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Oak Creek discusses changes to school district employee's benefits

March 26, 2013

Oak Creek - Plans to adjust teacher compensation and benefits were kicked around amid a full house at Monday's School District committee meeting.

The plans outlined by School District Director of Human Services Troy Hamblin are in their preliminary stages. They won't see definition until the state passes its budget, possibly sometime in April.

Cuts to current retirement health care plans, the inception of a self-funded health retirement account (HRA), and changes to paid time off and compensation were proposed by Hamblin to a room full of teachers. The changes will continue to be hammered out in an advisory committee composed of Hamblin, Superintendent Sara Burmeister and eight teachers in the months leading to a final state budget.

Retirement issues

Those retiring from the district are currently in a pay-as-you-go system on which the district currently spends $2 million per year. With a mounting $10.5 million in unfunded liability for currently retired employees plus those about to retire, the district wishes to create an HRA account.

The HRA account would set up a trust fund that employees would pay into tax-free to cover health costs as they retire. If an employee moves from the district, they lose the ability to take out funds from the HRA. The HRA fund can only be used for health insurance premiums.

The district broke employees into three tiers, with tier one including 29 employees closing in on retirement. The second tier, made up of 303 employees, would start paying roughly $2,000 annually into an HRA account. Plans for how much would be paid by the third tier, roughly 80 new hires, are still up in the air.

Hamblin is courting the idea of cutting back on how much the district will pay off for tier-one employees' retirement health insurance. The district is responsible for paying $80,000 over four years for retirees' health insurance. While the numbers aren't final, Hamblin would like to reduce the district's responsibility by a few thousand per year, maybe ending at $74,000.

Many teachers at the committee spoke against the potential retirement cuts, urging the district to respect those who have shown loyalty through their years of service.

"I think that would feel to many people as though the rug is being pulled out from under them," said Terry Grogan, president of the Oak Creek Educational Association. "It felt like they weren't given time to plan. It's scary to think that I've been here for 15 years and plan on being here for another 10 or more and we've been banking on being able to retire without having to scramble at the last minute."

Starting the HRA would be an eight-year project, with the district paying roughly $1 million into the fund. The fund would have a maximum balance of $2.75 million. After setting up the fund, Hamblin projects the district's yearly investment to be $1 million.

Time off

Plans were dished to drop the fragmented personal, sick or funeral leave time-off structure and adopt an all-encompassing paid-time-off structure.

Hamblin would like to reduce the total number of days of by one or two by giving teachers incentives not to take days off. One idea would have unused paid-time-off days put into an employee's HRA.

Another idea proposed would eliminate the unlimited nature of paid-time-off days to a set amount per semester.

Disability and life insurance

The district currently provides long term disability pay for three years after a 60-day elimination period. Hamblin projected the district could save roughly $20,000 annually by moving to a 30-day elimination period and reducing the percentage of disability pay.

The district pays 90 percent disability for the first two years, dropping it to 80 percent at the third year. The district could move to a 90, 80 then 70 percent pay structure.

Citing that one teacher died before retirement in the district, Hamblin contemplated the possibility of eliminating the insurance altogether. The district spends $25,000 annually on life insurance.

Moving forward

All the plans discussed on Monday's meeting will mulled by the advisory committee. The numbers could also vary depending on the state budget as well.

"As we start working our way through them (the changes) we can start attaching either a savings or expense to them and then we'll think about when we'll propose it," Hamblin said. "We would want things relatively well in place and in hand and have given people the opportunity to see what it is we're talking about before we're standing in front of them with a proposal they've never seen."

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