Say No to Outsourcing in TESD … An Outsourcing Alternative

The decision about outsourcing the aides, paraeducators and substitute teachers should not only be about money.  It should be about doing what’s right — these employees are part of our community and deserve to be treated fairly.  The outsourcing sales pitch may seem like the answer but it’s not a panacea.  I hope that the Board and the administration will re-think the proposed outsourcing … tripping over dollars to pick-up pennies is not a solution.

Following the May 13th TE School Board meeting, the community was left with many unanswered questions related to the proposed outsourcing of the aides, paraeducators and substitute teachers.  Requirements of the Affordable Care Act  (ACA) and the effect that compliance will have on the District are at the core of the situation.  The aides, paras and substitute teachers are the only group of TESD employees not currently receiving health care benefits.  As of January 1, 2014, the ACA will require the District to offer these benefits to all employees working 30 hours or more.

Since the last School Board meeting, the aides, paras and substitute teachers, representing all 8 District schools, have met three times and I attended the meetings.  The mission of the meetings was to disseminate information and discuss acceptable alternatives to outsourcing.  The meetings were intended to provide a ‘safe’ forum where affected employees could express their concerns and ask questions, yet some did not attend, fearing workplace retribution for their participation.

At my request, Neal Colligan attended the meetings and helped us understand how the District could comply with the ACA without resorting to outsourcing.  I want to be clear that neither Neal nor I represent these employees – we are simply residents seeking a solution to a community issue. Through the discussion with the paraeducators and other members of the community, an outsourcing alternative evolved.  As part of the collaborative effort, Neal spoke with health care experts to better understand the requirements of the ACA and what compliance would mean for the District.

The parameters of the ACA requires that the school district offer health insurance to its employees that work 30 hours or more that is both affordable and of minimum value.  Currently the only group of employees in the District not receiving health care benefits is the aides, paras and substitute teachers.   The ‘affordable’ test means that the employee cannot be asked to pay more than 9.5% of their household salary for insurance. The insurance plan is of minimum value if “the plan’s share of the total allowed costs of benefits provided under the plan” is at least 60% of such costs.

Given the information available, Neal created a conceptual outsourcing alternative that would comply with the law and keep the jobs of 260 employees from outsourcing. (Click here for copy of the outsourcing alternative). The alternative was presented to the aides, paras and substitute teachers in attendance at this week’s meeting and copies were sent to the administration and school board members for their review (in advance of Monday’s Finance Committee meeting).

Neal provided the following explanation of the outsourcing alternative for today’s Community Matters post:

As the District has spent all of its time on a plan to outsource to avoid the Affordable Care Act (ACA); we based our plan on the idea of complying with the new Federal Law.  With the help of community members and industry experts, we were able to price a health care insurance offering that is Affordable and meets the minimum standards required by the ACA.  You will see in our analysis that complying with the Law (and offering a health care option) should be far less expensive to the district and its Taxpayers than paying the fee attached to outsourcing.  We’ve also done some work on  PSERS costs as it relates to this employee group and have devised a plan to neutralize those cost increases to the District.

Please know that this is a conceptual plan only.  We did not have all of the information needed to develop “hard” numbers.  The District, if it decides to investigate this option, would not be limited by estimates.  Further, the cost of our insurance offering was also estimated.  We believe this to be a conservative estimate as the District is a large insurance client and may be able to secure this type of plan at a more competitive cost.  The new insurance plan offered (in our analysis) may be considered discriminatory as it is not of the caliber offered to the other District employee groups.  Certainly it is no more discriminatory than the current situation where this employee group is not covered at all.  We also believe the District is not in danger of violating the discriminatory parameters of the ACA as they do not meet the test of “fully insured employer” (they are partially self-insured…this may be too mush inside baseball for many).

We ask the District to consider this conceptual approach.  We believe an alternative to outsourcing along these lines can and will produce a more cost-efficient and sustainable solution while keeping this employee group as District employees.

If you oppose outsourcing the jobs of the District’s aides, paraeducators and substitute teachers, please plan to attend these meetings:

  • Finance Committee Meeting: Monday, June 10 at 7 PM, Conestoga High School
  • School Board Meeting: Monday, June 17 at 7:30 PM, Conestoga High School
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4 Comments

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  1. Cheers to Neal et al for thinking of an alternative solution.
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    I see two problems.
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    1. The “bare bones” healthcare plan offered to the paras might be discriminatory under PPACA. The tests are complex and the penalties for discrimination are high. My understanding is that the District’s healthcare plan is self-funded and is subject to the PPACA discrimination tests. The District would need guidance from an expert to understand whether the “bare bones” plan passes the discrimination tests.
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    2. The District needs to act quickly to avoid the real and large penalties associated with not offering healthcare to the paras. The status quo is not an option. Either the district needs to offer healthcare coverage or the jobs need to be outsourced. Delaying a decision by a month to do further investigation means outsourcing probably could not be done for the next school year – CCRES needs time to hire and train employees. In the absence of a clear, proven healthcare alternative that meets the discrimination rules, the board may opt for outsourcing.

    [Reply]

    Pattye Benson Reply:

    Keith,
    What if the District reduces the aides and paras to less than 30 hours — wouldn’t that comply with ACA?

    [Reply]

    Keith Knauss Reply:

    As I understand the law, yes. I’m guessing that the District or any temporary agency (e.g. STS or CCRES) will structure most jobs to be just under the 30 hour threshold. This will avoid potential ACA penalties.
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    When I spoke with Jay Godwin of STS he mentioned the problems of managing employees under the 30 hour limit. STS had a keen awareness of the penalties and custom software to track daily hours. It’s questionable how well the District will fare. An uninformed principal asking a para to spend an additional hour or two on a special needs basis could trigger a large penalty.

    [Reply]

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