Monday, April 20, 2009

The Fleecing of Michigan’s Teachers and Public Employees

The MEA, through it’s subsidiary the Michigan Education Special Services Association (MESSA), is diverting over $367 million in badly needed funds from classrooms. It does this through its practice of reselling Blue Cross Blue Shield insurance products under it’s own banner. The Hay Group Report shows that on average MESSA is the most expensive program of all other choices. It's simple math, Blue Cross makes a markup, then MESSA makes it mark up and the cost goes up.

MESSA's balance sheet (show below) quantifies the true cost of this manipulation. As of the most recent audit (full 2008 report here) MESSA has earned and holds over $365 million; it would be $394 million if MESSA was not forced to disclose $28 million in pension liabilities for MESSA staff. MESSA claims a portion of the reserves are for rate stabilization. This is a marketing claim because MESSA is not required to hold reserves. The truth is that Blue Cross Blue Shield is required to hold these reserves because they are the actual insurance provider, not MESSA.

From MESSA’s own 2007 financial statement (page 11 of MESSA financial statement), the reserves belong to “our members and their school districts.” REALLY? OK, I want MESSA to return our share of these “reserves” back to my district -- or failing that, return it to my employees because it is part of their negotiated compensation. Of course I will not hold my breath, MESSA will not even comply with state law which requires disclosure of experiential data (Public Act 106), the law is over a year old and MESSA has not complied (MESSA has no excuse for this, their systems are fully capable of producing this data).

About that $28 million in MESSA pension liabilities: a part of this is attributable to a nonconforming, and underfunded pension plan. Why is it nonconforming? The main reason is to cover extra pension contributions for executives earning over $225,000 per year. Is this really in the best interest of the public employees “covered” by this organization? These are employees that are at significant risk because of massive funding shortfalls at the state level. We ALL need to aggressively cut costs to save the jobs of the people that matter the most -- the teachers in the classrooms.

MESSA is redundant organization (Blue Cross Blue Shield already provides the same administrative functions) that marks up its product (which is buys from Blue Cross Blue Shield), and withholds the rebates it earns through the good health of its members (rebates given by Blue Cross Blue Shield to reflect cost savings) so it can fatten its executive ranks and manipulate its own political objectives (by deciding when and where to change the rate it charges for its Blue Cross Blue Shield insurance). The MEA is selling its members short, it should live up to its own words and recognize that these funds belong to “our members and their school districts.

MESSA 2008 Balance Sheet MESSA 2008 Balance Sheet R1Lawrence From MESSA's 2008 financial statement (page 4 or document, page 2 of statement) is the true magnitude of how much money MESSA holds on it's balance sheet. This money belongs to it's members (teachers, public service employees, and school districts that contribute their payroll to MESSA under collective bargaining agreements). It's time to send the money back to the members.

1 comment:

Geoff said...

Mr. Lawrence,

How much does BPS spend (on average) on health care alone per teacher? Is that amount commensurate w/ other Oakland County districts or similar to other top-performing districts in the state and country like Birmingham? It would only seem fair that the teachers at BPS are taken care of like those same districts.

I'm really glad that someone turned me on to your blog b/c I can see that you are a champion of the students and teachers of this district. It's good to know BPS teachers have a friend on the board of education.

Geoff Wickersham