Shelby County Schools mistakenly sent a letter to some retirees telling them that their insurance costs will jump by 16 percent this fall, a district spokeswoman acknowledged Tuesday.
The letter, dated August 2015, was received over the weekend by hundreds of retirees who have not turned 65, causing a wave of confusion and panic.
“The district has decided at this time NOT to move forward with many of the recommendations discussed that would reduce our OPEB debt, but we still must identify ways to reduce costs,” the letter said.
Attached was a cancellation form to allow retirees to opt out of receiving insurance benefits from the district. Once a retiree opts out, the retiree can’t opt back in. The letter said retirees had until Sept. 11 to make a decision. It was signed by Loretta Poindexter, the district’s benefits manager.
The letter arrived only weeks after administrators told board members they would wait a year before making any significant changes to the district’s health insurance plan for 8,000 retirees.
District officials said Tuesday that another letter will be distributed to offer clarification on retiree benefits.
“I’m a little confused and a little hurt,” said Daisy Cleaves, former president of the district’s Retired Teachers Association, who has been an outspoken critic of the proposed changes. “It’s like they’re saying, ‘Hurry up and get this done.’ I figured everything would be OK. I thought they’d leave us alone. I thought we’d have a grace period.”
Cleaves said she’s been fielding phone calls from friends and former colleagues asking for information.
The cash-strapped district faces a major financial challenge because of its $1.5 billion liability for retired employees’ health and life insurance, known as Other Post-Employment Benefits, or OPEB costs. The way its insurance plan is structured, the district is not contributing enough money to cover retirees’ real costs.
Responding to pressure from state and local politicians, administrators proposed earlier this summer to cut district health insurance costs by, among other things, switching retirees to a state plan, doling out checks for retirees to shop for their own plan, or cutting spouses from the plan.
Hundreds of retirees complained at several forums that the district was seeking to save money on the backs of sick senior citizens by breaking a promise made decades ago to new teachers.
Shelby County Schools, which is the state’s largest public school district, is one of the first in Tennessee to explore ways to reduce its health insurance liability costs. Both Shelby County and Memphis City governments already have reduced their costs by cutting employee benefits.