Supplemental Materials for the November 13, 2010 School Board Meeting: New Teacher Contract

Here are the supplemental materials provided in preparation for the regular meeting of the School Board, to be held Monday November 13, 2013 at 5pm at the ILC Annex (formerly the Central Office Annex). Please note the change in time, adjusted so that a couple of our folks can make it to their childrens' school activities that evening.

Without a doubt, the most significant item on the agenda is F1, a resolution to accept the tentative collective bargaining agreement we have negotiated with the teachers' union, the Hilliard Education Association. In various shifts, all five members of the School Board participated in the negotiation of this agreement, and it is my expectation that the resolution will be adopted unanimously.

I'm not an expert in labor law - none of us on the School Board are. So we retain the services of Don Scriven, a partner in the law firm of Scott, Scriven and Wahoff, to advise us. Mr. Scriven has represented the School Board for a number of years.

Likewise, the teachers negotiate with the assistance of an attorney from the Ohio Education Association.

Rather than starting with a clean sheet of paper, labor agreements are negotiated via a process that begins with the parties exchanging proposals as to how they would like various articles in the existing agreement to be changed. One party says "we propose these changes to A, B, and C," and the other says, "we propose these changes to C, X and Y."  Then the negotiations would proceed on A, B, C, X and Y only - the rest of the contract is not brought into the dialog.

In the course of the negotiation, the parties might agree to take items B and Y off the table, leaving the negotiations to be about A, C and X only. Perhaps agreement on X is reached quickly, but A and C, which might be related, take more time. Eventually (hopefully), "tentative agreement" is reached on all items.

That tentative agreement is first presented to the union membership for their ratification. This step has been taken, and the teachers agreed to accept the tentative agreement. The last step is for the School Board to accept the tentative agreement, which is the purpose of item F1 on the agenda.

At this stage, the tentative agreement is not in final contract form. Rather it is a collection of markups of the prior agreement (which is the 2008-2010 agreement in this case), initialed by representatives of the two parties. If the School Board passes the resolution to accept this tentative agreement, the final contract will be drawn up, and the duly authorized representatives of each party will sign.

So the real question, what has changed in the new agreement?

Because the tentative agreement shows all the markups, I'll not address every change here - you can easily find them. But what most people will be interested in is what changed in regard to compensation and benefits, which represent 85% of the district's operating budget.

First, I would encourage you to read an article I wrote in 2010 to explain how teacher compensation works in our district, which is structurally identical to virtually every other district in Ohio, and is commonly used in similar form across the country (go here to examine the labor agreements for other public sector unions in Ohio). It is in essence a three-dimensional matrix which considers length of employment (steps), the level of education of the teacher, and a base salary number.

This contract resumes the 4.15% normal steps and 6% educational columns, although we need to remember that in the 2011-2013 agreement, one step was permanently skipped. This means that teachers with N years of experience are paid according to step N-1.

So the only change to the pay grid is the base salary. While the 2011-2013 agreement had no increases in the base pay for those three years, this new agreement has a 2% increase in the base pay in each of its three years.

Therefore teachers on steps 0 to 15, plus steps 20 and 23, will receive a 4.15% step increase and then a 2% base pay increase each of the three years of this contract (ie a combined 6.233%). The rest of the teachers will receive only the 2% base pay increase each year. Any teacher who reaches one of the target education levels will receive a 6% increase in addition.

However, in conjunction with these salary changes, the School Board requested changes to the design of the health insurance package to reduce the cost borne by the taxpayers to provide coverage to the teachers and their families.

Some may recall that prior to 2008, the employees of our district made no contribution to the cost of the premium we paid for our health insurance. In the 2008-2010 agreement, the School Board negotiated a change to this (and it was a difficult negotiation), increasing the employee's share of the premium from zero to 10% in 2010 (ie the taxpayers still paid 90% of the premium). In the 2011-2013 agreement, the employee share was increased to 15%, and it remains this in the tentative agreement.

You may also recall that in 2010, the School Board and employees agreed to convert to a self-insured system, meaning we now pay directly for all claims, albeit with stop-loss coverage to limit our risk. So rather than there being a premium per se, the Insurance Committee (on which I sit), examines the claims history each year as well as our insurance fund balance, and determines the employee contribution necessary to fund the plan for the coming year. Therefore the 15% refers to the percentage of this contribution, which is currently $1,605.93 per month for family coverage, making the employee share $240.88 per month.

What is less obvious are the parameters of the coverage. Up to now, the employees had neither a deductible nor any co-insurance liability. In other words, if an employee (or covered family member) had a $10,000 medical procedure, the cost to the employee was zero - we taxpayers covered it all.

In the new contract, the deductible will be $250 for 2014, stepping up to $500 for 2015-16, and the co-insurance amount will be 5% in 2014, becoming 10% in 2015-16. At the same time, a family "out-of-pocket" maximum has been implemented (which is unnecessary if there is no deductible or co-insurance) of $2,000 in 2014, $2,500 in 2015, and $3,000 in 2016.

Therefore in the event of a $10,000 medical procedure, the employee in 2014 would pay the $250 deductible, plus 5% of the remaining $9,750, or $488, for a total of $738. The school district would pay the remaining $9,262. If the same procedure were to take place in 2016 or later, the employee would pay the $500 deductible, plus $950 in coinsurance for a total of $1,450, leaving the school district with responsibility for $8,550.

This is still excellent coverage, at least compared to the medical insurance I have, which includes a $1,500 individual deductible, 20% co-insurance, and a $5,000 family out of pocket max. This $10,000 procedure would cost me $2,500. I suspect many of us in the community have plans similar to mine, although HSA/High-deductible plans are becoming much more prevalent.

The big question mark remains on what changes the Affordable Healthcare Act will cause, should it survive in something like its present form. We know there is a potential collision out there, when the so-called "Cadillac Tax" provision comes into play in 2018. Our health insurance consultant has projected that if no changes are made to our plan design, we could trigger this tax.

In future years, we need to discuss the merits of plans based on a different structure, such Health Savings Accounts with high-deductible coverage. It's always about the apportioning of risk between the employer, the employees as a group, and the employees as individuals.

The effect of this insurance plan change will be to offset some of the cost to taxpayers of the salary increases. How much we won't know for a while because when you change the plan parameters, you also change the behavior of the folks who are covered. 

We don't want folks to put off going to the doctor until they're really sick, so the plan design continues to encourage preventative care, which is further encouraged via our wellness programs. Nor do we want folks to suffer when they get hit with really big medical bills. But we want them to be wise consumers of medical care, and being exposed individually to a little more of the cost should foster that.

I feel this new collective bargaining agreement is a reasonable deal. Nothing about it changes our statement that no levy will be on the ballot before 2015, provided the General Assembly honors their current biennial budget. That doesn't mean we can stop looking for ways to moderate the rate of spending growth. I feel some tough conversations about the breadth of our programming, particularly at the high school level, are still needed.

Your feedback is welcome, but as always, I'll require that it be rational and respectful.