The Buffalo Public Schools budgeted about $55 million in each of the last three years for retiree health insurance – which is about $5 million more than the district paid last year to transport pre-K through eighth grade students on yellow buses.
This expense for former employees is not sustainable in the long term, the district said last week, and wrestling over the future of retiree compensation has become a major sticking point in testy contract negotiations between BPS and the Buffalo Teachers Federation.
In contract talks, the school district has proposed eliminating retiree health insurance for any teachers hired after ratification of a new contract, district general counsel Nathaniel Kuzma confirmed Friday. Current teachers with at least 15 years of service would remain eligible for district-sponsored retirement health insurance under this proposal. Teachers currently have to work at least 15 years before qualifying for the benefit, and any teacher now on the payroll would continue to qualify once reaching that threshold.
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The savings from not providing health insurance for future teacher hires represents an “opportunity cost” that could be applied to raising salaries for current and future teachers, Kuzma said. Salaries and retiree health insurance are inseparable topics, the district contends.
“We want to increase salaries to a competitive level, but we can’t do both and still sustain a district well into this century,” Kuzma said.
But BTF President Phil Rumore in late July said he did not plan to budget on retaining the district-sponsored retiree health insurance included in the current contract.
“I believe it’s against everything that unions stand for, to sacrifice newer members for existing members,” Rumore told The News this summer. The BTF president did not respond to multiple requests for comment last week.
For more than three years, the union that represents Buffalo public school teachers and the Buffalo School Board have been unable to agree on the terms of a new contract. The stress is beginning to show.
The impasse over retiree health insurance comes amid rising tensions in contract negotiations. The BTF has accused the district of improper practices and bargaining in bad faith to the Public Employment Relations Board, and voiced its frustrations at a rally of about 400 teachers at Buffalo Academy for Visual and Performing Arts before the Sept. 19 School Board meetings. Negotiators for each side sparred verbally at a special School Board meeting a week earlier.
The BTF later decided unanimously to give the Buffalo School Board and Superintendent Tonja M. Williams a vote of “no confidence” if a new contract is not settled by Oct. 11, the date of the next union meeting. The district plans to submit its contract proposal Oct. 7 to an independent fact-finder, who is tasked with evaluating the offers of both sides and determining a fair deal, though the recommendation is not binding.
Administrators hired after July 2023 will not be eligible for health insurance paid for by the district after they retire, under the terms of a new contract approved this week by the School Board.
The school district has already settled contracts with 10 of its 11 unions, but the teachers are by far the largest group. Kuzma said of the nonteacher settlements, six unions agreed to forgo retiree health insurance for future hires for the first time.
Unions for administrators, engineers, teachers aids and food service workers were among those to drop retiree health insurance. Kuzma said the district’s liability for Other Post-Employment Benefits, or nonpension retiree benefits, was estimated at $2 billion prior to these new contracts.
The chief difference between Buffalo Public Schools and many of its peers is that BPS under its current teacher agreement offers a health insurance policy, administered by BlueCross BlueShield, even after the age of 65, whereas other city and suburban districts may help cover only the gap years from early retirement at 58 until age 65, when Medicare coverage becomes available.
Kuzma estimated the district spends about $12,000 per teacher per year in retiree health insurance. In most insurance plans, retired Buffalo teachers must contribute less than 10%.
For reference, Medicare B (medical insurance) premiums cost about $170 per month, or around $2,000 annually, for individuals who made less than $91,000 annually. Medicare A (hospital insurance) is free for most people over 65. Those in the federal program often must contribute a percentage for many medical services.
The counsel explained that the district is self-insured; it does not pay premiums for health insurance but pays dollar for dollar. In other words, the $55 million in the 2021-22 budget represents how much retired BPS employees are actually utilized, Kuzma said.
If the BTF agrees to remove retiree health insurance, Kuzma said the district would explore ways to help retired teachers navigate post-retirement health insurance in the same way it did for other unions. For example, the contract with the Buffalo Council of Supervisors and Administrators union allows administrators hired after July 1, 2023, to trade in up to 120 sick days and use early retirement incentives toward purchasing a district-sponsored health insurance plan.
For BPS, both of these options already exist for teachers under the current contract, but Kuzma said the district would consider expanding the cap for how many sick days could be sold back. Many suburban districtslike Orchard Park, Cheektowaga-Sloan and Depew, allow teachers flexibility in how they allocate their retirement dollars toward health care.
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While the BTF and the district are at a standoff on health insurance, they are also not close in how much they believe teachers’ wages should increase. In comparing a recent district proposal to one of the union’s proposals at the Sept. 19 board meeting, Kuzma said the district would raise the average teacher salary from $72,000 to $84,000 over a three-year period. The union, Kuzma said, wants teachers to earn between $169,000 and $189,000 annually after three years, once the annual raises and cost-of-living increases it seeks are calculated.
Because current BPS teachers, under the district’s latest proposal, would still receive retiree health insurance, the district would not receive much financial relief in the short term, Kuzma said. The district’s offer would require current teachers – both in their active status and in future retirement – to essentially double their contributions toward a health insurance premium, from $1,500 to $2,793 annually for the most expensive family plan and from $600 to $1,257 annually for the most expensive individual plans.
“We’re not going to realize the benefit until 25-30 years down the road,” Kuzma said. “When you think about long-term planning, that’s what we’re trying to do. We’re not looking at the next 4-5 years, I’m looking at the next 40-50 years, and what this district is going to look like.
“You hear our teachers talk about, ‘Well, we’re this far behind where our suburbs are at in terms of pay,’ ” he said. “And our counter to that is, ‘Yeah, the suburbs, if you look at their collective bargaining agreements, don’t have retiree health insurance.'”
Ben Tsujimoto can be reached at btsu[email protected], at (716) 849-6927 or on Twitter at @Tsuj10.
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