October 18, 2006
How much do retirees pay for medical benefits in other school districts? Is it a common practice to convene special committees to make recommendations about benefit packages? Is it ethical to appoint members to the committees who receive those benefits? Those are just some of the questions East Hampton School Board President Mike Tracey wants answered.
In a recent interview, Tracey admitted he was "embarrassed" when questions from this newspaper shed light on a situation that appears to have been going on for years: although the district can ask retired staff to pay up to 50% of medical costs, no such request has been made for perhaps as long as a decade. And that's cost the district tens of thousands of dollars in lost contributions.
It stops now, Tracey vowed. He plans to ask the district's labor attorney to research the history of how the school has managed benefits for retirees since it became self-insured over a decade ago.
To learn exactly how much money the district has paid out would take an in-depth actuarial analysis, Tracey related. Determinations would have to be made as to how many retirees received benefits in any given year, since the number fluctuates. Once the retiree becomes eligible for Medicare the district stops paying.
Right now, 40 former employees are eligible. Tracey said that by not charging them anything, the district loses only around $20,000.
But that's at a 10% co-pay. According to the board president, the district would not ordinarily ask retirees to kick in the full 50% immediately upon making the discovery. Instead, incremental increases would be more legally palatable. According to district superintendent Ray Gaultieri, New York State law doesn't permit the district to raise retirees' contributions at a rate any higher than employees' costs are increased. Also, he noted that one court decision determined that retirees can't be charged any more than their exit agreement states, meaning whatever they agree to pay when they leave the school's employ is the amount they pay for the life of their benefits.
Benefits for each retiree runs about $5000 per year. Ten percent of that for 40 former staff members equates to the $20,000 shortfall. Fifty percent, which is as high as the contract allows, would mean an extra $100,000 the district wouldn't have to collect from taxpayers.
While it remains to be seen how the dollars have added up, Tracey expressed concern about "an inherent conflict of interest" in the composition of the committee charged with making recommendations about health benefits. The committee is comprised of a representative from the school's administration as well as reps from the teachers and non-teachers unions. A member of the school board and an alternate school board member are also appointed to the committee. Tracey wants to review the rosters of the committee over the last years to see if any of the elected school board members were also retirees benefiting from recommendations made. Currently Wendy Hall is the board's representative on the committee.
John Ryan Sr. is also a member of the current board and a former school employee. He has served on committees relating to health insurance for district employees dating back to when he was a teacher with the district. He made clear that the advisory committee serves as a watchdog of the company that administers district health benefits and is an intermediary for beneficiaries who have coverage issues. Employee contributions have not been an issue that has come before the committee, he said. Members feel the issue is best addressed during contract negotiations. Asked recently to weigh in on the notion of retirees' contributions, the committee abstained, according to Ryan.
Since alerted to the situation by The Independent late last spring, the board has begun to consider requiring retirees to pay a portion of their benefits, 10%. At first, according to Tracey, irate union officials suggested asking for retroactive payments from all retirees. However, the board is leaning toward asking those who retire beginning next June to contribute.