School board discusses PERS options

Posted: Friday, October 06, 2006

After the Pledge of Allegiance and a rumble of chairs on the stage floor, the Kenai Peninsula Borough School Board welcomed new student representative — Lydia Ames of Soldotna High School — to its meeting Monday at the Mariner Theatre.

However, the item of high interest was Resolution 06-07-2, authorizing withdrawal of school board members from the Public Employee Retirement System, or PERS.

Although the board postponed a vote on the resolution, members seemed inclined to approve it, once more information can be obtained on the impact it will have on future board members.

According to an estimate of liability for elected organization officials in PERS, prepared by the office of Rep. Paul Seaton, the pension for a member of an organization council, such as city council or school board, can be up to $66,000, while the medical liability can total up to $368,545 over 22 years of retirement.

This can bring the total liability cost to the district to $434,000 per retired member. Figures are based on 10 years of service, with a retiree at age 60 living 22 more years, the average lifespan after retirement.

Of the nine school board members in September, four were vested in PERS, three were not involved in PERS and two were not yet vested. Members become vested for medical benefits after 10 years. After five years, members can receive a pension but not medical benefits.

Melody Douglas, the district’s chief financial officer, said should the action to withdraw from PERS pass, current board members would remain in the program. The vote to exclude elected officials would apply to those not formerly vested in PERS and those who were elected following the resolution to withdraw.

Board Vice President Sammy Crawford of Kenai moved for approval of the resolution and board member Bill Hatch of Kenai seconded the motion.

Before the resolution was voted on, board member Debbie Brown of Kasilof said she would like the resolution to be legally reviewed before the board voted on it.

The PERS resolution states the “political subdivision agrees that all eligible employees except in the following designated category will participate in the retirement system: all elected officials.”

Brown said she believed the resolution should be reviewed, and if possible, more categories added to the list of exceptions, then voted on at a later date.

Douglas said the resolution had been “thoroughly legally reviewed.”

Brown said there was a possible conflict of interest for board members to vote on the issue while some were vested in PERS.

“I want it legally in writing saying there is not a conflict of interest,” she said.

Crawford was ready to vote on the resolution.

“I think it’s the right thing to do,” she said. “We are here because we are in public service.”

Crawford reminded the board that the Homer and Seward city councils had chosen to opt out of PERS.

Homer passed a resolution in 2005 excluding all elected officials from PERS, and Seward passed a similar resolution in March.

Board member Nels Anderson of Soldotna said the resolution should be a public service issue. He already has opted out of the plan. However, he said medical costs are becoming a problem that is almost insurmountable nationally.

“I’m not sure I’m ready right now to eliminate that option for people in the future,” he said.

The discussion ended with Crawford moving to postpone the issue to the first meeting in November.

The meeting finished with members commending board clerk Sandra Wassilie of Seward on her nearly four years of service on the board. Because of health issues, Wassilie will not finish her term on the board. Monday night was her last meeting.

“You’re here for all the right reasons ... . You’re going to be so missed,” said Crawford.

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