In some of Michigan’s largest
cities — Lansing, Detroit, Grand Rapids — and even in villages like Vanderbilt
in Otsego County, public schools are facing diverse challenges such as student
emigration, job cuts and building closures.
Financial challenges come in
different forms for different districts, but a comprehensive plan to create a
state pool for school employee health insurance is being proposed in the state
Senate, in hopes of relieving some financial pressure. Two education bills
introduced in January, which would greatly alter how school district employee
health insurance plans are administered, are at the center of a brewing school
health insurance controversy. Proponents of the measures, among them Republican
endorsers Sens. Shirley Johnson and Ken Sikkema, see Senate Bills 55 and 56 as
tools to cut a substantial amount of excess spending on insurance administration
from school district budgets.
Under Senate Bill 55, a state
school employee health care board consisting of two members nominated by the
governor, two by the Senate majority leader and two by the speaker of the House
of Representatives would be created. This panel would take on the responsibility
of designing optimal and stable health insurance plans to be offered to certain
school and community college employees, similar to the plans covering other
state workers. School districts or community colleges choosing to provide health
insurance for their employees would be allowed to provide only the insurance
plans determined by the new state board. All plan-providing districts would be
required to transfer to the state plan after their current plans expire. The
Department of Civil Service would "implement and administer a medical insurance
plan for school employees and community college employees as determined by the
board." Supporters of the revised approach note that the state spends
substantially less to insure its employees for comparable levels of benefits
than school districts typically do for their employees. By adding school
employees into a state plan, school districts would be able to spend a smaller
proportion of education funds on health insurance.
If Senate Bill 55 becomes law,
Senate Bill 56 would amend 1947 PA 336 — Public Employment Relations Act — to
stipulate that collective bargaining agreements involving a public school
employer or board of a community college district are subject to the insurance
plans administered by the Civil Service.
In July, a $292,000 study
commissioned by the state Senate and performed by the Virginia-based Hay Group
projected that a health insurance pool for Michigan’s 190,000 public school
employees could save the state between $146 million and $281 million in the
2005-2006 school year. According to Gongwer News Service, the study also
concluded that health insurance benefits could improve for as many as 90 percent
of the state’s public school teachers.
Benefits for salaries?
Senate Republicans believe these
bills will allow school districts to spend more education funds in the classroom
and not on the administration of employee benefits.
The opponents of the bills,
however, see the issue differently. The Michigan Education Association — largely
aligned with Democratic legislators — has criticized the proposal. MEA President
Luigi Battaglieri made it a cornerstone of his Lansing Lobby Day speech in
February. "It’s time to stand up and proclaim that public school employees are
not the cause of the education funding problem in this state, and raiding our
benefits is not the solution," he said, urging union members to petition their
The MEA asserts that in the past
teachers have accepted lower salaries in exchange for benefits, and that
Michigan will not be able to recruit good teachers without providing appealing
benefit packages. Battaglieri told Michigan Information and Research Service in
March that he "can give … names and places of where (education employees) took
less salary in order to maintain the insurance."
Nonetheless, several data sources,
including Education Week, the American Federation of Teachers, and the National
Education Association indicate that Michigan ranks between second and fourth
nationwide in average yearly teacher salary at around $52,000-$54,000.
Michigan Education Special Services
Association, the MEA’s health insurance administrator that manages health
insurance services for the majority of Michigan school districts, has posted a
link to a Web page called "stopthetakeover.net," a site that decries the
proposed Senate action.
Still, MESSA has been under
scrutiny for over a decade. In 1994, MESSA was ordered to return $70 million of
excess reserves to Blue Cross/Blue Shield by the Michigan Insurance Bureau. An
influential 1993 Mackinac Center for Public Policy study called MESSA the MEA’s
"money machine" for using "unusually costly" health insurance to subsidize the
union’s basic operations.
More questions were raised when
former Superintendent of Public Instruction Thomas Watkins projected in a report
last December that 53 percent of Gov. Granholm’s planned $300 per-pupil funding
increase would be spent on employee health care plans, greatly reducing the
classroom impact of the proposed increase.
Former MESSA Executive Director
Frank Webster has criticized the cost of the most common MESSA family plan,
which, according to the Kaisar Family Foundation, is about 50 percent more
expensive per year than a typical family plan purchased by employers across the
nation. The price of this plan was scheduled to increase by 16 percent to
$18,464 in July, according to an Impact HealthCare summary earlier this year.
Also, unlike many typical insurance
providers, MESSA will not provide school districts with certain claims histories
that are a crucial requirement for shopping around for the optimal plan.
Accordingly, some critics believe that part of the reason for the crisis is that
many school districts have not been able to seek competitive bids on health
Questions over high costs and the
percentage of education funds that many Michigan school districts spend on
health insurance plans appear to have given impetus to the Senate’s interest in
the issue. On Lobby Day, Battaglieri had his own explanation, "No one in
education denies that health insurance has been going up as a result of the
national healthcare crisis." According to MIRS, Battaglieri maintains, "MESSA is
good coverage at an affordable price. We are very competitive."
Related considerations about public
school financing may come to the fore as the Senate considers the legislation.
On the Website
MichiganVotes.org, one anonymous school employee commented on the
bill by asking, "My paycheck does not say ‘State of Michigan’ on it, why should
the state dictate my insurance options?" The School Aid Fund, by far the largest
source of state aid to schools, is financed by a combination of sales and use
taxes, education taxes, income taxes, tobacco taxes, liquor taxes, real estate
transfer taxes, lottery profits and other tax sources. Teacher salaries are tied
directly to per-pupil "foundation grants," which are paid out partially from
this fund. This government-to-school relationship will undoubtedly raise
questions about the possible implications of government supervision of teacher
benefits, which the Senate will consider when data from the commissioned
analysis becomes available.
Alternatively, a bill introduced by
Sen. Barb Vander Veen requiring claims history disclosure from Third Party
Administrators to school districts upon request could become part of the
Insurance pooling explored
Senate Republicans believe their
approach will save school districts money on health insurance so that available
funds can be used for instructional activities; controlling spending and getting
the most value out of every education dollar.
Opponents argue that the current
system is fair, and that other sources are to blame.
In a May Battle Creek Enquirer
interview, Olivet Community Schools Superintendent Dave Campbell explained that
he believed the rising cost of education employee health insurance is hurting
school districts across the state, telling the paper he could be using his time
better by focusing on curriculum instead of worrying about how "to stretch state
dollars when fixed costs are rising."
The National Center for Policy
Analysis reports, "At least six other states are considering health insurance
pooling plans for school districts as a way of holding down increasing health
care costs," and that unions in Oregon and Minnesota are supporting plans on the
basis that they limit medical costs which might otherwise cause other cuts to
school district budgets.