Idaho lawmakers voted to send an additional $105 million a year to K-12 schools in hopes of improving employee health insurance. But some schools are reluctant to switch to the state’s relatively low-premium, high-benefit insurance plan for fear that increased state funding won’t cover the costs.
Supporters have touted the increases as a ‘game changer’, though schools and the legislation’s legislative sponsor say the $105 million won’t be enough to bring K-12 staff spending to the same level than the $12,500 spent on other state employees (schools currently receive $8,400 per state-funded employee).
“We’ve been trying for so long to participate in the state plan, and it would be really, really cool if we could,” Nama School District Chief Financial Officer Randy Dewey said. “But right now it just doesn’t make sense financially.”
Gov. Brad Little, who proposed the boost in his January State of the State address, solidified the increases by signing a policy bill and an expenditure bill to fund the increases.
The culmination of those bills adds the state’s $105 million in annual spending, $75.5 million in one-time federal money to help cover transition costs to the state plan, and cuts a program leadership bonus of $17.9 million as a compromise.
But ultimately, districts will be “a bit short” of the annual funding they need to spend as much on their employees as state agencies, said Rep. Rod Furniss, R-Rigby, who sponsored the increases that have gone through Legislature 2022.
This is for several reasons.
One is that the $105 million figure was calculated using the state’s arcane funding formula for schools, so only positions covered by the state will be funded, as confirmed by the head of the Little’s budget, Alex Adams, at EdNews last month. That leaves staff positions that districts pay for with other sources — whether property tax levies, other state funds or federal cash — not covered by the increase.
The Nampa School District, for example, will be more than $600,000 short of what it would cost to pay for the state’s plan year over year, Dewey told EdNews this week.
Another reason is that state funding can be earmarked for school employee health insurance, but schools can spend it at their discretion. Furniss said some lawmakers have overestimated how much of that money schools use for other expenses, but even the extra money won’t have strings attached. The money is ‘discretionary’, so schools can use it for whatever purpose they choose.
As administrators take stock of their budgets, it’s too soon for some to say whether they’ll be able to switch to the state plan or whether they’ll use the annual funding increase to cut out-of-pocket expenses for their employees. .
After Little solemnly signed the bill to increase insurance funding in front of the Melba Elementary School student body, Melba’s superintendent said she wasn’t sure the money would be enough to join the state plan.
“If we can flip it, that would obviously be my preference, as it would benefit all the staff. Their premium would be significantly reduced and their deductible would be significantly reduced, Superintendent Sherry Ann Adams told EdNews. “But I can’t do it at the cost of program cuts.”
If they do not transition to the state plan, rural districts may face additional challenges. Districts like Melba, which employs only about 100 people, have much less bargaining power with insurance companies, Ann Adams said, but she hopes the optional state plan will make negotiations easier. .
make the change
Districts also cite another reason for their reluctance to move to the state plan: lack of money to cover upfront costs.
In addition to the $105 million annual increase in state general fund spending, the Legislature created a $75.5 million pot of one-time federal money for schools to spend on the initial costs of transition to the state plan.
To join the state’s plan, enrollees must contribute to a “high-risk claims pool,” a shared pot that helps the state pay for costly and unexpected medical bills and procedures.
Furniss, the legislative sponsor of the increases, is a career insurance salesman and sits on the board of Your Health Idaho, which deals with state insurance matters. He argues that school districts will receive enough federal money to cover upfront costs and transition to the state plan. Additionally, he says the state’s high-risk pool is currently overfunded by $50 million, and he hopes that could be used to offset school costs.
Yet many proceed with caution.
Dewey estimates state funding will cover just over half of the original $5.9 million cost to join the state’s plan, though Furniss disputes claims that districts won’t be able to. to cover those costs, pointing out the differences in how the $75.5 million will be distributed. .
Dewey remains optimistic about change.
“Even if we put all this (annual) money into our own plan, we will have a much better plan for our teachers,” he said.
After meeting with several school administrators, Furniss predicts that most districts won’t transition to the state plan for another year; they have two years to do so, before a deadline for spending federal aid.
From the outset, proponents of the policy change never advocated that all districts would move to the state plan.
“The governor’s goal is to provide better health insurance coverage for school employees; in some cases it may mean joining the state plan, in other cases it will mean providing coverage through other carriers, but in all cases the governor’s goal is to reduce premiums or franchises that school employees face,” Alex Adams told EdNews via email in early February.
“A good compromise”
Although the reduction in a $17.9 million leadership bonus for experienced teachers will still leave schools with a net increase in funding, some are disappointed with the reduction. Especially if teachers cannot benefit from the state plan in return.
“For this to go for nothing, it looks like some kind of big scam to get rid of the leadership bonus money,” said Brian Coffey of the Nampa Education Association.
In Nampa, the district uses the $3,000 bonuses to recruit so-called hard-to-fill special education jobs. The district will have to find another way to make up the difference to keep those teachers from taking a pay cut, Dewey said.
Furniss called the cut a “good compromise” and he made an early campaign promise, of sorts, in an interview Wednesday with EdNews.
He said he would seek to “fix” the state spending deficit, so that it covers all staff, pushing for legislation to increase ongoing state spending on the employee health insurance next year if re-elected.
In the meantime, he hopes to assuage the concerns of administrators, amid confusion over how much money districts will receive and how it will be distributed.
“I had meetings with 90 superintendents. They all interpreted it differently,” Furniss said.
As districts gain a better understanding of their budget pictures, there could be an increase in the number of schools moving to the state plan, Furniss predicts.
“They see if we are legit. No one has ever given them so much money before and they are just scared. You know, this is the biggest increase in the state budget they’ve ever seen. And they never trusted the money we gave them before and you know, I don’t blame them for being skeptical. I don’t blame them at all.