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Franklin School District reduces retirement benefits

March 20, 2014

Franklin — Teachers were livid when the Franklin School Board approved to alter the district's retirement benefit program on a 4-3 vote March 12.

Since 2013, the district has reviewed several options that would change its retirement benefits to save on costs. After receiving input from the administrators, the board considered four options, but primarily focused on Option 2 and Option 3.

Option 2 would grant long-term employees, ages 50 or older and district-employed for at least 15 years, the existing retirement benefit.

Option 3 would grant long-term employees those benefits only if they were eligible by July 1, 2013. Employees that did not qualify by that date would receive the benefit but would be required to pay the same percentage of the premium for health insurance as active employees.

After consulting with faculty a year ago, the administrators recommended Option 2.

"The reason we recommended Option 2 is when we looked at the purpose behind (the change) and looked at the long-term financial impact on the district, we think it's an option that's good for our staff," Franklin Superintendent Steve Patz said. "We have to make a move, there's no question about that, (but) I also think we have to keep interest in our employees at a high level. ... It's important that we have people who want to come here and work (in the district)."

With its current benefits, the school district is projected to spend $105 million in retirement benefit costs by fiscal year 2051.

"Based off projections, the cost of health insurance extends beyond what the district budget can afford," said Jim Milzer, director of business services. "We need to cut down on costs because our budget can't continue the way it has been."

Option 2 would reduce the district's benefit costs by 59 percent, or $42 million over that time period.

Option 3 would reduce the costs by 60 percent, resulting in $41 million savings — a $1 million difference in savings.

"When I compare (the options') percent reduction in cost, they are all within a couple of percentage points of each other," board member Melissa Klein said. "In my mind, materially, they're practically the same. So I don't know the extra 1 or 2 percent points are worth taking that much away from our staff members.

"... Option 2 still cuts our costs by 59 percent; that's drastic. I don't think we need to go to 60 percent."

Board member Debbie Larson agreed.

"(Under Option 2), we're not taking as much away from our employees and we're still making our district an attractive place to get new employees," Larson said. "I just don't see a huge amount of savings between (the options) and I would rather keep our staff happy and secure in our buildings — therefore having a better impact on our children and our community — than to cut small amounts of dollars every year just to make (more savings)."

Klein, Larson and board member Aimee Schlueter moved to approve Option 2, but the motion failed in a 3-4 decision.

"One of my concerns, looking at Option 2 and Option 3, is that any change we make now may not have any budgetary impact for at least eight more years," board member Tim Nielson said. "In Option 3, the entire district would share these changes, not just (those who don't yet qualify for retirement benefits). I think having everyone help with the cost sharing is something that makes sense, considering all the changes we're making and investing into the district."

"This isn't fun," Nielson said later in response to vocal criticism from the audience. "This is a very weird situation to be in, but Option 3 keeps everyone involved, and it's a $1 million (in savings) compressed into about 20 years."

Board Member Linda Witkowski also favored Option 3.

"Sharing the cost keeps everyone on the same page, with the same goal, " Witkowski said. In order to get "our hands around the health insurance (costs), we all need to participate and do what we can to keep those costs equal. ... These small changes do matter; over time, they add up."

Board member Alan Aleksandrowicz made a motion to approve Option 3, which was approved by Nielson, Witkowski and Janet Evans. Klein, Larson and Schlueter voted against the motion.

Option 3 means "less dollars to benefits, but more to education," Evans said. "Less spending helps keep jobs."

In response to the decision, enraged employees interrupted meeting proceedings with exasperated sighs and jeers, including one man who told the board members to "shove it."

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