A Lewiston-Porter United Teachers controlled benefit trust is growing — by more than $500,000 a year — leaving school district officials calling for concessions to help bridge a historic $1.8 million budget deficit.

The taxpayer-funded health insurance benefit trust is allocated to the teacher’s union through a long-standing agreement with the district and, according to tax documents, has built a positive fund balance of approximately $3.5 million.

The benefit trust is intended to pay for teachers health insurance benefits, but the district has overpaid the fund each year since 2004. The records indicate the trust’s “net assets or fund balances” at year’s end grew during the five-year period, from $1.5 million in 2004 to $2.075 million in 2005, $2.6 million by 2006, $2.9 million in 2007 and $3.5 million in 2008.

The fund’s balance is not only attributed to overpayment by the district, but by what Lewiston-Porter United Teacher’s President Kevin Jaruszewski calls proper management.

“We absolutely managed the fund well,” Jaruszewski said. “For years, through negotiations the district gave us a set amount for health insurance, we took on all the responsibility, all the administration of it and the investments that came along with it.”

And administered it well, according to Paul Accardo of the Accardo Agency, the administrator of the group fund.

“They invest their money into number of low-risk government securities like (treasury) bills, earning a little more than 3 percent a year,” Accardo said.

Jaruszewski confirmed the fund currently holds $3.5 million and contends the union is allowed to speculate with the money because it was allocated to them through contract negotiations.

School Board Member Ed Waller disagreed, saying the board needs to be vigilant in reforming the union’s practice.

“For years, board members have been handing over tax dollars knowing it was going to overpay health care for the school district, millions of dollars have been stockpiled and gambled in the stock market, and we continue to overfund this by as much as a million dollars a year,” Waller said. “The board must stop this practice, and we have to take the money we already paid and make sure it is used to pay for health care.”

Jaruszewski said the money is not technically the taxpayers, since the union has used investments to aid in the creation of the fund balance.

“It’s not actually the taxpayers’ dollars. Our investments are what made that money grow, you’d have to fight on whose money it really is,” Jaruszewski said. “The district gave us a set amount from the taxpayer and we took it, managed it and invested it, it’s not black and white whose money it truly is.”

In comparison, the fund balances for other local school districts:

n North Tonawanda Schools: 2006 fund balance is $178,711.

n Grand Island Schools: 2007 fund balance is $215,828.

n Hamburg Schools: 2006 fund balance is $188,310.15.

n Alliance of Western New York Benefit (Niagara Falls): 2007 a negative fund balance of $116, 648

Accardo, also manages the Alliance of Western New York benefit, which serves 24 different entities including the Niagara Falls School District said it is “a different animal” compared to Lew-Port’s. He said the fund is reserved only to pay health costs and is not able to be invested into the stock market, which is why, in 2007 it had a negative fund balance.

Board Members have argued that money should be invested in to the students of Lewiston-Porter and not into the stock market. Accardo said most local districts do not allow health benefits to have a fund balance.

He said the Western New York Alliance’s fund balance fluctuates from year to year based on health insurance costs, but the goal is to end as close to zero as possible.

Jaruszewski said health insurance is extremely costly and despite the large fund balance LPUT isn’t completely out of the woods. The teacher’s union has gone two years without a contract. He said if the district were ever to stop paying, then money would be drawn from the reserve.

“We have $3.5 (million) in reserves, it is in case we don’t have a contract,” Jaruszewski said “It’s not like we take that and go on vacation and get plastic surgery. It’s in the reserve, it’s not a slush fund, it’s not play money, it is a reserve.”

Lew-Port Superintendent R. Christopher Roser said until this year the district was unaware the union was investing the money in the stock market.

“We didn’t know that until this year. The trust is not acting as an entity of the school; their rules are different to a certain degree, a lot of the details that are coming out we were not aware of,” Roser said. “I am definitely asking the questions this year, quite frankly, I am less accepting of what has happened in the past, that’s why we are where we are.”

The district has little oversight into the fund, because it is controlled by an eight-member board of trustees made up solely of teachers union representatives.

Last month, the school board approved a 120-hour independent study into the fund by the Walsh Firm at a cost of $5,750. Roser confirmed they met with the company last week and results of the probe should be available shortly.

“It is no secret thing that happened or an overbilling to the district. It was an amount that was negotiated,” Jaruszewski said. “I am sure (the board) wants transparency now and that’s actually what we are working on. We don’t have anything to hide.”

Facing an unprecedented budget gap, the district and school board are openly looking to seek concessions of around $800,000 from LPUT to aid in eliminating the gap, but Jaruszewski said concessions is a word he doesn’t like.

“People are calling for us to make concessions and what not. I don’t like the word concede. We are willing to work with the district and the board to try and figure out what’s best for both sides,” Jaruszewski said. “There were years when our trust was almost bankrupt. Nobody was complaining then.”

Roser said the district is trying to maintain constant dialogue with the union to work through the negotiations.

“There’s roughly $800,000 that has to be worked out through negotiations and that’s why this month is so important and we maintain good relationship and good dialogue, that’s a huge a part of it,” Roser said. “We are working together, it’s been pretty hard, we have been negotiating hard, both sides have been adamant about what they want, but it has moved forward.”

Jaruszewski hinted the union may be seeking salary increase, despite the tough fiscal climate in education. He cited the fact that Lewiston-Porter schools are No. 11 in Western New York and first in Niagara County academically.

“Look at the economy (teachers) are not immune to it either, two and a half years without any salary increase, of course, my goal in negotiations is to enhance teacher salaries,” Jaruszewski said. “We have to move up with the economy, if you compare the top steps salary-wise in the area, and we are nowhere near where we should be.”

Lew-Port teachers, despite not having a new contract have still received STEP increases, the union is fighting to obtain a raise in the amount of the increase they are currently receiving.

Roser believes the teachers at Lew-Port are paid accordingly but admitted in negotiating, you must be willing to concede.

“I can’t get anything without giving up something and the same goes for them,” Roser said.

Over the past weeks, the district has presented possible doomsday scenarios that have shown dozens of teachers and programs being axed to help eliminate Gov. David A. Paterson’s proposed budget. Jaruszewski said he does not want one teacher to lose his or her job and neither does Waller.

“ We don't need cuts, we don't need a tax increase, we need to use the money we already paid for what it was intended and not as an investment account for the teachers’ union,” Waller said.

The district will continue to review its budget over the next three weeks, with negotiations between the union and district coming behind closed doors. Neither side would comment at how close they are to reaching a deal.

Contact reporter Nick Mattera at 282-2311, ext. 2251.