CASTRO VALLEY -- Some retired teachers were shocked this month to find that a Medicare benefit paid for by the school district for years was illegal.
Dozens of teachers got letters from the Castro Valley Unified School District explaining that the district had been footing the bill for a supplement to their Medicare insurance when, in fact, the district had been paying public money as a gift, which is illegal, said Superintendent Jim Negri.
Of the rouhgly 85 teachers affected, those retired for three years or more each owed their former employer more than $8,000, the letter said. The district is not trying to collect more than three years of the payments.
"Once we became aware that we were paying benefits that were no longer in the contract, we had a legal obligation to stop paying," Negri said. "The payments are legally and technically considered a gift of public funds."
The oversight was discovered earlier this year when the district was responding to an unrelated payroll question, Negri said.
The district has been paying the retirees $226 a month to supplement their Medicare, a negotiated benefit. The benefit had been deleted from the contract in 1997, but apparently word never reached the district staff, Negri said.
In the case of retired Castro Valley High counselor Natalie Van Tassel, the letter said the district had overpaid her $22,000, but was only trying to collect $8,136, or three years of benefits.
"It was quite a bombshell, I must say," she said.
Before 1986, teachers in the district did not pay into Medicare, said Castro Valley Teachers Association president John Green. After Medicare regulations changed, the supplemental benefit was negotiated so that those teachers would receive the same benefits as younger workers, he said.
The school board has asked the staff to work with each retiree to work out a repayment plan based on each individual's situation, Negri said. Meetings are set up beginning later this month. "We are sorry that post-65 retirees will no longer realize this financial assistance," he said.
The union and the district tried to negotiate to add the benefit back into the contract, but talks broke off in May and are not scheduled to resume until August.
"The negotiations became very contentious," Green said. "The school district kept asking for other concessions in exchange for the payments."
The union and district also disagree on whether the benefit was intentionally left out of the contract beginning in 1997 or whether it was an oversight; no current district staff or union members were involved in those talks.
Informing the retirees by letter was cold, Green said.
"I don't think a form letter demanding payment of $8,000 from a senior citizen is appropriate," he said.
Negri said each retiree received a personal letter. "Once we were unable to negotiate an agreement, we were under a legal obligation to notify them. We really do want to work with each individual rather than take a blanket approach," he said. "We're taking every step we can to work with individuals."
Van Tassel's letter indicated that the $226 she had been receiving each month would stop immediately.
"The payment of the health care is minimal compared to the $8,000 we're expected to pay," she said. "That's a lot of money, especially for a retired schoolteacher."
Teachers who retired before June 1997 will continue to receive the Medicare benefit because it was in the contract when they retired, Negri said.
The fact that the oversight was not discovered despite numerous internal and external audits concerns him. "I am directing staff to launch a comprehensive internal review and work with a third party to assess our internal control procedures," he said.