Cal­i­for­nia schools fac­ing $24 bil­lion in re­tiree health costs

Ripon Bulletin - - Local / State -

SACRA­MENTO (AP) — Cal­i­for­nia schools are on the hook for $24 bil­lion in fu­ture health care costs for their re­tirees, a moun­tain of debt that’s forc­ing some dis­tricts to curb ben­e­fits or spend less on teacher salaries and class­room equip­ment, ac­cord­ing to a new state report.

Los An­ge­les Uni­fied School Dis­trict boasts a whop­ping 56 per­cent share — or $13.5 bil­lion — of the un­funded li­a­bil­ity, al­though it ed­u­cates nine per­cent of Cal­i­for­nia’s public school pop­u­la­tion. It’s his­tor­i­cally pro­vided some of the most gen­er­ous re­tiree health ben­e­fits, in­clud­ing life­time cov­er­age for re­tirees and their spouses.

Teach­ers’ union rep­re­sen­ta­tives ar­gued good health care is an es­sen­tial tool for re­cruit­ing and re­tain­ing teach­ers. But the loom­ing debt means newer teach­ers are of­fered skimpier ben­e­fits and less money is avail­able to spend in class­rooms.

“Dis­tricts have to pay our bills and our ba­sic bills are em­ployee costs,” said Teri Burns, a lob­by­ist for the Cal­i­for­nia School Boards As­so­ci­a­tion. “As that goes up, there’s just that much less that’s avail­able for ev­ery­thing else — books and mod­ern­iza­tion, com­put­ers, pro­fes­sional de­vel­op­ment.”

Be­yond re­tiree health ben­e­fits, Cal­i­for­nia’s teacher pen­sion fund is fac­ing nearly $100 bil­lion in fu­ture pay­ments it can’t cur­rently af­ford.

“A hun­dred and 25 bil­lion is like an an­chor for fam­i­lies with kids in public schools,” said David Crane, a Stan­ford Univer­sity lec­turer who writes on state pen­sions. “It drags down the per­for­mance of schools be­cause the money doesn’t even make it into the class­room. It’s a re­ally big prob­lem.”

Shan­non Haber, a spokes­woman for the Los An­ge­les Uni­fied School Dis­trict, said no one was avail­able to com­ment Tues­day on the dis­trict’s un­funded re­tiree health costs be­cause they were in meet­ings.

Spend­ing on re­tiree health ben­e­fits nearly dou­bled be­tween 2003 and 2016, from the equiv­a­lent of $91 per stu­dent to $171 per stu­dent, the report said.

That spend­ing varies widely among dis­tricts, which de­cide on an in­di­vid­ual ba­sis what ben­e­fits to give and for how long. Los An­ge­les, for ex­am­ple, of­fers life­time ben­e­fits,

while most dis­tricts stop cov­er­ing health care when a re­tiree hits age 65 and is el­i­gi­ble for Medi­care.

As costs sky­rocket and debts loom, schools are start­ing to scale back ben­e­fits for newer hires. In the 1980s, a teacher in Los An­ge­les earned ben­e­fits af­ter five years of

teach­ing. Now, a hire’s age and years of ser­vice must com­bine to be 85 or higher. Fresno Uni­fied, mean­while, ended life­time ben­e­fits in 2005. Many other dis­tricts are rais­ing the age and years of ser­vice needed to qual­ify for the ben­e­fits, ac­cord­ing to the report.

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