The Little Rock School District has asked the Arkansas Teacher Retirement System to waive nearly $62,000 in interest charges assessed by the system after the district failed to pay more than $19,000 in contributions for an employee.
The system's trustees decided Oct. 7 to delay action until their December board meeting on the request to waive the interest charges of $61,928.53 in the matter of Sandra Ledbetter, who has worked for the Little Rock School District since 1991.
The district failed to pay contributions of $19,437.47 from fiscal years 1995-2000 on Ledbetter's behalf into the retirement system.
Ledbetter is a multitier support system coordinator at Henderson Middle School, and her salary is $67,869 a year, Little Rock School District spokeswoman Pamela Smith said Wednesday.
The Arkansas Teacher Retirement System is state government's largest such agency with more than $17 billion in investments and more than 100,000 working and retired members.
The school district has certified Ledbetter's salary and service for the years from 1995-2000, according to the system's staff report.
"It looks to be a simple error in their bookkeeping process," system Executive Director Clint Rhoden told the board of trustees last week.
Trustee Danny Knight of Sherwood said he doesn't understand how an auditor didn't catch the error at the school district.
School district staff attorney Eric Walker said, in a letter dated Aug. 13 to then-system General Counsel Laura Gilson, that while the school district wants a resolution of the matter, "the district still denies any negligent wrongdoing and further denies any fault as it relates to this matter."
In a Sept. 12 email to Gilson, Walker wrote that district Superintendent Michael Poore "has stated that he would like to buy back the years of Ms. Ledbetter ... if the interest can be waived."
Walker said he's spoken with Ledbetter's attorney, Greg Alagood, generally about this.
"They do not want to enter into any type of settlement agreement and ... are only interested in getting the 6 years," Walker wrote in his email to Gilson. "They are going to stand by on the issue."
Alagood last week declined to comment about the case. Ledbetter could not be reached for comment by telephone on Friday.
According to the system's staff report, the system's three-member manifest injustice committee has determined that a manifest injustice has occurred and Arkansas Code Annotated 24-7-205 (d) allows the system to correct an error in a member's record beyond the five-year look-back period.
"However, to correct Ms. Ledbetter's record, the employer contributions in the amount of $19,437.47 must be paid to ATRS," the system's staff report said. The system charged system employers an equivalent of 12% of a member's salary in that six-year period, said system general counsel Martha Miller.
Arkansas Code Annotated 24-7-411 (a) requires the system to impose an interest penalty that ranges from 6% to 8% for the years in question.
"A large amount of interest ($61,928.53) has been assessed as a result of the 20 years that has passed since the initial unreported service," according to the system's staff.
Arkansas Code Annotated 24-7-411 (c) allows the board to waive interest if the employer delinquency was not the result of "intentional nondisclosure, fraud or misrepresentation and that under the circumstances the payment would be unduly penal or burdensome," the system's staff noted in its written report.
The system "has no evidence" that the failure to report and remit the contributions was intentional, the staff report said. "Given that the initial failure to report the service occurred over 20 years, the amount of interest due could be considered unduly penal and burdensome."
The system has waived the interest associated with errors in reporting employer contributions in the past, according to the system's staff. The executive staff recommended the waiver.
Rhoden said last week Ledbetter isn't eligible for retirement, but she would be closer to it if she gets credit for the six years in question.
A member may retire with an unreduced retirement benefit based on age, starting at age 60 with five or more years of credited service, or credited service at any age with at least 28 years of credited service, Miller said.
Rhoden said he is forbidden by state law from disclosing any personal information about a member's retirement benefits.
He said noncontributory service for a system member up until 2017 had a 1.39% multiplier used to calculate the individual's retirement benefits, so adding six noncontributory years would add 8.34% of a member's final average salary to the annual retirement benefit.
In most cases, the system uses the average salary over a member's five highest-paid years for the member's final average salary to compute retirement benefits, Rhoden said.
Trustee Richard Abernathy of Bryant wanted assurance there aren't other employees with similar issues.
Smith, who is spokeswoman for the Little Rock district, said Wednesday that "per our chief fiscal officer [Kelsey Bailey], we have no knowledge of any additional employees that have been impacted."
Abernathy said he also wants information on the history of the board waiving interest charges.
During the past several years, the largest amount of interest waived for a claim of manifest injustice was $18,815.70 for the Wonderview School District. The system board waived it in February if the district paid contributions of $68,695.17 before the end of the fiscal year, according to a system staff report. The district paid May 9.
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