Schools consider reducing health, life insurance benefits for retirees
The change would decrease the rate of reimbursement the school system contributes to retiree health and life insurance to the state minimum, which is currently 50 percent, regardless of number of years of service by the employee.
Right now the school system provides a state minimum 50 percent reimbursement for employees who retire with 10 or fewer years of service. For those employees who retire with between 11 and 20 years of service, that rate goes up to 75 percent and for those who have over 21 years of service at the time of retirement the rate is 95 percent.
"It’s not immediate. It’s going to be a phase in type of thing where it is going to be a year down the road so employees applying in the district will know that far in advance," Al Suffrin, School Board president, said.
School officials said an audit report revealed the school system would need an estimated $270 million in the future in order to cover retiree insurance costs at the current reimbursement rate.
"I tell you what, I have some sleepless nights over it because that $270 million figure just worries the heck out of me," Suffrin said. "I think it’s a proactive move on the district’s part. I think we’ve got to do something to stop the bleeding. I mean that liability is growing out of control and we are doing everything we can to try and manage it."
Jim Melohn, chief financial and administrative officer for the district, said $270 million would be too much for the school district to handle.
"We would have to set aside $22 million every year," Melohn said. "We are not going to do that."
Suffrin said other governmental entities have suffered from inaction when it comes to similar liabilities.
"A lot of districts and governmental entities that have the same responsibility are just sitting back and doing nothing," Suffrin said. "They just kind of have it on the back burner and we are just trying to be proactive and address it."
District 7 board member Arthur Aucoin likened the decrease to measures taken in the private sector.
"I know in industry right now this is pretty much prevalent to things going on in the chemical plants up and down the river," Aucoin said. "This is what they are doing with new employees. They’re not receiving additional benefits."
The proposition is expected to receive a full vote at the August 22 school board meeting.
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