The amount of money Milwaukee Public Schools needs to fund future retiree benefits has dropped by more than half since 2007 and now sits at just under $1 billion, the district announced this week.
MPS’ unfunded liability for retiree health care and life insurance was $2.3 billion in 2007 and dropped to about $1.4 billion by July of 2011. It was down to $1.2 billion in 2013 and then dropped to $997 million in 2015, according to the latest actuarial valuation from Gabriel Roeder Smith and Co., which sent its report to the district in November.
The financial analysts noted that the district’s unfunded liability was expected to rise slightly between 2013 and 2015, but that it dropped instead — good news for a district that has long been burdened by a yawning gap between financial promises it made to retirees and the money available to actually pay for those benefits.
In a statement, the district said the unfunded liability decreased because the school board directed MPS to pay ongoing annual costs and also to pre-fund into a trust each year at least 5% of the expected retiree claim costs. As of July, that trust had accumulated $127 million.
Other changes in recent years also made a difference. The district negotiated a new health care plan administrator with unions in late 2010. And in 2012, after the Act 10 law gave the district authority to change benefits without negotiating first with unions, the school board raised the minimum retirement age, changed health benefit plans and closed the post-retirement health care plan to employees hired after June 2013.
“We still have work to do, but we are headed in the right direction,” said Dan Chanen, chief human resources officer, according to a statement provided by MPS.