Wednesday, January 24, 2007

Help Solve School Cost Problems – Part One, Healthcare:

A history lesson for Birmingham parents: Costs increases from 2003 to 2007 driven by healthcare and pension obligations run amok (based on a $62.9 million salary budget).

Salary Increase Healthcare Increase Pension Increase

$616,776 (0.99%) $2,690,000 (22.48%) $2,980,000 (36.83%)

  • Why did salaries grow at less than 1%?

Simply put, the wage structure brings new teachers in at low salary levels, with experienced teachers retiring at higher pay levels earned through increases tied to improved skills (higher learning), achievement of specialty certifications, contract increases, and increases tied to seniority.

  • Will we always experience low salary growth through turnover?

No, the district has experienced a long period of well matched turnover in the teacher ranks. Last year the district offered, for the first time ever, an early retirement incentive which is anticipated to save hundreds of thousands of dollars over the program life. However, the larger than normal “exit” of highly compensated teachers is anticipated to reduce the typical number of retirements over the next two to three years.

  • Do you want to take benefits away?

No, our staff deserves the best coverage we can provide. I just don’t want to pay more than I have to when providing that coverage. Several studies have indicated that the additional cost imposed by the current system totals nearly $500 million annually statewide. Savings like that would help ensure we continue to retain our most valuable assets, our teachers.

  • Why are healthcare costs so high?

Our costs have increased in the same manner as all healthcare costs. The general rate of cost inflation for healthcare is between 7.5% and 11% per year. Our increase has tracked the higher end of the range.

  • Do the teachers and staff have co-pays?

Yes, as a matter of fact teachers and staff agreed to support cost increases as part of contract negotiations. That support is very uncommon and speaks to the heart of the employees of the Birmingham schools.

  • Can we get better bids from Healthcare Providers?

Yes and no. We collectively bargain the healthcare package and have submitted bids to other providers; the bids are generally not useful because we cannot provide historic claims data from our staff.

  • Why can’t we get historic data for bid analysis?

State law allows the union owned healthcare provider (MESSA) to withhold that data from school boards.

  • Is MESSA more expensive than the alternatives?

We don’t know, without the claims history we can only guess. It’s instructive to know MESSA purchases its healthcare coverage from Blue Cross Blue Shield – in fact MESSA is one of BCBS’s largest “customers.” Common sense would say that the addition of a middleman increases cost. This highlights the lack of transparency associated with one of our biggest expenses.

  • Will the union help?

They have, this local has agreed to carry some of the increase out of pocket with co-pays. The membership also selected a lower cost MESSA plan in the last contract. They have been a great help, but we face a financial crisis of a magnitude never before seen in this state, we need more help.

  • What more can be done?

The short answer is to open the data so everyone can understand the true cost of our coverage. The current system is controlled by MESSA (which is controlled by the Michigan Education Association – MEA) and as a result may be used to subsidize various districts or regions as seen fit by the directors of MESSA. The idea is to provide the transparency so everyone understands where we stand. We may find the MESSA plan provides the most cost effective package, but at this point no one knows.

We want to protect teacher and staff jobs, we want to provide great benefits, and we want to continue as one of the best school districts in the state. The old way of doing things is gone - economic conditions dictate new ways of operating. The news is filled with changes in attitude and operation at the Big Three and the UAW. We have to work cooperatively with every constituent group if we hope to maintain our high levels of performance and achievement. There is no “our side” and “their side” in this effort, only one group attempting to weather the storm. We’ve made cuts at every level, from custodial to administrative. We’ve found ways to lower salary costs through early retirement plans. We’ve restructured our middle and high school schedules to lower costs. Our teachers have agreed to teach more without increases in compensation (that’s how we save using a trimester). We’ve seen great team efforts and it’s hard to say that it’s not enough, but the funding crisis dictates that we have to say it’s not enough. We cannot ignore possible savings in healthcare and pension costs; we cannot ignore alternative savings in administration and services. We must work together as never before, or we face the prospect of having solutions forced on us; that’s not an attractive prospect.

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