School District: Retirement Benefits Must Give, but How Far?

Whitefish Bay School District officials are mapping out reductions in retirement benefits, which they say are unsustainable due to state revenue cuts.

Actuarial analysts have calculated the district needs to set aside $3.1 million per year to fund severance packages and health insurance costs included in the district's retirement benefits. Last year, the district's budget only set aside $970,000.

Shawn Yde, the district's business manager, said these post-employment benefits were negotiated decades ago, and health insurance costs, in particular, have quadrupled over the past 15 years. Those increases, coupled with decreasing aid from the state, mean that continuing to fund retirement benefits would come at the expense of staff cuts, salary cuts or increased class sizes.

"The current (state) revenue cap doesn't provide enough to cover current operations, let alone cover health insurance increases for retirees," Yde said. "Something's got to give."

The district has tried to negotiate cuts to retirement benefits over the past 12 years but has not been able to substantially reduce the post-employment benefits liability. With the passage of Act 10 in the state Legislature, the district now has control over most salary and benefits costs.

How district is proceeding

The school district formed a subcommittee to analyze Other Post-Employment Benefits in September, and they briefed the School Board last week on some of their findings. The board is expected to discuss this issue at future meetings and could make a decision on the matter as soon as June.

Yde said the subcommittee is trying to balance fiscal constraints with concerns about recruiting and retaining quality staff and honoring promises that have been made to employees.

"We need to make sure we are competitive with other districts so we can continue to attract and retain quality people," Yde said. "We can't just wipe out employee benefits or you lose that ability."

Some possible options being considered include:

• eliminating post-retirement health benefits for new hires
• capping the district's contributions at their current dollar value
• freezing benefits earned based on years of service to date or some other variation.
• modifying eligibility requirements
• current funding options such as 403(B)’s, HRA’s, HSA’s, or
  increasing direct compensation.
• review implications of federal laws on non-discrimination

Eight early retirements accepted

On Friday, the board approved eight early retirements at the same benefit levels previously offered, with the caveat that any future increases in health insurance costs would not be covered by the district. Those benefits may not be the same benefits offered for future retirees.

The teachers accepted for early retirement include Whitefish Bay Middle School teacher Margaret Harrington, elementary schools orchestra teacher Jonathan Brodie, high school science teacher Mike Roth, middle school teacher Barbara Gallagher, high school gym teacher Sue Vielgut, Cumberland second-grade teacher Pam Marshall, high school band director Stan Luth, and Richards fourth-grade teacher Mary Kreul.

Current post-employment benefits include a severance package of 110 days pay and 1/12th of a day's pay for each unused sick day. Health insurance costs vary by employee group and the employee's date of retirement.

(This article was updated Tuesday with Jonathan Brodie's correct title.)