Politics & Government

School District Will Save $2M Per Year with Retirement Benefit Change

Faced with rising insurance costs and reduced state aid, the Whitefish Bay School Board approved a plan that would reduce the annual cost of providing retirement benefits by $2 million.

After months of actuarial studies, committee meetings and discussion, the Whitefish Bay School Board Wednesday night approved a plan that reduces the district's cost of providing retirement benefits.

Whitefish Bay School District officials say the district's current retirement benefits are unsustainable, costing the district $3.1 million per year, when last year, for example, the district only set aside $970,000 for retirement benefits.

The district formed a special subcommittee eight months ago and has since come up with a plan that brings the annual required contribution to just over $1 million.

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The school district's cost of providing retirement benefits has ballooned with exponentially rising health insurance costs. At the same time, the amount the district has been able to contribute has also slimmed due to recent state budget cuts.

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.

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Since the initial conceptual plans were presented, district officials have surveyed district employees and gathered input at public meetings. Superintendent Mary Gavigan has said the subcommittee tried to balance the district's need to reduce unsustainable benefits with the retirement promises made in the past.

"This plan focuses on making the benefit fiscally sustainable while also recognizing the ethical, moral and integrity issues that needed to be considered in recognition of past agreements with our employees," Gavigan said at .

District officials have also said they are among the first Milwaukee-area school districts to make these types of policy changes, so they may have to make adjustments in the future to keep Whitefish Bay School District benefits competitive with other area school districts.

Benefit changes

Under the plan, employees hired after July 1, 2011 would not receive post-retirement health insurance benefits or a severance benefit when they retire.

These newer employees would receive a current-funded, employer-paid tax-sheltered annuity set at $1,000 per year of full-time service for those groups who are eligible. The benefit requires 20 years of service and would be forfeited if the employee leaves prior to 20 years and the minimum retirement date.

The TSA was developed as a way of leveling the playing field for newer employees, while giving the district the ability to recruit and retain new hires. Yde said the $1,000 TSA could be adjusted to remain competitive with other school districts in the future.

For employees hired before July 1, 2011, the district will cap the retiree health insurance contribution, maintaining the same percentage of the premium in effect at the time of retirement, provided that the dollar amount doesn't exceed the amount paid during the 2011-2012 school year.

Those employees' severance benefits would also be frozen at the level earned as of July 2012. Currently, the district's severance benefit allows 110 days pay and 1/12th of a day's pay for each unused sick day.

The plan also pushes back the minimum age for which an employee can apply for early retirement from 55 to 57. Some employees have been hired under contracts allowing eligibility at 55, but this proposal would set the minimum age of 57 to all employees.


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