Missed Opportunity For School Cost Saving

The December 1 deadline has passed, and not one new municipality or school district signed on to provide employee health benefits through the state’s Group Insurance Commission (GIC) in fiscal 2012 – which means that hundreds of local government entities continue to pass up an opportunity to realize significant savings in this “budget buster” account.

With schools across the Commonwealth under intense fiscal pressure from rising health insurance costs, MBAE regards this reform as a key education issue.  That’s why we joined Associated Industries of Massachusetts, the Massachusetts Taxpayers Foundation, and other statewide business organizations and local chambers of commerce in endorsing legislation to facilitate moving local government employees to the GIC or similar plan, and to require all eligible local retirees to enroll in Medicare as their primary source of health insurance. The savings were estimated at $100 million per year almost immediately and as much as $2 billion by 2020. The Legislature failed to act on the bill in its last session – but the need for action is now clearer than ever.

The principal cause of inaction has been the opposition of public employee unions, reluctant to reduce the scope of their local collective bargaining authority. The Municipal Partnership Act of 2007, which allows local governments to take advantage of the state’s buying power through the GIC, requires 70% of local union membership to sign off on any change to insurance. The teachers’ unions are generally the most important players in these decisions, in many cases representing a majority of public employees.

It’s getting more and more difficult to take complaints about inadequate funding seriously when they come from people and organizations unwilling to take the simplest, most obvious step to preserve educational quality for the children they serve – and for that matter the jobs of their colleagues.

Many municipal leaders have called for authority to design health insurance plans without union approval; this was the centerpiece of the AIM/MTF legislation MBAE endorsed.  Governor Patrick, who sponsored the existing legislation, has proposed lowering the union approval threshold to 50%. Another proposal is for the Commonwealth to take control of teachers’ health benefits in a single system, as it did with teacher pensions. 

The five new municipal entities that joined the GIC in FY2011 brought the total number of participants to just 31. There are 351 cities and towns in Massachusetts, and hundreds of eligible school districts, charter schools and regional planning agencies. Those that have joined have achieved tens of millions of dollars in savings, avoiding double-digit annual increases – and staff layoffs.  It is disappointing that others have missed the most recent deadline to do the same.