When the Utica Board of Education approved retiree health-care benefits for a large group of teachers 16 months ago, it had no idea what the added burden to taxpayers might be.

Now, officials do know — and the price tag is staggering.

For its assets to keep up with its added retiree benefit obligations, Utica’s school district should be setting aside $14 million more per year than the $5 million it budgets for retiree health costs now, according to an accounting form obtained by the Observer-Dispatch under the Freedom of Information Law.

The district’s current budget is about $130 million. Technically, covering the retiree benefits in full could mean a 50 percent increase in the tax levy, according to district figures explaining how spending increases affect the amount raised in taxes.

Failure to set aside money for the new benefits could put the school district’s bond rating at risk of dropping, experts said. Utica is not alone in wrestling with how to pay for retiree benefits, but it made a conscious decision 16 months ago to extend such benefits, one analyst said.

“The contract took an expenditure that was going to be basically flat and increased it by a factor of almost three,” said Lise Bang-Jensen, senior policy analyst for the Empire Center for Public Policy, a group that’s been critical of the impact of generous public employee benefits.

This all stems from the return of a benefit that district teachers had not seen for 30 years. The school board had cut retirement health benefits for all teachers hired after Dec. 31, 1977, but in a September 2008 vote, it restored such benefits.

No estimate existed then on the added costs, but the numbers were worked out subsequently. In accounting terms, Utica’s retiree health care benefits liability is $189 million, more than half of which stems from the new benefits.

In an attempt to cover the costs, the school district is budgeting another $167,000 this year, and the amount would only ratchet upwards in years to come. Under this approach, Utica taxpayers would be paying at least $10 million more per year in two decades to cover the teacher retirement benefits.

But that approach doesn’t meet the extent of liability the district faces, Bang-Jensen said.

Meeting that goal would mean $19 million per year set aside, according to the district accounting form.

Board President Barbara Klein, however, said the numbers might not accurately represent what the district will actually spend.

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