Center for Policy Research

Policy Brief

Can Schools Sustain the Rising Cost of Retiree Health Care?

Robert Bifulco and Iuliia Shybalkina

C.P.R. Policy Brief No. 24

December 2025

Robert Bifulco

Public Administration & International Affairs Department

Center for Policy Research

United States

Robert Bifulco

New York State school districts face a growing fiscal challenge that could reshape public education budgets for decades to come.

Many districts spend significant amounts each year for retiree health care benefits, with costs currently averaging 4.5 percent of district revenues. Unlike pension plans, these benefits are funded on a pay-as-you-go basis: today’s taxpayers pay for yesterday’s employees’ benefits. Without policy changes, these costs are projected to reach 9 percent of total revenue by 2055 and exceed 13 percent by 2075.

This brief examines strategies to address these rising costs, including partial pre-funding, adjusting eligibility requirements, and gradually increasing the share of premiums paid by retirees. These changes could help districts manage costs while balancing the needs of current students, future taxpayers, and retirees.

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CPR Policy Briefs present concise summaries of findings from recent research conducted by CPR affiliates in the areas of crime and the law, economic wellbeing and poverty, education, energy and the environment, families, health, public finance, social welfare, urban and regional economics, and other policy-relevant domains.