story by Roby Brock, a TCW content partner and owner of Talk Business
A consensus exists to solve the teacher insurance crisis, but a consensus solution has far from materialized.
Lawmakers and public school stakeholders have been holding non-stop meetings and conversations all week long in an effort to find common ground for a potential stop-gap to a $58 million insurance deficit and skyrocketing premiums for public school employees.
Key legislators, such as House Speaker Davy Carter, R-Cabot, say that the financial solution to the problem will come from a combination of state, school district and teacher concessions.
Carter tells Talk Business that he and Senate President Michael Lamoureux, R-Russellville, have asked the heads of the education and insurance committees to begin shaping ideas for a legislative solution within the next week-and-a-half.
A drop-dead date for announcing a short-term financial fix to the troubled teacher insurance pool is Oct. 15, when state employee benefits managers must know if policymakers have hard numbers for shoring up the program. Managers will need about two weeks to rework charts and programs ahead of a Nov. 1 open enrollment period.
“We’ve asked the chairs to begin the process of putting together a framework for the collective membership by the end of next week,” Carter said.
Gov. Mike Beebe (D) has indicated a willingness to call a special legislative session to address the issue, but he’s insisted that short-term and long-term solutions to remedy the insurance crisis must be agreed to in advance.
“To build a consensus on this type of issue on this type of timeframe is a whole other animal,” said Carter of the daunting task. “I don’t know what the best process is, but I can’t think of anything better than what we’re doing. Let’s start out with something and try to build on it.”
What could a potential solution include?
There are myriad ideas and none seem to be coalescing as a lay-up to solve the financial problems of the program.
According to notes obtained by Talk Business from a closed-door meeting with the Governor and school superintendents, some of those ideas include:
• $7 million from the National School Lunch Act;
• $10 million in new ongoing funding from the state;
• $7 million from professional development training funds for teachers; and
• $8 million from school districts that won a lawsuit to keep excess funds from a 25-mill uniform rate of taxation (URT).
All of these possible solutions still fall short of the $58 million projected deficit and would require one-time money to meet needs if benefits remain the same.
The school lunch funding shift appears to be a non-starter. Lamoureux and Sen. Johnny Key, R-Mountain Home, chairman of the Senate Education Committee, both agreed that it was an unlikely revenue source.
“I don’t see any support for that from the superintendents I’ve talked to,” said Key. “They are willing to go find some other category of funding that they would rather repurpose than take from NSLA.”
“For some people like me, I can tell you the Russellville School District, pretty much the best thing we have going for us is how we’re spending our NSLA money,” Lamoureux said.
Both men suggested that public schools may simply be asked to meet a yet-to-be-determined dollar figure through belt-tightening or repurposed existing funding.
Recapturing money from the eight school districts that won the lawsuit to keep their excess funds above the 25-mill URT also appears unlikely.
“I’ve never seen a district voluntarily give up money,” said Lamoureux. “I’d be surprised if they’re supportive of that.”
According to the superintendents’ memo, other areas of discussion also include reducing the foundation funding amount that applies to health insurance, roughly $148 million, and sending that money directly to the Employee Benefits Division of the state, which administers the Public School Employees Benefit Program.
“Districts would then be out of the health insurance business for any employee hired with foundation dollars,” the memo stated. It also noted that Beebe said he would not support this concept.
Asking spouses and children of public school employees is another option that was suggested in the memo. In effect, it would ask that families fund the additional costs of the health insurance plans for spouses and dependents.
Establishing variable rates such a smoker’s rate versus a non-smoker rate is listed as a potential cost savings initiative, and mandatory participation for new hires after July 1, 2014 was also listed.
There were also concerns raised in the memo about how the Affordable Care Act might impact the public school employees’ insurance fund.
“No one really knows how ACA will impact future health insurance costs and benefits,” the memo said. “If ACA requires 100% of your employees to take health insurance, then there is a substantial unfunded mandate for schools.”
Key said while others are discussing potential short-term funding fixes for the insurance pool, he is focused on long-term reforms. He said there is “no appetite from either party” to “write a check” and make up the $58 million deficit.
Key said there has to be “fundamental reform,” such as eliminating “no deductible” gold plans, instituting cost sharing by teachers, and perhaps shifting teachers and school employees to health savings accounts (HSAs) to offer more financial flexibility in health insurance expenses.
“I think now that we’ve had to pick up the problem, we’re responsible moving forward. I don’t want to see another 48% increase after we get involved,” he said.
Matt Decample, spokesman for Beebe, said the Governor remains engaged in conversations on the subject and is hopeful that a remedy can be fashioned before the dramatic rate increases would ensue.
“There are no easy answers, whatever we do is going to cost money and its going to take shared contribution,” he said.