It’s only a couple minutes old but as with any Budget there are positives and negatives. Unfortunately, there appear to be more negatives than positives.
Regarding state employee and higher education contracts, nearly all, except Teamsters correction contract and Washington State Patrol, were not funded. Instead higher education employees will be provided a $500 per year salary increase effective July 1, 2017, and July 1, 2018. On the other hand, the union coalition bargaining agreement on health insurance was fully funded.
On the bleaker K 12 side, the Senate budget repeals the Initiative 732 salary increase instead providing a 2.3% salary increase effective September 1, 2017. Further, insurance funding would not change staying at $780 per month for the 2017-18 school year.
What’s important to realize is that there isn’t funding for a salary or insurance increase the second year of the budget since this is the year when the Senate republican McCleary solution, SB 5607, takes effect (see my previous entry about the bill). Sorry to get complicated but starting September 1, 2018, school districts would receive increased state funding based upon the National IPD (implicit price deflator). The IPD usually runs about 1% below the Seattle CPI (consumer price index) – the current measure for our annual salary increases. The way their proposal works is that when this IPD increase goes into effect in September 2018, we will have to negotiate with the school district how much of this increased funding goes for salary or insurance benefit increases starting September 1, 2018.
One positive with their proposal (looking hard for a silver lining), really not this proposal, but their McCleary solution: the state will be funding the additional 5,000 classified employee FTEs that are currently funded by local levies.
And another good point is that the pension plan was fully funded with an additional $246 million set aside to pay for the unfunded liability.
As I spend more time on this proposal, I will update as needed.
Update #1 – Good news…The Senate fully funded PSE’s paraeducator bill, SB 5070 at a cost of $2.3 million!
Update #2 – Good news…they used $700 million from the “rainy day” fund to buy down the PERS 1 unfunded liability.
Earlier I reported on a small bill, HB 1042, that has an innocent objective. Stop collecting K 12 insurance data and save the state $250,000 per year. I testified earlier that it doesn’t make sense to stop collecting information while the problem still exists. Otherwise, how will you know what you need to do to fix the problem?
Nonetheless, the House approved the bill on strict party lines: 50 democrats voting for it, 47 republicans voting against it. I was pleased to hear the democratic speaker mention classified employees and the republican speaker tie the K 12 insurance problem to a potential McCleary solution.
Not a lot to see or hear in the debate but here it is:
PSE’s effort to provide affordable, quality health care insurance for all school employees has stalled for now. SB 5726 continues to get plenty of favorable attention but also receives some negative attention. One thing that gets in the way is the cost to provide K 12 employees “parity with state employees”. What this means is K 12 employees, including part-time classified employees, would receive the same funding as state employees.
K 12 employees currently receive $780 per month while state employees receive $888 per month. A second major cost is that part-time state employees who work half-time or more receive the same funding as full time employees while in K 12 they are prorated. For instance, a 4 hour part-time classified school employee receives $390 per month while a 4 hour state employee receives $888 per month.
It costs nearly $330 million per year to treat all K 12 employees the same as state employees. $82 million of that is to provide part-time classified school employees the same benefits part-time state employees receive.
Not surprisingly, that makes this issue more difficult to fix. However, one insignificant victory in this struggle is that OSPI’s first estimate of the cost of the bill was $700 million per year. Yea we were successful reducing the cost but that doesn’t make our opponents go away, unfortunately.
Yesterday, House republicans attempted to amend HB 1843 by adding classified employees to PEBB. 1843 is the House democrat’s McCleary solution (check out previous entries). There was an impassioned plea from Representatives Drew MacEwen, Dave Hayes, Dan Griffey, Ed Orcutt and Bob McCaslin to help out classified employees and PSE members. Really nice to hear their support for us.
Though the amendment failed on a party line vote of 47 republicans voting yes and 50 democrats voting no, it was good to hear the two democratic opposition speakers say this is a problem that needs to be fixed this session.
Here is the debate on the amendment:
Less than 30 minutes ago, the Senate Ways and Means committee approved SB 5726, PSE’s bill, sponsored by Senator Hobbs, to put all K 12 employees into the PEBB health care system. Senator Karen Keiser’s amendment to just put classified employees into PEBB failed when republicans united behind their leader, Senator John Braun, who said that it is time to reform K 12 health insurance for all employees, not just classified employees.
Yesterday was an exciting day for two bills that are strongly supported by PSE. Bills 5726 and 5727 were simultaneously heard yesterday in the Ways and Means committee. PSE was pleased to see that there were professional support employees, teachers, and administrators all testifying in support of both of these bills. Karen Carter, Mead para educator, explained that 30% of their family pay was going to monthly healthcare premiums for her family. Amy Lindsey, Pioneer school district teacher explained how she paid over $1200 a month in premiums to cover her family. Mark Trobough testified how costs for family insurance was making the teacher shortage worse. Kim Lackey, Puyallup school district office manager, explained how she used to provide insurance for her children but had to stop because of the high cost of monthly premiums.
I chose to testify on the other side of the insurance spectrum as someone who is fortunate enough to pay nothing for my medical insurance. I shared with the committee my experience working with other professional support employees who once upon a time had paychecks to take home because insurance was affordable but who now are taking home considerably less due to rising costs. I also shared my story about my daughter who is a teacher but has not married the father of her two children because it would cost them over $800 per month to add him to her insurance.
Testifying on the con side were WEA (the teacher’s union) and Premera Healthcare. Premera said they didn’t see a problem with the current system as they are able to deliver a cost effective product to school employees with only 4% in overhead costs. As many of us know…a 43% increase in premiums over the last 4 years does not seem cost effective? WEA testified that they don’t think the system is broken. They just want the allocation to be higher.
There was a great article in the Seattle Times on the 10th of February. They talked to both the bill sponsor, Senator Hobbs and our own Doug Nelson. Senator Hobbs said it well, “Although many school districts offer affordable insurance plans to individuals, the family plans are out of reach for many school employees.” It is a hot issue on the hill and there will be more to come.
Here’s the hearing…
Representative Michelle Caldier introduced today, two days before cutoff, her own solution to ensure school districts are offering affordable and quality health insurance for all employees in K 12 public schools. HB 2110 would address the dependent/family ratio by requiring that, “Local bargaining over basic benefits shall not alter the right of each employee of a district to pay substantially the same percentage share of the cost of health benefits as all other employees in the district, regardless of whether an employee chooses to cover dependents.”
I don’t expect her bill to get a hearing much less a vote in the House Education committee but it is nice to see her attempting to fix the problem.
I was unable to testify at last Monday’s House Appropriations committee hearing on HB 1843/SB 5607 because I was snowed in. Below is what I sent to committee members after the hearing which captures what I would have said on behalf of PSE’s 30,000 classified employees had I been at the hearing:
PSE signed in support of both bills because each of them have positive impacts on classified school employees.
What we like in 1843:
• Increasing the classified employee salary allocation
• Professional development for classified employees
What we would like to see changed in 1843:
• Change the classified employee basic education funding formula so that the state, not local levies, are paying for 5,000 classified employee FTEs (see this chart).
• Change levy system to promote levy equity
What we like in 5607:
• The state will be fully funding classified employee services (5,000 FTE are currently funded by local levies)
• Implementing a comprehensive paraeducator development program
• More flexibility to hire paraeducators as teachers
• Housing allowance includes classified employees
• Implements the 3:1 insurance payment ratio so that employees with families pay $3 for every $1 a single employee pays
• Levy changes that promote levy equity
What we would like to see changed in 5607:
• 3 year implementation of 3:1 insurance ratio so that in the first year it would be 5:1, second year, 4:1, and third year, 3:1.
• Use the Seattle CPI (consumer price index) as the inflation index rather than the National IPD (implicit price deflator).
• Include an insurance inflation factor that reflect premium increases.
• The requirement that school expenses for compensation not go beyond 80% will harm classified employees since teachers will consume whatever capacity school districts have to spend money. Change this so that classified employees are not left out of staffing, salary, or benefit capacity.
Yesterday, the Appropriations committee voted 1843 out of committee on a partisan vote of 18-15.
PSE is committed to finding affordable insurance for all school employees, especially the classified employees we represent and their families. With that goal in mind, we have worked with Senators Steve Hobbs, Ann Rivers, Mark Mullet, Guy Palumbo, Dean Takko, and Karen Keiser to introduce two bills, SB 5726 and SB 5727. Big picture view of the two bills is that 5726 is significant change with substantial cost ($200 million per year) to the state and employers and $21 million less for employees, 5727 is smaller in its reach and comes at no cost to employers but with cost shifting for employees. First, I’ll explain the easy bill.
5727 requires that K 12 insurance premiums be structured so that an employee who has full family insurance will pay $5 for every $1 that an employee with single only coverage in the 2018-19 school year, $4 for every $1 in the 2019-20 school year, and $3 for every $1 in the 2020-21 school year. To make this happen, insurance pooling dollars must first be used to maintain the appropriate ratio.
On the other hand, 5726 requires much more explanation. 5726 would move all K 12 employees into the PEBB insurance plans. This dramatic change to the insurance options available to school employees has numerous benefits:
….”insurance parity 1″ – K 12 employees would receive the same state funded levels as state employees. Currently, full time K 12 employees receive $780 per month. Based upon current funding for state and higher education employees, we would see an increase to $888 per month.
….”insurance parity 2″ – half time employees (employees working 630 hours or more per year) would be treated the same as state employees. Currently, half time or more K 12 employees receive pro-rated insurance funding. As a result of this bill, they would receive full funding.
….”balanced out of pocket costs” – the PEBB insurance plans are developed to ensure that employees with family coverage pays no more than three times what a single employee pays.
….collective bargaining for insurance, with a couple exceptions, would occur at the state level. Instead of negotiating insurance plans, employer funding and insurance pooling at your school district, these negotiations would take place at the state level just like state and higher education employees. Imagine the bargaining strength when all of us, K 12, state and higher education employees join together to negotiate for insurance funding and payments. What are the couple of exceptions that we can continue to negotiate? We would still be able to negotiate enhancements to the PEBB provided dental, vision, group life and group long term disability plans, as well as miscellaneous insurance plans like cancer insurance, etc.
….plan year would be on a calendar year basis rather than school year. Each January, our new insurance plans would start.
….the move into PEBB will be implemented in school districts on a schedule determined by the Health Care Authority over a three year period starting January 2019.
….employees or employers no longer have to pay the retiree carveout (currently $64.39 per month per 1440 FTE) once they move into the PEBB system.
What’s important to note about the PEBB insurance plan is that 3,000 current K 12 employees and 4,000 of their dependents are on it. PSE’s higher education employees and PSE’s staff is on PEBB. Additionally, 36,000 K 12 retirees are on PEBB.
And even more important, if this bill passes, 9,000 school employees (mostly classified employees) and 30,000 of their dependents (mostly classified employee dependents) will be able to have insurance again.
In a touchy debate last night, Senate Republicans passed SB 5607, their McCleary solution, on a 25-24 vote. This close vote was expected and not surprising. What was surprising is how quickly they passed the most sweeping, some would call it “radical”, change to K 12 in decades. As dramatic as the funding changes were, the policy changes were equally dramatic. Policy changes which included prohibiting teacher strikes, clearly describing how to fire poorly performing teachers, or making it easier to hire paraeducators (and others) as teachers (as long as they are supervised by a teacher.) With the passage, they also approved the paraeducator bill, SB 5070.
While there is a great deal of data about the levy proposal and funding elements, it is also safe to say that there is considerable debate about the impacts. That shows you how complicated their solution is. Here’s the tax impact, state budget impact, funding impact by school district, funding by student, taxpayer impact, and another taxpayer impact.
What has to be noted is that the Supreme Court demanded that the State should reduce their reliance upon local levies to pay for basic education. They also noted that there is a significant problem with levy equity (rich school districts provide more funding for basic education that poor school districts). 5607 successfully solves these difficult problems.
Another issue they addressed was K 12 health insurance. The bill requires school districts to begin offering insurance benefits that require employees who need full family insurance coverage to pay $3 for each $1 an employee who signs up for employee only coverage pays. PSE prefers that they stagger this implementation over a 3 year period starting at $5:$1 in the first year, $4:$1 in the second year, and, $3:$1 in the third year.
Of further interest and equal concern is the elimination of the current funding mechanism for salaries, staffing and insurance. What I like about their proposal is they fully fund classified employee staffing ($168 million). What I don’t like is the inflation factor (National IPD) – I prefer the Seattle CPI. I also prefer that they add an insurance inflation factor in their formula. I also don’t like the 80% threshold for school districts to spend on compensation. With that in place, it will be very difficult for classified employees to negotiate improvements if districts have already given funding capacity to teachers.
Here is the debate on the Senate floor on the bill: