In my last article, I explained how the Johnston County School Board spiked its Superintendent’s salary by $130,000 to increase his pension, how the Superintendent then retired at age 50 with a pension of $143,436, and how the State Treasurer then sent Johnston County a bill for $435,000 to pay for the ‘pension spike.’

Today, I’d like to discuss another side of the problem called pension spiking.

Say a private sector worker met with his financial planner and asked how much cash he’d need to put in his retirement fund or IRA in safe investments to be able to retire at age 50. Safe investments like the U.S. Treasury earn about 2.5% so a $143,000 pension is worth somewhere around $6 million. Which means to match the Johnston County Superintendent’s pension, a worker would have to be a millionaire six times over.

Of course, the Johnston County School Superintendent doesn’t have a $6 million IRA, but he receives a pension that is worth the equivalent of a six-million-dollar retirement account.

And whether you’re a school superintendent or another state employee that math makes pension spiking a sore temptation. It’s not surprising that, over the last two years, twenty of NC’s 115 school systems have received bills from the Treasurer for pension spiking.

Here in Hickory City a school system retiree made the list by retiring on August 1, 2015 while generating a pension spiking charge of $151,000. The school board gave him retirement plan with an investment value of around $4 million.

On July 1, 2015 a retiree in the Alexander County Schools made the list as well – when the Treasurer sent those local taxpayers a bill for $65,000 to pay for its pension spiking so he could retire with benefits approaching $3 million.

As I explained, gaming the pension system is a hard temptation to resist. But there’s a clear bottom line: The more spiking drives up the cost of pensions, the more money it takes out of classrooms.