Schools to use new medical benefits system

The Superior School District approved a post-employment agreement with the teacher's union Tuesday that changes the way health care will be provided to retiring teachers.

The Superior School District approved a post-employment agreement with the teacher's union Tuesday that changes the way health care will be provided to retiring teachers.

Instead of providing a defined benefit in the form of health insurance, the district will fund a defined contribution, said Jack Amadio, district business manager.

Currently, the district offers health insurance to retirees age 55 and older until the age of 65, when Medicare takes over. The district pays a premium for employees that is capped at the rate of insurance the year following the employee's retirement.

The new agreement with the Superior Federation of Teachers will provide each retiring teacher with $100,000 in a trust fund to be used only for health care costs such as insurance premiums. Money will be paid to each retiree during a period of five years following retirement. The $100,000 price tag per retiree was based on an actuarial study that evaluated the current cost of health insurance factored over 10 years.

The move takes the benefit cost out of the hands of the health care industry and puts it in the hands of the district, Amadio said.


The agreement provides a new healthcare system to teachers who join the district once the revised contract takes effect. They'll receive $1,300 per year in a healthcare savings fund. It will be set up similar to a 401K where money is invested and increases over time.

The invested funds will be available to employees upon retirement. If the employees discontinue employment before retirement, the funds revert to the district, Amadio said.

"I think this is a very good move," board member Richard Van Rossem said during the meeting. "The administration and teacher's union is to be commended."

This change results from new Government Accounting Standards Board rules. GASB is an organization that establishes accounting practices for state and local governments.

Local governments and school districts across the nation are struggling with the new standards, which require reporting of projected costs for post-employment benefits. The rules take effect for the 2007-2008 school year.

Government organizations have offered insurance to retiring employees for decades and recently those costs have skyrocketed. This cost increase is the reason for the new reporting rules.

The new post-employment agreement will allow the district to report its obligation to future retirees at a set amount without having to add projections for the rise of health care costs.

The GASB rules were first approved in 1999. And school administrators has been looking ahead and planning for the change.


In 2003, the district set up a trust to fund the retirement benefit and started working with the union to begin developing this agreement.

Two community members expressed concerns Tuesday about the cost of the new agreement.

Van Rossem and Amadio attempted to explain how the agreement will save the district, and by extension the taxpayers, money by relating the future costs.

The actuarial study projected that in 30 years, the district would be paying $18 million in health care to retirees under the current benefit agreement. Under the new policy, the district would be paying $1.9 million.

Contract negotiations with the Superior Federation of Teachers will resume in January.

Anna Kurth covers education. Call her at (715) 394-4411, ext. 138 or e-mail akurth

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