Even though times are tough, state educators have to realize they must pay more for health insurance and retirement
By: Health Insurance
Submitted: 2009-12-01 22:16:59 | Word Count: 751
Imagine your rich uncle taking you out to dinner, month after month, year after year, for more than two decades. During that time, all he asks of you every monthly dinner is that you throw in $2 for the tip, even though the cost of food has skyrocketed over those 20-plus years. In fact, he is paying more than 1,150 percent more for dinner than when you started chipping in $2 all those years ago.
Now, your rich uncle says he can no longer afford to pay any more for the cost of dinner than what he does now, and just in the next year, that cost will climb 32 percent. He'll keep paying what he did this year, but starting next year, you either have to fork over some more money, or you're going to have to find a way to cut the cost of dinner, like doing without some of the usual offerings.
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bnhlthed1123.jpgThat is the prospect facing state teachers and other school employees when it comes to their benefits. Recently, the state Board of Education voted unanimously to support Superintendent Joe Morton's recommendation that the state education budget include no increase for health insurance and retirement benefits. That means the state health insurance program would have to raise the amount education employees pay or cut benefits. Educators have paid $2 a month for single health insurance coverage since 1986.
The school board also adopted Morton's proposal to have educators start paying 6 percent of their salary toward retirement instead of 5 percent.
While the Alabama Education Association complains that requiring educators to pay more for retirement and health insurance amounts to a pay cut for teachers, something has to give. In 1986, when educators began paying $2 a month for health insurance, the state's cost per employee was $60 a month. This fiscal year, it is $752 each month for each employee. In the 2011 fiscal year, the cost of health care for educators is expected to rise to $995 a month, which comes to another $283 million.
That is money the state just doesn't have. Since fiscal year 2008, the Education Trust Fund, which pays for K-12 schools, colleges and universities (and for educator benefits) has lost more than $1 billion in tax collections because of the sagging economy. The education budget suffered 11 percent, across-the-board cuts in fiscal year 2009, and already, Gov. Bob Riley ordered this year's budget trimmed by 7.5 percent.
An education budget that two years ago was about $6.7 billion is down to about $5.3 billion after the most recent cuts. While stimulus money brings total education spending this year to roughly $5.8 billion, the federal dollars disappear after this year.
During the roughest economy in decades is a tough time to ask educators to contribute more toward their benefits or make do with less. But look what has happened in the private sector: layoffs, pay cuts, frozen pensions, rising health insurance premiums and/or cuts in benefits, and even doing away with health insurance in some instances.
Times are tough all over. A modest increase to $25 a month for single coverage and co-pays, such as what a recent bill defeated by AEA had proposed, would raise $47.5 million if applied to educators and state employees, the Legislative Fiscal Office estimated. That's not nearly enough to cover next year's rising cost, but combined with some selected benefits cuts, maybe it would help tide over state government until better times.
Truth is, the rich uncle of state government never has been very rich. Just look at Alabama's per-capita ranking on tax collections (50th). The rich uncle has just been overly generous when it comes to benefits for educators and state employees.
Tough times force tough decisions. Even AEA's Paul Hubbert is beginning, finally, to recognize reality. "The AEA will ask the Legislature to increase the state contribution in insurance coverage, but may accept a freeze," he said.
AEA members, and lawmakers, really don't have much choice.
