City Schools Superintendent Jean-Claude Brizard has released a proposed $677.5 million budget for 2008-2009 - it's nearly a 4 percent increase over this year's spending.

Criticism of the size of the city school district budget, particularly in light of looming state and city budget gaps, has already begun. And, if history is any indication, that criticism will likely intensify.

The school district's budget is predicated on receiving $434.3 million in state aid and $119.1 million from the city.

Employee salaries are the district's largest expenditure, but the fastest-rising expense is the cost of health-care benefits. And the school district, like many public entities, provides health-care benefits to retired employees as well as current employees.

The city school district will spend $54.5 million this year on health-care insurance - $13.5 million of that for retired employees. That's more than the district will spend on new equipment, including rapidly changing computer technology. Three years ago, the district's price tag for health-care insurance was $41 million.

Providing health-care benefits to retired workers is common in public service. Last year's cost of providing benefits for city workers was $23.4 million, and another $16.5 million went to retired workers, says Donna Turner, the city's director of human resource management. Few private companies offer health-care benefits to retired workers. Those that do are generally in industries with strong unions.

It's important to keep in mind that teachers' salaries started low, says Jody Siegle, executive director of the Monroe County School Boards Association, and have remained relatively low considering the level of education needed to do the job. Salaries have long been a problem in the teaching profession, she says, which makes health-care benefits for employees, including retired employees, extremely important.

Health-care benefits are a large expensive, says Nancy Palozzi, the city school district's director of employee benefits, "but you have to keep in mind that government employees typically are paid a lower salary than their counterparts in the private sector. Generally, the benefits are better, but the salaries are lower."

And it's not easy to change the benefit package, even in difficult times. Brizard cannot, for example, reduce the benefit to reduce expenses.

"About 99 percent of all school district employees, not just teachers, belong to some type of union," says Palozzi. "Changing the benefit requires a renegotiation with the unions."

Some health benefits have also become state-mandated expenses.

"Take Timothy's Law," says Palozzi. "We are mandated to provide some days for inpatient and outpatient mental health. That is a 3 percent increase to the health benefit package. When you look at the number of employees we have, you can see the impact it has on a multimillion-dollar budget."

Even though retired workers are eligible for Medicare - the federal health insurance program for people age 65 and older - it does not cover everything. Supplemental insurance is a requirement for most people, especially as the cost of prescription drugs has soared. And health concerns typically become greater with age.

There will eventually be, years from now, some reduction in these costs. While the school district's benefits are generous, they are becoming less so for new hires.

"It varies by district, but the cost to the former employee was much lower 20 years ago," says Tom Gillette, regional staff director for New York State United Teachers. "Those employees starting work today will be sharing more of the cost of their insurance coverage than workers did 15 to 20 years ago. I think this discussion of costs is a good thing, but I think the issue of health care and affordable health care, whether you're talking about the teachers union or county workers like police officers, is an education and social justice issue. These people have provided a public service."