Money Matters

By Cameron Macko
managing copy

As Governor Rick Snyder’s budget reforms and cuts are put into action, teachers are set to feel the effects. His 182 day plan of “relentless positive action” has eliminated the state’s deficit of $1.5 billion, but how the plan deals with school budgets and teacher salaries remains controversial.

A major reason for teacher discontent is Senate Bill no. 7, a recent bill initiated by Snyder. Also known as the “Publicly Funded Health Insurance Contribution Act,” this bill will limit the health care coverage that employers could give to public employees, as well as require public employees to supplement the remaining costs with their own incomes. This new requirement could be executed one of two ways.

The first option would place a cap on the amount of health care coverage an employer could provide. The limits would be: a hard cap of $15,000 for family coverage, $11,000 for employee +1 and $5,500 for individuals.

The other option, called the 80/20 approach, is percentage based. In this scenario, employers would cover 80 percent of healthcare costs, while employees would cover the remaining 20 percent.

As this issue went to press, the school board had not yet decided which plan it would take and there are no plans to discuss this at future board meetings. However, in an email to all insured employees, Associate Superintendent Linda Cline and Director of Human Resources Cynthia Finney said that the Hard Cap plan would not provide enough budget relief for the district.

“The Hard Cap plan would provide $14,000 per year [in savings for the school district],” Cline said during a telephone interview. “The 80/20 plan would save $1.4 million.”

The total amount of money the district budgets for health care is $7 million.

Under the Hard Cap plan, only single employees would be covering a portion of the premium cost, while an employee plus one and a family would have no reductions in health care. This accounts for the variations between final savings in the Hard Cap and 80/20 plans.

Despite the large savings gap, the Hard Cap plan is the default plan. Therefore, a switch to the 80/20 plan would require a majority vote of the MPS school board. Should there be no change in plans, the Hard Cap would take effect Jan. 1, 2011.

Currently, single employees pay $479.55 per month to health care, an employee plus one pays $845.97 per month and a family pays $1152.33 per month. These rates are subject to change and should be decided by mid-November.

Teachers and other public employees are allowed to opt out of medical coverage.

Along with healthcare, pensions have been targeted in the last year. According to information provided by MPS Assistant Superintendent Gary Verlinde, in May of 2010 legislation was passed that demanded all public school employees contribute three percent of their paychecks to retiree medical benefits and about 24 percent to the pension system. Individual employees, however, contribute directly to their pension based on hire date, chosen pension plan and current level of salary or wages.

Although pension policy changes occurred under Granholm, Snyder’s polices have also not been welcomed by many teachers.

“The governor’s approach to policy is favorable to wealthy elites,” social studies teacher James Ferency said.

Math teacher Terry Schwartzkopf estimates the cuts will total about $10,000 being taken out of his paycheck annually. Schwartzkopf said he would have to take his children out of his school of choice, they would have to quit violin lessons, ballet and all family vacations would be suspended.

Cutting teacher salaries has not been the only budget solution proposed. Snyder proposed teachers be paid based on the performance of their students, rather than seniority. The governor has already taken steps to weaken the seniority system, signing a bill on July 19 that limits tenure rights.

This also hasn’t had universal support from teachers.

“To tell me I’m a terrible teacher because of a lazy student,” Ferency said. “It’s ridiculous.”

Schwartzkopf thinks that reforms should be made to help rid the system of bad teachers, but the idea of a purely performance-based system scares him.

“I don’t believe that dismantling the system is the correct way to go,” Schwartzkopf said.

Another idea would be to make Michigan a “right-to-work” state, which would eliminate the requirement that teachers must be union members.

The governor understands that his cuts won’t be embraced whole-heartedly.

“This will not be simple or easy,” the governor said in his inaugural address in January. “It will require shared sacrifice from all of us. When we make changes like this we are faced with the realization many of us will have to take a step back in the short term to move us all forward together in the long term.”

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