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Disabled retirees lose life insurance benefit

By John Published: May 27, 2010
Retired Akron Public School teacher Cindy Ponos is upset with the district canceling her term life insurance. (Phil Masturzo/Akron Beacon Journal)

By John Higgins
Beacon Journal staff writer


Akron Public Schools has told 239 disabled retirees that they will lose their district-funded life insurance on Monday.

The retirees will then have a month to convert the district's policy to a private one that they must pay for themselves.

The cut will save the district about $100,000 a year.

Retirees received letters on Saturday informing them of the cut.

''I'm so completely floored by this,'' said Cynthia Ponos, an administrator who retired four years ago because she has multiple sclerosis. ''It's the only peace of mind that I had as a disabled person.''

Superintendent David James said the district was simply correcting a mistake that was discovered when staff began closely examining benefits.

District employees generally receive term life insurance equal to 125 percent of their salary, which they can increase at their own expense.

The policy has no cash value and only pays at death. When employees retire, they have the option of converting that policy to a private whole life policy, which can be cashed in before death, but usually costs much more.

Ponos worked 17 years for the district, as a teacher, the learning specialist for social studies and finally as an assistant principal.

She said that when she retired, she was told that the district would continue to provide her term life insurance, which would pay her
heirs $97,000 upon her death.

Ponos, 53, said it would now cost her $4,327 a month to convert to a whole life policy that maintains the same level of coverage, which she couldn't possibly afford.

''In my opinion it's discrimination,'' Ponos said. ''Only the weakest of the weak, the physically weak, the people who are broken, are the ones being penalized.''

Longtime practice

The district has paid the term life insurance for disabled retirees for at least 30 years, bundling those policies with the ones for current employees and the district pays a single premium.

That premium will cost about $100,000 less a year going forward after the retirees' policies are canceled.

''It should have been discontinued years ago,'' said Treasurer Jack Pierson. ''It was a mistake that we made years ago that is being corrected.''

Akron teachers union President Bill Siegferth has no problem with discontinuing the practice going forward.

It's never been part of the teachers' contract, but Siegferth still is seeking legal counsel to determine if the union has an obligation to its affected former members and whether the district is legally bound to honor its past promises.

''I don't think there's any question that if prospectively they wanted to say, 'Hey, we're not going to do this any more,' they wouldn't have a problem with that,'' Siegferth said. ''But for those who have had it and have counted on it and who have made decisions not to buy other replacement life insurance as a result of the board providing it, there's a real question there.''

Ben Cully worked for the district about 19 years before he had to retire in 1994 because of leg, back and eye problems that made his job as a maintenance painter working on scaffolding too dangerous.

''All my life since I've been retired I've been planning on this for my daughter,'' Cully said. ''I didn't get extra insurance because I had that. Now I can't get a policy like I could have got 16 years ago.''

Cully, who is 61, said he depended on the district's assurance that he would keep his term life insurance, which would pay $37,000 upon his death.

''I have a 36-year-old daughter with grandkids and I was just planning for them,'' Cully said. ''What do you do with your family? You try to take care of them.''

Unique benefit

James said the retirees have received a benefit that no other APS employee receives and no other district that he knows about provides.

''They've saved a lot of money over that period of time,'' James said. ''And now all we're saying is that, 'Hey, you can still get the coverage through the carrier that's here now. You're just going to have to pay for it,' ''

Cully doesn't know what a conversion to whole life would cost him yet, but David Bolyard, another maintenance painter who retired in 2001 with a disability after nine years in the district, has figured it out and knows he can't afford it.

''I was covered for $47,000 with the Akron schools,'' said Bolyard, who is 56 and lost a leg after a series of surgeries. ''For a $25,000 whole life policy, my premium would be $155 a month at my age.''

He said he'll explore other options, but he's not hopeful.

''When you do apply for a life insurance policy, most insurance policies want some type of a physical,'' Bolyard said. ''If you've got physical ailments, cancer or disabilities that are enough to put you out of a job 100 percent disabled, it's going to make a lot of people uninsured unless they do go through this expensive company that the board is referring us to.''

Although James informed the Akron School Board in a closed-door session about the change in policy, he said it was an administrative decision and not subject to board approval. He said the district wanted to get it done before the start of the new fiscal year on July 1.

The district announced layoffs of 110 employees including 84 teachers earlier this month to reduce pressure on a projected budget that still shows an $8 million deficit in the 2011-2012 school year.

''Is it fair to the taxpayers to pay people a benefit that none of them probably have?'' James said. ''Is it going to be uncomfortable for the folks who will no longer have the benefit? Absolutely, and we understand that. But we have some really serious financial situations that we need to deal with.''


John Higgins can be reached at 330-996-3792 or jhiggins@thebeaconjournal.com. Read the education blog at http://education.ohio.com/.
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