contracted services

Budget and Affordable Care Act on TE Special Meeting agenda tonight … Is this the precursor to outsourcing?

There is a special TE School Board meeting scheduled for tonight for 7 PM at Conestoga HS. The two items for priority discussion on the agenda are (1) The Board will consider options to close the projected budget imbalance of approximately $3.1 M for the 2014/15 school year and (2) Presentation of the impact of the Affordable Care Act (ACA) on the School District.  Unfortunately, this important special school board meeting conflicts with both the Tredyffrin and Easttown Board of Supervisors organizational and regular meetings, which includes the swearing in of newly elected officials, previously scheduled for tonight.

In the District’s draft budget (included in the agenda), the base model for the 2014/15 school year indicates a $3.1M budget deficit – this model assumes no tax increase from the Act 1 Index or  referendum exception (PSERS, Special Ed).  In the projection model that includes the Act 1 index (2.1% tax increase) the District’s budget deficit is reduced to $1.2M.  A third project model shows the budget deficit reduced to $141K if the District takes the referendum exception (1.1% tax increase) and the Act 1 index (2.1%).  The $141K deficit project model would still requires the District to find other cost savings in addition to the 3.2% tax increase to the residents.

If the District imposes the 3.2% tax increase for 2014/15 school year, I think that would make the third year in a row they have imposed the maximum tax increase allowed by state law without a voter referendum.  But here’s the disconnect for me – on one hand, the Board has voted to take the maximum tax increase but … for the last several years, the District has come up with multi-million dollar budget surpluses.  As examples, the 2011/12 year saw the District in a surplus position of $3.9M and for the 2012/13 year, the surplus was nearly $5M.  The budget surplus is not reflected in the District’s draft budget nor indicated in the next year’s budget.  The multi-million budget surplus is added to the District’s fund balance and the taxes continue to rise.

Since the multi-million dollar budget surplus is taxpayer dollars, wouldn’t it be great if the taxpayers had a say regarding the surplus?  Here’s an idea — Rather than adding additional millions of taxpayer dollars to the fund balance, what about using some of the budget surplus dollars for health insurance benefits to that all TESD employees as covered as required by the Affordable Care Act.  Afterall, the District lists ACA and the TEEA teacher contract as the two items to impact the 2014/15 budget.

Following the District’s 2014/15 budget discussion tonight, is an ACA overview by attorney Rhonda Grubbs.  Her presentation will discuss how the federal law will affect TESD and its employees. Grubbs is an associate at Wisler Pearlstine, the law firm of Ken Roos, the District’s solicitor.  You may recall that Grubbs offered her legal opinion on the ACA at a TE school board meeting last spring in response to the District’s aide, para and substitute teacher outsourcing debate.  Don’t get me wrong; I think a legal presentation on the ACA and how it will affect the District and its employees is important.  However, in my opinion, residents and employees would have been better served by a third-party legal expert versus a representative from the District’s contracted law firm.  And what about an insurance expert – I’m certain that there is any number of local insurance consultants/experts who would make a presentation to the District (and I’m guessing would do so, free of charge).

Under the ACA, employers will be required to provide employees who work more than 30 hours per week with health care benefits.  The federal mandate will go into effect for school districts in the 2014/15 school year.  Currently T/E aides, paras and substitute teachers do not receive health coverage.  For the record, T/E is the only school district in the area that does not provide health insurance for their employees – Great Valley, Radnor and Lower Merion school districts all offer healthcare coverage to all their employees.

The District lists the following ACA compliance options:

1.  Health Benefits:

  • Provide health coverage for employees working 30 hours/week or 130 hours/month

2.  Contracted Services:

  • Outsource the jobs of aides, paras and substitute teachers

3.  Reduce Hours:

  • Reduce hours of aides/paras to 27.5 hours/week and hire additional aides/paras to cover the reduced hours
  • Limit substitute teachers to 3.5 days/week
  • Reduce hours of aides/paras to 27.5 hours/week while increasing the hourly rate to make the reduction in hours neutral to the employee income
  • Reduce hours of aides/paras to 27.5 hours/week while increasing the hourly rate to all aides/paras

4.  Incur IRS Penalty

After much debate, the Board decided not to outsource the aides, paras and substitute teachers for the 2013/14 school year.  It is my understanding that 40% of the District’s aides/paras did not return for the current school year.  Although neither the school board nor the administration has confirmed it – I was told that the positions of non-returning aides/paras who worked 30 hours or more were outsourced.  If this is true, than the number of District employees that need to be covered by the ACA has dropped since this issue was debated last year.

As follow-up, how has the outsourcing of the aides/paras worked out for the District?  For the record, several parents, aides and paras have told me that the result has been less than satisfactory — it would be interesting to know if the administration and Board are pleased with the job performance of these contracted employees.

I cannot help but think that the administration and the school board may have already made up their minds about the ACA situation.  Were it not for the pushback they received last year, I believe that the administration would have already outsourced the jobs of aides, paras and substitute teachers working 30 or more hours per week.  Clearly, the handwriting was on the wall in 2013 for the District’s aides, paras and substitute teachers and the 2013/14 school year may prove to be only a one-year reprieve for these employees.

Some have described tonight’s planned Affordable Care Act presentation by the District’s law firm representative as nothing more than a PR move but …  I remain hopeful that some of our school board members will show their support of the District’s aides, paras and substitute teachers and fight for them to keep their jobs (and their hours).

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