Negotiations stick on health care — School district, associations, working out details of health care plan

By Jenny Neyman

Redoubt Reporter

Negotiations between the Kenai Peninsula Borough School District and Kenai Peninsula Education and Support Associations continue to inch forward in an effort to set a three-year contract, which is now half a year beyond when it was set to take effect.

Bargaining teams for the district and associations have been meeting since January 2012, but were unable to come to agreement in spring 2012, as was the original hope. Instead, talks paused for the summer and now have continued for more than a year, past a round of mediation and nonbinding arbitration. Teams are scheduled to meet again Thursday in Soldotna.

Recent meetings, including one Feb. 20, have centered on issues related to health care — specifically, how contributions to the district’s self-funded health care plan will be calculated, and the makeup and function of the Health Care Program Committee, which oversees benefits of the plan.

Talks took a major step forward toward settling the most contentious issues of the contract — salary and health care — following the culmination of nonbinding arbitration in December. The district re-crafted its offer to adopt much of the arbitrator’s recommendations, including that the pay scale be increased by 2 percent for each of the three years of the contract, which was supposed to begin with the 2012 school year.

The district also agreed to shoulder more of the cost of the district’s self-funded health care plan, at a split of 80 percent in the first year of the contract, 83 percent in the second year and 85 percent in the third year, with employees contributing the other 20 percent in year one, 17 percent in year two and 15 percent in year three. The district agreed to the arbitrator’s recommendation to do away with additional fees for family coverage and the previous practice of splitting any health care cost overruns 50-50 with employees, a measure that was particularly unpopular with employees when hit with unexpected health care premium increases at the end of the year.

The one significant deviation in the district’s offer from the arbitrator’s recommendation was in proposing changes to the membership and authority of the Health Care Program Committee, to prevent changes in health care coverage without agreement by district representatives and association members. Since the district will be shouldering more of the financial burden of paying for health care, it wants more say in decisions that would have financial ramifications to the plan.

Working out those changes has been the fodder of the recent negotiations sessions. The current proposal includes increased representation for the district on the committee, with four representatives selected by KPEA, three representatives selected by KPESA, one representative selected by the Kenai Peninsula Administrator Association and three employees selected by the superintendent. Further, the committee must vote on any proposed changes in benefits or increases in administrative expenses, with an 80 percent majority required for passage of motions.

Beyond that, the district and associations have moved toward a platform of agreeing to disagree in how health care contribution rates will be set. Both sides agree to the prudence of estimating what costs for the year are likely to be, and budgeting for premium payments accordingly. Come the end of the fiscal year in June, the year’s actual costs will be known. For its contributions, the district intends to budget conservatively, expecting that health care costs will increase 8 to 10 percent per year, so as to avoid having to contribute extra money to cover cost overruns come June.

The associations, though, want the ability for association representatives to set the employee premium amounts, which make up their 20 percent, 17 percent and eventual 15 percent contributions to the plan. To give them that flexibility, the teams have been discussing the creation of a health care subcommittee comprised of the KPEA, KPESA and KPAA members of the Health Care Program Committee, to determine the employee contribution amount.

Association teams have devised a formula for estimating health care costs and figuring what employee premiums should be. The teams also are discussing creating an employee health care reserve account of $750,000, so that if costs exceed expectations during the year, money can be taken from that account to make up the difference in the employees’ share — rather than employees getting hit with an increased bill at the end of the year.

That account would then be replenished the following year with increased employee premiums the following year.

The association teams would like their formula included in the contract, and also propose including language that the health care subcommittee can change that formula and the employee premium amounts in the future if they deem necessary.

The district team was uncomfortable with the formula being spelled out in the contract, because it didn’t want to appear as though the district was signing off on the formula. By the district team’s estimation, the formula could underfund the employees’ health care contribution share, resulting in an extra cost to employees, and the district doesn’t want to be implicated in that, said Dave Jones, assistant superintendent of education support for KPBSD.

“The impact on the district is that in a year from now, when your employees get hit with a large increase, when they have to pay for the year and they have to get the large increase to pay for what they didn’t pay for in the prior year, the implication will be, ‘Oh, the district made us do that because it’s in the agreement,’” Jones said. “I don’t want the district to be implicated in being part of setting the employees’ portion because that’s been given to you because you wanted the ability to make it one amount.”

Association team members counter that they believe their formula is a reasonable estimator of costs and would avoid overcharging employees and taking money out of their paychecks unnecessarily. Including the formula will help the health care subcommittee hit the ground running, since the year already is half over, said Matt Fischer, with the KPEA team. He expressed frustration at the district’s acceptance of language governing the employees’ health care reserve account in the contract, but reticence in including the funding formula setting the employee contribution rate.

“This is an instance where you guys are taking what you think is a good part of it, ignoring what we think is a good part of it. So as we’re looking at coming to a compromise you guys say, ‘Yeah, we’ll take the part you guys gave us but, no, forget your part,’” Fischer said.

Negotiation teams are scheduled to meet again Thursday in Soldotna.

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