(4/20/01) I received more input from teachers supporting the governor’s recommendation to increase the retired teachers’ health benefits than from any other constituents this year. Teachers asked that the House grant retired teachers more relief from the escalating cost of health insurance.

To put this issue in perspective, two newspapers reported in January that the governor had made a deal with the teachers union (NEA). In return for their endorsement last fall, prior to the election, the governor promised to propose more state contributions for retired teachers’ health insurance. Although the NEA and the governor denied it, the issue of increasing retired teacher health benefits proposed by the governor this session has been clouded by this alleged quid pro quo.

There are currently 3800 retired teachers who receive retirement benefits. About 2500 are enrolled in the health insurance program, 1,600 as individuals and 850 with their spouses. Half of the current health insurance cost for retired teachers is paid for by the state. They are insured under the BC/BS JY plan, the Cadillac of all health insurance plans in Vermont. No benefits are offered to spouses. The total policy cost for the JY plan for a retiree is $235 per month.

While the governor has publicly lamented that soaring health care costs are draining state dollars and has proposed trimming health benefits for many low income Vermonters, he added money to his budget to increase teachers’ health coverage. The governor proposed to increase the states’ contribution to 80% of the JY plan for retirees and 50% for spouses. He proposed spending $3 million of state funds to do this. The estimated cost was $3.8 million.

The House government operations committee took testimony on this issue and proposed raising the state’s contribution to 75% for retirees and 50% for spouses in exchange for using a $250 deductible comprehensive policy ($250 comp) as the base rather than the JY plan. Active teachers would contribute 41.5% of the additional costs of the increased benefits and the state would contribute 58.5%. The maximum out of pocket costs for the retired teacher would be $500 including prescription coverage. This would cost the state an additional $1.6 million over the current 50% JY plan.

The House appropriations committee, working under tight budget constraints, proposed that the state contribute 65% for retirees and make no contribution for spouses, at a costs to the state of $163,000 using the $250 comp plan as defined by government operations. A teacher who switches from the JY to the $250 comp will save $688 a year in premiums.

In their correspondence to me, many teachers were also concerned about the state not meeting its actuarial obligation to their retirement fund. In fact, the value of the fund has risen from 80% of the desired level of funding in 1995 to 88% in 2000. Though the state has only appropriated the actuarial request four times in the last 20 years, the fund value has increased because of increasing stock values. However, due to the recent declines and history of inadequate contributions, the house appropriations committee decided to supplement this year’s appropriation to the fund.

Over the years, the state has also made several improvements to the retired teacher’s benefits including reducing the vesting period to 5 years and increasing credit for military service in the last 2 years. Also, once a teacher is vested, there’s no requirement for continuous service to be eligible for retired teacher health benefits. The teachers’ retirement system continues to evolve and the House continues to take prudent steps in a positive direction to support teachers.
 

Thank you for your calls and notes. I can be reached at 658-3975 (home), 228-2228 (State House) and via e-mail

Rep. Frank Mazur
South Burlington