Early Retirement Incentives

Q: Can districts offer early retirement incentives?

A: No. Districts are prohibited from offering or providing a financial or other incentive to district employees to encourage them to retire from the Teacher Retirement System of Texas (Texas Education Code § 22.007).

Although districts cannot offer incentives specifically designed to encourage employees to retire, they may offer other types of incentives that encourage employees to provide timely notice of their intent to leave the district, whatever the reason. For example, an incentive payment may be offered to employees who provide notice by a specified date (such as Feb. 1) of their intent to leave the district at the end of the school year. In exchange, the district benefits from knowing where it stands with respect to budget and staffing needs earlier than normal.

If your district is considering offering an early resignation notice incentive payment, it is important that the board has authorized it in advance of the school year as part of the district’s compensation plan. This ensures the district is not making a gift of public funds in the middle of the school year to contract employees.

The TASB School Law eSource paper, Exit Incentives - Points to Consider, provides an overview of legal issues relating to early resignation notice incentives and standard exit incentives, including a form for early resignation notice incentives.