Tucson School District Gave Away $700,000 in Free Insurance

June 5, 2007

The Tucson, Ariz., Unified School District is meeting with employee unions in an attempt to recoup $700,000 in free health insurance it inadvertently gave to its workers.

The district has not formally announced the error to employees, and presidents of three of out of four of the district’s labor unions are concerned that the cost of the error might get passed along to their members.

The problem began when the district switched health care providers in the 2004-2005 school year. Because open enrollment in the new plans wasn’t available until three months after the expiration of the previous plan, the district extended the old plan.

But 4,800 district employees who receive additional health care, such as vision, dental, cancer insurance and family coverage, were never charged for more than $700,000 in insurance for those three months, Superintendent Roger Pfeuffer said.

He said health-insurance funds are held in an account that’s not monitored by the district’s regular outside auditors and without strict oversight.

“It was an unfortunate, major failure and we clearly need stronger internal financial controls so that our focus is on student achievement,” district board member Alex Rodriguez said.

Pfeuffer declined to say who was being disciplined for the error, or what that discipline was. “We are following through in holding people accountable for this problem,” he said.

The presidents of three unions — the Tucson Education Association, Communications Workers of America Local 7000 and the American Federation of State, County and Municipal Employees Local 449 — all have requested the district’s reports on the error to see the numbers themselves.

District officials are working with each union separately to find a solution that doesn’t include asking employees to pay for the insurance. One proposal would ask employees to give up one personal leave day next year.

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