free administration from (that) time forward.” Carbone’s fallback position was to correct only two years’ worth of past errors.
By fall 1990, the executive director of the state board, Earl Hale, wrote a series of memos to the presidents of all the community colleges telling them how to address the reporting problems unearthed in the audits.
First, they were to make retroactive retirement-plan contributions only as far back as July 1, 1987, and only for current employees. “Do not make corrections for persons no longer employed, even though they may have been eligible as a result of previous employment,” Hale wrote.
The Department of Retirement Systems also suggested ways to avoid paying even more part-time faculty.
An administrator at the Department of Retirement Systems, Geary Sallee, wrote a “memo of understanding” to the state board in March 1990 suggesting they could “include fewer people” by limiting corrections only to those employees who had worked enough hours to be required to enroll in the retirement plan (those who worked more than 80 percent of a full-time load), as opposed to those who had the option of applying for membership (based on working at least 90 full-time days during the school year).
Those who were never told they had an option to join the retirement plan in the past were thus cut out of any corrective plan.
Years after the state board and Department of Retirement Systems reached an agreement to severely limit the extent of the corrective action required, a part-time instructor at Highline and Seattle Central community colleges filed a petition with the state retirement agency seeking retroactive membership in the teachers retirement plan.
The instructor, Joanne Rudo, had been teaching since 1984. Her main argument was that she was never told that she was eligible for membership and therefore could not be held responsible for her failure to enroll.
In conjunction with the appeal, a benefits manager for the Seattle Community College District erroneously told the state Attorney General’s Office that college faculty members weren’t eligible for the plan.
Rudo’s request was denied by the Department of Retirement Systems both in 1995 and on appeal in 1997.
The petitions examiner at the Department of Retirement Systems, Paul Neal, decided that the employee was eligible to enroll in the retirement plan from 1984 through spring 1990, but it was too late to enroll now. Neal’s decision was made despite the fact that the 1990 audit by the retirement agency found that every two-year college mistakenly did not calculate hours for part-time employees, and that corrective action had been limited to ignore instructors like Rudo who were eligible, but not required, to enroll.
The current lawsuit encompasses much more than the audits in 1989 and 1990, including a central dispute over whether part-time instructors were legally entitled to credit for hours worked outside the classroom. But the plaintiffs are frustrated no one ever informed their colleagues from the 1980s that, because of accounting errors, they never got retirement credit for the hours they worked.
It is a frustration that does not particularly impress the state Attorney General’s Office.
“I think at this stage of the game, 10 years down the stream, that it’s one of those coulda, shoulda, mighta things,” said Chip Holcomb, an assistant attorney general working on the case. “I think at this stage of the game, it’s in many ways a moot point.”
