NCPA - National Center for Policy Analysis

REIN IN RETIREE HEALTH BENEFITS

May 11, 2007

Since January, Carlsbad (30 miles north of San Diego) Unified School District administrators and teachers have been engaged in contentious contract negotiations.  But don't let the usual back-and-forth over a pay raise obscure the bigger issue, says the North County Times: How much should taxpayers pay for the generous benefits that are offered to public employees by local elected officials?

Consider:

  • Last week the district announced that it will need to come up with almost $33 million to pay for retiree medical benefits. 
  • Unlike pensions, these are benefits that have been won by the union in previous contracts -- perhaps in the early 1990s -- not anything that is mandated by state or federal law.

The generosity promised by this health benefit is something our school districts simply can't afford -- not if we want them to keep educating our kids, says the Times.

Under the terms of the Carlsbad contract, the district pays the medical insurance premiums for eligible employees for 10 years after retirement, or until the age of 65, whichever comes first.

  • Teachers can qualify for the benefit with as few as 10 years of service, which seems to provide an odd incentive for early retirement in a field plagued by too few qualified teachers and too much turnover at struggling schools.
  • The benefit costs the district more than $10,000 per retiree on average.
  • Finally, and perhaps most important, this is a benefit that exists almost nowhere else beyond the public sector.

Ideally, the district should eliminate this benefit altogether from the teachers contract.  It must at least limit the benefit to existing employees, increase the number of years it takes to earn the benefit -- 20 sounds about right -- and dramatically decrease the amount it contributes, says the Times.

Source: Editorial, "Rein in retiree health benefits," North County Times, May 10, 2007.

 

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