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School district health plans: big savings to taxpayers if employees chip in

School district health plans: big savings to taxpayers if employees chip in

February 2, 2010
February 2, 2010

Idaho taxpayers could save millions of dollars if the state’s school districts started requiring their employees to contribute to their monthly medical plan premiums, but the Idaho Freedom Foundation has found that many schools continue to demand that taxpayers fund 100 percent of the cost of medical benefits of district employees.

Assuming school employees were to pay just 10 percent of the cost of medical insurance premiums, the savings would be at least $11.1 million.

Crunching the numbers

The Idaho Freedom Foundation obtained records from the state’s 20 largest and 20 smallest school districts and found that many require taxpayers to finance the entire medical premium of each employee.

Of the 40 districts we contacted, only a handful require employees to pay any portion of the cost of their medical insurance premiums. Meridian, the state’s largest school district, requires individual, full time employees to pay $11.50 per month toward their medical premium, which works out to about 2.75% of the total cost.

In comparison, according to an October 2008 article from Forbes.com, the average private sector employee in Idaho contributes 16 percent to his or her monthly premium. State employees pay for 8 percent of their medical insurance premiums, while taxpayers pay the remaining 92 percent.

To avoid overinflating the possible savings associated with requiring school employees to start covering some portion of the cost of medical insurance, we estimated that Idaho's mid-sized school districts spend at least $221,000 a year for insurance -- a reasonable assumption, given that the smaller Nez Perce School District, which spends the most among the 20 smallest, spends that amount annually. Using that figure, it's easy to estimate that Idaho's public schools spend at least $111.8 million a year for medical insurance premiums.

Estimated savings

Using our estimated numbers, we figured what would be saved if employee contributions of 10, 16, 30 or 40-percent were required in all of Idaho’s school districts:

Percentage x Total est. expenditures = Est. savings to taxpayers
10% $111,808,495 $11,180,849
16% $111,808,495   $17,889,359
30% $111,808,495 $33,542,548
40% $111,808,495 $44,723,389

Why are we paying 100%?

So why don’t school districts require their employees to contribute to their own insurance coverage, as the private sector does? Kathy Wistisen, with the North Gem School District in Bancroft, says it would amount to a pay cut for employees. “If you say we’re going to back off -- the employee has to pay 20 percent of their insurance -- then you’ve just cut their wages that much.”

But in the state’s second-largest district, the reality of the budget crisis is starting to sink in. “That’s where people are going, that’s where private businesses are going toward: employees contributing a portion,” said Brent Nye with the Boise School District. “To be honest, probably one day we’ll be there.

And that’s the challenge, because benefit cost is part of total compensation, they have only so many dollars to compensate the employee with, whatever you put into insurance is taken from dollars that would otherwise be available for salaries.”

The lack of taxpayer involvement in the “shopping” process might be one reason school district employees are not required to ante up for their coverage. Generally speaking, school districts use a committee process to choose which coverage limits, deductibles and other features they want, in a sort of play on the concept of the fox guarding the henhouse.

Allison Westfall with the Nampa School District describes how it's done it in the state’s third largest district. “The district receives proposals from different companies. Those proposals are reviewed by an insurance committee made up of teachers, district staff who work with insurance providers, and administrators. The committee makes a recommendation to the district’s negotiation team. The final decision is made as part of the master contract which is approved by the school board and the teacher association.”

So the teachers, staff, administrators and the union are represented, but the taxpayer is not.

Requiring an employee contribution is only one way school districts could cut the amount they spend on employee medical coverage, and thereby ease the burden on the taxpayer.

(Joe Rossi provided research assistance for this article)

Idaho Freedom Foundation
802 W. Bannock Street, Suite 405, Boise, Idaho 83702
p 208.258.2280 | e [email protected]
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