School districts struggle to pay retirees’ health benefits

Bob Kelleher:

Some Minnesota school districts may have to go into debt to pay for the rising cost of health care for their retired employees.
Local Minnesota governments have until October to sell bonds — without a public referendum — to help pay for retired employees’ health care. But with the economy in the tank, some people are unhappy about paying higher property taxes to fund someone else’s health benefits.
The retirees’ health policy costs fall under something accountants call OPEB — Other than Pension Employee Benefits. OPEB obligations, especially for health care, are really starting to put the squeeze on school districts statewide.
“We’re actually paying for a larger number of retirees, from a pot that is generated by a smaller number of students,” said Robert Belluzzo, superintendent of the Hibbing school district.
In that district, $1 of every $5 of its budget goes to retiree benefits, primarily for health care. Meanwhile, Belluzzo says the retiree pool keeps growing.
“The number of retiree health insurance plans is more than the number of active insurance plans that we have,” said Belluzzo.

8 thoughts on “School districts struggle to pay retirees’ health benefits”

  1. Last time I checked (couple of years ago) Madison public schools was not putting their health care contracts out for bid,rather had a sweetheat contract with the teachers union who gave the contract to a union officials favorate health care company(he sat on the board of the company)

  2. I don’t believe that’s an accurate statement. My understanding is that MMSD employees have a choice from al the major HMOs in town, including WPS, the one you refer to (John Matthews of MTI is on their board). I have no idea how many MTI members choose which HMO but certainly health care costs are a major factor in the contract with the district- a contract that is up for renegotiation.

  3. here’s my general understanding. perhaps someone else has more information.
    increasing number of members, especially younger members (I believe), opt for GHC, which does not require an employee contribution. when hmos first started more members selected WPS.
    my understanding is also that the union position is that it’s up to its members to decide the allocation of resources negotiated between wages and benefits.

  4. MMSD bargains with several unions. All unions, except the the teachers portion of MTI, have agreed to steps to reduce health care costs in the past two years. MTI’s teachers bargaining unit is the only MMSD union that continues to have WPS as a health insurer. Over half of the people in the teachers’ unit choose GHC. Those numbers are growing each year.

  5. Thanks Lucy. I’ve heard, from teachers, that GHC is much less expensive. The flip side is that teachers closer to retirement prefer WPS because they offer providers nationwide- hence their expense.

  6. Dunno. I believe that the trend is to hang on to WPS up to retirement and then switch to GHC because the premiums are much lower. I believe that the largest group of WPS users are concentrated among the most senior teachers who have not yet retired.

Comments are closed.