FREQUENTLY ASKED QUESTIONS
PREPARED BY THE LEADERSHIP COMMITTEE OF THE
OUHSDRA and the OUHSD
Who is eligible to receive retiree health benefits? Management, certificated, and full-time classified employees, in other words, vested employees, who retired at the age of 55 or above with a minimum of a 15 years of service. A small number of paraeducators is included in this group. Any current district employee is considered vested and therefore eligible to receive lifetime medical benefits if he/she meets three criteria: 1) works for the district for at least 15 years 2) retires at the age of 55 or above, and, 3) was hired before July 1, 2004. Vested retired employees remain on the district’s active plan until the age of 65. At that point, Medicare eligible retirees are to sign up for Medicare and then are covered by the Medicare Advantage plans, which were instituted October 1, 2013 as a cost saving measure to the District and the bargaining unit.
Who does not qualify for lifetime benefits? Campus supervisors, part time classified employees, and anyone hired after July 1, 2004.
Why was a cutoff date established for eligibility for lifetime benefits? In 2004, due to concerns over the unfunded liability to pay for future retiree health benefits, District employees voted to end the offer of lifetime benefits to any employee hired after July 1, 2004.
Who pays for retiree benefits? Per bargaining unit agreements, the District pays for classified and management benefits for active employees and vested retirees, and the certificated unit share formula does the same for certificated.
Why has this become an issue? As we know, all medical benefits costs have increased dramatically in recent years, especially pharmacy costs. The demographics of the District employee pool have changed since 2004 so that at present, the majority of employees are not eligible for lifetime benefits.
What is the Trust and why was it established? The Trust was established November 17, 1999. Because of concerns over the growing unfunded liability of providing lifetime medical benefits to retirees, District employees voted to create and fund a Retiree Health Benefits Trust. As stated in a 2005 position paper issued by the Trust board, the purpose of the Trust is to “financially ensure, through investment of Trust funds…. a comprehensive health and benefits program for every eligible retiree of the District…” For many years, bargaining unit members and the District agreed to forgo a portion of salary increases to fund this Trust.
Who runs the Trust and who are they responsible to? The Trust is governed by a Board of Trustees comprised of six members, three appointed by the District and three appointed by OFT-SE. All Trust matters are decided by a majority vote of District representative trustees and a majority vote of OFT representative trustees. Votes are not individual; each side must agree. The Trustees are responsible to the beneficiaries of the Trust. The beneficiaries are vested retired employees of the District and their dependents and current active vested District employees and their dependents.
Are there other advisers to the Trust?
Yes. The Trustees are assisted by the Trust's attorneys and its accountants. The accountants produce quarterly financial statements.
What are the responsibilities of the Trustees? Trustees’ investment management responsibilities are numerous and are delineated in Article 6 of the Trust agreement. Article 6.22 states, “Trustees shall be free of compromising influences and loyalties. A Trustee shall fulfill his or her responsibility solely on behalf of the mission of the Trust.” In addition, Article 8.5 states, “Neither the District nor the Federation shall be liable in any respect for any of the obligations, acts or omissions of the Trustees, or any of them, because such Trustees are in any way associated with any of the District or the Federation.”
Is the Trust required to be fully funded before a contribution can be made from the Trust toward the cost of retiree health benefits? No. The Court's decision rejected Plaintiff's claims regarding a requirement of full funding of the trust prior to any use of the trust to pay for retiree health benefits. The Court's decision affirms the position that trust assets may be used for the intended purpose of paying for retiree health benefits, in full or in part, without the trust being fully funded.
Can the Trust assets be used to pay the benefit provider (CSEBO) for the cost of retiree health benefits in full or part? Yes, The Court's decision rejected Plaintiff's claims that the Trust could not be used for this purpose until fully funded, thereby affirming the position that Trust assets can be used to pay for retiree health benefits in full or part through the benefit provider (CSEBO).
Will any contribution of Trust assets toward the cost of retiree health benefits be paid to OUHSD? No, any contribution of the Trust assets toward the cost of retiree health benefits will be paid to the benefit provider (CSEBO) directly from the Trust, no Trust funds will be paid to the OUHSD.
Does the Trust Board have a legal fiduciary duty to use the Trust funds to pay for retiree healthcare medical benefits as necessary or appropriate? Yes,
Can the OUHSD decide to stop providing retiree health benefits? While not a party to the Court's decision, OUHSD is bound to honor to any contractual obligations it has to provide retiree benefits and the District can't decide to terminate existing contractual obligations. OUHSD's contractual obligation is to provide lifetime health benefits to any employee hired prior to July 1, 2004 who retires from the District with 16 years or more years of service after reaching age 55.
Can the collective bargaining agreement direct contributions from the Trust? NO.
Can the Trust Board direct the assets of the Trust to be used on any OUHSD expenses other than contributions paid to the benefit provider (CSEBE) toward the cost of retiree health benefits? NO
OUHSD Retiree Health Benefit Trust meetings will be posted at the following website: www.ouhsdrhbt.org
PREPARED BY THE LEADERSHIP COMMITTEE OF THE
OUHSDRA and the OUHSD
Who is eligible to receive retiree health benefits? Management, certificated, and full-time classified employees, in other words, vested employees, who retired at the age of 55 or above with a minimum of a 15 years of service. A small number of paraeducators is included in this group. Any current district employee is considered vested and therefore eligible to receive lifetime medical benefits if he/she meets three criteria: 1) works for the district for at least 15 years 2) retires at the age of 55 or above, and, 3) was hired before July 1, 2004. Vested retired employees remain on the district’s active plan until the age of 65. At that point, Medicare eligible retirees are to sign up for Medicare and then are covered by the Medicare Advantage plans, which were instituted October 1, 2013 as a cost saving measure to the District and the bargaining unit.
Who does not qualify for lifetime benefits? Campus supervisors, part time classified employees, and anyone hired after July 1, 2004.
Why was a cutoff date established for eligibility for lifetime benefits? In 2004, due to concerns over the unfunded liability to pay for future retiree health benefits, District employees voted to end the offer of lifetime benefits to any employee hired after July 1, 2004.
Who pays for retiree benefits? Per bargaining unit agreements, the District pays for classified and management benefits for active employees and vested retirees, and the certificated unit share formula does the same for certificated.
Why has this become an issue? As we know, all medical benefits costs have increased dramatically in recent years, especially pharmacy costs. The demographics of the District employee pool have changed since 2004 so that at present, the majority of employees are not eligible for lifetime benefits.
What is the Trust and why was it established? The Trust was established November 17, 1999. Because of concerns over the growing unfunded liability of providing lifetime medical benefits to retirees, District employees voted to create and fund a Retiree Health Benefits Trust. As stated in a 2005 position paper issued by the Trust board, the purpose of the Trust is to “financially ensure, through investment of Trust funds…. a comprehensive health and benefits program for every eligible retiree of the District…” For many years, bargaining unit members and the District agreed to forgo a portion of salary increases to fund this Trust.
Who runs the Trust and who are they responsible to? The Trust is governed by a Board of Trustees comprised of six members, three appointed by the District and three appointed by OFT-SE. All Trust matters are decided by a majority vote of District representative trustees and a majority vote of OFT representative trustees. Votes are not individual; each side must agree. The Trustees are responsible to the beneficiaries of the Trust. The beneficiaries are vested retired employees of the District and their dependents and current active vested District employees and their dependents.
Are there other advisers to the Trust?
Yes. The Trustees are assisted by the Trust's attorneys and its accountants. The accountants produce quarterly financial statements.
What are the responsibilities of the Trustees? Trustees’ investment management responsibilities are numerous and are delineated in Article 6 of the Trust agreement. Article 6.22 states, “Trustees shall be free of compromising influences and loyalties. A Trustee shall fulfill his or her responsibility solely on behalf of the mission of the Trust.” In addition, Article 8.5 states, “Neither the District nor the Federation shall be liable in any respect for any of the obligations, acts or omissions of the Trustees, or any of them, because such Trustees are in any way associated with any of the District or the Federation.”
Is the Trust required to be fully funded before a contribution can be made from the Trust toward the cost of retiree health benefits? No. The Court's decision rejected Plaintiff's claims regarding a requirement of full funding of the trust prior to any use of the trust to pay for retiree health benefits. The Court's decision affirms the position that trust assets may be used for the intended purpose of paying for retiree health benefits, in full or in part, without the trust being fully funded.
Can the Trust assets be used to pay the benefit provider (CSEBO) for the cost of retiree health benefits in full or part? Yes, The Court's decision rejected Plaintiff's claims that the Trust could not be used for this purpose until fully funded, thereby affirming the position that Trust assets can be used to pay for retiree health benefits in full or part through the benefit provider (CSEBO).
Will any contribution of Trust assets toward the cost of retiree health benefits be paid to OUHSD? No, any contribution of the Trust assets toward the cost of retiree health benefits will be paid to the benefit provider (CSEBO) directly from the Trust, no Trust funds will be paid to the OUHSD.
Does the Trust Board have a legal fiduciary duty to use the Trust funds to pay for retiree healthcare medical benefits as necessary or appropriate? Yes,
Can the OUHSD decide to stop providing retiree health benefits? While not a party to the Court's decision, OUHSD is bound to honor to any contractual obligations it has to provide retiree benefits and the District can't decide to terminate existing contractual obligations. OUHSD's contractual obligation is to provide lifetime health benefits to any employee hired prior to July 1, 2004 who retires from the District with 16 years or more years of service after reaching age 55.
Can the collective bargaining agreement direct contributions from the Trust? NO.
Can the Trust Board direct the assets of the Trust to be used on any OUHSD expenses other than contributions paid to the benefit provider (CSEBE) toward the cost of retiree health benefits? NO
OUHSD Retiree Health Benefit Trust meetings will be posted at the following website: www.ouhsdrhbt.org