District pays into deputy superintendent’s separate retirement fund

The Newport-Mesa Unified School District has paid $273,591 into a separate retirement account for Paul Reed, its deputy superintendent and chief business official, as an incentive to delay his retirement.

The compensation was brought to light by John Caldecott, the district’s former director of human resources, through documents released to him in accord with the state’s public records law.

The fund was created “in recognition of the board’s desire that the deputy superintendent continue to serve the district past the optimal STRS retirement age of 62,” Reed’s contract states. Reed, 68, also will receive a pension from the state when he retires.

Reed is the only management employee who receives additional retirement money from the district, according to Newport-Mesa spokeswoman Annette Franco.

“Experienced professionals with strong business and education proficiencies, like Paul Reed, are difficult to come by,” board President Dana Black said. “We value his knowledge, expertise and success in ensuring our continued fiscally responsible approach to providing a world-class education for our students.”

But Caldecott said: “He does nothing for this compensation. This is a gift. It doesn’t make sense to pay someone not to retire.”

Black declined to comment further on Reed’s compensation, saying she is not allowed to discuss personnel issues.

Reed declined to comment through his executive assistant.

The contributions, which a district spokeswoman says are transferred annually into an account at Reed’s bank, were first approved by the district board in 2009.

At that time, the board offered to buy service credit from the California State Teachers’ Retirement System, or CalSTRS, which would have, in essence, increased the number of years Reed has served in public education in the eyes of the state retirement agency. That number is used as part of a calculation to determine compensation after an employee retires, according to CalSTRS.

However, Reed asked the board, and it agreed, to purchase a tax-sheltered annuity of “like value” instead of the CalSTRS credit. A tax-sheltered annuity, also known as a 403(b) account, is similar to a 401(k) in that it enables employees to defer some of their salary in individual accounts. The deferred salary is generally not subject to federal or state income tax until it is distributed, according to the U.S. Internal Revenue Service.

It’s not unheard of for public employees to receive retirement funds in the form of tax-sheltered annuities, according to Michael Sicilia, media relations manager with CalSTRS.

“We wouldn’t even know about it because it wouldn’t have an impact on STRS credit,” he said. “It’s something that’s negotiated in employee contracts.”

Reed’s contract does not specify how the district calculates the amount to contribute to his retirement fund or the amount to be paid annually.

But this year, the board agreed to pay $40,414 into Reed’s retirement fund, according to information provided by Newport-Mesa Unified.

Reed will earn a base salary of $259,143 this year. He also receives annual allowances of $7,800 for transportation and $1,200 for communications such as cellphones, according to his contract.

Caldecott said the absence of specifics related to retirement contributions in Reed’s contract raises red flags about what Caldecott believes is the district’s lack of transparency.

“There is no way the public would have known the dollar amount that is being contributed by the district to Paul Reed,” Caldecott said. “The board is elected to be the eyes, ears and voice of the taxpayer. I don’t think that happened in this case. They have been the voice of the administration.”

The board fired Caldecott in January 2015 shortly after he filed a lawsuit against the district to compel officials to release internal emails and other documents related to his claim that Supt. Fred Navarro had created a hostile work environment for employees and retaliated against Caldecott for questioning salary reports to CalSTRS.

In December, a three-judge panel of the state 4th District Court of Appeal ruled that the school district must release dozens of documents related to Caldecott’s allegations against Navarro. The district plans to release the documents after a final review by an Orange County Superior Court judge.

Reed began working at Newport-Mesa in 2002 after spending 26 years in the Irvine Unified School District, where he got his start as a labor negotiator. As one of Newport-Mesa’s top officials, Reed has guided the district through recession and changes in state funding for education.

Franco said she is not aware of the district grooming anyone to take over for Reed when he decides to retire.

“We’ll have to cross that bridge when we come to it,” she said.