Palo alto unified School District
Supplementary Retirement Plan (SRP)
POST-ANALYSIS REPORT – REVISED
February 19, 2021
PARS | Public Agency Retirement Services
P A G E 1
Introduction
The primary objective of a retirement incentive is to increase and accelerate the retirement rate over and above
natural attrition in order to facilitate specific District objectives such as personnel restructuring, fiscal savings, etc.
Fiscal savings are achieved by replacing the retiring employee, who is typically at the top of the salary schedule, with
a replacement employee at the bottom of the salary schedule. With retirement incentives involving teachers, the
resulting salary differential is sufficient to pay for the costs of the plan and generate additional savings over and
above natural attrition.
Analysis Method of Calculation
The analysis compares the savings projected over a five-year period from offering the PARS Supplementary
Retirement Plan (SRP) during the 2020-21 academic year to the savings expected over the same period if natural
attrition runs its normal course. The analysis examines current and future costs and compensation differentials,
including projections of all compensation and benefit increases. This analysis has been used nationwide for well
over one thousand plans, and is a well-accepted model of calculation.
The basic model of calculation is as follows:
Palo Alto Unified School District
P A G E 2
Assumptions
Certificated Non-Management Employees
• Age 55 with 12 years of District service
Certificated Management Employees
• Age 55 with 5 years of District service
Classified Management Employees
• Age 55 with 5 years of District service
Resignation from District employment effective at the end of the school year:
• On or before June 30, 2021
50% of Final Pay Spend Amount*
*2020-21 Contract Salary (inclusive of longevity) multiplied by the participant’s current FTE.
Certificated Non-Management: $91,407*
Certificated Management: 90.00% (Step 6)
Classified Management: 88.00% (Step 6)
*Based on PARS 1-Year New Hire Study
Active Employee: $14,424 (Prorated by FTE)
Retired Employee: $14,424 (Prorated by FTE)
0.00% annually
5 years
100% to 0% replacement of positions, in varying increments
Fiscal projections illustrated in the post-analysis are based on the actual demographics of the retiring employees.
PARS has also provided non-replacement figures in this proposal with the District’s understanding that these non-
replacement numbers represent position cuts obtained through the offering of a retirement incentive plan. The
District should be sure not to budget a similar number of position cuts, thereby double counting savings within this
retirement incentive analysis and the budget. The following summarizes the results of the analysis:
Palo Alto Unified School District
P A G E 3
FISCAL SUMMARY OF SAVINGS
50% of Final Pay Spend Amount Benefit
2020-21 Retirements
Employee Group
# of
Eligible Employees
Retirements
with PARS SRP
Percentage
Retirements
Certificated Non-Management
140
33
23.57%
Certificated Management
14
6
42.86%
Classified Management
15
0
0.00%
TOTAL
169
39
23.08%
Projected Fiscal Impact: 100% Full-Replacement
Employee Group
Non-
Replace
PARS
Projected Savings
in Year 1
Projected Savings
over 3 Years
Projected Savings
over 5 Years
Certificated Non-Management
0.00
$329,256
$628,208
$553,894
Certificated Management
0.00
($24,411)
($158,179)
($374,406)
TOTAL
0.00
$304,845
$470,029
$179,488
Projected Fiscal Impact: Break-Even
Employee Group
Non-
Replace
PARS
Projected Savings
in Year 1
Projected Savings
over 3 Years
Projected Savings
over 5 Years
Certificated Non-Management
0.00
$329,256
$628,208
$553,894
Certificated Management
1.00
$106,578
$248,982
$336,271
TOTAL
1.00
$435,834
$877,190
$890,165
Palo Alto Unified School District
P A G E 4
FISCAL SUMMARY OF SAVINGS
50% of Final Pay Spend Amount Benefit
Certificated Non-Management
Replacement Scenario
Non-
Replace
PARS
Projected Savings
in Year 1
Projected Savings
over 3 Years
Projected Savings
over 5 Years
100% Replacement
0.00
$329,256
$628,208
$553,894
90% Replacement
3.30
$540,059
$1,277,340
$1,675,000
80% Replacement
6.60
$750,862
$1,926,473
$2,796,105
70% Replacement
9.90
$961,665
$2,575,605
$3,917,210
60% Replacement
13.20
$1,172,468
$3,224,737
$5,038,315
50% Replacement
16.50
$1,383,271
$3,873,869
$6,159,421
Certificated Management
Replacement Scenario
Non-
Replace
PARS
Projected Savings
in Year 1
Projected Savings
over 3 Years
Projected Savings
over 5 Years
100% Replacement
0.00
($24,411)
($158,179)
($374,406)
83% Replacement
1.00
$106,578
$248,982
$336,271
67% Replacement
2.00
$237,568
$656,142
$1,046,948
50% Replacement
3.00
$368,557
$1,063,302
$1,757,626
Palo Alto Unified School District
P A G E 5
Notice
This analysis attempts to quantify in economic terms - not budgetary terms - the fiscal impact of a retirement
incentive program at the District. This analysis is entirely driven by the assumptions set forth by the District. If the
assumptions are changed or modified by the District the results shall vary from what is set forth in this analysis.
The accuracy of any results and/or analysis will depend entirely upon the accuracy of the information provided and
the assumptions used.
The information, data and assumptions used in this analysis have been provided to Public Agency Retirement
Services (PARS) by the District. It shall be the responsibility of the District to certify the accuracy, content and
completeness of the information, data and assumptions so that PARS may rely on such information without further
audit. PARS shall be under no duty to question the information, data and assumptions received from the District
including, but not limited to, inquiries about how the analysis, information, data and assumptions work in
conjunction with the District's budget.
PARS shall not be liable for non-performance of Services if such non-performance is caused by or results from
erroneous and/or late delivery of information, data and assumptions.
PARS is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice.