A new three-year agreement on healthcare announced Wednesday by the Los Angeles Unified School District will preserve a generous benefits package for about 250,000 employees and their families while also limiting district costs.

But the tentative deal also increases the district’s ongoing budget deficit and could lead to higher medical expenses for employees if healthcare costs continue to rise sharply.

The agreement maintains free lifetime benefits for district employees (there is no monthly payment to the district). But the pact sets benchmarks for when new workers become eligible.

Settling the healthcare issue -- the teachers union’s top priority in negotiations -- could diminish the immediate possibility of a strike. Just one day earlier, United Teachers Los Angeles leaders had scheduled a strike authorization vote over protracted contract talks.

L.A. Unified officials say the agreement, which includes seven other unions, is their longest healthcare deal ever and could save the district at least $207 million over the next three years by capping the annual increases in total costs at 3.5%. If that’s not enough money to maintain the current level of service, employees could see some expenses rise.


Healthcare plans are negotiated by a benefits committee that includes union representatives.

The district is facing steep budget reductions because of the state’s ongoing fiscal crisis, and officials warned that the agreement will not stave off cuts, including probable layoffs next year. L.A. Unified officials project a nearly $670-million deficit in the next fiscal year, which has risen at least $57.7 million because of this benefits settlement.

“We will have to make program adjustments,” said Megan K. Reilly, L.A. Unified’s chief financial officer.

The agreement, which still must be ratified by union members, covers 75,000 employees and 35,000 retirees. The number rises to 250,000 including family members.

Retired teacher Louisa Caucia said she was “elated.”

“The rumor going around was that it would cost $200 to $400 a month for benefits” instead of nothing, said Caucia, who retired in June 2005 from Columbus Middle School in Canoga Park. “That would really be cutting into a retiree’s monthly income. That was very unnerving. I can now call all the worried people who called me and give them the good news.”

One change in the package is that new employees will have to work longer to earn lifetime health benefits -- 25 consecutive years instead of 15. And their years of service plus their age must add up to 85 instead of 80.

Representatives from eight employee unions warmly praised the settlement.

Leaders of the teachers union have not decided what, if any, impact the benefits deal would have on a possible teachers’ strike, said UTLA President A.J. Duffy.

The union’s outstanding issues include improving safety at schools, avoiding layoffs and ending district-mandated testing.

The union still might press for a salary increase depending on factors such as an infusion of cash from the federal stimulus package, Duffy said.

“We still have issues to resolve,” he said.