Last month, we wrote that the Buffalo school district's budget included a special retirement incentive for teachers. That was true then, but isn't true now. The Buffalo Teachers Federation would have had to sign off on such an incentive, but the union decided to hold off.
CFO Barbara Smith said she expected the incentive to save $40,000 per employee and budgeted overall savings of $600,000 through the incentive. Even though the incentive is no longer being offered, however, Smith said she expects enough teachers to retire this year that the district will still see $600,000 in savings through the elimination of salaries.
If you're a teacher and supremely curious about the nuts and bolts of how the retirement incentive would have worked, read on.
The incentive was designed to encourage teachers to withdraw from the district's health insurance coverage, saving the district money while giving teachers the ability to purchase health coverage independently -- and pocket any extra cash. It's likely that the district will propose the same incentive again next year. We further describe the incentive this way:
The incentive would give teachers a one-time $5,000 bonus, plus $7,500 or $15,000 a year to withdraw from the district’s health insurance plan and put any of those dollars toward the independent purchase of a single or family health plan until age 65. After that, retirees could participate in the district’s Medicare Advantage Plan at no cost to them.
That's our "short version." Here's the district's "short version" (which is notably longer):
If you retire before July 1, 2014 and opted out of the district’s health care as a retiree, effective the end of this calendar year and you had a family plan then you would get a one-time $20,000 lump sum payment in the year 2015.
For each year, thereafter until you reach the age of 65 and became Medicare eligible you would get $15,000 per year. That would be until you reach 65 and then you would go on the district’s Medicare Advantage Plan, paid for at 100 percent of the cost to the district.
For individuals on single carrier plans (just themselves): They would be eligible under the same terms except they would get in the first year, 2015, a one-time payment of $12,500 and for each year thereafter they would get $7,500 until they reach 65. Then they would go on Medicare at 100 percent paid by the district.
There was also a one-time for anybody who went into this and didn’t like it the first year because they would be responsible for going out to purchase their own insurance (if they didn’t like the exchanges) they could opt back in and go on the district’s insurance. They would no longer get any further payments but they would be permitted to return as if they never left.
[The BTF] will not do the incentive because the Buffalo Teachers Federation didn’t feel they had enough time to explain this to their membership. They weren’t opposed to the idea but they didn’t feel they had enough time.
-- Sandra Tan