By Jennifer Eisenbart
Editor
For the past year and a half, the Burlington Area School District officials have maintained they are keeping up with post-employment benefits for retired employees with annual payments.
And for that same year and a half, School Board Member Roger Koldeway has been saying the district is operating that policy at a deficit based on an audit showing the district’s post-employment benefit liability.
The reality is neither party is necessarily wrong. In an extended presentation Monday evening, the School Board had two different presenters outline just what the district is facing.
So far, the district has paid its cost in those benefits – referred to as other post-employment benefits, or OPEB – each year.
For 2013-14, the district will pay $660,705, based on its current retirees and expected retirements of 67. That is down about $100,000 from 2012-13, when the district was paying for 74 employees, and down another $100,000-plus from 2011-12, when Act 10 was put into law and the district had a high of 77 retirees.
The cost in 2014-15 is expected to fall to about $584,000 as the number of retirees drops to 61, and then rise slightly to $586,050 in 2015-16, in spite of dropping to 48 retirees receiving the OPEB.
The number of employees receiving the benefit rises and falls per retirements each year, and people reaching the cap for their OPEB – normally between 3-8 years, said BASD Business Manager Ruth Schenning.
The reason for all the uncertainty is simple: the cost of health insurance. What may have initially been a benefit costing only a small amount per employee has ballooned with rising health care costs.
The total liability the district faces – if all OPEB came due at one point – increased from $16 million in 2010 to $22 million in 2012. The next circle can’t be calculated until the end of 2014.
That is a number that frightens Koldeway, who has been advocating for the district to find a way to close that gap and create a savings account – a trust fund, which only 25 percent of the districts in Wisconsin currently have.
Consulting accountant Natalie Rew told officials, “every single district is doing something different.”
The increase in liability is not a BASD problem alone. Health care inflation is creating a problem everywhere. Some districts have even gone the route of eliminating OPEB – though Nicole Weis from Key Benefits Concepts, who was also at the meeting, called that a PR nightmare.
School Board President David Thompson said the board relays the information, but right now the study is almost “academic.”
“We do this to make sure we are still within some normal framework as a school district,” he said.
And Koldeway doesn’t want OPEB done away with, either. He wants the district to address the rising gap between what it pays each year and the increasing liability.
Weis summed it up succinctly.
“I think the biggest thing is looking at your cash flow and making sure you can afford it,” Weis said.
“That’s the decision of the board, where do you want to move forward?” she asked.
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