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Posts Tagged ‘FBA’

Legislative nonsense: midweek edition

February 9, 2016 8 comments

In case you missed it this morning, my two things for Tuesday were simple.

  1. I don’t think the governor’s plan to raise teacher salaries makes sense or is plausible.
  2. I hope I’m wrong.

When I expect the worst, I always hope I’m wrong. You can have hope and be a realist at the same time, after all.

“It’s silly not to hope. It’s a sin, he thought.” – Ernest Hemingway, The Old Man and the Sea

On the other hand, tomorrow, a House subcommittee plans to hear HB 3154, which would force school districts to divert health insurance costs to salary. We would call it a pay raise.

It’s not.

Several people have already heeded the alert from CCOSA and other groups to call the subcommittee members and insist they kill the bill. Here’s the short version of what the bill would do:

What it would do:

  • Require districts to use money now set aside for employee health insurance to give teacher raises.
  • Permanently cap (at FY 17 levels) the amount of money districts receive to pay for employee health benefits.
  • In effect, the state will shift its obligation to fund health insurance to local communities because districts will eventually be forced to use local money to pay increasing employee health insurance costs and to pay for teacher/support employee raises.

Teacher pay wouldn’t increase, but in future years, the burden of health insurance will, thus lowering a teacher’s effective rate of pay.

Here’s a list of the subcommittee members. Call and email them, please. Tweet at them, if you’d like. Some in this group are genuine friends of education.

Representative Phone Email Address Twitter
Cannaday, Ed 405.557.7375 ed.cannaday@okhouse.gov  
Coody, Ann 405.557.7398 anncoody@okhouse.gov  
Dunnington, Jason 405.557.7396 jason.dunnington@okhouse.gov @jdunnington
Henke, Katie (VC) 405.557.7361 katie.henke@okhouse.gov @KatieHenke
Kern, Sally 405.557.7348 sallykern@okhouse.gov @SallyKern
Martin, Scott (C) 405.557.7329 scott.martin@okhouse.gov @scottcmartin
Peterson, Pam 405.557.7341 pampeterson@okhouse.gov  
Rogers, Michael 405.557.7362 michael.rogers@okhouse.gov @rogersmichael21
Thomsen, Todd 405.557.7336 todd.thomsen@okhouse.gov @ToddThomsen
Virgin, Emily 405.557.7323 emily.virgin@okhouse.gov @RepEmilyVirgin

Additionally, I want to share with you a correspondence between a real live Oklahoma educator and a real live Oklahoma legislator. I will edit for space:

Question:

Good afternoon Representative Rogers, My name is Jen Masterson and I am a Speech/Pathologist at Claremore Public Schools. I work in Claremore but I live in Broken Arrow so I will be emailing the Claremore representatives as well. I greatly appreciate the efforts in the House to raise teacher pay. This is a topic that has gone undiscussed for far too long in our state. However, with the current budget crisis, myself and many of my colleagues are not concerned about our salaries at this moment.

We are concerned about colleagues and support staff who have been and will be laid off due to mid-year adjustments in our district. I work at Will Rogers Junior High in Claremore and, along with being a Speech/Pathologist, I serve as the Special Education Department Chair for our building. I have had to make some tough decisions about who on our support staff (paraprofessionals) will be returning next year and who will not. An increase in my salary would be appreciated; however, it comes at the expense of my colleagues and our students and I am not ok with that.

My specific concerns with HB 3154 include the following: If national teacher pay comparisons already include salaries and benefits, how will moving health insurance over to teacher salaries raise our state’s ranking for teacher pay? What will happen to the thousands of support employees currently receiving health care coverage when the money used to pay for their insurance is instead given to teachers as a pay raise? Who will pay for the health insurance of educators if the state decides to no longer cover this expense?

 

Response:

Thank you for email and input on my House Bill 3154. This bill has drawn some critics, and most do not understand what I am trying to accomplish. Here are the facts for you to consider when reviewing my bill. First, the current house bill 3154 is not going to be heard tomorrow. Second, it will have a committee substitute to change the language to a more clear understanding of the bill. The whole intent is to put us in a better position long term and get us away from a long-term liability that is unsustainable. The bill is also set up to give the local school district the flexibility to make the decisions on the local level that is best for their district. The misconception is this was written to give the teachers a pay raise. It was written to address the long-term liability that is draining our appropriations to common education. Here are the facts:

FBA (Flex Benefits Allowance)

1) Flex benefits in FY 16 – $416 million

2) Estimated FY 17 FBA $446 million ($30 million increase)

3) FBA has increased an average of 6.6 percent over the last 10 years.

4) Since 2002 (last 14 years) the legislature has increased appropriations for common education by 22%, during that same time Flex Benefits have risen 92.4 %.

5) Why is this a problem?

a) Currently FBA is around 20% of the appropriated dollars that goes to Common Education.

b) As FBA rises then per pupil decreases.

c) If we currently continue to do what we are doing then in 14 years FBA will be 30% of the appropriated dollars that goes to education, which will drive down even lower our per pupil funding.

d) Here is what FBA looks like for the next 15 years:

i) FY 2020 $537 Million

ii) FY 2025 $739 Million

iii) FY 2030 $1.0 Billion

6) If we do nothing and continue on this trend, the legislature would have to appropriate an additional $30 million per year to common education just to keep our per pupil from dropping from its current level. This would not allow the legislature the ability to increase per pupil funding.

7) What would that look like? Let’s use the same years FY 20, FY 25, and FY 30.

(1) By year 2020 the legislature would have appropriated an additional $120 million to Common Education ($30 million per year for 4 years).

(2) By year 2025 the legislature would have appropriated $240 million.

(3) By year 2030 the legislature would have appropriated $420 million. And our per pupil funding would have actually decreased significantly, because as the FBA ball gets bigger the 6.6 % gets bigger so from 2029-2030 a 6.6% increase would be $66 million.

If we are serious about making tough decisions that put us in a better position in the future to give teacher pay raises, increase per pupil funding, and give the kids of Oklahoma the best education available, than this is a conversation that has to be had.

Representative Michael Rogers

Oklahoma House of Representatives

District 98

I’ve seen a few people post that response to Facebook now, so he must be sending it out to all questions he has received. This is the only exchange I’ve received showing both sides of the conversation, though. And I agree with everything Jen said above. If we’re raising teacher salaries by robbing our own insurance, or deeply hurting our support employees, then we’re extremely foolish.

I don’t know where Rep. Rogers gets his 2020, 2025, and 2030 projections, but I’m trying to keep teachers employed in 2016 and get some hired for 2017. If the state can’t afford those health insurance increases, what makes him think teachers can?

This bill does nothing to raise teacher pay or help with health costs. It does nothing to raise per pupil spending. It does nothing to address our increasing student enrollment. It does nothing to curb the teaching shortage.

In short, this bill does nothing useful.

Please call, email, and tweet. Kill this thing.

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About the FBA Redistribution

Once again yesterday, we caught a glimpse of what happens when the state superintendent of public instruction doesn’t understand school finance…or schools for that matter.

Supt. Barresi directs OSDE to use remainder of activities funds  for teachers’ health insurance

OKLAHOMA CITY (May 14, 2014) – As the Oklahoma State Department of Education (OSDE) has not yet received a supplemental appropriation for teachers’ health insurance premiums, known as the Flexible Benefit Allowance (FBA), state Superintendent of Public Instruction Janet Barresi has directed OSDE to use what remains in the schools’ activities funds to pay for the health insurance of Oklahoma’s fulltime district employees.

“This action effectively depletes available funds left in the schools’ activities fund for the current fiscal year, but we must take care of our teachers,” Barresi said. “On top of everything else, our school districts must cover health insurance for their fulltime employees. These increased costs, which are in part a consequence of Obamacare, needed to be addressed.”

The distribution of funds for FBA means that for the remainder of FY 2014 there will be a marginal reduction in funds for alternative education, Oklahoma Parents as Teachers (OPAT) program and professional development. Districts have the budgetary flexibility to move dollars to these programs, Barresi said.

Districts today are being notified of the situation, but the action is pending final approval by the State Board of Education at its May 22 meeting.

The FBA provides funding to districts to cover the cost of insuring eligible certified and support personnel. Based on data certified Jan. 1, districts have had an increase of more than 1,300 teachers and other fulltime employees eligible for state-funded insurance since January 2013.

FY 2014 funds for the Reading Sufficiency Act and the ACE initiative, both critical education reforms, were provided in full to school districts earlier this year.

There are multiple issues at play here, but before I get to those, I should probably explain a couple of terms:

Flex Benefit Allowance (FBA) – Part of the funding school districts receive each year is designated to cover the health insurance costs of teachers and other school employees. Most school years, the SDE asks for a supplemental appropriation to cover the cost of premium increases.

Activities Budget – On this spreadsheet explaining the SDE’s budget request for the 2014-15 school year, the third bold line is the total of the activities budget. This includes a number of programs, such as the ones mentioned in the SDE bulletin. The three specifically that she’s cutting (Alternative Education, Oklahoma Parents as Teachers, and Staff Development) account for about $19.2 million of the activities budget. For some programs, such as ACE and RSA, districts receive their entire allocation in one lump sum near the beginning of the school year (more towards the middle this year). For these three, however, districts receive four equal allocations.

This decision by Superintendent Barresi means that districts won’t get their fourth payment for these three activities. Essentially, she is saying that districts can take the money they haven’t spent and move it into the FBA line to cover unmet expenses there.

There are three fundamental problems with this.

  1. This gives the legislature a free pass on taking care of a shortfall, amounting to a last-minute budget cut to districts.
  2. Some districts may have already spent or encumbered their entire allocations for these activities.
  3. This may not be legal.

With the first concern, Barresi doesn’t see the problem. She thinks that districts can just move money around to cover any overages from these budgets. That’s just a budget cut from a different category. If District A is $250,000 short on the FBA line for the remainder of this fiscal year, and they lose $250,000 in funding from the state for other activities, they have to make it up somewhere. If the SDE doesn’t reposition the deck chairs, as Barresi has suggested, the district is still short $250,000 that they have to take from somewhere else. This is sleight of hand, nothing more.

The second shows a fundamental lack of understanding of how schools work. Alternative education and professional development run on a shoestring budget. School districts have already spent the money they’re going to use on these activities and are mostly just waiting on the reimbursement now. Those funds pay for teacher salaries, among other expenses. Districts made plans based on the amount they were allocated, not 75% of that amount.

As an example, Tulsa Public Schools projects more than $477,000 in cuts from this decision:

Tulsa Public Schools would be hit hard by a last-minute cut to the school activities fund proposed by State Superintendent Janet Barresi.

The Oklahoma State Department of Education announced late Wednesday that Barresi has directed $6.54 million budgeted for a variety of school activities to instead be used to cover a deficit in health insurance premiums for school employees.

TPS Chief Financial Officer Trish Williams said Thursday that TPS alone would lose more than $477,000 it was counting on to cover costs incurred during the school year that ends in two weeks.

The school district said it would lose $394,236 for alternative education programs, $21,000 for the Oklahoma Parents as Teachers parent education program and $61,896 for professional development.

It’s not just the programs named in the SDE’s bulletin, either.

Redistributing the $5.1 million in unencumbered funds means less will be available to schools for bonuses for National Board Certified Teachers; Advanced Placement teacher training; test fee assistance for students; the Oklahoma Student Information System; development of a component of the new Teacher Leader Effectiveness evaluations; the REACH literacy coaches who travel throughout the state; and third-grade reading readiness, according to Tricia Pemberton, an Education Department spokeswoman.

These are critical programs, and the impact on school districts will be significant, though varied. Once again, Barresi treats a nuanced problem with zero understanding of that nuance.

As to the legality of this decision, it is critical to remember that Barresi has tried this before – two years ago.

Early Friday, District 9 Rep. Marty Quinn stated as others were expressing frustration over the SDE’s intent to divert textbook funding that if it happened with the stopgap they were proposing, that he would vote against every education bill moving forward. District 2 Rep. John Bennett explained that a superintendent from his district had called him to explain that the SDE was keeping one-third of the textbook money. He then reminded the body that last year, the legislature trusted the SDE with a lump sum of funds and that the agency then failed to pay school employees’ flex benefits as legislated (requiring a supplemental appropriation this session). District 61 Rep. Gus Blackwell pointed out that the SDE has a history of ignoring legislative dictates. He followed up by threatening to deplete the agency’s budget if that happens again. District 64 Rep. Ann Coody mentioned that the Senate’s removal of line items in the SDE’s budget the last couple of years has led to unfunded mandates on schools.

Members of Superintendent Barresi’s own party were on the floor of the legislature saying that in a little over a year, she has already established a pattern of neglecting their will. Democrats like Joe Dorman, Ed Cannaday, Scott Inman, and Jerry McPeak were also vocal in their frustration over how she has performed. The fact that textbook funding was both restored and protected is huge. This means schools will not have their ability to pay for critical instructional materials depleted any further. It also means that the legislature will likely be more careful in the future when it tells the SDE what to do.

That’s from my post dated May 26, 2012, titled A Stern Rebuke. It seems that legislators didn’t like Barresi moving money from fund to fund and they wanted to proscribe how the SDE was to spend its allocation. They restored line items to the education budget, and that was that.

Additionally, this issue has come up before and was discussed at length in a ruling from the Attorney General’s office – in April 2003 (found using this search engine and entering the term Flexible Benefit).

You next ask whether a school district’s statutory obligation to pay a percentage of the cost of certified employees’ health care premiums is dependent upon the amount of funding the district receives from the State Board of Education. School districts receive State funds appropriated to the State Department of Education based on a State aid formula (see 70 O.S. 18-200.1 (A) (2002)), as well as State funds appropriated for specific purposes, such as the flexible benefit allowance. 2002 Okla. Sess. Laws ch. 388, sec 11. Since a school district’s obligation to pay 75% of the health care cost is reduced or offset by the amount of the legislatively-funded flexible benefit allowance, the question that arises is how the district’s obligation is calculated if a State revenue shortfall reduces the flexible benefit allowance funds that are allocated to school districts by the State Department of Education.

To refresh your memory, the 2002-03 school year was one of the worst in recent memory for the state budget. School districts laid off a lot of personnel. This is a long AG opinion (over 2,800 words), but the gist is that there is a limit to how low school districts can go in funding FBA for employees, and that they can only dip below 75 percent if there is a state revenue shortfall. What I’m not seeing is the shortfall. The state has the money, and the legislature has chosen not to allocate it to school districts. The state superintendent thinks she can just whip money from line to line in violation of legislative intent.

I’m not sure what the strategy is here. Maybe it’s another attempt to prove to teachers that she’s looking out for them. Maybe she is just trying to work Obamacare into the conversation because it plays to her base. I’ll give her credit for repeatedly asking the legislature to fund the shortage, but I’ll also consider that their reticence has something to do with the miasma I discussed a few days ago. At this point, I think the legislature is ready to repudiate anything she does – or look at it skeptically.

As should we all.

June 24th can’t come soon enough.

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