Kettering Superintendent’s Claim About Teachers Paying More For Health Insurance Is Misleading

Kettering is seeking approval for a 4.9 mill school tax levy in this November’s election. A big part of School Superintendent Jim Schoenlein’s pitch to voters, urging support for the levy, is that teachers have agreed to a one year “pay freeze,” and, teachers have agreed, that for one year they will, “pay more of their own health insurance.” (See Schoenlein’s comments in the recent “Blue Ribbon Report” — mailed to all Kettering residents.)

Since the claim about a “pay freeze” amounts to misinformation — in the one year the pay scale is frozen, 70% of Kettering teachers will receive “step” increases of 3% to 8% of their salary — I decided to research the claim about health insurance as well. I appreciate the fact that the Kettering Treasurer, Steve Clark, is accessible, and, yesterday, I met with Mr. Clark to find out details of the teachers’ health insurance agreement.

My conclusion is, like the claim that teachers have agreed to a “pay freeze,” the claim that teachers have agreed “to pay more of their own health insurance” amounts to misinformation.

What I discovered yesterday is that the basis for Dr. Schoenlein’s claim about health insurance is the fact that Kettering teachers, in the one year extension of their contract, have agreed, starting in January 2012, to receive a marginally smaller amount in their “health savings account.”

The two year teachers’ contract, approved in May, 2009, initiated a “high deductible health care plan.” As part of this high deductible plan, teachers are provided a “health savings account” — a credit card provided to each teacher, on which the district makes regular deposits.  The credit card is used for paying the amount of the deductible charged for doctor’s visits, lab work, prescription drugs, etc.

Each year, in the first two years of the contract, teachers with a single plan have $2000 added to this “health savings account” credit card, and, teachers with a family plan have $4000 added.

The modification that the teachers agreed to, for the 2011-12 school year, is, starting in January, 2012, teachers with a single plan will receive $1850 each year for their “health savings account,” rather than $2000; and, teachers with a family plan will receive $3700 each year rather than $4000.

One great feature of the plan is that the “health savings account” money is available for whatever the teacher chooses to spend it on — not just medical deductibles — and that the unused money on the card accumulates year after year.  So long as this savings account is used for medical deductibles, the money is tax free. If the money in the account is used for non-medical purposes, however, the teacher must then pay income tax on the money, plus an additional amount of 20% of the income tax.  Regardless, this plan means that a healthy teacher, over time, should accumulate extra cash for his or her own use.

The modification in the 2011-12 contract does not change the basic formula of how Kettering Schools pays health insurance premiums. The district will continue to pay 90% of the cost of premiums for the health insurance, and teachers will continue to pay 10%. Currently a single plan costs $4378 in premiums each year.  A family plan costs $11,532 in premiums each year.

The small decrease agreed to in the “health savings account” — $300 less for those on a family plan and $150 less for those with a single plan — will result in only an insignificant change in the proportion of the total health insurance cost that teachers pay. As I calculate it, in the first two years of the contract, teachers, each year, will pay 7.77% of the total cost of their health insurance, and, with the new agreement, starting in 2012, teachers will pay 7.90% of the total cost.

A claim that teachers have “agreed to pay more of their health insurance” is misleading.  The increase in the proportion of total cost — from 7.77% to 7.90% — is insignificant.

But the chief reason that the claim is misleading is because most people would think, if teachers are “paying more for their health insurance” they must be paying more out of pocket money.  But that is not the case.  The truth is more complicated. Agreeing to accept a small decrease in the “health savings account” is not the same as agreeing to pay more out of pocket.

As a result of modifying the original health insurance agreement, most teachers will simply accumulate a slightly smaller amount in their “health savings account.” Only a teacher whose deductibles are large enough to exhaust the teacher’s “health savings account” will need to pay anything more.

Since there is nothing in the “Blue Ribbon Report” and nothing on the Kettering Schools’ web-site that attempts any explanation of how health insurance works in Kettering Schools — no explanation of what teachers actually agreed to in their two year contract, and no explanation of how this two year contract was modified for the 2011-12 school year — the superintendent and the school board, by claiming that teachers have agreed to “pay more for their health insurance,” have opened themselves up to the unfortunate criticism that they are not attempting to educate the public, not attempting to engage the public in a responsible way, but, rather, are simply attempting to manipulate public opinion as a means to achieve passage of the 4.9 mill tax levy on November 2.

However it’s analyzed, it seems clear that any objective observer must conclude: Kettering Superintendent’s Claim About Teachers Paying More For Health Insurance Is Misleading.

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13 Responses to Kettering Superintendent’s Claim About Teachers Paying More For Health Insurance Is Misleading

  1. Bryan says:

    Welcome to local government…where truth is relative. It’s not just for DC anymore!

  2. nightfly says:

    Fascinating stuff Mike, even for those not in the Kettering district. It just goes to show you the shenanigans that school districts everywhere probably stoop to just in order to perpetuate their own livelihood. You can’t fault people for trying to preserve their job or make more money, but when it comes to public servants who are paid largely by the taxpayers, you expect alot more transparency and honesty. Big unions may have served a purpose in manufacturing industries, but they have no place in civil service jobs like teaching. They are not interested in Democracy, the voice of the community or being frugal with the funds they are given. I’m sure many citizens are tired of hearing teachers moan for more money when their average salary is not meager in any stretch of the imagination. And the fact that 85% of a school district’s budget goes to salaries, that just blows me away. The children, who everyone agrees is of paramount importance, have to subsist on just 15% of the funds, is criminal. And when the levys don’t get passed, the first thing they do is punish the CHILDREN, taking away programs, sports, transportation…NEVER “we will have to reduce our personnel expenses by 5 or 10%”. Schools need a major transformation if we have any hope to truly educate our children.

  3. Stan Hirtle says:

    “the fact that 85% of a school district’s budget goes to salaries, that just blows me away. The children, who everyone agrees is of paramount importance, have to subsist on just 15% of the funds, is criminal. ”
    Please explain this. Salaries for teachers and those who manage and support them is going to be a major expense for schools along with buildings and equipment, plus things like transportation. But in general kids don’t get paid to go to school. Where does “the children get only 15%” come from? They get it all in the form of education. Makes no sense.

    Raising the deductables for health insurance and allowing the employees to pay these deductables with contributions to “Health Savings accounts” which the employee can fund with pretax dollars, essentially a government subsidy, is popular in this era of health care reform but is generally seen as an added expense to the employee (Conservative health care reformers like the idea of having patients have financial incentives not to use health care). The amounts here seem small in the big picture of running a school system, but real enough. So what’s dishonest? Some people don’t like paying increased school levies, understandably if they are house rich and income poor, and particularly when foreclosures are reducing real estate tax revenues and squeezing those that are left. Some don’t like teachers for partisan political reasons, and some don’t like taxes and government. But I don’t see the problem with this specific issue.

  4. Mike Bock says:

    Stan, thanks for commenting. I agree with you that “I don’t see the problem,” with the school system having a “high deductible health care plan” and providing teachers with “health savings accounts.” It sounds like a great plan, and I hope it works, as promised, to help contain rising health insurance costs for the Kettering school system. But, the focus of this article is not on the merit of the health insurance plan.

    One big issue that I attempted to raise in my efforts last year to be elected to the Kettering School Board is the fact that Kettering Schools must be transparent and must engage the Kettering public as full stakeholders in Kettering Schools.

    I object to the fact that our local board, once again, has initiated a campaign of misinformation as a strategy to gain public support for raising school taxes. It is absurd that a local school board should trifle with the public trust. In this election season, voters are cynical about most political advertisements — 30 second blasts on their TV — that seek to influence and manipulate and do so via campaigns of “truthiness” that pollute our airwaves and our democracy with misinformation. It is absurd and unwise that a local school board would choose to join in the miasma of politics / campaigns of misinformation rather than rising above it.

    In this levy campaign Kettering voters are being told that Kettering teachers have accepted a “pay freeze,” and that Kettering teachers have agreed to “pay more of their own health insurance.” At best, these claims are misleading, and communicate misinformation. The fact that this is a deliberate attempt to mislead the public, as a strategy to influence a ballot issue, I find offensive.

    The problem is, there is no effort by the school board to show transparency. Any Kettering voter who wanted to understand what the board means by “pay freeze” or what exactly it means that teachers have agreed to “pay more of their own insurance” could only do so through great effort. These terms are not explained on the district’s web-site, nor in any publication I have seen. The district has scheduled eight public meetings with a chance for voters to meet with the superintendent and treasurer and board members and the one meeting I attended these terms were not explained.

    The only way that I could find out what the meaning of the claim that teachers agreed to “pay more for their health insurance” was to make the effort to go to the treasurer’s office and spend over an hour in discussion with him.

    Last year, I objected to how the 6.9 mill renewal was advertised and made an unsuccessful formal complaint to the Ohio Election Commission that the term “Absolutely zero increase in taxes,” used by the superintendent (Bob Mengerink) was false advertising. How can the word “absolutely” have shades of meaning?

    The board’s attorney gave a defense that, every time I read, makes me laugh: “A statement is not false where, even though it is misleading and fails to disclose all the relevant facts, the statement has some truth in it. Moreover, a statement that is subject to different interpretation is not false.”

    I lost my complaint and after the election, when the county auditor released the new effective tax rates for Kettering, my prediction was confirmed — the effective tax rate for this 6.9 mill renewal increased, and the effective rates for other school tax levies were increased as well. I wrote, Last Year, Kettering Schools Promised “ZERO Tax Increase” — But, School Taxes Increased By 2.34%.

    Stan, the reason I made the effort to go to the OEC wasn’t to protest paying a few more dollars in tax. And I’m not complaining now because of how teachers are compensated, via health insurance or “step” increases. The issue was, and still is, transparency. The issue is the fact that if we are to build and sustain a great system of public education we must do so via a vitalized democracy where the public is fully informed and fully engaged. Board members were well aware that renewing the 6.9 mill levy would result in an increase in effective rates, yet they advertised “Absolutely zero increase,” regardless. The same strategy of “truthiness” is now in force with a campaign that claims that teachers have accepted a “pay freeze” and that teachers have agreed to “pay more of their own health insurance.”

    My effort to change the board’s advertisement strategies has had no impact. It doesn’t seem to matter that a citizen complained to the OEC and, evidently and it appears the standard for truth by the board’s attorney, cited above, is still in force.

    I find it amazing that I am in the position that, as a retired teacher, although I want to support public education in Kettering, and always have, because of the obstinacy of this local board, I’m being led to conclude that I must vote “No” on this levy.

    NIghtfly,– thanks for commenting. You write,“Big unions may have served a purpose in manufacturing industries, but they have no place in civil service jobs like teaching.”

    As a teacher, I was active in my local union, served for a while as a union officer. The teachers’ union has a huge opportunity and a huge responsibility. A teachers’ union, if it so chose to do so, could demonstrate leadership and help bring the authentic transformation to public education that is needed. But, what is needed is an active and engage public that demands something better. Unions are lazy and happy with the present system. They need pressure from outside in order to make meaningful change, that is why a community like Kettering must find its public voice, must become a vitalized democracy. You’ve made me want to do more thinking and research on this topic. Thanks.

  5. Ryan says:

    Apparently the movie “Waiting for Superman” is a game changer as far as the teacher’s union goes. Hopefully it gets widespread attention and exposes the caustic affect the union is and continues to have on our education system.

  6. Eric says:

    A teachers’ union, if it so chose to do so, could demonstrate leadership…

    Has that ever happened? In the last decade? In any of over 12000 American school districts?

    Teachers’ unions are dependent on their staff–many labor relations consultants who earn their keep by helping teachers negotiate more favorable contracts. Until the staff (paid with the union dues of teachers) can support the civic mission of public schools, unions are an unlikely source of “authentic transformation.”

    because of the obstinacy of this local board, I’m being led to conclude that I must vote “No” on this levy.

    What about the disengagement of the union? Is the board being obstinate, or just realistic that it must balance a budget through the mechanisms specified in negotiated agreements?

  7. Mike Bock says:

    Eric, you are right. The system will not transform itself. There must be an outside force that pushes transformation. The mechanism to accomplish transformation is already in place — democratic action via local control — it simply must be activated. The Kettering community is an ideal place for local control to awaken and to assert itself. Next year, November, 2011, there will be two board seats open for election.

  8. Eric Weber says:

    Stan I hope you will read this and then decide if this is not a benefit that exceeds the private sector.

    In the 2010 school year, the Kettering School District pays for 90% of the teachers and administrators health insurance premiums. The health care plan is a high deductible Health Savings Account (HSA) which is intended to result in lower premiums to the district. This move from their previous plan was a prudent move and will likely result in some savings for the district.

    For those not familiar with HSA Health Plans, the coverage consists of two components:

    * The major medical portion which the KSD pays 90% of that premium.
    * The annual deductible which the employee is typically responsible for funding.
    o Family Plan Deductible is $4000.00/yr
    o Single Plan Deductible is $2000.00/yr

    For the plan year, the employee is responsible for paying for medical expenses up to their annual deductible. If their medical expenses exceed the deductible, the Major Medical coverage pays for charges in excess of the deductible.

    In the majority of private sector HSA Health Plans, the annual deductible is typically the employee’s responsibility to fund every year. This is not the case with the KSD. To offset the high deductible cost for those enrolled, district teachers and administrators receive compensation in the amount of $2000/$4000 per year to cover the deductible. This annual offset is deposited into each participating employee’s HSA Bank Account and cannot be recovered by the district unless an employee quits during a specific calendar school year.

    Under the current contract, this offset is deposited into participating employee’s HSA Accounts every year . Upon retirement, the unspent dollars remaining in the account may be rolled over into a personal IRA or other IRS approved investment vehicle. The KSD indicated recently that in 2011-12, the amount paid to those enrolled in a family plan will be reduced by $300.00 and those in a single plan will be reduced by $150.00 per year.

    Opportunity for District Savings
    In the majority of private sector HSA Health Plans, the annual deductible is typically the employee’s responsibility to fund every year. Is it fair to ask Kettering taxpayers to provide benefits to teachers and administrators that exceed those available in most private sector jobs of like qualifications?

  9. Eric says:

    Next year, November, 2011, there will be two board seats open for election.

    So will the board be transforming or just controlling damage from levy cuts? Will 2011 be spent trying to pass a levy?

    At the Oct 7 levy forum I heard concern with the growth in spending including the “step” increases. One participant took offense that step increases occurred despite a pay freeze.

    The broad goals outlined by the community need to be followed up with specific actions for the next year. But right now, there are two options on the table:
    1. Pass the levy (which might mean business as usual)
    2. Cut with a meat ax.

    The community is objecting to business as usual. They need to make improving business practices a condition for passing the levy. But Kettering has already done quite a bit–it’s pretty far down on my worry list. The district needs support outside the district (e.g. Columbus–not the Governor’s unfunded mandates) to make much more progress. But instead of creating the conditions for community support, the teachers’ union has been busy in Columbus fortifying the status quo.

  10. Eric says:

    Here’s how another union has addressed concerns similar to those raised by Kettering residents:

    The Montgomery County Commission and the union membership, on Tuesday voted to accept a fact-finder report that ruled out across-the-board raises and step increases for the bargaining unit, but did include the lump sum payment. A fact-finder is a neutral third party assigned by the State Employee Relations Board.
    The union includes employees from most departments under the Montgomery County Commission including Job & Family Services, Administrative Services, Stillwater, Community and Economic Development, Building Inspection, Environmental Services, the Animal Resource Center and others.
    Maria Knox, regional director for the American Federation of State, County and Municipal Employees Council 8, said a lump sum payment is common, especially when an employer is having budget difficulties.
    “It’s tough out there,” Knox said. “We tell our members it’s not always about the money. It’s about keeping jobs.”

  11. Rick says:

    Albert Shanker, long time president of the American Federation of Teachers, stated something to the effect of, the union would pay attention to the needs of students once they began paying union dues. His point is well take as the role of a union is to be the Collective Bargaining Agent for the members. No more, no less. We should not expect unions to be transformative agents for educational change.

  12. Eric says:

    the role of a union is to be the Collective Bargaining Agent for the members….

    Title 36 – Patriotic and National Observances, Ceremonies, and Organizations
    Subtitle II – Patriotic and National Organizations
    Chapter 1511 – National Education Association of the United States

    The purposes of the corporation are –
    (1) to elevate the character and advance the interests of the profession of teaching; and
    (2) to promote the cause of education in the United States.

    From wikipedia:
    “The NEA was founded as the National Teachers Association (NTA) in 1857, and adopted its present name in 1870. It was chartered by Congress in 1906 and merged with the American Teachers Association, formerly called the National Association of Colored Teachers, in 1966. In the 1960s, the NEA adopted union activities to supplement its long history of operating as a professional association.”

  13. Stan Hirtle says:

    What you describe is how I understand these high deductable health plans, accompanied by a health savings account, to work. To the extent that employers care about the fact that they are shifting a lot of health care costs to the employees (say if the employees have a decent union or are high skilled and hard to replace) they often also pay contributions to a health savings account so the employee has money to pay deductables with. Otherwise the effect of deductables is that people don’t seek care until their health problems get really serious. (A particularly bad idea for school systems). Some conservatives believe that making the patient pay from their pocket is the only way to hold down health care costs, while others are concerned that people can’t afford deductables and don’t get care. Actuaries may figure out whether it is more profitable not to pay for a lot of low cost care and make it up by paying for more expensive care, which they might traditionally refuse to pay for claiming a preexisting condition or hope some other insurer ends up with the person when they are sick, or just daring the patient to find the money to sue them. So it may be that a lot of bottom line private employers with relatively interchangeable employees will not fund the HSA accounts. Do I think there should be a race to the bottom so that public employees should be treated like the worst off private employees? No. I think we should have a fair universal health care system that covers everyone. Also if we claim to care about educating our kids we need to expect to pay decent amounts to the people who teach them.

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