Proposed Graded Scale Premium for School Employees

August 27, 2007

Senate and House Education Committee took up a package of bills to change school employee retirement system, changing the retiree health care benefits to a graded scale premium, (SB 546, SB 547, HB4797, HB 4798). Under these bills school employees do not get full health care benefits unless a retiree puts in 30 years of service, and under the Senate version, it bars collecting health care benefitsuntil reaching age 60. In tying the benefit to the years served,retirees would get a subsidy of the health care premium costs of 3 percent for each year after they served 10 years until the maximum isreached with 90 percent for 30 years of service. Retirees could buy upto five years of credit to qualify for benefits, but only if they hadserved at least 10 years. The graded premiums for school employees'contributions to the system would be changed for those who earn over$15,000 a year, who would have to pay 6.4 percent, instead of thecurrent 4.3 percent, of the amounts over $15,000 in addition to continuing to pay a base amount of $510 annually. For those earning less than $15,000, the premiums would remain unchanged. The change would save local districts an estimated $7.35 million the first year. A similar system was implemented for the state employees retirementsystem in 1997.