Maryville City Schools grappling with retirement health benefits cost

Early retirement incentives, specifically the one paying medical benefits to age 65, were a focus of concern at the Dec. 3 Maryville city schools meeting.

Teachers and administrators were concerned about losing the benefit while school officials were concerned about being able to pay it.

Schools director Mike Dalton said federal law enacted this year required public entities acknowledge how much money in their budgets was needed to pay for benefits.

Dalton said he hadn’t brought it up to the board because the city hadn’t completed their actuarial study until recently. “I explained it was something we had been working on but hadn’t made public until we got the actuarial study. We didn’t have figures to talk about anything,” he said. “That was something that had come up during this year and something I didn’t want left for a new superintendent to have to start out with.”

Dalton said a policy is in place that when school employees reach retirement age of 55 and have 30 years experience, they qualify for retirement. “The system has been offering a benefit that paid medical benefits to 65 when Medicare kicked in,” Dalton said.

The actuarial study said that to continue the program as it is now, the cost to fully fund all the benefits that have accumulated to now is $27 million. “I’m not sure what kind of period of time that covers. The recommendation is if you’re going to offer it, you put money back to pay it,” he said. “The study says to fully fund it we need to put $1.4 million into the operating budget. It would increase our budget by $1.4 million.”

Dalton said it is probably going to be very difficult to fund the current program in the future because of the increase in medical costs down the road and the growing number of people that will qualify because people live longer.

To make a change in the retirement incentives program requires 180 days notice. “I had suggested that and had put it on the agenda that we go ahead and start the 180-day notice. We were going to change it to reduce the cost of it,” Dalton said of the retirement package.

Dalton said the next item on the agenda during the Dec. 3 meeting was to approve a committee of staff and administrators to look at what the system is offering to make it more affordable down road. Board members didn’t vote to give the 180-day notice but instead chose to create to committee to research the changes.

“Because there was a lot of concern from people not understanding what was going on - we hadn’t explained it well - it meant we were going to terminate the current program and approve a committee to study changes to make it affordable,” Dalton said. “All the board did, because there was so much concern, we said let’s wait to start the notice period and give the committee a couple months to make recommendations so people know what changes are going to be before the notice period starts.”

Dalton said this will be an issue the new schools director must face. “At least it’s not something the new person has to introduce. I wanted to address that before I left,” Dalton said. “You don’t want to promise something today and have to take away from a kid’s education down the road to pay for it.”

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