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Riverhead is giving its highest-paid teachers a better reason to retire with a new retirement incentive package.

In addition to existing retirement benefits, teachers will now be able to receive an additional incentive of either $25,000 or subsidized health insurance until the age of 65, according to the terms of a memorandum of agreement approved by the school board last night and obtained by RiverheadLOCAL through a Freedom of Information Law request today.

Eligible teachers must submit their letters of resignation by Jan. 15 and must retire on June 30, 2016. Teachers who will become eligible between June 30 and Nov. 11 must retire within one day of becoming eligible to retire. The incentive program ends Nov.11. To be eligible for the program, teachers must be eligible for regular service retirement before Nov. 11 and must have a minimum of 10 years of service with the Riverhead Central School District, according to the agreement.

The benefits will be paid into the retiring teacher’s 403 account as an employer contribution, saving both the retiree and the school district “significantly” in payroll taxes, according to school district superintendent Nancy Carney. It is similar to the retirement incentive the district gave teachers three years ago.

“The retirement of so many teachers will enable us to preserve programs for all students,” Carney said today.

The incentive will first be paid through redemption of unused sick time, and then the district will pay the remaining amount from the district’s general fund. That allows the bulk of the incentive to be paid from the district’s reserve funds, Carney explained.

Retiring high-paid teachers means the district can hire new teachers who make “significantly less,” Carney added.

“This will yield at least $1.5 million in savings in next year’s budget,” she said.

Such savings are necessary with the district facing a property tax cap of  0 percent this year before capital exemptions. “We need to take every opportunity we have to lower our expenses for next year,” she said.

Riverhead Central Faculty Association president Lisa Goulding said the association is pleased with the agreement.

“We’re hopeful that the savings realized by the district will be used to maintain and strengthen programs vital to the growth of our student body,” Goulding said.

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