THE SETTLEMENT OF the recent Quincy teachers strike has everyone involved breathing a sigh of relief. But once the relief subsides, we should turn our attention to just how easily avoidable the episode was.
As in many municipal contract negotiations, the dispute centered on how to split the rapidly escalating cost of health insurance premiums between the city and its teachers. Quincy teachers currently pay 10 percent of health insurance costs. The school district eventually succeeded at bumping that up to 20 percent, to be phased in over three years.
But if Quincy and other Massachusetts municipalities purchased health insurance through the Commonwealth's Group Insurance Commission, they would save hundreds of millions of dollars that could be redirected into classrooms and other local services, and employees would get better coverage. For the current fiscal year, state education aid to cities and towns went up $217 million. Despite the substantial jump, pay increases and the rise in nondiscretionary spending outpace revenue growth in many districts.
The biggest driver of cost increases is health insurance. Sam Tyler of Boston Municipal Research Bureau estimates that the city's healthcare costs rose 92 percent over the last six years, compared with a 61 percent jump in state costs over the same period. Between 2001 and 2005, the Massachusetts Taxpayers Foundation found that municipal health insurance costs rose at nearly double the rate of state costs.
The reason is simple. About 74,000 teachers are split into nearly 350 school districts. Meanwhile, 270,000 people get their health insurance through the Group Insurance Commission.
It doesn't take an economist to know who has more bargaining power with insurance carriers. In fiscal 2006, the Commonwealth paid about $3,800 for each GIC member. Compare that to the nearly $22,000 Nantucket paid for each school employee.
Unlike in the private sector, where employees generally pay 15 to 30 percent of health insurance premiums, school districts usually cover at least 80 percent. But even towns such as Winthrop and Westport, which have negotiated a 50-50 split, paid about $9,000 per employee last year.
If Boston had purchased health insurance for its teachers through GIC in fiscal 2006, it would have saved more than $45 million. Lawrence, Worcester, and Springfield are among the cities in which savings would have topped $10 million. Even municipalities such as Marlborough and Weston could have saved over $3 million each. The savings don't come at the cost of quality coverage. In fact, smaller districts often have just one or two health plans, while GIC offers a dozen.
Even though GIC promises better coverage at a lower cost, many public employee unions are loath to give up the right to bargain employer/employee split. In his Municipal Partnership proposal, Governor Deval Patrick gives municipalities the option of joining GIC, but only after approval by 70 percent of the local union committee.
Pensions are not a part of teacher contract negotiations and health insurance premiums shouldn't be either. The additional hundreds of millions of dollars unnecessarily spent on premiums represent funds that are sorely needed in the classroom. For example, the Department of Education asked for $30 million to turn around habitually failing schools this year. Like last year, they will likely have to settle for just a fraction of that.
In addition to Quincy, health insurance was also a key issue in recent negotiations in Worcester and Springfield. In Worcester, where nine of the city's 47 schools have been designated as underperforming, teachers worked without a contract for a year before an agreement was reached in June 2006. Implementation of critical contract provisions regarding class size, more common planning time for teachers and flexibility to fix underperforming schools was needlessly delayed during that year due to the disagreement over health costs.
The misfortune of the recent Quincy teacher strike is magnified by how easily it could have been avoided. But perhaps we will look back on it as the point when political leaders prioritized education reform by taking health insurance off the bargaining table and mandating that cities and towns join the Group Insurance Commission.
Jim Stergios is executive director of Pioneer Institute, a Massachusetts public policy think tank. Alison Ledger Fraser directs the Great Schools Campaign at the Mass Insight Education Research Institute.