By Victor Skinner
YPSILANTI, Mich. – While school districts across Michigan are using a state-mandated 20 percent health insurance contribution from employees to help stem runaway labor costs, at least one school district is stuck with a perpetual deficit while paying 100 percent of insurance costs.
The Willow Run school district in Ypsilanti agreed to a five-year contract with its local teachers union in 2010 that locked in teachers’ free health insurance in exchange for pay cuts of between 2.5 and 4 percent over three years of the contract, Michigan Capitol Confidential reports.
That means district officials won’t be able to tap into the potential health insurance savings until the union contract expires in 2014.
Willow Run was in its fifth year with a budget deficit when school officials inked the deal in 2010, so it must have saved substantial amounts of money through the pay cut concessions, right?
Capitol Confidential reports a Willow Run teacher with 10 years of experience and a bachelor’s degree will give up about $5,410 in salary over the life of the contract. How does that stack up against the savings that could have been realized through a 20 percent employee insurance contribution?
“The district did not provide cost information for teacher health plans, but a family health insurance plan for a principal cost the district $15,744 in 2009-10, district records show,” according to the news site.
Assuming the same teacher with a decade of experience uses the same family plan as the principal, a 20 percent insurance contribution would have equated to about three times the amount saved through the pay cuts.
In other words, school officials would have been far better off asking teachers to contribute 20 percent toward their own health insurance than cutting pay for three years. And that’s exactly why teachers unions often push hard to maintain 100 percent taxpayer funded health insurance coverage over raises or other perks.
Willow Run school officials shot themselves in the foot by agreeing to a very long-term teachers contract in 2010 that didn’t do enough to address their budget problems.
And when state and federal education funding was subsequently reduced, Willow Run officials were caught off guard.
“ … (C)uts made later at the federal level were just not anticipated back in 2010,” Superintendent Laura Lisiscki told Capitol Confidential.
If school officials failed to recognize the existence of the huge federal budget deficit and failed to plan for likely budget cuts, they were extremely naïve. The fact that Republicans took control of Michigan’s state government and the U.S. House of Representatives in the 2010 elections should have provided ample warning that cuts were on the way.
In any case, Willow Run has now experienced seven straight years of budget deficits and likely will have to endure two more before they can do much about it.