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Illinois School Board Journal
May/June 2006

Superintendent's contract: What a board needs to know

by Jerry Glaub

Jerry Glaub is IASB's deputy executive director, communications.

A school board that has labored through the process of selecting a new superintendent may be tempted to quit before negotiating an employment contract.

Giving in to that temptation is a bad idea. In matters involving the superintendent — unlike other district employees — the school board provides the only voice for the employer. The employment contract provides an essential foundation for the board-superintendent relationship. The board, therefore, ignores the superintendent's employment contract at its own peril — an oversight that more than one board has lived to regret.

The law

Illinois law creates these basic considerations for administrator employment contracts:

• A school board may provide an administrator a multi-year employment contract of up to five years. However, a multi-year contract must include performance goals related to student achievement and the contract may not be extended without evidence of progress toward those goals.
• An administrator employed on a series of single-year contracts will acquire tenure as an employee of the district after four years.

Beyond these basics, the board-superintendent relationship must be constructed locally by each board and superintendent.

Basic contract provisions

Unfortunately, most board members probably have only a vague idea of what should go into an employment contract. Some provisions are essential, or else the board very likely will not secure the candidate that it wishes to hire. By the same token, some provisions also are essential to protect the school district.

For starters, a board and superintendent need to decide on the length of the contract. Most superintendents will want a multi-year contract. Considering that the makeup of the board can turn over rather quickly with any election, the key issue is job security, especially if taking the job means moving a family any appreciable distance. And most boards also favor the multi-year agreement, because it avoids giving the superintendent an opportunity to acquire tenure in the district.

Although they might not think of them at the time they hire a new superintendent, most board members will eventually wish they had answers to some or all of the following questions:

• How many years are covered by this contract?
• Who pays the superintendent's relocation expenses?
• Where will the superintendent live?
• Can or should the district hire the superintendent's spouse?
• What if the superintendent decides to accept a job in another district?
• What if we don't like the way the superintendent does things?
• What if the superintendent becomes ill or disabled?
• What do we have a right to expect of the superintendent?
• Can we terminate this contract?

The new superintendent is sure to be concerned about the same issues, plus:

• How much will I be paid?
• What types of benefits will I get?
• Am I protected against unfair dismissal?

A good contract describes a reasonable relationship between employer and employee; an inadequate contract can create an unbalanced relationship or one that is simply unclear and subject to numerous interpretations. A good contract also provides direction if either the board or superintendent becomes dissatisfied and wants to end the relationship.

Most boards, of course, expect to keep their new superintendents for at least a few years and don't want to make departure too easy with a one-year contract. So they opt for the multi-year contract.

In addition, other typical contract clauses that school board members need to understand:

1) What are the essential requirements of the superintendent's job that could lead to dismissal if not met? Or is the board willing to tolerate any level of performance or conduct?

2) Is the superintendent required to provide any proof of state certification? (Failure to provide a certificated superintendent puts the school board in violation of state law.)

3) Is the superintendent allowed to perform outside work, such as teaching at a nearby college or consulting with other districts? If so, is there a restriction on allowed absences?

Time bombs

A superintendent's contract can contain some unpleasant surprises for the unwary school board:

The cost of salary and benefits can greatly exceed what the school board intends. Some boards offer the superintendent a flat dollar amount and say divide it into salary and benefits as you wish. That works fine, but only if the board is aware of what various benefits actually cost. If the board agrees to pick up the superintendent's contribution to the Teachers Retirement System (TRS), for example, this simple benefit adds 10.375 percent to gross salary — or $10,375 to a salary of $100,000. The board needs to know that.

Most school employees would like the board to provide additional pay when they approach retirement, because retirement benefits are typically based on earnings during the last four years of work. The new superintendent is no exception and may be old enough to consider retirement pay an essential benefit. Problem: recent legislation designed to protect the Teachers Retirement System can make late-career pay increases very expensive for the employer. A board should not agree to these provisions without first calculating the cost of those TRS penalties.

When the superintendent is ready to leave the district in the future, will the board be presented with an unexpected bill for unused vacation days? It can happen unless the contract specifies the number of vacation days allowed each year and limits the number of unused vacation days that the superintendent may carry over from one year to the next. State law at 820 ILCS 115/5 requires that any vacation time provided by contract or policy be reimbursed upon termination of employment.

Just because a benefit meets the approval of TRS is no guarantee that the Internal Revenue Service will see it the same way. The federal tax treatment of a benefit given only to highly paid employees can bear heavily on the board that neglects to treat it properly. Special benefits, such as an annuity or any provision that gives the superintendent the option of taking cash, often create significant tax issues for the employer as well as the employee. They should be reviewed in advance by the school board attorney (who may suggest input from the district auditor or other financial consultant) so that both the board and superintendent can be informed of the tax implications.

Evaluation of the superintendent is a common provision, especially considering the performance goals required of multi-year contracts. But who will ensure that the subject is placed on the board agenda or otherwise brought to the board's attention at the appropriate time?

What options are available to the school board, if any, in the event the superintendent becomes disabled? A superintendent on extended sick leave can present a special problem in a small district. That is, who will run the district in the superintendent's absence? For any district, the contract should describe what the board will do when sick leave is exhausted or if the disability proves to be permanent.

The key point is for the school board to treat the superintendent's employment contract as a very important matter deserving careful study and expert guidance. The search and hiring process is not over until the contract is signed.