As teachers in Los Angeles Unified School District (LAUSD) prepare to go out on strike this Thursday, Chad Aldelman calls attention to the district’s big increase in spending on employee benefits. He points out that:
From 2001 to 2016, LAUSD increased overall spending by 55.5 percent, but its spending on salaries and wages increased just 24.4 percent. Meanwhile, employee benefit costs soared 138 percent.
Aldeman notes that one reason benefit costs are so high in LAUSD is that the district has offered generous health care benefits to retired teachers.
He delved more deeply into the issue of school district spending on health care for retirees in an article in the Winter 2019 issue of EdNext.
Like many school districts, where salaries are low compared to private-sector peers, Los Angeles Unified School District (LAUSD) has chosen to compensate by providing its teachers with generous health benefits. In fact, the district extends medical, dental, and vision coverage not just to current employees but also to retirees and their spouses, who do not pay premiums or deductibles and yet qualify for full benefits for life. So LAUSD’s projected health-care spending includes 38,000 former workers and spouses, each of whom is estimated to cost up to $291,000 during their retirement years.
LAUSD is an outlier in terms of how generous those benefits are, and the district has begun to roll back who is eligible to receive them over the past decade. But this illustrates a little-understood way public employees like teachers are increasingly diverging from their private-sector peers: they are much more likely to receive health-care benefits after they leave their jobs. Nationwide, the estimated liability for post-retirement health-care benefits for public employees is $692 billion.
— Education Next