SUFFOLK
When the School Board approved a $153.5 million budget Friday, it had about $858,000 more in local funding than expected.
The last-minute addition will allow the division to set aside money for future retirement health benefits - a plan the board approved earlier this month. Previously, those benefits were financed on a pay-as-you-go basis.
Retired Suffolk schools employees can participate in the division's medical plan until they're eligible for Medicare.
Pre-funding the liability is not required, but it makes sense, said Michael K. Brink-ley, the division's executive director of finance. Putting the money in a trust will generate investment earnings and should improve the city's bond rating, he said.
"This does not change benefits at all," Brinkley said.
Accounting standards set by the nonprofit Governmental Accounting Standards Board now call for state and local governments to calculate their other post-employment benefits, even if they don't plan to pre-fund them.
"If you don't do this, then you're understating how much the government services really cost," said Karl Johnson, a project manager with the standards board.
The b oard voted Friday to transfer roughly $1.4 million left over from the 2007-08 budget to pay for this year's contribution.
Board members requested that the city cover $1.3 million of the $2.2 million cost for the next fiscal year. The remaining $945,000 could come from proceeds from the trust fund for actual retiree benefits.
The city agreed to partially fund the request by contributing one cent of the real estate tax rate, which is projected to add up to $858,000.
The School Board also included in the 2008-09 spending plan an average 5 percent raise for all employees and an additional step at the top of the pay scales to benefit longtime employees.
Hattie Brown Garrow, (757) 222-5562, hattie.brown@pilotonline.com
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