Capital News Service

of the Michigan State University School of Journalism

Education experts wary of health care, pension proposal

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By JORDAN TRAVIS
Capital News Service

LANSING – As the state figures out how to pay for future health care and pensions for its workers, educators are waiting to see the solution.

If Rep. Andy Dillon, D-Redford Township, sees his proposal passed, school employees will get the same deal.

Dillon proposed that they pay into the same pension and health care pool as state employees.
He also called for creation of a state board that, according to Rep. Dan Scripps, D-Leland, would formulate pension and benefits packages for school districts.

Dillon’s Web site, Newideasformichigan.org, claims that his plan would save the state $700 million to $900 million per year by “consolidating the planning, delivery and administration of health care benefits” for state employees and retirees, as well as school employees.

While Scripps is undecided on supporting the proposal, he said it should be carefully considered.
“Any time you talk about potentially saving that amount of money, it’s something you’ve got to look at,” he said.

One concern Scripps has about the proposal is how it would affect the collective bargaining process used by school districts.

Currently, he said, each district draws up a benefits package and negotiates with the unions representing district employees.

Cal DeKuiper, superintendent of the Ludington Area School District, said the current system works well for his employees.

“A union contract is a solid document to work from if it’s done in a fair, equitable way and if you have people to work with in good faith,” he said, “which I do.”

DeKuiper said he is more concerned about the funding “cliff” that schools are approaching. While he wasn’t familiar with Dillon’s plan, he said the state must look at everything that could potentially save money.

The superintendent noted also that school districts don’t set up their own retirement system. This means he has no control over pension costs, which come out of the per-pupil funding from the state.
Scripps said he also worries that any change in school worker benefits packages would shift costs to the employee.

The Michigan Education Association (MEA) opposes the Dillon plan. Communications director Doug Pratt said the plan has two problems: It wouldn’t achieve the savings Dillon promised, and it would cost $870 million to set up.

The MEA is the state’s largest union of school employees

Pratt said that administrative efficiencies promised in Dillon’s plan have already been realized. Instead, he said, the plan is designed to save money through other means.

“The only way to realize savings is by gutting health care packages,” Pratt said, and cutting health care coverage of educators already in the middle of the H1N1 flu crisis would be a mistake.

Pratt noted that $700 million had already been saved through choosing less expensive health care plans, or ones with higher premiums and co-pays.

“The fundamental problem isn’t health care costs,” he said. “Our tax structure is broken, and school funding is gone.”

The problem can’t be fixed, he said, by taking away benefits.

Kate Kohn-Parrott, health care policy adviser to Dillon and the House of Representatives, said that isn’t the case.

“There’s an incorrect perception that this is all about taking benefits away,” she said. “It’s actually about making sure we can still give benefits.”

She said the MEA’s claim that the plan would take $877 million to start is “totally ridiculous. I can’t even imagine how they came up with that number.”

Kohn-Parrott said that the plan would have a 7 percent administrative cost, but the state health care system currently has administrative costs of 10 to 12 percent.

Dillon’s plan, she said, could save the state money by making the purchase, administration and oversight of state employee health insurance more efficient.

The bill is in the House Committee for Public Employee Health Care Reform.

© 2009, Capital News Service, Michigan State University School of Journalism. Not to be reproduced without permission.

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