MONROE - The Monroe school board is considering adopting a proposal to switch to a pre-funded retirement benefit plan, where teachers age 50 or older who have taught at least 10 years in the district would receive $8,670 per year for six years in a tax-sheltered annuity.
The district's Employee Relations Committee has reviewed ways to address retirement language that would maintain current benefits but eliminate the district's $5.3 million contribution after teachers retire, called the Other Post Employment Benefit liability. The change wouldn't affect teachers' Wisconsin Retirement System pension.
Monroe District Business Administrator Ron Olson updated the board on the proposed retirement benefits change at a meeting Monday.
Once teachers in Monroe reach retirement eligibility and have been with the district for 15 years, they currently receive a $52,000 benefit from the district. They receive a $6,000 tax-sheltered annuity (TSA) at retirement and $46,000 to be applied toward future health premiums.
Like a 401(k), a TSA allows employees to invest a portion of their earnings into a retirement plan.
"We want to go to where it becomes a pre-funded benefit and eliminate post-employment benefit liability," Olson said. "We think it provides some good flexibility while maintaining the benefits."
The Monroe school board will vote on the proposed retirement benefit change Feb. 26.
"We want to give a clear answer to our staff whether that benefit will remain," Olson said of the current option.
Olson said the district can't provide teachers with a choice of benefits when they reach retirement because it creates conflicts with an IRS law. The district had hoped to offer a one-time choice to anyone older than 50 between the new and old retirement benefit packages, he said, but allowing that choice also conflicts with the law.
He said the district's legal team is reviewing whether the district can have all staff members age 50 or older as of June 30 retain their current benefit so they are covered whole and then transition anyone younger than 50 to the new benefit.
The current exempt staff benefit is about the same as teachers in the district except they get the full $52,000 applied towards health insurance. The new benefit for exempt staff would be the same as for teachers. Exempt staff includes school nurses and managers of support staff, such as the food service director.
The current benefit for administrators is eight years of health and dental insurance at age 57 with at least five years in the district. The new benefit for administrators would start at 44 and would provide $8,670 per year for 12 years.
Board member Dan Bartholf said the positive is that hopefully the TSAs will grow with interest before teachers and other district employees retire.
"We are hoping more employees will put more of their own money away for retirement," Monroe District Administrator Rick Waski said. "We are hoping this (pre-funded benefit change) will be a catalyst."
Waski pointed out that teachers and district employees may need to be educated on TSAs.
"You can't take money out of tax-sheltered annuities without penalty until you are 59.5," he said.
Olson said the district is in the process of looking for a third party to administrate the TSA plan.
The district's Employee Relations Committee has reviewed ways to address retirement language that would maintain current benefits but eliminate the district's $5.3 million contribution after teachers retire, called the Other Post Employment Benefit liability. The change wouldn't affect teachers' Wisconsin Retirement System pension.
Monroe District Business Administrator Ron Olson updated the board on the proposed retirement benefits change at a meeting Monday.
Once teachers in Monroe reach retirement eligibility and have been with the district for 15 years, they currently receive a $52,000 benefit from the district. They receive a $6,000 tax-sheltered annuity (TSA) at retirement and $46,000 to be applied toward future health premiums.
Like a 401(k), a TSA allows employees to invest a portion of their earnings into a retirement plan.
"We want to go to where it becomes a pre-funded benefit and eliminate post-employment benefit liability," Olson said. "We think it provides some good flexibility while maintaining the benefits."
The Monroe school board will vote on the proposed retirement benefit change Feb. 26.
"We want to give a clear answer to our staff whether that benefit will remain," Olson said of the current option.
Olson said the district can't provide teachers with a choice of benefits when they reach retirement because it creates conflicts with an IRS law. The district had hoped to offer a one-time choice to anyone older than 50 between the new and old retirement benefit packages, he said, but allowing that choice also conflicts with the law.
He said the district's legal team is reviewing whether the district can have all staff members age 50 or older as of June 30 retain their current benefit so they are covered whole and then transition anyone younger than 50 to the new benefit.
The current exempt staff benefit is about the same as teachers in the district except they get the full $52,000 applied towards health insurance. The new benefit for exempt staff would be the same as for teachers. Exempt staff includes school nurses and managers of support staff, such as the food service director.
The current benefit for administrators is eight years of health and dental insurance at age 57 with at least five years in the district. The new benefit for administrators would start at 44 and would provide $8,670 per year for 12 years.
Board member Dan Bartholf said the positive is that hopefully the TSAs will grow with interest before teachers and other district employees retire.
"We are hoping more employees will put more of their own money away for retirement," Monroe District Administrator Rick Waski said. "We are hoping this (pre-funded benefit change) will be a catalyst."
Waski pointed out that teachers and district employees may need to be educated on TSAs.
"You can't take money out of tax-sheltered annuities without penalty until you are 59.5," he said.
Olson said the district is in the process of looking for a third party to administrate the TSA plan.