Retired teachers told to pay back money school district erroneously gave them for substituting

After the Mt. Diablo Unified School District violated state employment laws by overpaying retirees who work as substitutes, it is now the retirees who are on the hook to pay back the funds.

The Mt. Diablo Unified School District is trying to collect money it mistakenly overpaid retired teachers who have been working as substitutes in the classroom.

The California Public Employees’ Retirement System (CalPERS) has been sending letters notifying the retirees they’ll need to repay the district. For its part, the district has been following up by sending its own letters asking the teachers to return the extra money by certain dates.

One retiree was instructed to pay back more than $1,000 while others fear they may be asked to return even bigger sums, said Bonnie Rea, a retired special education assistant and former union president who has been advocating on behalf of retirees who received the letters.

Rea said she believes the district should eat the cost for making the error.

The mistake involves holiday pay. A 2013 state law changed the rules for compensating retired teachers who substitute. Where before they received holiday pay for working so many hours right before the holiday, the new law says they’re no longer eligible for that or or any other special compensation other than their hourly rate, Rea said.

Yet, despite receiving several notices a few years ago from CalPERS advising it about the law change, Mt. Diablo Unified continued factoring holiday pay into some employees’ paychecks until the summer of 2019, according to Rea and documents she provided from fellow retirees.

As a result, some employees have paid back a lump sum of what they were erroneously overpaid.

Austin Breidenthal, a spokesperson with the district, confirmed in an email that “CalPERS did discover in an audit that the district had overpaid the employees, and our own audit confirmed the finding.”

Asked about requiring teachers to pay back the money, Breidenthal said, “These mistakes do not happen often, and yet anytime an agency using public funds overpays an employee, it is considered a, ‘gift of public funds,’ meaning that the employees are required to repay the district the total amount they were overpaid (to which they were not entitled).”

Breidenthal said while some retirees fully repaid the money right away, the district has arranged longer-term payment options for others “where possible.”

Writing off overpayments is not an option, Breidenthal insisted.

“For a public agency to forgive an overpayment is, again, not lawful, so that option could not be presented to the employees who were overpaid,” Breidenthal said, noting the district has now “corrected” the holiday pay practice so that it will not happen in the future.

But Rea argued the money is not actually a “gift of public funds,” but rather a district mistake that the district itself should rectify. The notices CalPERS sent in 2012 and 2013 to school districts and agencies throughout the state alerted them to the changes and provided links to information explaining the rule changes.

Rea acknowledged CalPERS puts the onus on retirees to track their hours and to not violate the public employment law. But for the most part, retirees weren’t made aware of the 2013 law change, Rea said, noting she herself hadn’t been notified despite being president of the local retirees’ association for special education assistants from 2010 to 2016.

A CalPERS spokeswoman provided a link to an online handbook it publishes so employees can understand post-retirement work rules but she could not confirm whether the agency issued notices to its members about the 2013 law changes or the holiday pay issue.

For retirees who struggle to live on a fixed income, having to pay back $1,000 or more is “stressful,” Rea said.

And the stakes are high. For example, a CalPERS letter to one retiree warned that not only must the holiday pay be returned but “any future violation of post-retirement restrictions at this or any other CalPERS employer will result in reinstatement from retirement.”

Reinstatement isn’t easy, Rea said, pointing out retirees would have to be reclassified as employees, then reapply for retirement while losing their pension for a period.

“That’s why this is so, so important,” she said.