Teachers grab extra incentive to retire

Wednesday, July 25, 2007 | 7:14 a.m.

With the window closing for public employees to enroll in a state health plan for retirees, the Clark County School District is facing a drain on two of its most critical resources - teachers and money.

Thousands of veteran teachers who now pay for health insurance through their union may decide to take early retirement within the next 16 months and sign up for state insurance coverage, because their premiums would be largely subsidized by the School District.

Those who now pay $435 a month for individual HMO coverage through the union-run Teachers' Health Trust would, as retirees, have to pay only about $50 a month for PPO coverage under the state's Public Employees Benefits Program. It would be that cheap because the district would pay about $500 a month toward each retiree's insurance premium - an amount that could total $1.2 million a year for every 200 employees who retire and join the state plan.

The School District is trying to determine how many of its 18,000 teachers would qualify for retirement benefits under the state plan by the November 2008 deadline. To qualify, teachers must work for 30 years, or be at least 60 years old . Teachers with fewer than 30 years of service are allowed to "buy" additional years toward their retirement.

The downside to the state insurance plan: The retirees would have to pay large deductibles for medical coverage. There are no deductibles under the union's HMO health plan.

Still, the financial incentives to retire and join the cheaper state health plan, even with greater deductibles, outweigh the motivation to keep working and pay larger premiums for union health coverage, said John Wise, a teacher with 26 years of service.

"We really have one option - to get the state insurance," Wise said of the savings to longtime teachers . "It's almost like they're forcing us to retire."

Answering the retirement benefits question is a top priority as the district and the union prepare for upcoming negotiations, Clark County Schools Superintendent Walt Rulffes said.

"We expect this to exacerbate an already trenchant problem," Rulffes said. "There is a very real concern that we will have an exodus of teachers retiring."

The looming deadline illustrates the uncertain landscape of insurance coverage for public employees, and sets the stage for more changes.

Four years ago, most of Clark County's retired educators were enrolled with the Teachers' Health Trust, which is run by the union but to which the School District contributes as part of the negotiated contract.

In 2003 the Legislature required all non state public employers, including municipal governments and school districts, to subsidize the cost of retirees who signed up with the state's Public Employees Benefit Program. The district complained that it was being saddled with millions of dollars in new costs.

In 2004 the Teachers' Health Trust phased out its coverage for its retirees, allowing them to enroll in the state plan or sign up with an HMO. The state plan was far and away the more popular of the choices because it was cheap and allowed retirees to pick their own health care providers.

But what was good for retirees put a financial pinch on the state, whose insurance plan was suddenly inundated with retirees, many of whom required expensive medical care.

To help the state plan recover from the financial hit, lawmakers decided this year that if employers were going to allow retirees to join the state insurance program, they also would have to allow their younger employees - who demand fewer medical services - to join the state plan .

The cost to the district of switching 18,000 active teachers to the state plan would be about $30 million more per year, said Peter Alpert, chief executive officer of the Teachers' Health Trust.

Rulffes noted the district does not have the authority to decide whether current employees are moved to the state plan.

"The Teachers' Health Trust is grounded in contract," Rulffes said. "We do not have unilateral authority to make that kind of decision."

Even if the Teachers' Health Trust came up with an alternate retiree health care plan, the district still would need the state's help to offset the costs, Rulffes said.

"I question the ability of the education system to provide retirement subsidies within the current funding level," Rulffes said.

Leslie Johnstone, executive officer of the benefit program, points out that nothing prohibit s the district from offering teachers incentives to stay with the union's Health Trust.

"There's nothing to stop them from subsidizing coverage with the local plan," Johnstone said. "The cost (to the district) is going to be about the same, but it might keep people in the workforce longer."

Wise, the teacher, said he's been more than satisfied with the coverage he has received from the Teachers' Health Trust. However, he would support the district moving all 18,000 teachers to the state plan, if it meant protecting retirees down the road.

"You give 30 years of your life to somebody only to have them cut you loose?" Wise said. "When we retire, they're just going to throw us out into the alley?"

Mary Ella Holloway, president of the Clark County Education Association and who is approaching her 28th year with the School District, said she is struggling with whether to put in her notice before the November 2008 cutoff. She hopes the district and the union will come up with a reasonable and affordable alternative by the first of the year.

"The only people who are advocating this (switching to the state plan) a re those near retirement," Holloway said. "If the state and the district have to kick in more for retirement benefits, that could cut back on future pay raises for teachers. The money has to come from somewhere."