Pa. Teachers Union Want No Financial Responsibility In Paying Taxpayer Funded Health Benefits

12/31/2014

Philadelphia teachers want schools to look elsewhere for financial relief

By Evan Grossman | Watchdog.org

The Philadelphia teachers union says making teachers pay for part of their health benefits isn’t the way to plug the city’s hemorrhaging public school budget, and the district should look elsewhere for relief.

In October, the district terminated an expired contract with teachers after two years of failed negotiations and is asking them to pay part of their health insurance.

Philadelphia schools are facing an $80 million deficit if teachers don’t pay for part of their benefits.

“What the district was attempting to do was to save a lot of money on the backs of some employees,” Philadelphia Federation of Teachers President Jerry Jordan said.

Most Philadelphia teachers haven’t had to contribute to their benefits. Philadelphia, Ephrata and Warwick are the only three districts in Pennsylvania that don’t pay for health care.

On average, U.S. citizens are paying $328 per month for middle-tier plans under the Affordable Care Act, and the School Reform Commission, which governs the School District of Philadelphia, is asking teachers to pay a portion of their benefits as a way to save more than $200 million over the next five years.

The district is mandating they contribute up to 13 percent, or up to $200 per month, for family plans. But instead of asking teachers to pay for benefits as a way to save the district money, Jordan wants it to slash funding to its charter schools as a solution to budget problems.

“They are taking one-third of the district’s budget, $760 million a year, for charter schools,” Jordan said.

According to a five-year spending plan unanimously approved by the SRC this month, the district is funding its charters no differently than it funds its other schools. About a third of its $2 billion budget goes to those 86 charters, which make up about a third of its 268 total schools.

The spending plan, which is more of a forecast than an actual budget, projects the district should brace for a $30 million deficit next year. That total assumes teachers will help defray the cost of their health benefits, which is no guarantee.

The PFT is fighting the SRC’s contract termination in Commonwealth Court and if it rules in favor of PFT, the effects could be devastating, inflating the deficit to almost $80 million in 2016.

“The plan assumes expenditure reductions from benefit savings from the PFT,” according to the spending document presented by Superintendent William Hite. “Similarly, if necessary savings are not achieved, the district will be required to make drastic cuts to services to align expenditures with revenues.”

Assistance from the teachers was initially going to save the city’s schools $49 million. Those figures are charted in the five-year spending plan and are expected to rise incrementally to a total of $200 million by fiscal year 2019.

The district also detailed challenges related to pensions. While salaries are expected to remain flat over the next five years, state pension rates are projected to increase from 21.4 percent in FY15 to 31.3 percent in FY19, which translates to $75 million in expenditures.

“This 48 percent increase in (Public Schools Employees’ Retirement System) expenses creates a significant structural problem as offsetting revenue increases leave a gap of approximately $29 million in unfunded PSERS mandates over the years of the plan,” according to the budget forecast.

The district recommends the pension formula be reformed to provide relief of “uncontrollable cost growth.”

The last five-year plan was presented in 2012 and helped to produce more than $140 million in labor concessions, the closure of 24 schools and reduced administrative spending.

“After years of significant reductions, the district cannot continue to cut its way to solvency,” the new plan advises. “The district faces a revenue, rather than an expenditure, problem.”

In addition to asking for more city and state funds, the district reiterated its need for an updated funding formula for state funds, reform of the charter school funding mechanism, reform in per-pupil special education funding and reform of the pension formula.

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