The Anne Arundel County Public Schools (AACPS) Board of Education has been generous to outgoing superintendent Kevin Maxwell for his last month of employment ending July 31, 2013. Excluding his health benefits and the increase in his pension, which is paid for by the State of Maryland, I estimate his daily pay at $4,582/day. Assuming he works an eight hour day, that comes to $573/hour. Here is the math:
For every day of work or paid leave, Maxwell was paid 1/260th of his salary. I’m assuming his salary was $257,000/year. That comes out to approximately $1,000/day based on dividing $257,000 by 260 days.
During July 2013, there were 23 midweek days. Excluding July 4, a holiday for all AACPS employees, the balance is 22 midweek days. From that I subtract days of paid leave for which Maxwell is eligible:
- 4 days for all Fridays off during July. Available to all AACPS employees (according to AACPS, this paid leave is a “cost-saving measure,” which presumably covers such savings as a lower energy cost due to less air conditioning).
- 10 days for paid personal leave (use it or lose it by the end of his employment). Included in Maxwell’s termination agreement (the termination agreement doesn’t explicitly state the type of leave, but this is the type I infer; see footnote 1 below)..
- 2 days for paid sick leave. Included in Maxwell’s termination agreement.
This adds up to 16 days of leave. Subtract that from 22 potential work days and we are left with 6 days of work.
To calculate Maxwell’s compensation for July 2013, I multiply the 22 days by $1,000/day and add his monthly car allowance ($1,000, paid in cash), monthly paid annual leave of 2.5 days (worth approximately $2,500) and $1,667 payment to his personal retirement account. That gives us $27,167 in compensation for July, which we divide by the 6 days to get us the estimated $4,528/day. Excluded from this calculation are Maxwell’s free medical, dental, and vision benefits, as well as the increase in his pension, which is paid by the State.
Maxwell’s termination agreement says that he is entitled to use his paid leave during July and that the Board of Education has allowed him to use it (in addition to the two days of paid sick leave, which he does intend to use). Nevertheless, he doesn’t intend to use it.
How credible is such an unverifiable promise? Consider the practicalities. Are school board members, who rarely visit Riva Road during the summer, going to personally check on his whereabouts? And if he were to spend much of his time preparing for his new job in Prince George’s County, including organizing his papers, interviewing reporters who cover Prince George’s County, and discreetly probing those who he might want to eventually bring along with him to Prince George’s County, who would know?
Recall that the Board of Education is notoriously bad at monitoring such promises. For example, during the mid-2000s it was discovered that AACPS employees had taken a small fortune of paid leave without the days actually being credited to their account, thus leaving the taxpayers to pay for not only the leave but the substitute teachers on the days of the leave. In other words, the accountability mechanisms designed to prevent misuse of leave had failed. A July 13, 2005 internal audit under former Superintendent Eric Smith concluded that “numerous employees have not accurately recorded their attendance on the appropriate time sheet, which may lead to inaccurate leave balances and salary overpayments.” Moreover, even after the problem was discovered, there was no attempt to claw back payments for non-work. The Board’s mindset regarding the accounting for leave was reflected in the lack of public oversight hearings and news coverage on what happened. However, the internal revelations were one factor that eventually led the Board to invest in a new multimillion dollar payroll system. See footnote 2 below.
Consider the political incentives, too. Maxwell would forfeit his personal leave if he didn’t use it before leaving AACPS. But it would look terrible for the Board of Education and Maxwell if it were publicly stated that Maxwell would earn a full salary during July while working only six days. So regardless of whether Maxwell diligently worked for AACPS during the month of July, the parties to the termination agreement would have to say he did. It is often said within AACPS, such as during contract negotiations, that professionals only work when paid; that free labor is for amateurs. But such sentiments don’t play well with the general public. The termination agreement appeared to play it both ways, a trait common in political speech: on the one hand, saying Maxwell could take the leave he earned; on the other hand, noting Maxwell’s “present intention” not to use it.
But let’s assume that Maxwell not only forewent the personal leave he was entitled to but also concentrated on AACPS rather than other business during his workdays. This would bring his work days up to 16 for July, or $1,698/day, about a 70% premium over his regular salary/day.
As for Maxwell’s early termination penalty with AACPS ($5,000), it is dwarfed more than 200:1 by the signing bonus in his new contract with Prince George’s County (see Maxwell’s Unreported $1 Million Signing Bonus with Prince George’s County, Courtesy of Maryland Taxpayers). To me, the fact that this piddling penalty got so much press attention is incredible.
The actual contract that the Board of Education negotiated with Maxwell was one-sided in that it guaranteed Maxwell the compensation of a four year contract, unless he was fired for “cause” (which I take to mean gross negligence or moral turpitude, although I could be wrong on this) while also giving him the option to back out at any time for essentially any reason, such as getting a better job, without paying any penalty, regardless of the cost to AACPS and Maryland taxpayers. The only penalty was $10.000/month for less than three month’s notice. That penalty was largely eliminated by extending his contract through July and having Prince George’s County pick up $15,000 of the remaining $20,000 penalty.
For the sake of argument, let’s assume it was a smart move to extend Maxwell’s contract through July after he gave notice on June 27. That still wouldn’t justify obfuscating to the public the high cost of extending his contract.
Mamie Perkins’ Signing Bonus
On July 23, 2013, the AACPS Board of Education formally hired Mamie Perkins as incoming interim superintendent beginning August 1, 2013 and ending June 30, 2014 for “$197,087 for the 11 months of the contract.” Adding in 3.5 days of paid leave per month (including 1 day per month of paid sick leave) for 11 months, that comes to 38.5 days of paid leave valued at $31,837, for a total 11 months’ pay of $228,924. That’s the equivalent of an annual salary of $249,735 or a daily salary of $961.
Our task is to estimate the increase in the value of Ms. Perkins’ pension as a result of her employment with AACPS. To do this we must first estimate her average salary for her last three years of work prior to and after signing her contract with AACPS. Then, as we did with the estimated increase in the value of Maxwell’s contract, we will multiply that by her years worked, a multiplier for each year of work, and her expected lifespan after retirement. Those numbers are: 40 years of work in a Maryland public school, a 1.5% multiplier (the average multiplier for each of those years), and 24 years (the expected lifetime for a healthy woman who retires at age 64; Ms. Perkins is currently 63). Note that the 40 years of work is probably low in that it doesn’t include accumulated unused sick leave, which often adds more than a year of creditable service to retirement.
From published accounts, I have been able to gather the following information: Ms. Perkins was promoted from Chief of Staff to Deputy Superintendent in Howard County Public Schools in February 2011, when then Superintendent Cousin was diagnosed with lymphoma cancer and took medical leave but still remained in daily contact with the Deputy Superintendent. She resigned effective July 30, 2012 when Superintendent Foose took control of the Howard County Public Schools. She was paid a salary of $194,765 as Deputy Superintendent (Cousin earned $265,000). I assume that she earned the same salary, $156,549, as her successor as Chief of Staff. Based on this information, I estimate that for the last three years of work her previous average salary was $162,918 ($194,765/12 months X 6 months/3 years + $156,549/12 months X 30 months/3 years) and her new one $191,392 (($194,765/12 months X 6 months/3 years + $156,549/12 months X 19 months/3 years + $249,735/12 months X 11 months/3 years).
Plugging this into the equations above, we get a total retirement benefit of $2,346,024 prior to her taking on her position in Anne Arundel County and $2,756,042 after, an increase of $410,018, which I’m calling her “signing bonus.”
Of course, Anne Arundel County taxpayers aren’t paying for this increase in Ms. Perkins’ retirement benefits. It’s courtesy of Maryland taxpayers. So given that it is a freebie to us and other public school districts presumably do the same, one might argue that the Board of Education was being prudent in giving it to Ms. Perkins. But if such pensions eventually get shifted to the counties, as the General Assembly appears intent on doing, then such perks will no longer be a freebie to us paid for by taxpayers in other counties. Instead of them being the suckers, we will be.
Regardless of who really will end up paying for these “signing bonuses,” I believe the public should be educated on the nature of such benefits so it can make its own informed evaluation. One unintended result of the current system, for example, is that there is great pressure now to hire within Maryland from the pool of long-term government employees because they are the only ones who can financially benefit from such cost shifting to other taxpayers. This may help explain why the last three Anne Arundel County superintendents have been hired from within Maryland.
I suspect that the public would never tolerate paying such large signing bonuses if they were explicit and their distortions of the hiring process explained. But in the current political environment in Anne Arundel County, it’s unlikely that such an honest public discussion is possible. It would probably be political suicide for a politician to start such a frank discussion.
Understanding AACPS compensation is incredibly difficult, partly because it is unlike anything people in the private sector are likely to be familiar with from their own work experience. For example, one has to calculate in a byzantine variety of leave days and multipliers to calculate the value of each leave day. And one has to be familiar with a half dozen or more contracts or laws regarding various types of benefits such as pension, healthcare, and disability, to understand what is actually in, say, the superintendent’s contract. The accounting system is designed for insiders, not the public, to understand.
I won’t guarantee that my arithmetic here has been perfect or that my assumptions cannot be contested. But despite any such weaknesses, I do believe that my calculations are closer to the truth of the matter than the PR coming out of both the Prince George’s and Anne Arundel county public school systems.
1) The termination agreement with Maxwell was vague (perhaps strategically vague?) about exactly what type of leave the Board of Education allowed Maxwell to use for the two weeks of vacation during July. Maxwell was paid many types of leave, including five days of personal leave per year, which could accumulate up to 15 days over multiple years but not be cashed in upon separation from AACPS employment. This type of leave is different from the 2.5 days/month of paid leave that can be cashed in for higher pay. In my analysis, I’ve assumed the Board granted Maxwell use of his personal leave during July, which would have made the most financial sense from Maxwell’s perspective.
2) If you want to understand the occasionally hypocritical and dirty nature of Anne Arundel County school ethics and politics, contrast the press, politicians’, and state prosecutor’s response to County Executive Leopold’s catheter incident to this school board incident and ask yourself which caused greater public harm. For those who may not remember, the catheter incident was one of the two counts that forced County Executive Leopold to resign from office and serve jail time. Leopold had asked one of his political appointees, his secretary, if she would be willing to remove and empty his catheter bag after the tragic failure of his back operation that left him unable to control his ureter in an environment where public disclosure of his involuntary urinary malfunction would have generated contempt and perhaps cost him the election. The appointee felt that given the power relationship she had no choice but to say yes to doing this highly unpleasant task on a daily basis for a matter of months. The point of this analogy is not to defend Leopold’s behavior but to point to a double standard and all that it might imply about our County’s politics. For a brief discussion of loopholes in the Hatch Act that facilitate such double standards, see Anne Arundel’s Next Superintendent Should Restore Integrity to SMOB Elections.
Source: Snider, J.H., School Board Pays Maxwell $4,582/Day In July; Maryland Taxpayers Pay Perkins $410,018 Signing Bonus on Top of $249,735 Annual Salary, Eye on Annapolis, August 2, 2013.
Addendum, August 3, 2013
It has come to my attention that I underestimated the AACPS Board of Education’s payment to Maxwell during July 2013 because I forgot to include the $10,000 he earned in reduced penalties by receiving credit for an additional month of notice before leaving AACPS. Under Maxwell’s contract, he was obliged to pay a penalty of $10,000/month for each month he left AACPS prior to three months’ notice.
This additional $10,000 would give Maxwell a total income of $37,167 for July 2013, which divided by six days of work would give us $6,194/day, or if divided by 16 days of work $2,323/day.
I do not include the $95,060 he was paid during July 2013 for unused leave (on top of the more than $20,000 he was paid for unused leave during FY2013) because he earned that compensation during a different pay period; he merely received cash for it during July 2013.