Outreach - Teacher Health Care Negotiations


Update: May 13th 2017
When the Beck Amendment mentioned below failed, H.509 passed and was sent to the Senate. Last week the Senate added the Ashe Amendment.

This amendment agrees with the Governor that about $13 million will be saved in FY18 by having all teachers on a 80/20 split of premiums and a portion of the savings going to an HSA to help with out-of-pocket expenses. But to understand how this amendment returns those savings to taxpayers you have to understand a little bit of Vermont's very complicated public education funding mechanism.

Every School  District (frequently a single town) votes on a separate school budget each year. It's a "yes" or "no" on a single article that specifies the total amount for the school budget. After the budget is approved the state bundles together all the local budgets to determine how much the whole state needs to spend on public education. Some of that overall budget is paid for by lottery revenues, sales tax, and a few etc's. But eventually a total that needs to be raised by local taxes is determined. There are actually three taxes involved: two property taxes (one on your home and the other on any other property you own) and one income related tax. But to keep things simple we'll just use the homestead property tax to explain this.

To collect the funds needed, the State determines a sort of base property tax that is then adjusted for each town depending on the value of all the property in the town. That is a vast over-simplification but I'll use it. The Town then uses that tax rate to collect the money needed to fill the big pot the State uses to fund all the town school budgets. The collected taxes, go into the pot and the state returns enough money to the town to fulfill the town's budget.

The Ashe amendment determined that if health care were negotiated along those specified parameters of 80/20 etc. then each town would need a little bit less than their budget specified. So we'll just knock a little off the tax rate for that town. As a result, the State will collect a little less and return a little less to the town.

The Ashe Amendment essentially says "One way or another you have to cut your budget by this amount." The amendment does say that one way to do that is to negotiate your health care to these parameters but it doesn't guarantee that the teachers will go along with it. If the teacher don't agree then it's up to the school board to find savings somewhere else. The amendment has the following: "Savings shall not be achieved by reducing any expenditure related to direct instructional services." Which further ties the school board's hands.


Update: May 7th 2017

Last week the House considered the 'Beck Amendment,' which I previously attributed to Representative Scheuermann. The vote on the amendment was 74 to 74; a tie. Which means the amendment failed. Speaker Mitzi Johnson had to cast the deciding vote. I supported the amendment as I believe it puts tax payers on a more equal footing with teacher negotiators.

One of the reasons people support this amendment is because they believe there will $26 million in saving. I doubt that. That amount depends on the negotiated settlement and the health care choices teachers make after the settlement is in place. Counting on those savings is not a good reason to vote for this change.

The only reason I'm skeptical of adding this power to the Governor's office is that every two years there is an gubernatorial  election. I'm not sure if many of the Republican who voted for this change would have done so if the current Lt. Governor Zuckerman was Governor.

The idea of State-wide negotiations of teacher health care benefits will come up for a vote again. Here's the details of last week's vote:

R-Yea  52
R-Nay 0
D-Yea  16
D-Nay 66
R-Absent 1
D-Absent 1
Oth-Yea 6
Oth-Nay 8
Oth-Absent 0
Abstain 0
Not-Voting 0
150
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Older Information -

Vermont's Governor, Phil Scott, proposed that the State negotiate with public school teachers over their Health Care benefit. Currently this is done by each School Board as part of periodic salary and benefits contract negotiations. Vermont Senator Dustin Degree proposed an amendment to House bill H.509 to bring that about. The Senate amendment failed.

This week, Representative Heidi Scheuermann, will submit a similar amendment to the same bill when it comes to the House for consideration. Here is the most recent version of the amendment (April 28th of 2017).

The basic idea is that the Governor's office will negotiate Health Care benefits with the Vermont Education Association (VEA) which represents all public school teachers. The results of the negotiations will be voted upon by all the public school teachers in Vermont. The Governor will NOT negotiate salaries or any other benefits. In addition, teachers in Vermont will not be allowed to strike over health benefits. After a negotiated settlement has been reached and approved by VEA membership, all Vermont public school teachers will have the same health care benefit package.

The way I read the proposal, this applies to "all teachers, administrators, and municipal school employees statewide" that are represented by a union. So that means support staff and principals as well as teachers.

There is also some question as to where exactly any savings achieved by this change will end up. Again, by my reading, they end up in the Education Fund. If your interpretation is different, please let me know.

Background
Teacher's health insurance is handled through the Vermont Education Health Initiative (VEHI). VEHI offers a number of Health Insurance plans to the teachers. VEHI has completed revamped the plans it offers. As a result, every school district in Vermont is re-negotiating Health Care benefits. The teachers will have four plans to choose from. The services offered by all four are exactly the same, only the cost is different. The monthly premiums vary according to how much the teacher wants drug, maximum out-of-pocket and deductible coverage.

When School Boards negotiate health care benefits they offer to pay a split of the total premium. In Colchester, the school district currently pays 80% of the premium and the teachers pay 20%. Few other school districts pay that low a percentage, though that is the amount the Governor mentioned in his proposal. Those percentages would be part of the negotiations. School Districts can also offer Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) to help cover out-of-pocket expenses. How much a school system contributes to such accounts is also subject to negotiation. These are the sort of negotiations that the Governor wants handled on a state-wide basis. All the teachers in Vermont would get the same health care benefit, while currently that benefit varies by school district.

House bill H.509 is referred to as the 'Yield' bill because it sets the 'Dollar Yield' numbers for the next year. Those numbers are part of the formula that determines property tax rates throughout the State. This bill must pass sometime before the session ends, so the proposed amendment will be up for a vote as well.

Pros
The Vermont School Board Association and the Vermont Superintendents Association support the idea of a state-wide health care benefit negotiated by the Administration. It makes School Board negotiations a lot simpler. This is a particularly good year to make this change because all School Boards are negotiating their Health Care Benefit.

There could be considerable cost savings to the state and/or school district.

The Vermont Education Association has more resources available for negotiations. This will help "level the playing field" as the State will have a similar level of legal council, negotiating history, and public outreach that the VEA now has.

Maybe it would be good to put more time into this decision, but with all school districts in Vermont re-negotiating health care benefits this year the timing is good. If we wait, there will already be many signed contracts.

Keep in mind that Governors are elected. The negotiators, and their perspectives, may well change with the administration.

Cons
The Vermont Education Association apposes the amendment. They have had very little input into the development of this concept

Health Benefits are a key bargaining chip or both sides. School Boards and teachers alike loose flexibility when they loose such tools.That doesn't help negotiations.

Such a significant change in law should not be made by tacking an amendment to an unrelated bill. There should be more consultation, testimony and analysis before making such a big change.

The cost saving numbers depend heavily on the results of negotiations. Such savings also depend on how teachers respond to their new health plans, in terms of their individual health care decisions: what prescriptions should I buy, should I go to the emergency room or wait a day and see my doctor. etc..

Keep in mind that Governors are elected. The negotiators, and their perspectives, may well change with the administration.

Please contact me if you know of other arguments 'for' or 'against' this amendment. I will add them to the list and consider them when I vote.