An eight-person committee has become the center of disagreement between the Kenai Peninsula Borough School District and its labor unions over how to manage the rising costs of the district’s self-funded health insurance.
During the first negotiation meeting since a non-binding arbitrator’s opinion was released in December, the school district presented an offer that adopted all but one of the arbitrator’s suggestions. While the arbitrator suggested not altering the structure of a health care committee, the district proposed changing its makeup.
The committee determines and controls the health care program for all covered district employees, including setting the amount of monthly employee contributions and dependent coverage costs, benefits and coverage provided, cost containment measures, and regulating the use of the health care cost reserve account according to the last collective bargaining agreement between the district and unions.
Currently the committee has four Kenai Peninsula Education Association members, three Kenai Peninsula Education Support Association members and one Kenai Peninsula Administrator Association member.
The school district proposed eliminating one KPEA seat, adding three superintendent-appointed seats and a establishing a super majority of 75 percent for any changes the committee makes to district benefits.
LaDawn Druce, KPEA president, said the proposal could eliminate the voting rights of support and certified representatives on the committee by requiring a super-majority.
According to a media release by the unions, a committee of 10 members could be rendered “powerless to act” by the actions of two members.
The issue with the proposed structure, she said, was one of representation.
“The majority of people who pay into the plan are certified employees and classified support employees,” Druce said.
“We are the bulk, by far, of the user group so we feel given that, we need to have a very strong voice on the committee.”
According to a KPBSD media release, the current structure of the health care committee was acceptable to the district because of the 50/50 split between the unions and the district when covering excess costs of the health care plan.
The proposed new split would end with the district absorbing 85 percent of the cost by the end of a three-year agreement.
“The school district is the one responsible financially for any increased costs and so the school district wants a seat at that table and so we want to work together,” said Pegge Erkeneff, district spokesperson.
According to the district’s offer it would also not be required to adopt changes made by the committee if they:
■ Resulted in violations of established laws or regulations;
■ Altered the administration or management of health care benefits;
■ Resulted in a cost increase to the plan of more than five percent;
■ Would be detrimental to the financial interests of the district, as determined by the superintendent.
Druce said the unions read those changes to mean the superintendent would get “ultimate veto power” over any decisions made by the committee.
Erkeneff said superintendents job was to oversee “extraordinary” new expenses in the district.
Both Erkeneff and Druce said the changes KPBSD proposed came from the model the Fairbanks school district currently follows with its labor unions and while Erkeneff said the model works well in Fairbanks, Druce said it was a radical change from current policy.
“It is so different from how we have been doing business, I just don’t feel like we would be able — quite honestly — to feel good about a change like that,” she said.
Druce said the idea that the current health care committee would make decisions that were detrimental to the financial health of the district with the removal of the 50/50 cost split was wrong.
“We are self-funded, we have to pay the bills,” Druce said. “If we have a bad claim month or a bad couple of months, then we have to collect more. It’s a really difficult thing and that’s, I guess, what’s really bothersome about the district wanting to restructure the committee is that we’ve somehow been unprofessional. That’s just not true. The people on the committee know they’ve made hard decisions, they’ve taken it seriously and they’ve done their jobs.”
Erkeneff said two recent decisions made by the health care committee were part of the reason the school district wanted representation.
The committee voted to raise the dental benefit from $1,500 per person to $2,500. It gave employees a “health care contribution holiday” paid for by the health care reserve account, according to an October news release from the unions.
While neither of those decisions was a point of contention for the district, Erkeneff said, each represented a significant amount of money.
According to KPBSD figures, as of Jan. 24 there are 1,243 employees and 2,421 spouses and children enrolled in the district’s health care plan.
The changes to the dental benefit will cost a minimum of $600,000 annually and the rate holiday will cost more than $1.1 million to be deducted from the Health Care Internal Service Fund, according to district figures.
“These are million-dollar decisions,” Erkeneff said. “The district wants to make sure that they have a seat at the table. A voting seat at the table.”
Erkeneff said health care costs in the coming years were uncertain and the district wanted to have a hand in how those costs would be shared between itself and the employees.
Druce said the unions had not yet formed a counter proposal.
“We just went to the table, knowing they needed to make an offer first,” Druce said. “The team is meeting (Thursday) to look at what our next steps could be. Potentially it could be some kind of counter proposal, I can’t say with certainty.”
She said the coming weeks would be spent educating union members on the district’s proposal and why the unions could not support it.
“Our members have said time and time again, you have got to control health care costs, you have got to figure out how we can plan for the costs ... we’ve heard that loud and clear,” she said. “Our feeling is, this new committee structure would completely take that out of our hands and potentially be detrimental to our constituents.”