Retirees’ Suit Over FUSD Health Costs Heads To Trial

May 12--Three decades ago, Fresno Unified trustees promised to give retirees health benefits for life -- free of charge.

Now the district is headed for trial in a lawsuit accusing it of backing away from that pledge.

At the heart of the court battle is a $758 million health-care funding gap.

In order to close that gap, trustees in 2005 ordered retirees to begin paying for some of the benefits. That prompted the Fresno Unified Retirees Association to sue. Members contend trustees reneged on a promise that was written in board policies and in collective bargaining agreements dating back to 1977.

"A promise made is a promise kept," said the group's president, Carole Sarkisian-Bonard.

Retirees feel betrayed because many of them worked more than a decade without a pay raise so Fresno Unified could remain financially stable, Sarkisian-Bonard said. They also were not represented at the bargaining table when the district implemented the health benefits fee with its unions, she said.

"It's unlawful what the district is doing," Sarkisian-Bonard said.

Trustees, citing the pending litigation, declined to be interviewed. They plan to meet in closed session Wednesday to discuss the case.

Since July 2005, more than 3,000 retired employees have had to pay $30 to $70 monthly for health benefits, based on how many dependents they have.

On March 20, Judge Donald Franson Jr. sided with the retirees and rejected the school district's arguments that the civil case be dismissed. Instead, Franson ordered the district to prepare for a trial in Fresno County Superior Court.

The retirees -- administrators, teachers, cooks, janitors and other employees -- are seeking a court order that would stop the district from billing retirees for health care and the return of their money, plus interest, said the association's lawyer, Robert Bezemek. Since July 2005, retirees have paid the district more than $1 million a year, Sarkisian-Bonard said.

Promising lifetime health benefits is a common recruitment tool among government agencies in California. For example, Fresno Unified Superintendent Michael Hanson, who is on disability leave, will receive lifetime benefits after three years of service, according to his contract.

Via e-mail, acting Superintendent Ruth Quinto said the district pays about $107 million annually for health benefits of employees, retirees and their dependents. Of that, about $25 million covers retirees, she said.

Before July 1, 2005, the district paid all medical coverage for retirees.

Afterward, retirees have been required to pay the same health-care fee as active employees -- $30 for an employee, $40 for an employee and spouse or $70 for employee and his or her family.

Sarkisian-Bonard said retirees hired Bezemek because he has prevailed in similar cases against other school districts, including in Richmond, Hollister and San Leandro.

She said the issue may have given some the wrong impression that retirees are greedy. In reality, many retirees live on a fixed income and have little or no ability to earn extra money, she said.

Sarkisian-Bonard also said the district's estimate of a $758 million shortfall is only "guess work."

In general, the unfunded liability is the amount of money the district would need if every current and retired employee cashed out their health benefits at the same time. "That would never happen," Sarkisian-Bonard said.

Unless a settlement is reached, the case will likely go to trial next year, Bezemek said.

"The district has a foot in the door," Sarkisian-Bonard said. "If we don't address this now, what does the future hold?"

The reporter can be reached at [email protected] or (559) 441-6434.