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Teachers fear proposed cuts to health care funding - The Day
By Johanna Somers
Publication: The Day
Published February
23. 2014 4:00AM
Some worry state budget plan could deplete insurance fund
While Gov. Dannel P. Malloy is
proposing in this year's budget that retired teachers pay less state income tax
on their pensions, he is also seeking to reduce the state's funding for their
health insurance.
The reduction would affect both those covered by local
school boards' plans and participants in the Teachers' Retirement Board
Medicare supplement program. Some fear it could start depleting the health
insurance fund by fiscal year 2017.
The Teachers' Retirement Board administrator, Darlene Perez,
said last week that if the state continues to contribute less than is legally
required, teachers could have to put more toward their benefits, the state
could have to fill a funding gap or the insurance plans might have to be
changed.
Malloy's biennial budget proposal in 2013 included zero
funding for the teachers' Health Insurance Premium Account this year and next,
but the legislature raised it to 25 percent of the retiree health insurance
costs, still less than the statutory requirement of 33 percent.
Now the governor is proposing the state keep the 25 percent
rate but reduce its contribution in fiscal year 2015 by $6.5 million because
monthly premiums have gone down.
"Instead of reducing the money, or taking out money
because premiums went down, why not leave the money in and make it closer to
the 33 percent?" said Mark Waxenberg, executive
director of the 43,000-member Connecticut Education Association. "The
issue of robbing Peter to pay Paul is pervasive."
The state is required by law to cover any shortfall caused
by insufficient contributions. The retirement board expects $133.6 million in
revenue and $135 million in expenditures in fiscal year 2017. If the health insurance
fund were to run out, the state and Teachers' Retirement Board would have to
determine a different cost-share plan, Perez said.
"If they continue underfunding the system, it could put
it in jeopardy," Waxenberg said.
"There is always concern," Perez said. "But I
feel like we are in a more secure environment today than when we adopted the
(current) two-year budget."
Teachers have increased contributions to the fund in the
past, Waxenberg said, but "there has to be good
faith on everyone's part." In 2004, active teachers' contributions were
increased to 1.25 percent of their salary from 1 percent. Retirees also pay a
portion of their premiums.
The state, the active teachers and the retirees are supposed
to each contribute one-third of the total toward retired teachers' health
insurance. If the teachers have to pay more than their share, that is not a
good-faith negotiation, Waxenberg said.
Matt O'Connor, spokesman for the American Federation of
Teachers Connecticut, said a solvent health care fund would allow teachers to
retire with dignity.
"Going forward, we'll continue to support efforts to
shore up the fund because it is consistent with our commitment to health care
for all," O'Connor said.
The state contributed nothing to the retired teachers' health
insurance fund in fiscal years 2010 and 2011, before Malloy was elected.
"We will lobby this year to restore the one-third
funding," said Robyn Kaplan-Cho, retirement specialist for CEA. "They
should pay the full one-third just like teachers have always been required to
pay their full share.
"We still have major concerns about the solvency of the
retiree health fund moving forward," she said.
Perez said, "What I am hearing from the teachers is
that they are not happy that he has cut it back, but they are thankful that he
didn't take it away altogether."
Both of the state's teachers unions, CEA and AFT Connecticut,support Malloy's tax
cut proposal to reduce income taxes on retired teachers' pensions by half. This
cut would decrease retired teachers' pension taxes by $23.1 million in
fiscal year 2015. The governor has said this is fair because teachers don't
receive Social Security. Connecticut
would join several other states in reducing the income tax on teachers'
pensions for that reason, Waxenberg said.
"But one shouldn't be played against the other. That is
a separate issue," he said. Teachers have been working for at least 15
years to reduce the income tax on their pensions and will continue to lobby for
restored state contributions to the teachers' retiree health fund, he said.
Teachers' health benefits are more vulnerable than those of
state employees because they are not the result of collective bargaining. The
general statutes uphold teachers' retiree health benefits, but the General
Assembly could amend or override that legislation.
CEA initially advocated for a state constitutional amendment
that would have prevented underfunding the pension or reducing the benefits
promised to teachers. "We were not able to get any traction on that,"
Kaplan-Cho said.
The compromise was to make teachers' pensions a
"contractual right" by law in 2003. That change specifically left out
retiree health benefits, which suggests that health insurance could be changed
by future legislatures for vested employees and retirees, according to a 2010
report by the state's Office of Legislative Research.
The state "didn't want to be locked into the inability
to change retired health benefits," Kaplan-Cho said.
j.somers@theday.com
http://www.theday.com/article/20140223/NWS12/302239908/1070/rss06