Retirees fret as Shelby County Schools eyes retirement benefits

PHOTO: Daarel Burnette II
From left: Daisy Cleaves, president of Shelby County's Retired Teachers Association, discusses retirement benefits with teachers union president Keith Williams and retiree LaVerne Dickerson.

When Daisy Cleaves became a special education teacher in Memphis almost 50 years ago, she knew the $500-a-month job wouldn’t make her wealthy but she expected a steady income and, one day, a comfortable retirement through her pension and benefits.

Now 70, retired and president of Shelby County’s Retired Teachers Association, she finds herself on the verge of a fight in behalf of 8,000 retiree members who depend on financially strapped Shelby County Schools in their retirement.

Next Tuesday, Superintendent Dorsey Hopson is expected to present proposed changes in the district’s retirement plan at an estimated savings of $9 million. The proposal would increase the amount retirees under age 65 contribute to their health care insurance from the current 34 percent to almost half. He also wants to drop all retirees’ spouses from the district’s self-insured plan.

“They’re trying to balance their budget on the backs of the people who can least afford it,” Cleaves said this week, noting that some retirees live at or below the poverty level and suffer from chronic diseases such as diabetes, Alzheimer’s or cancer.

The district is responding to pressure from the state and Shelby County government to pay down its liability for Other Post-Employment Benefits (OPEB), which are retirement benefits such as health care and life insurance but excluding pensions. Last year, the district’s OPEB liability rose to $1.4 billion — close to the amount the district spends on K-12 education in an entire school year.

By not paying down the liability, the beleaguered district could face bankruptcy, according to Mike Swift, director of administration and finance for Shelby County government.

Hopson has said the district has no choice but to revise its retirement benefits and has suggested that those who are impacted should sign up for the federal Affordable Care Act, which was signed into law in 2010 and expands Medicaid coverage to millions of low-income Americans.

“Someone made a decision 40 to 50 years ago to offer more benefits to employees,” Hopson said during a recent radio program. “At the end of the day, we’re feeling the effect of those decisions because nobody put the money aside for those benefits.”

Formed in an historic 2013 merger of two large school districts in Memphis and Shelby County, Shelby County Schools is beset with financial and academic challenges. During the last two years, Hopson and the district’s Board of Education have worked to get the school system’s house in order under the weight of dwindling student enrollment, expensive academic intervention programs and decreasing property tax revenue. Last month, the board voted to cut $125 million from next school year’s budget by laying off more than 350 employees, closing schools and pulling $25 million from its savings account.

The merger consolidated two districts that were self-insured and for decades had pledged to maintain employees benefits in retirement. Medicare would pick up a portion of those costs once retirees turned 65.

In the last decade, however, health care costs have outstripped inflation while the area’s population has aged. The former districts, meanwhile, failed to keep up with the cost of health care and allowed their actuarial costs to balloon. For example, the former Memphis City Schools paid just $12 million toward its $1.1 billion liability, while the former Shelby County Schools paid $3.8 million toward its liability estimated at $342 million. Last year, the merged district paid $12 million toward its $1.4 billion liability.

A 2014 state law requires local governments to pay 100 percent of their actuarial pension plan costs in the next six years. It stipulates that a district cannot change its pension plan but can revise health care benefits, according to county officials.

Swift wants the district to pay the “actuarial” costs of its health insurance program — estimated at between $30 million and $40 million annually — to have enough money accumulated to fund all benefits.

School administrators don’t know how much the district will have to pay this year toward its OPEB fund because health care costs and the number of retiring employees fluctuates annually.

During a budget hearing last week before the Shelby County Commission, during which school administrators asked for an extra $15 million in funding, several commissioners prodded Hopson to make larger OPEB payments.

“It’s important to us that they evaluate their priorities and deal with the issue,” Swift said.

Elected school leaders have urged administrators to explore how to make cuts. “We can’t ignore it,” said board member Chris Caldwell. “The big question mark is how much [do you fund it]? You have to balance at this juncture the needs of the children and the long-term consequences of not addressing it.”

Since the merger, several tweaks ordered by district leaders have caused the costs of insurance premiums and prescriptions to increase and teachers and retirees to gripe.

Earlier this year, the district changed its health insurance provider from Blue Cross Blue Shield of Tennessee to Cigna, at a cost savings of $3.8 million. Blue Cross Blue Shield recently filed a lawsuit over the bidding process.

Last month, David Pickler, a former school board member and the financial adviser for the Tennessee School Boards Association’s trust account for employee retirement benefits, resigned amid complaints that he didn’t properly invest the district’s contributions worth about $36 million, exposing the district to market swings.

Such issues are rarely discussed or shared with leaders of the county’s largest teachers union, even though they directly impact members, said Keith Williams, president of the Memphis Shelby County Education Association. “They’re doing this to the retirees because they don’t have to look them in the face every day,” said Williams, who suggests that district cuts come from the salaries of central office staff instead of from the pockets of retirees.

Proposed benefits changes that are expected this month from Hopson would be far more sweeping and permanent than previous tweaks. Among the items he’s suggested are the elimination of retirement health insurance for employees hired this year after July 1, and increasing premiums for retirees who smoke.

For her part, Cleaves has spoken with a lawyer but fears her 749-member organization, which charges annual dues of $10, won’t be able to afford a legal challenge. She plans to comb through the union’s past contracts to look for promises made.

“It’s not our fault that the district didn’t put enough money aside for the future,” Cleaves said.

Contact Daarel Burnette II at dburnette@chalkbeat.org or (901) 260-3705.

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call out

Our readers had a lot to say in 2017. Make your voice heard in 2018.

PHOTO: Chris Hill/Whitney Achievement School
Teacher Carl Schneider walks children home in 2015 as part of the after-school walking program at Whitney Achievement Elementary School in Memphis. This photograph went viral and inspired a First Person reflection from Schneider in 2017.

Last year, some of our most popular pieces came from readers who told their stories in a series that we call First Person.

For instance, Carl Schneider wrote about the 2015 viral photograph that showed him walking his students home from school in a low-income neighborhood of Memphis. His perspective on what got lost in the shuffle continues to draw thousands of readers.

First Person is also a platform to influence policy. Recent high school graduate Anisah Karim described the pressure she felt to apply to 100 colleges in the quest for millions of dollars in scholarships. Because of her piece, the school board in Memphis is reviewing the so-called “million-dollar scholar” culture at some high schools.

Do you have a story to tell or a point to make? In 2018, we want to give an even greater voice to students, parents, teachers, administrators, advocates and others who are trying to improve public education in Tennessee. We’re looking for essays of 500 to 750 words grounded in personal experience.

Whether your piece is finished or you just have an idea to discuss, drop a line to Community Editor Caroline Bauman at cbauman@chalkbeat.org.

But first, check out these top First Person pieces from Tennesseans in 2017:

My high school told me to apply to 100 colleges — and I almost lost myself in the process

“A counselor never tried to determine what the absolute best school for me would be. I wasted a lot of time, money and resources trying to figure that out. And I almost lost myself in the process.” —Anisah Karim     

Why I’m not anxious about where my kids go to school — but do worry about the segregation that surrounds us

“In fact, it will be a good thing for my boys to learn alongside children who are different from them in many ways — that is one advantage they will have that I did not, attending parochial schools in a lily-white suburb.” —Mary Jo Cramb

I covered Tennessee’s ed beat for Chalkbeat. Here’s what I learned.

“Apathy is often cited as a major problem facing education. That’s not the case in Tennessee.” —Grace Tatter

I went viral for walking my students home from school in Memphis. Here’s what got lost in the shuffle.

“When #blacklivesmatter is a controversial statement; when our black male students have a one in three chance of facing jail time; when kids in Memphis raised in the bottom fifth of the socioeconomic bracket have a 2.6 percent chance of climbing to the top fifth — our walking students home does not fix that, either.” —Carl Schneider

I think traditional public schools are the backbone of democracy. My child attends a charter school. Let’s talk.

“It was a complicated choice to make. The dialogue around school choice in Nashville, though, doesn’t often include much nuance — or many voices of parents like me.” —Aidan Hoyal

I grew up near Charlottesville and got a misleading education about Civil War history. Students deserve better.

“In my classroom discussions, the impetus for the Civil War was resigned to a debate over the balance of power between federal and state governments. Slavery was taught as a footnote to the cause of the war.” —Laura Faith Kebede

Weekend Reads

Need classroom decor inspiration? These educators have got you covered.

This school year, students will spend about 1,000 hours in school —making their classrooms a huge part of their learning experience.

We’re recognizing educators who’ve poured on the pizazz to make students feel welcome. From a 9th-grade “forensics lab” decked out in caution tape to a classroom stage complete with lights to get first graders pumped about public speaking, these crafty teachers have gone above and beyond to create great spaces.

Got a classroom of your own to show off? Know someone that should be on this list? Let us know!

Jaclyn Flores, First Grade Dual Language, Rochester, New York
“Having a classroom that is bright, cheerful, organized and inviting allows my students to feel pride in their classroom as well as feel welcome. My students look forward to standing on the stage to share or sitting on special chairs to dive into their learning. This space is a safe place for my students and we take pride in what it has become.”

Jasmine, Pre-K, Las Vegas, Nevada
“My classroom environment helps my students because providing calming colors and a home-like space makes them feel more comfortable in the classroom and ready to learn as first-time students!”


Oneika Osborne, 10th Grade Reading, Miami Southridge Senior High School, Miami, Florida
“My classroom environment invites all of my students to constantly be in a state of celebration and self-empowerment at all points of the learning process. With inspirational quotes, culturally relevant images, and an explosion of color, my classroom sets the tone for the day every single day as soon as we walk in. It is one of optimism, power, and of course glitter.”

Kristen Poindexter, Kindergarten, Spring Mill Elementary School, Indianapolis, Indiana
“I try very hard to make my classroom a place where memorable experiences happen. I use songs, finger plays, movement, and interactive activities to help cement concepts in their minds. It makes my teacher heart so happy when past students walk by my classroom and start their sentence with, “Remember when we…?”. We recently transformed our classroom into a Mad Science Lab where we investigated more about our 5 Senses.”


Brittany, 9th Grade Biology, Dallas, Texas
“I love my classroom environment because I teach Biology, it’s easy to relate every topic back to Forensics and real-life investigations! Mystery always gets the students going!”


Ms. Heaton, First Grade, Westampton, New Jersey
“As an educator, it is my goal to create a classroom environment that is positive and welcoming for students. I wanted to create a learning environment where students feel comfortable and in return stimulates student learning. A classroom is a second home for students so I wanted to ensure that the space was bright, friendly, and organized for the students to be able to use each and every day.”

D’Essence Grant, 8th Grade ELA, KIPP Houston, Houston, Texas
“Intentionally decorating my classroom was my first act of showing my students I care about them. I pride myself on building relationships with my students and them knowing I care about them inside and outside of the classroom. Taking the time to make the classroom meaningful and creative as well building a safe place for our community helps establish an effective classroom setting.”


Jayme Wiertzema, Elementary Art, Worthington, Minnesota
“I’m looking forward to having a CLASSROOM this year. The past two years I have taught from a cart and this year my amazing school district allowed me to have a classroom in our school that is busting at the seams! I’m so excited to use my classroom environment to inspire creativity in my students, get to know them and learn from their amazing imaginations in art class!”


Melissa Vecchio, 4th Grade, Queens, New York
“Since so much of a student’s time is spent inside their classroom, the environment should be neat, organized, easy to move around in but most of all positive. I love to use a theme to reinforce great behavior. I always give the students a choice in helping to design bulletin boards and desk arrangements. When they are involved they take pride in the classroom, and enjoy being there.”