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Can Georgia schools afford rising teacher benefits?

I was chatting with my AJC colleagues in the office today about possible candidates for the chief turnaround officer created by the new law on state intervention in failing schools. I wondered about Hall County Schools Superintendent Will Schofield, who is liked and respected by Gov. Nathan Deal.

In the midst of that discussion, my editor sent me a link to a fascinating story in the Gainesville Times in which Schofield predicts school districts will not be able to maintain the level of benefits now accorded employees. Schofield says the rising tab facing his district and others is “on an unsustainable path.”

Georgia and other states are shifting more of the cost of school staff benefits to local school districts. According to a Georgia Budget & Policy Institute analysis of Deal's new  budget:

School districts employ bus drivers, custodians, administrative staff and other workers who are not certified to teach. For many years, districts and the state shared the cost of providing these workers health insurance through the State Health Benefit Plan. Georgia began reducing its contribution in 2009 and eliminated it entirely in 2012. Plan administrators increased the monthly amount districts must pay for employees from $218.20 to $846.20 in the 2017 fiscal year, adding over $400 million to districts’ health care costs. The monthly bill for each non-certified worker is set to climb to $946 in the 2018 fiscal year, an increase to districts’ total cost of almost $30 million.

The budget calls for $166 million less than the state’s school funding formula calculates school systems should receive. School districts will need to pay nearly $30 million more for health insurance for bus drivers and other non-teaching staff, and that’s on top of steep price hikes in previous years. Districts will also shoulder a portion of rising retirement costs and offset shrinking state funding for student transportation.

The Times reports: (Try to read the full story as it is informative.)

Hall County’s proposed 2018 fiscal year budget includes nearly $6.5 million in new costs for employee benefits to go along with more than $4 million for a 2.5 percent pay increase for all employees. “That’s a one-year increase, and that’s just an awful lot of money,” he said. “That’s a mill and a half of local taxes. That’s $6 million that would have been going to something like reading teachers or additional software licenses or additional books for libraries.”

Schofield said more than $11 million of the $13 million in increased spending in the proposed 2018 fiscal year budget is related to salary and benefit increases for employees. The county budget plan includes both budget cuts and taking up to $6 million from the district’s fund balance to cover the increases. He added that the burden on local school districts is likely to continue to increase, potentially leading to more future cuts.

Public employees have more of their health plan premiums covered than their private industry counterparts.

In 2014, the average total annual cost per employee in the U.S. for group health plan premiums was $9,504, of which the average employer cost was $6,276 and the average employee contribution was $3,228, according to survey data from the 2014 United Benefit Advisors (UBA) Health Plan Survey of nearly 10,000 U.S. employers.

Government (public administration) health insurance plans had the highest average total premium cost per employee at $11,329 per year—17.5 percent higher than the average group health plan. Despite this, public employees' share of their premiums was the lowest among all workers at $2,040—45 percent less than average, the survey found.

In a report on monthly costs to employee compensation, the Bureau of Labor Statistics looked at data for December and found:

Employer costs for employee compensation averaged $34.90 per hour worked in December 2016, the U.S. Bureau of Labor Statistics reported today. Wages and salaries averaged $23.87 per hour worked and accounted for 68.4 percent of these costs, while benefits averaged $11.03 and accounted for the remaining 31.6 percent. Total employer compensation costs for private industry workers averaged $32.76 per hour worked in December 2016. Total employer compensation costs for state and local government workers averaged $47.85 per hour worked in December 2016. {The report notes: "Professional and administrative support occupations (including teachers) account for two-thirds of the state and local government workforce, compared with one-half of private industry."}

North Carolina is among the states now debating abandoning state teacher pensions for 401(k) plans for new hires in an effort to decrease costs. Georgia lawmakers attempted similar changes with little success.

State Sen. Hunter Hill, R-Atlanta, has proposed keeping the pension system in place for current employees but offering a hybrid retirement plan for incoming teachers -- part traditional pension and part 401(k).

As the AJC reported, the political challenges to such a change are daunting:

Any talk of altering the current pension system for teachers causes a political stir at the state Capitol. Teachers and retirees say that changing the system so that new teachers get a 401(k) rather than a pension, or letting the system put money into riskier investments, are terrible ideas. They say the pension plan is a key tool in recruiting and retaining educators.

John Palmer, a Cobb County educator and spokesman for the activist group TRAGIC, has made it clear that teachers and retirees would fight any changes to the pension system. He said lawmakers approved measures similar to those promoted by Hill and Martin a decade ago for the state employee’s retirement system.

"The argument back then was that the state would offer higher wages to offset the loss of a defined retirement benefit,” Palmer said. "Those higher wages have never materialized, and state agencies are finding it nearly impossible to recruit and retain state employees. "Teachers are used to broken state promises, and we will not be able to recruit and retain quality teachers by trading one of the most stable retirement systems in the country for the empty promise of a higher salary."


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About the Author

Maureen Downey has written editorials and opinion pieces about local, state and federal education policy since the 1990s.