The Los Angeles Board of Education approved a multibillion-dollar benefits plan Tuesday that will maintain the current package of healthcare services for employees for the next three years.
The agreement resolves one major issue between the nation's second-largest school system and the teachers union, but the two sides remain at odds over other issues in bargaining. Union leaders on Tuesday staged demonstrations at three L.A. Unified campuses.
The benefits pact factors in modest annual increases in expenses and resolves some long-term unfunded costs for L.A. Unified. Still, strains on the budget could contribute to layoffs or cutbacks in other areas, officials said.
Despite such qualms, the deal is worth it, said L.A schools Supt. Ramon C. Cortines.
"I want the agreement approved," Cortines told the board. He called it vital for easing the concerns of employees and making sure that "calm is in the district at this time. This is important for us, for all of us."
L.A. Unified has long offered a generous package of benefits, which cover family members of employees as well as retirees who work long enough to qualify. Based on 2014 district figures, those benefits cost about $10,500 a year per current employee, about $16,000 per retired employee who doesn't qualify for Medicare and $7,500 annually for those eligible for Medicare.
Board President Richard Vladovic said the gap between the time when employees retire and when they qualify for federal health subsidies has strained district finances, and that unions also are concerned about this problem. But he insisted that the deal was an easy call.
"We've never paid employees enough and we've never treated them fair enough," said Vladovic, who has received labor endorsements in his campaign for reelection next month. Two other board members, Bennett Kayser and Tamar Galatzan, also are running for reelection, and they too supported the benefits, which are available to all employee groups.
The only opposition was from Monica Ratliff, who wanted to delay the vote until district staff could provide a more detailed, long-term financial analysis.
"It's not about trying to impact this particular agreement or these benefits," she said. "We cannot continue to spend large sums of money without a thorough understanding of the future…There is a point where we are not fiscally viable."
For 2015, the deal will cost more than $1 billion. The agreement would factor in cost increases of between 6% and 7% a year, totaling $200 million over three years. The terms also call for partly drawing down a health benefits reserve fund.
The district's unfunded debt for providing lifetime health insurance to retirees and their dependents has more than doubled since 2005, resulting in an estimated $11 billion in future costs. The district would have to pay $868 million annually for 30 years to fully fund retiree healthcare obligations, according to estimates.
Under the tentative agreement, this unfunded debt would be reduced by 20%, according to L.A. Unified.
Other districts also face similar dilemmas. About 70 of California's 1,000-plus school districts provide some type of lifetime health benefits to retired employees.
A recovering state economy has buoyed district budgets, but other priorities exist, including the first raises for school employees in eight years and new spending on the most disadvantaged students.
San Pedro High School English teacher Laura Rodriguez said that health benefits were a main reason she has remained in L.A. Unified despite challenging teaching conditions. She said having 40 students in class has diminished what she can accomplish.
Her colleague, biology teacher Elisa de la Pena, said she found it hard to manage her class load of 240 students per semester.
The two teachers were on a bus that took a group of parents and instructors to the three demonstrations Tuesday.