District Used $1.7M in Tax Dollars Paying Employees Not To Take Insurance
Forest Hills paid 100 percent of health care benefit, then paid $5,000 to teachers who didn't enroll in the plan
The Forest Hills Public Schools paid its employees $1.7 million in 2010-2011 to opt out of its health insurance package in a lucrative setup that one small business lobbyist said was unrealistic.
At that time, the district offered to pay about $5,000 — the cost of that employee being on the district’s single-subscriber insurance plan — to not take the health care plan in which the district paid 100 percent of the employees' health care premiums.
"So if I don't buy the insurance, you are giving me money I didn't have to pay because the school district paid it?" said Charles Owens, Michigan director of the National Federation of Independent Business. "That's not a business model. That's a government model."
The Grand Rapids school district also pays 100 percent of the premiums for dental, vision, long-term disability and life insurance for those who opt out.
Overall, there were 351 school districts that spent $39 million in 2010-2011 on "cash-in-lieu" payments where the school offers the employee money to opt out of its health insurance plan, according to state records.
The Forest Hills school district changed its plan in the next teacher's contract so that the offer was lowered to 75 percent of a single-person plan in 2011-12, and 80 percent in 2012-13. The teachers also paid 10 percent of their health care premiums in 2011-12 and 11 percent in 2012-13.
Forest Hills Superintendent Dan Behm said cash-in-lieu payments dropped to $885,634 in 20012-12 while total employee benefit costs were $11.6 million.
"Paying insurance-eligible employees a stipend when they elect not to accept health insurance is a long-standing practice on the part of many employers," Behm said. "The idea is to save dollars by having fewer eligible employees on insurance rolls. Why incur the costs of health premiums if the employee is covered by a spouse or does not need the insurance?"
Behm said the language in the contract had been in "for some time" and predated his tenure as superintendent.
Michael Van Beek, education policy director of the Mackinac Center for Public Policy, questioned why Forest Hills even had to have a deal that was so lucrative.
"There are other school districts that pay no cash-in-lieu benefits or that pay substantially less," Van Beek said. "Why is it Forest Hills thinks it needs to spend $5,000 per employee for this perk?"
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
Want to support our work?
Help us tell the free market, limited government side of the story. Support Capitol Confidential today
.jpg)
Michigan schools seek $1.6 billion in new public debt May 6
Michigan spends $6.9M advertising 'cost-free' pre-K
Michigan House bill would allow college athletes to unionize, at an unknown cost
Voters Avert Disaster by Rejecting Proposal 2
Organized labor may be celebrating the presidential election, but union leaders who take the long view have good cause to be worried.
Proposal 2’s failure indicates the unions miscalculated the mood of Michigan voters and that a national trend of confronting public union arrangements will continue.
The union machine has been showing signs of rot in the past few years. Union membership itself has been dropping for decades. State government leaders, including Gov. Scott Walker of Wisconsin and Gov. Mitch Daniels of Indiana, have recently championed reforms to stabilize budgets and rein in the oversized influence of government unions. Voters in San Diego and San Jose insisted on pension cuts for city workers, and that reform will likely spread to other municipalities.
Above all, Gov. Rick Snyder has demonstrated a willingness to address labor policy if government functions can be improved (e.g., charter schools, emergency financial managers, public pensions).
Union leaders in Michigan saw an opportunity to reverse this decline and circumvent public union reform by injecting the constitution with a labor-friendly inoculation; Proposal 2 would have empowered government unions to override sensible reforms at the bargaining table and would have hog-tied legislators and local officials. The measure also would have guaranteed an untouchable funding source for organized labor. If successful in Michigan, national labor leaders planned to export the strategy of constitutional amendment to other states, according to the president of the AFL-CIO.
Michigan voters strongly rejected Prop 2, refusing to be the test-case for locking union power into Midwest constitutions.
The vote could indicate a fundamental shift in the way unions are perceived. Union strength relies on the ability to force workers into union representation against their will. Labor leaders have tested the limits of outrage by even organizing caretakers of disabled family members and labeling them as “public employees” in order to skim dues off their Medicaid payments (a measure Michigan also voted down this election).
Rejection of Prop 2 will only come as a surprise to those who believe that coercion is a justifiable means to guarantee organized labor. The people’s votes, on the other hand, suggest that they desire a choice in the matter.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
More From CapCon