As conventional public schools across Michigan struggle with overwhelming health insurance costs, one public charter school has adopted an approach that will save money and increase employee benefits at the same time.
"We have to be business-minded about this," says Lee Rogers,
treasurer for the Woodland Park Academy in Grand Blanc. "We don’t get more tax
money on a whim, and we can’t request millages."
Charter schools, also known as public school academies,
receive the minimum amount of state aid in per-pupil funding, $6,875, but
because they do not have geographical boundaries, charters receive no additional
local property tax dollars.
Rogers, who owns two businesses in the Clarkston area, joined
the Woodland Park board in 2004. He said the rising cost of health care for
teachers led him to suggest an approach he has been using in his private
businesses to great success.
"My costs kept going up every year and so finally I just
screamed uncle," Rogers says of his companies, one that manufactures granite
counter tops and another that makes architectural limestone. "I told my
insurance agent to get creative and give me something to fix it."
His insurance agent came back with a Health Reimbursement
Arrangement. With an HRA, the deductibles for Rogers’s employees increased from
$250 a year to $2,000, which decreased premiums significantly. The employer
agrees to cover the large deductible in exchange for the lower premiums.
"I have about 35 people at each company, and I figured at
most, I’d have to cover the full deductible on six of them," Rogers said. "So
far, it’s only been two or three per year. It saves tens of thousands of dollars
a year, even in a worst-case scenario."
By implementing the changes at Woodland Park, premiums will
be cut 28 percent to 55 percent the first year. Total outlay will fall from
$195,000 to what Rogers says is a worst-case scenario of $140,000. He predicts
it is more likely to be around $88,000.
"The costs will go down enough that our teachers won’t have
to contribute toward premiums for at least the first two years," Rogers said.
"We have medical, dental and eye coverage, and we were able to add long-term
Rogers sees no reason why this approach could not work for
school districts around Michigan.
"The concept doesn’t change with a bigger school," he said.
"A lot of it depends on the demographics of the staff. If you have a lot of
people over say, age 45, then you’ll have more claims. But even in a district
with 150 teachers, you’re talking a decent amount of money. If you had to pay
the maximum on everyone, you’d still save $25,000."
Rogers thinks larger school districts sometimes don’t
consider cost-cutting measures if the savings are deemed too small.
"Even $70,000 or $80,000 isn’t chump change," he said.
"That’s another teacher with benefits. What school couldn’t use an extra
Rogers said he isn’t the only board member at Woodland Park
who brings a business perspective to the table. The school of 330 students was
able to pay cash for a 10-acre parcel, where a new school is being built.
"We should be in there by spring, and it can handle 450," he said. "Within
three years we’d like to expand to 600 students, so we bought another five acres
that is adjacent."