Already struggling to stay afloat after years of painstaking budget cuts, education officials announced this week that some U.S. public school boards are currently in talks in an attempt to decipher how they can avoid making additional cuts once they have to pay the mandated health benefits under Obamacare to substitute teachers and support staff.
Under the Affordable Care Act, employers have to offer health care coverage to all full-time employees, which includes all those who work an average of 30 hours or more per week each month.
If an employer fails to provide health care coverage for full-time employees they will be charged a fine starting in 2015. The fine for not providing employees with health care coverage is about $3,000 per employee, which some have joked is actually cheaper than providing the health insurance.
Education Secretary Arne Duncan told POLITICO that his department has no plans to actively advocate for the health law, and would only provide help when asked, but so far, “No one has asked us,” he said.
Education officials say that unless school boards are able to find a way to absorb the costs of Obamacare, schools may end up cutting back staff hours to part-time in order to escape paying for all of their employee’s health care.
Mike Leichliter is the superintendent at Pennsylvania’s Penn Manor School District. He said the school’s budget is already “constrained” and that there is no room to provide health care coverage for employees.
“When we looked at our costs, (health care) was one area that really had the potential to skyrocket,” Leichliter said. “This is absolutely the worst time for school districts to be faced with mandated increases.”
According to the National School Board Association’s Communications Officer Linda Embrey, many school districts have seriously considered reducing hours for employees, since many are unsure of how else they can handle the additional health care costs.
But Leichliter said that for the Penn Manor School District, instead of cutting hours for employees to fewer than 30 hours per week, the school would probably use a substitute-teacher contracting service to pay part of the salaries for 95 employees, since money for substitute services would not count against the school’s budget.
According to a report from Reuters, it appears that most public schools plan to slash employee hours in order to avoid paying for their health insurance coverage.
Indiana’s Fort Wayne Community Schools district is one of the largest school districts in the state, with more than 4,000 employees. According to Krista Stockman, the school district’s public information officer, the school district decided to reduce hours for 610 of its employees, which includes substitute teachers and support staff, as providing these 610 employees with health insurance would have cost the school district $10 million annually alone.
“You get to a point where there’s a danger that you’re cutting too much and that the quality of education you’re providing isn’t as great,” Stockman said. “We’re just going to have to do the same amount or more with less.”
While some blame the Obama administration and the health care reform legislation for the layoffs and reduction in hours at many schools, an Obama administration official said the main issue is the sequester spending cuts that were introduced after Congress failed to fix the deficit — not Obamacare.
“We are seeing no systematic evidence that the Affordable Care Act is leading to a shift to part-time work,” the official said. “There are a variety of factors impacting schools, including sequestration, which is cutting budgets and is a completely separate issue.”
Education employees most affected by this latest budget crisis include substitute teachers, classroom aides, cafeteria workers, bus drivers and support staff. According to school officials and labor representatives, many of these employees have not previously been given health care coverage, but are now eligible under the health care reform law.
Solution: Reduced work hours and outsourcing?
In Georgia, the state’s School Boards Association said that many school boards have decided to pay health care coverage for all full-time employees, increasing health care costs for school districts by more than 33 percent in some cases. Since some schools can’t afford such a large bill, many plan to outsource a number of their employees.
Angela Palm is with the Georgia School Boards Association. She said it was a difficult decision for the school boards because while school budgets have continued to suffer with state cuts and a loss in property tax revenue, costs for things such as employee health care have continued to rise. Palm added that in order to keep the schools running, many schools have to consider outsourcing jobs such as maintenance and janitorial staff.
Barbara Jacoby, district spokeswoman for the Cherokee County School System, agrees with Palm and said the district’s “state health benefit plan premiums are going to increase by $4 million dollars for next school year, so that is an increase we can’t absorb into our budget, not when it’s coupled with sequestration, continuing state austerity budget cuts and a slowly recovering local tax digest.”
She added that by outsourcing janitorial staff the district could save $3 million, and that the school planned to ask the company it contracts with to keep the district’s existing janitorial staff.
But Marlene Wehrbein, a Nebraska-based labor union official who advocates for employees in the state’s public school districts, said outsourcing employees and reducing hours will create a lot of inconsistent staffing that she says wouldn’t be good for students.
“How could you have a teacher teaching English four days a week and then on the fifth day you have someone else?” she asked.
While some school districts are trying to absorb the costs of the health care coverage themselves, others are passing it onto the teachers directly.
In California, some school districts such as Newport-Mesa Unified School District have considered having employees pay 3 percent more each month toward their health insurance plans, and pay higher co-pays and deductibles. Union officials have largely rejected this offer to pass the cost onto the teachers, arguing that passing the cost on to the teachers sends the message that the teacher’s are not valued for their work with the students.
The Newport-Mesa Unified School District expects to pay an extra $2.3 million tax on premium policies under the Affordable Care Act, and wanted to split the 6 percent increase in health care costs with teachers equally, but the teachers in the district say they don’t believe the additional costs should be passed on to them.
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