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School Boards Scrutinize Teacher Health Plans

The Vermont School Boards Association says it’s time to take a closer look at the top-shelf health insurance plans being enjoyed by the state’s public school teachers. And according to a new study commissioned by the group, reducing the cost of those policies could deliver immediate relief to property tax payers.

Steve Dale is the head of the organization, and he says the group isn’t making any formal recommendations yet. But the study looks to be setting the table for cost-cutting reform proposals down the road.

“The current cost of health care for public school employees is contributing to this situation that we’ve had over the past few years of rapidly rising property taxes, and also the fact that the cost situation is limiting the ability of schools to invest in the education of our students,” Dale says.

"The current cost of health care for public school employees is contributing to this situation that we've had over the past few years of rapidly rising property taxes." - Steve Dale, Vermont School Boards Association

The study was performed by Scott Mackey, an economist and a managing partner at the Montpelier lobbying firm, KSE Partners. It found that Vermont will spend about $233 million on teacher health plans in 2015 – the vast majority of which will be financed by taxpayer-funded school budgets.

The teacher plans are among the best health insurance plans available – annual costs for family plans can exceed $22,000. So Mackey took a look at what would happen if  the teacher plan was replaced with one of the  “gold” plans sold on Vermont Health Connect, the online insurance marketplace.  

“In terms of, for this study, looking at something from a fairness perspective that would put school employees still at sort of the generous end of what Vermonters are getting today … there would be about a $39 million savings for taxpayers, which would translate into about 4 cents on the statewide property tax rate,” says Mackey, who formerly chaired the board at Harwood Union High School. Mackey has been a public critic of the state’s education financing law, known as Act 68.

Dale calls the study food for thought for school boards and for lawmakers, many of whom say they’re under increased pressure from disaffected property taxpayers who have seen rates spike in recent years. And it serves as a sort of opening salvo in a looming debate over education spending in Montpelier, and how to curb it.

“This is an issue that is the nexus between two of the most high profile political issues in Vermont at the moment, one being health care reform and the other being property taxes,” Dale says. “So we felt that it’s a very timely issue to be taking a deep look at.”

Joel Cook, executive director of the Vermont-NEA, says teachers are leading the push for reform, in both education and health care. But Cook says it makes far more sense to figure out how to improve health care for all Vermonters, rather than rolling back benefits for a choice few.

"For people to come in and suggest that everybody go down to 80 percent, rather than for us to come as close as what state employees have, and many school employees have, is foolish in the extreme frankly." - Joel Cook, Vermont NEA

“For people to come in and suggest that everybody go down to 80 percent, rather than for us to come as close as what state employees have, and many school employees have, is foolish in the extreme frankly,” Cook says.

Cook says educators are committed to working with lawmakers to improve the system. But he says the spending trajectory in public education isn’t as grim as some critics have suggested. As a percentage of total income in the state, according to Cook, spending on public education has been flat for the last 20 years.

“What I don’t agree with is that the spending track for public education is what some people refer to as unsustainable,” Cook says.

The study also looks at what might happen if Vermont adopts the single-payer health care plan being pushed by Gov. Peter Shumlin. The governor’s plan would replace private, employer-sponsored health premiums with a system of public financing. 

Shumlin hasn’t said yet how he’d fund single payer, but he’s said the program would likely rely on a payroll tax. If employers had to pay a 13 percent payroll tax under the new system, then health-insurance related costs for schools would shrink by $83 million, according to Mackey.

But while the NEA wants to see much of those savings returned to teachers in the form of higher base pay – in part as compensate for the lower-quality plan they’d likely receive in a single-payer system – Dale says lawmakers should preserve districts’ ability to use the money instead to reduce local property taxes.

Dale says that single payer or no, change is coming to the health care plans provided by public schools. That’s in part due to a clause in the federal Affordable Care Act that will, beginning in 2018, impose a 40 percent excise tax on so-called “Cadillac plans.” Dale says plans offered by most schools now will meet the Cadillac criteria, and that the resulting tax penalties would render them cost prohibitive.

“I think the point is that we as a society are changing to a whole different approach to health care, and we need to be open to what that change is going to look like in the world of education, and to manage it in a way that’s fair to all involved,” Dale says.

Rising property tax rates have emerged as a top issue in races for House and Senate this year, and top Democratic lawmakers called a press conference earlier this month to promise meaningful spending and financing reforms next year, if voters return them to office. Republicans called the event an election-season ploy.

The School Boards Association will hold its annual conference later this week, where Dale says the study will serve a springboard for discussion among board members from across the state.

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