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Janesville schools seek savings on retirement benefit

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Frank Schultz
November 8, 2013

JANESVILLE—The Janesville School Board is seeing savings that it could never have gotten when union contracts were in place.

The board already has saved several million dollars on employee health care by changing health plans and charging employees more for premiums.

The controversial law known as Wisconsin Act 10 allows boards to be creative in how they structure employee benefits.

Now, the board is eyeing the longstanding early-retirement benefit program enjoyed by teachers, administrators and some other employees. The school board on Tuesday will consider four proposals to change the benefit and save money.

The benefit has paid the health insurance premiums for many retirees. Certain employees receive four years of post-retirement health insurance and an additional four years if they banked enough sick days over the years.

The insurance acts as a bridge from the time their employee health plan ends and Medicare begins.

Problem: Health-care costs skyrocketed in recent decades, making the benefit increasingly costly and uncontrollable.

A solution, at least in the minds of some school board members, is to restructure the benefit so that costs can be predicted and planned for.

A key to the changes, many have said, is to grandfather the old program so that longtime employees would receive the benefit they had been told they would.

The board on Tuesday will be asked to consider four proposals that could be sent to an actuary, who would calculate how much each one would cost.

The goal is to cost out at least three scenarios, according to staff. The costing price is an estimated $1,500 to $2,000 per scenario. A final, more detailed report could cost upwards of $10,000.

Following are some details from each of the proposals:

--Scenario 1—Employees now 45 or older would get the old benefit of four years of health insurance. They could earn up to two additional years by converting sick days, not four years.

Remaining accrued sick leave would be converted to dollar credits and added to a health care account to pay medical costs.

The new benefit would contribute a set dollar amount into the health account of each eligible employee. Employees would be able to take the money in those accounts with them whenever they left the district, retirement or not.

-- Scenario 2—No change to the current plan.

-- Scenario 3—Starting July 1, 2014, any employee 45 or older would retire with the old benefit. 

“As a result of not having (the early-retirement) liability after that, the district may think of other ways to recognize, reward and retain their employees through higher salaries or an employer contribution of a set dollar amount into a Health Care Account for each eligible employee,” the memo states.

-- Scenario 4—Devised by teacher and longtime union official Jim Reif, this plan would maintain the current benefit for those near retirement and fund health care accounts for others.

Employees would have to work at least five years to begin vesting their health accounts. District contributions to the accounts would rise as employees reach their middle years, to encourage longevity.

Employees would be able to take half the account after five years of employment, 75 percent after 10 years and all of it after 15 years.

Money from employees who leave early would boost the amounts in remaining health accounts.

Employees would first have to bank 60 sick days. After that, they could cash in up to 15 unused sick days each year, at 50 percent of the employee base per diem. The money would go into the health account.



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