In an interview with the Kalamazoo Gazette yesterday, Governor Snyder acknowledged his nearly $1 billion of cuts to education spending would be tough, but tried to soften that blow by saying “We’re not just giving them a problem, we’re offering solutions.”
The two specific solutions he mentioned are for employees to pay for 20% of their health care premium and for all other non-instructional costs to be cut by 10%.
Health care costs and contributions have been, in the terms of the euchre card game so closely associated with this state, the right bauer of the educational spending reform argument. I’d say retirement costs are the left bauer. But the local districts have no say in retirement costs. Snyder’s smart enough to know this so he’s not bringing that to the forefront of this dialog. Current employee health care, however, is fair game for him.
But has The Nerd done his homework? Let’s do some math:
- The most recently available data from 2009 shows that K-12 school district General Fund budgets expended $1.8 billion on current employee insurance. That’s 11.6% of total General Fund Expenditures.
- That amount translates to $1,116 per pupil being spent on insurance for current employees.
- Let’s assume that no employees anywhere in the state make any payment against their premium – which is an absurd assumption. (In GPPSS alone employees contribute a minimum of 5%. The Mackinac Center for Public Policy estimates the statewide average is 4%.)
- 20% of the total insurance expenditure would equal about $364 million or roughly $223 per pupil.
- Governor Snyder is proposing $920 million of cuts to education which in K-12 budgets translates to a $470 cut per pupil PLUS over $230 per pupil in retirement cost increases.
By any number of equations, even if by a magic stroke of the pen all employees paid 20% of their health care and other insurance costs, this would only amount to about one-third of Snyder’s total proposed K-12 budget impact. I could take time to do the math on the impact of cutting 10% of all non-instructional costs, but I can guarantee it won’t come anywhere near making up the difference.
The Nerd is smart enough to keep poking at this raw nerve we call health care. Without knowing nearly any actual facts or figures, the American public gives the Nerd the benefit of the doubt on the argument that we need reform there.
But many of us DO do the math and Snyder has either not done his homework on how he expects K-12 districts to deal with this problem or he’s being disingenuous in his claim that he’s offering solutions.
4 responses to “Hey Rick, don’t overestimate health care contribution impact”
You better check YOUR math.
The GP teachers pay 7% of the illustrated rates (which are generally inflated 5-7% over the previous year’s experience rates). In addition to that, we pay $600 to have a spouse insured (plus the 7% rate of the couple rate or family rate, as applicable). The $600 equates to about 4-8% of the illustrated rates. On the inside, we pay 11% of the “premium” we’d be paying if the Board were carrying a policy on us, which it doesn’t. Additionally, GP teachers pay 10% of the cost of the first $10,000 in services that we use. Services=lab tests, etc. We pay a $10 or $20 co-pay for office visits and $100 for an emergency room visit. We have a $100 deductible per person, or $200 per family. Now, let’s talk drugs: $5 or $40 co-pays on medicine.
Add it all up, and buddy, we’re ALREADY paying >20% for our health care costs up to the first $11,000 of medical services. How many of the 600 teachers spend more than $11,000 per year in health care costs? Ask the consultants the district pays a teachers’ salary to in order to bean count how we use our health care benefits.
That’s all so the boys and girls of Grosse Pointe can have all of the programs they had before this budget crunch. The GPPSS employees are taking the hit instead of the schools. Our families are taking the hits in our homes instead of the students in the schools having reduced services.
When I was a student in the 60’s and 70’s in a public school in Wayne County, when the taxpayers didn’t want to have an increase in property taxes, and the costs went up, services were cut. When I was a girl in school, there were some years when we did not have interscolastic sports, or vocal music. Alternatively schools reduced the schedule to a five period day and only offered core classes. There are options and alternatives. The gov’nah is close to my age. He SHOULD remember those days.
GPEA members agreed to those health care concessions in our local collective bargaining that so we could keep our salaries, but for the average person on our salary schedule, with the 3% that the state is taxing us, and the increased costs in health care, and the inflationary rate, we lost a potential of about 8% of our income (again-on average) on this past contract. Over the life of the salary schedule, because of the way it was re-structured, beginning teachers gave up more than $15,000 in potential earnings. Take your calculator and compound the interest and theoretical loss in total income over a lifetime of work, if a teacher would have invested that amount in the first ten years of teaching.
With all of those concessions, we have larger class sizes, increased responsibilities for accountability, and the disdain of our neighbors. That’s why we’ve been saying, “Enough is enough!” Teachers did not cause this economic fiasco. We’re suffering from it like everyone else, doing more with less.
We have many suggestions for improving the economic outlook in our state but it appears our elected leaders feel they have been given a mythical mandate and are moving forward with it. I read all of the brochures that the corporate-sponsored candidates mailed to my home and none of them said that they would gouge public schools to the point that even the most fiscally responsible districts will have no chance of maintaining programs and services to children. None of them said that they would gouge the budget to the point that the only employed people in the state, the public workers, would have to get food stamps in order to feed a family of four. None of them said that they planned to raid the fully funded K12 school funds to subsidize colleges. None of them said that they couldn’t wait to take the state that spends the least on higher education to an even lower level of spending. I didn’t read any of that in their brochures. I read a bunch of promises that aren’t being kept.
It’s enough to make me mad enough to wear red for public ed.
As always, Ranae, the union perspective skews the numbers. The 20% discussed is for contribution toward premiume alone, and is independent of plan design cost. Most other employers ask employees to pay 20 to 25% of the premium cost, regardless of plan design. Teachers in Michigan (and especially in GP) pay MUCH less than average, and with a 90/10 plan (district pays 90% through the first 10,000, then all of it), your plan design is considerably richer than most all others. When all plan costs are considered, most plans have employees pay in excess of 30%, and you are being asked to just close to that level, not even exceed it.
And the $600 to have a spouse insured is not accurate either. The $600 is a surcharge ONLY if your spouse has other coverage available to them AND you want them to be on the district’s plan as well. This is a VERY small amount of people within the district, yet you make it sound universal. You complain that this is an extra cost to teachers, yet you think that the district should pay extra to have spouses with other to coverage available to them through their own employers covered for no cost?
Further, your copay structure ($10 and $20 dollars, and $5 to $40 for drugs) is in NO WAY obtrusive. In fact, it is again below what the average person pays in their typical plan design. Yet, you decry these very simply and reasonable plan design aspects as some additional undue burden on the poor teachers. Give me a break.
Your arguments ring hollow Ranae because you can’t even speak truthfully about the current situation and what you are asked to do, and you wonder why people get frustrated with your “enough is enough” rhetoric?
If the money is not there, we MUST cut to balance the budget, and both you and Mr. Walsh are parochial in your assessments, and in your case, inaccurate with the data.
I think everyone brings their own opinions to their, well, opinions. That’s why they’re called that.
My argument is parochial to the extent that I think Snyder’s proposed cuts to education are incredibly deep and impractical when, as an alternative for which I advocate, he has done nothing to address one of our state’s most egregiously out of whack expenses, corrections. All that said, I also agree K-12 cuts to some degree should happen as well. It’s that state’s largest expense and it’s irrational to think under these circumstances that it can be exempt. But $470 per pupil plus a 25% increase in retirement is reckless.
I think Snyder’s decision to go as far as he did with business income tax cuts in relation to other options is very questionable. Even if we all agree the MBT needed reform, delivering another $1.2 billion hole on top of the $1.8 billion shortfall – at this time and in relation to options – was far more than what non-partisan analysts would judge of Michigan’s business tax climate. Could we not have waded into those waters over his two year budget over which time the state economy will undoubtedly be healthier? Unemployment is already down slightly and SAF revenue is improving rapidly. As the business tax reductions prove to create jobs, then loosen them even further.
I’m the first to agree that it’s not fair to criticize without offering an alternative. So you are not reading from me that the budget musn’t be balanced, but reasonable people obviously disagree on the means to do so.
I think we’ll all soon find out what Snyder’s alternatives are anyways as it appears his plan to tax state retiree pensions may prove unconstitutional. He’ll also be challenged on the legality of using the SAF for higher education. So what he does in response to that may prove even more interesting.
Brendan
@GB-“As always”…doesn’t win any points in a debate. It’s interesting that your response, “And the $600 to have a spouse insured is not accurate either. The $600 is a surcharge ONLY if your spouse has other coverage available to them AND you want them to be on the district’s plan as well. This is a VERY small amount of people within the district, yet you make it sound universal” is assumed to be accurate by you, even though, as one of the bargaining team members, who bargained the current contract, and signed it, I do understand the verbiage. While I hesitate to read tone into your response, the word patronizing comes to mind.
Again, no points scored with
“Your arguments ring hollow Ranae because you can’t even speak truthfully about the current situation and what you are asked to do, and you wonder why people get frustrated with your “enough is enough” rhetoric?” You don’t know the veracity with which I speak and are being too quick to judge based on your assumption of my motives, and my politics.
I don’t lie and I check my facts. The Board does not pay premiums. We are self-insured.