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The Starpoint Board of Education settled its final union contract and received a glowing audit report Monday but was warned to plan for the future because employee retirement costs are expected to rise dramatically next year.

The board approved a three-year contract with its Civil Service Employees Association local, which represents 35 buildings and grounds workers.

Stephen Lunden, the district director of administrative services who helped negotiate the contract, said the agreement would give the employees a 3 percent raise for each of the next three years. It also would provide them a dental plan that would cost the district about $41.62 per month for each union employee. The employees would pay 10 percent of the dental plan costs.

The new contract also included an increase in longevity pay: $175 after five years of service, $225 after 10 years, $275 after 15 years and $325 after 20 years.

Union members would contribute $425 a year out of pocket to help the district cover its medical insurance plan for families and $250 for one-person coverage.

In a 2003-04 district audit, Richard Urtel of Fox & Co., an accounting firm, told the board that it is in good fiscal shape and that his company was unable to find anything wrong in the way school officials handled district finances last year.

He suggested the board set up a capital reserve fund to help head off a large anticipated increase in the cost of retirement benefits for non-instructional employees.

Lunden said low returns on state investments and other fiscal problems caused the state to increase school district contributions to the state Employee Retirement System from $99,000 last year to $261,000 this year. He said he expects that figure will triple in 2005-06, rising to $783,000.

Urtel said the state expects the $700,000-plus figure would then remain at that price level for the next five years. He said it might be wise to set up a capital fund to make sure the board can cover those costs.

He also said the state Teacher Retirement System costs are expected to rise to well over $1 million in 2005-06. Last year, the district paid $320,348 to teacher retirement while it is paying $700,000 this year.

Overall district retirement contributions could come to more than $2 million next year, four times the price that was paid a year ago, Lunden said.

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