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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Slight correction Pattye. The District imposed the maximum tax increases in 2 of the last 3 years (3.77% in 2011-12; 3.3% in 2012-13) as they increased taxes only by Act 1 (1.7%) last year. Was this an election year maneuver…hard to know? Appears they are leaning towards going back to the MAX tax rate increase convention now. But, it is not done yet…if they could find just $1 MM in savings in a planned spending budget of $117 MM; Act 1 increases would be sufficient to balance the budget. By way of comparison, spending this year is projected at around $114 MM.
Read through the ACA slides and this is the same decision matrix as last year. Like you, I believe this issue has been dealt with through selective outsourcing and limiting hours as it relates to the paras/aides. I see on the check register the larger payments to Delta T; one of their key outsource companies. Like you, I have no idea if this is policy or not but it is certainly prevalent according to employees I’ve talked with. I don’t think offering these employees health insurance or taking the ACA fine are really options. My guess is that this has already been decided.
Other correction: biggest conflict tonight is the Auburn/Florida State game. For the record, I like Auburn to win outright…forget the point spread. That means it will probably be a big night for the Seminoles!
There is another option to consider in regards to healthcare coverage for 30+ hours per week employees. That is offer bronze level healthcare for employees only.
The cost estimate in the handout slides for single coverage from a C2F2O2 plan was over $800K. That’s a platinum level plan with no deductible and only a $15 co-payment. This type of platinum level plan is rare and found chiefly in the public sector. Raise your hand if you have a $0 deductible plan. (mine is $5K)
A bronze level plan with a several thousand dollar deductible would cost about half that and only if every employee applied for coverage. I don’t know TE’s employees, but I’m guessing that many (maybe most) of the paras and aides are covered under their spouse’s plan and would not apply for TESD’s coverage.
In the end, providing bronze level coverage might be less expensive than the profit paid to any outsource company. It’s worth a look.