Politics

Lots of talk, no ‘real progress’ on teacher health care deal

Phil Scott
Gov. Phil Scott speaks last week about his plan for the state to negotiate teachers’ health benefits. File photo by Tiffany Danitz Pache/VTDigger
Gov. Phil Scott remained optimistic Wednesday a budget deal can still be brokered that would include $26 million in savings on teacher health care. However, no agreement was reached, and the governor said adjournment appeared unlikely before Friday.

Late Wednesday afternoon, Scott said he had just received another proposal from Senate President Tim Ashe, D/P-Chittenden, which the governor said he would look at but didn’t think, at first blush, would work. The governor said he was also waiting to see if Democratic House Speaker Mitzi Johnson had another proposal.

Scott, a Republican who served 16 years in the Legislature before being elected governor in November, said the end game this year between the administration, the House and the Senate was different.

Mitzi Johnson
House Speaker Mitzi Johnson, D-South Hero. File photo by Erin Mansfield/VTDigger
“It’s not just the Legislature versus the administration. They’re in their own negotiations about the budget that they’re not agreeing to either. So there’s that dynamic that’s happening simultaneously. So that gets complicated,” Scott said.

Lawmakers and the governor have been holding discussions over the past several days. Scott has insisted the state capture some savings when teachers are scheduled to change to less expensive health plans because of the Affordable Care Act. The issue has held up adjournment, and Scott has alluded to vetoing the state budget if lawmakers “walk away” from the savings.

The day was filled with closed-door meetings in the capitol focused on saving $26 million from the health care switch. Lawmakers and stakeholders filed in and out of Scott’s ceremonial office, and Democratic leaders met in the speaker’s office.

The governor has been pushing a plan where the state would negotiate health care benefits for all teachers. Moving to new plans that have lower premiums will free up $75 million, according to officials. The idea is to give $48 million of those savings back to the teachers through health savings accounts to cover most of their out-of-pocket costs. The governor’s plan would split the remaining $26 million among tax relief, teacher retirement and the education fund.

Other proposals would return it all to taxpayers.

door
A do-not-disturb sign hangs on the Senate president’s door Wednesday. Photo by Tiffany Danitz Pache/VTDigger
One of the biggest obstacles for some Democratic lawmakers, and the state’s largest teachers union, is that the change would represent a big shift in how labor negotiations have been traditionally done: with teachers negotiating wages and benefits with the local school districts.

Scott said he proposed that the teachers could negotiate the health care benefits with a representative group of local school officials to satisfy the lawmakers’ goal of having teachers bargain with their employer.

“From what I’ve gathered, the collective bargaining aspect of dealing with the state is problematic because the state is not the employer,” Scott said.

He said there was not “real progress” Wednesday but also that the talks had “not gone backward.”

“All the stars have to align. We’re going to have to get creative in order to do it. I think they can,” Scott said.

Meanwhile, Wednesday afternoon senators delayed voting on some of Scott’s appointees, including Forests, Parks and Recreation Commissioner Michael Snyder, to try to apply pressure, several senators confirmed.

Scott was unfazed, saying officials can serve without an official confirmation.

“I’m not discouraged,” he said. “I’m realistic, I’m pragmatic. It’s just how the end of the session goes.”

As for reaching a deal and legislative adjournment, Scott said: “It’s not going to be done today. It’s not going to be done tomorrow. But if there’s an emphasis put on Friday, maybe that can happen.”

House Republicans caucused in the late afternoon, annoyed they had to deal with bills on the floor that had been dead but were resuscitated while the Legislature waits for the Senate and House leadership to come to an agreement on the issue they can take to the governor. Until that happens, the budget can’t be decided, nor the education tax bill.

It costs $250,000 a week to keep the Legislature going, but Scott said that’s a good investment if leaders can capture $26 million for taxpayers.

On another side of the building, on a different floor, the Working Vermonters’ Caucus met and discussed its opposition to the change in collective bargaining.

“The buzz outside this building is still being framed as $26 million savings. What is really at issue is very, very different — it is a fundamental right to collective bargaining,” said Rep. Jim Masland, D-Thetford.

Masland said it’s about control.

“The governor wants control of certain things he has never had control of before and he has been dying for all session, access to savings. It will let him run havoc in a number of other funds. We need to not let that happen,” Masland said.

Other caucus members were frustrated because they said the $26 million was fiction.

George Till
​Rep. George Till, D-Jericho. File photo by Erin Mansfield/VTDigger
Rep. George Till, D-Jericho, said the $75 million in savings is real and comes from lower premiums. But he questioned whether spending $48 million of it to make sure teachers don’t have to pay any additional out-of-pocket costs would really result in $26 million in savings.

Mark Perrault, fiscal analyst at the Joint Fiscal Office, said the $26 million is not fiction but is based on several assumptions such as an 80/20 premium split and an exact amount of coverage of out-of-pocket costs, without localities increasing teacher pay too much.

The savings are there in the first year but not necessarily beyond that, according to Nicole Mace, executive director of the Vermont School Boards Association and a proponent of statewide negotiations.

“In the first year the savings are there no matter what. In future years it will be based on how teachers use their health care,” she said.

The new plans are structured to encourage teachers to choose urgent care instead of hospital emergency rooms, and generic drugs instead of brand name.

Lawmakers in the caucus also argued that teachers are healthier than the rest of the state.

“We already know [teachers] are highly educated and they use way less health care, and that is why the plans are already cheaper, because they use less health care,” Till said.

But a study performed in 2015 for the previous administration showed that teacher medical costs over time are similar to those for state employees, according to Laura Soares, CEO at the Vermont Education Health Initiative, which handles employee benefits for school districts.

“VEHI covers more than teachers. We cover all school employees and their spouses and dependents,” said Soares. “Our health analytics shows we are similar on health outcomes overall to the rest of (Blue Cross Blue Shield of Vermont’s) book of business.”

Rep. Adam Greshin, I-Warren, a co-sponsor of the failed amendment by Rep. Scott Beck, R-St. Johnsbury, that pushed the governor’s plan, said calling the savings fiction was willfully avoiding the facts.

“Leaving aside the well-accepted connection between cost and utilization, VEHI testified to using two sets of actuaries to develop their premium rates and worked with BCBSVT to dial in the details,” he said. “The plans were sanctioned by the Department of Financial Regulation. It seems to me we have the health care equivalent of climate change denial going on here.”


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  • Eric Hutchins

    Are Vermont’s property taxes too high? How would we know? To listen to Phil Scott and the Republicans in the state talk about it, it’s a given, stated over and over again with no supporting evidence. If property taxes in Vermont were too high, wouldn’t businesses fail and unemployment rise? Wouldn’t low income Vermonters lose their homes and small businesses be shuttered one after another?
    Vermont does have high property taxes, yet overall these taxes have yielded a top five education system, laudable safety nets and programs for the public good, all while maintaining an excellent business climate. According to the latest state ranking data from U.S. News and World Report Vermont ranks #12 in Economic Opportunity, #10 in Employment, and #15 in Business Environment out of 50 states. Recently, unemployment dropped from 3.5 to 3.2%.
    Complaints that low income or elderly Vermonters can’t keep their homes ignore Vermont property tax income sensitivity requirements. If you make less than $137,500 annually in your household, your property tax burden is less than 2% of income. If you make over $100,000 a year and can’t afford your property taxes, you might just need to downsize.
    I don’t want to understate the pain many people have felt over the years from the downturn in our economy. I know it has been rough for many people, but high tax rates that kept government running, provided job training, supported families down on their luck, and a top notch education system were what kept Vermont strong throughout the economic downturn. Luckily, we live in a 50 state laboratory, and we can see what happens to states where Republican governors got their way and were allowed to slash taxes across the board. Take a long look at Kansas if you want to see what happens in those states.
    Recently I spoke to a local small business owner who claimed that she wouldn’t be able to stay open if her property taxes increased anymore. I asked her why she hadn’t left already, taxes in Vermont had been high for a long time. “Well, I’d like to move to a more tax-friendly southern state, but I’d want to wait until my kids finish school here first, of course.” Of course you would, and so would most people. That’s the point, everybody wants to go to heaven, but nobody wants to die, just as everyone wants a beautiful, clean, highly-educated state with good roads and social programs, but no one wants to pay taxes. That’s just not how it works folks.

    • Jon Corrigan

      Your statement “If you make less than $137,500 annually in your household, your property tax burden is less than 2% of income” is patently false. Where did you find that?

      • Lucas Barrett

        He is referring to education property taxes, and the income sensitivity cap which is near 2% depending on the education spending in a given district. This only affects education taxes and the homestead value (house plus 2 acres) of your primary residence.

      • Eric Hutchins

        You’re right, that is more of an estimate of an extremely complicated formula that you can get here- http://tax.vermont.gov/property-owners/property-tax-adjustment-claim

        Is there an income level, property value (near average home value) combination that yields substantially more than 2%? What would that be?

        • Jay Eshelman

          2% is an inaccurate estimate. As with most Education Tax calculations, its complicated.

          Vermont’s ‘Modified Adjusted Gross Income’ is not the same as Federal taxable income.

          Household Income includes all income, taxable and nontaxable, of everyone who resided in the household at any time during the tax year, including children and non-related individuals.

          The prebate amount is progressive and limits the property taxes paid to about 5% of qualified household income. That means a household with $100K in total income (the aggregate of everyone in the household) will pay the full property tax on property appraised at about $275K.

          http://tax.vermont.gov/property-owners/property-tax-adjustment-claim

          Again, Vermont’s tax structures greatly favor low income Vermonters. While that may seem fine to those who focus on a compassionate society, the disincentive to middle and upper income Vermonters in the private sector, not to mention businesses, will continue decrease their willingness to stay or move here. This is why Vermont’s job growth is primarily in the public and social services sector (it’s the only sector hiring), it’s why our successful young people are leaving the State, and why school enrollments are declining.

          In short, dysfunction has become Vermont’s growth industry while it kills the goose that pays for it.

        • Jon Corrigan

          I’ve been paying property taxes here for quite a while, so am well aware of Vermont tax forms. The point is my ‘property tax burden’ includes the education tax, highway fund, general fund and a local agreement tax – combined for this coming year, based on approval of tax rates at Town Meeting, my ‘burden’ will be 5.1 percent of my Household Income, as Jay notes below.

          For comparison: one of my siblings lives in Denver. Her home is valued at 350% of mine, but her ‘property tax burden’ is 13 percent less and only 1.1 percent of income.

          Jay’s last sentence is spot on.

    • Jay Eshelman

      Re: ” If property taxes in Vermont were too high, wouldn’t businesses fail and unemployment rise?”

      Property taxes for low income Vermonters may be low. But for Vermonters who are middle and upper income earners, especially those who own and operate businesses, property taxes are a significant detriment to business and employment opportunity.

      Vermont’s low unemployment rate is significantly affected by the increase in public sector, non-profit and healthcare related jobs, not private business expansion….not to mention those who rely on public assistance and are no longer counted in the workforce.

      My town recently lost 85 private sector jobs that are moving to Buffalo NY. My personal business employment rolls are down 75% from their highs a decade ago. Student enrollments in my school district are down more than 50% from their highs 25 years ago. And house values are declining because property taxes (one of the major costs of homeownership) continue to increase.

      As a former School Board director, I know Vermont’s education prowess, as reported by the National Association of Education Progress (NAEP) that you cite, is misleading. First, fewer than 5% of Vermont’s students take the NAEP assessments. And while Vermont has one the highest K-12 education costs per student and lowest student/teacher ratios in the U.S., only 40% of Vermont’s high school graduates go on to college, about 40% of those who do go to college require remedial instruction before taking their college courses, and about half of that 40% group drop out of college after two years. And because Vermont’s job prospects are marginal, many of those students who do succeed leave the State.

      Lastly, Vermont has the highest business taxes, as a percentage of State Domestic Product, in the U.S. at 7.3%. If this trend continues, expect even more economic concern.

      • Eric Hutchins

        Thanks for your response. We do have a graduated tax structure in Vermont, where the wealthy pay a greater share of the tax burden than low income people. Most people believe this is fair. All these statistics you provide do indicate that taxes are higher in Vermont than other places, and that it is more expensive to do business here, yet Vermont’s economy still rates as much healthier than average. What I’m really questioning in my post is the unsubstantiated claim that our higher tax rates are bad for the economy. The opposite would appear to be true.

        When it comes to the quality of Vermont’s K-12 schools, nearly every measure of quality puts Vermont at least in the top 10. U.S. News and World Report #5, WalletHub.com- #4, HuffPost #3. Those are just the first three surveys I found, you can do your own research and find something similar.

        That so many Vermont students don’t end up attending college has little to do with the quality of our public schools and much more to do with our incredibly inequitable system for helping students afford college.

        • Jay Eshelman

          Re: “… yet Vermont’s economy still rates as much healthier than average.”

          If you read the Forbes analysis I referenced, it concludes that “The state’s economic outlook is also weak—projected to be the fifth worst in the U.S. over the next five years. Income growth is also expected to badly lag the rest of the country.”

          In the final analysis, I can only point to the data. Our tax revenues are declining below expectations, we’re losing population in our schools, our taxes are higher than average, our student costs are among the highest in the U.S., our student performance ideclines as costs increase.

          And it’s not just low college attendace. It’s the marginal performance of those students who do attend college.

          But to return to the issue at hand: if Governor Scott’s proposal stands a chance of decreasing costs, why are we continuing to debate the prospect when what we have going now is so obviously unproductive.

          Simply put, the status quo isn’t working and if we continue with the same economic logic, its a good chance we’ll continue with the same economic decline.

        • Jay Eshelman

          Your references to Vermont’s education standing are actually references to ‘well-being’ assessments for the most part, not academic standing. And those references that are focused on academics are circuitous, all of which being based on the NAEP assessments I referenced earlier, which are based on cohorts of less than 5% of Vermont’s students.

          More reasonable data are Vermont’s own internal assessments of Adequate Yearly Progress, previously using NECAP and currently using the Smarter Balanced Assessments, as it relates to all Vermont students. These data compare, for example, the academic performance of a given school, compared to the performance of the LEA (School District) in which the school resides, compared to the State as a whole.

          This link is an example of the academic performance of a district Middle School that my towns students may be required to attend as a result of consolidation. It shows that 77% of all 8th graders in the school (not just the 5% cohort assessed by the NAEP) do not meet minimum standards in Math, that 77% of 8th graders in the LEA (School District) as whole do not meet those minimum standards, and that 56% of 8th graders in the State, as a whole, do not meet the minimum standards.

          http://edw.vermont.gov/ReportServer/Pages/ReportViewer.aspx?%2fPublic%2fSmarter+Balanced+Assessment+by+Grade+Report

          Again, the NAEP cohort is limited to less than 5% of the student population and taking the test is voluntary, not required.

          If anyone wants to emphasize this level of academic performance as exemplary, be my guest. But as an employer, I’m not particularly impressed by the capability of the work force trained by these schools.

    • Jay Eshelman

      Vermont:
      Job Growth (2016): 1.7%
      Cost of Doing Business: 14.9% above nat’l avg
      College Attainment: 36.9%
      Net Migration (2015): -1,300

      https://www.forbes.com/places/vt/

    • Lucas Barrett

      Here is a hot take for the debate.
      Ignore the proposed savings. I argue they don’t exist because any decrease in benefit value will be erased by a future increase in compensation.
      Look at the proposal as an improvement in governance. Right now thousands of hours are being spent negotiating the many details of the new health care plans at hundreds of negotiating tables. These details are only one factor in what really matters, which is total compensation. In moving this piece of negotiations to the state level, local school boards and unions will still be able to negotiate the most important and transparent element of total compensation, salaries.
      Less time spent negotiating means less union dues dedicated to negotiation counsel. This theoretically will strengthen the unions negotiation power by simplifying the process.
      It makes sense that the VT-NEA at the state level opposes this legislation, not because it weakens their bargaining power, but because it strengthens it and reduces their purpose.
      If you are scratching your head at this take, just think to yourself what is usually the best way to do things. Is it with one simple direct process, or hundreds of independent processes? But each district is different you say. What about local control?
      Local boards and unions will still negotiate salaries.

    • Jim Manahan

      “If you make over $100,000 a year and can’t afford your property taxes, you might just need to downsize.”
      Really? That’s a very short-sighted and naïve statement.
      Why is it the taxpayer might just need to downsize, but our state or local governments are never expected to downsize or control their wasteful spending?

    • Peter Everett

      Eric,
      Based on my income, my property tax rate is just under 7%. This is higher than my state income tax rate. So, I guess that this is OK in your book.

    • Steve Baker

      Our Property Tax burden is the THIRD HIGHEST in the country. Our overall Tax burden is THIRD HIGHEST in the country. (Two different measures say the Same thing)
      https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494/

      US News and World Report actually reports Vermont with an Economic Rank of 33rd, I believe that’s in the lower 1/3rd in the nation. 47th in Economic Growth, that’s the bottom of the stack.
      Let’s really look at the report:
      Job Growth #44
      Growth of Youth #48
      Entrepreneurship #43 So low because the Largest employer is the State
      Median Income $28,825
      https://www.usnews.com/news/best-states/rankings/economy

      So, look at the “Hole” picture and like the above post “you might have to downsize”…..to another State

  • Matt Young

    Mr Hutchins, Governor Scott and “the Republicans” look at data and even go so far as to listen to their constituents in order to arrive at the conclusion that Vermonters are overtaxed. Our experience with the public education system in Vermont would give it an F.

  • John Freitag

    In recent years the legislature has scrambled to patch together a budget that somehow look like it is in balance. This has resulted in year after year of large budget gaps. Long term problems, such as making up for years of robbing contributions that were suppose to go to the teachers retirement fund, have been left unaddressed or even worse have had money borrowed from the rainy day fund to cover gaps with no plan on how to pay that money back.
    A fiscally responsible compromise solution to this issue would be use this unique opportunity to go to a statewide negotiations for teachers health plans and use ALL the savings to meet the obligations made to the teachers retirement fund.
    This win -win solution would not be dependent on exactly how much money would be saved. At the same time it would go far to ensure the solvency of that fund on which teachers depend, and remove this obligation from being a threat to the state credit rating and the drag it is now on meeting our many other needs.
    This does require budgetary thinking beyond trying simply to get through the current year. It also requires the courage to stand up to powerful interest groups as well as to resist the temptation to overspend on admittedly worthy needs . Yet, whether in business, our personal lives, or in government, squarely facing our existing obligations and using long term budgeting is, in reality, the only way we will be successfully meet the challenges of the future.

  • Steve Baker

    Here are more facts for those few who claim all is good with the States Financial Picture.

    http://www.burlingtonfreepress.com/story/money/2017/05/10/woolf-vermonts-revenue-problem-deepens/101512272/

  • Bud Haas

    After all the reporting and all the commenting, I still have not understood how the State (Governor) would negotiate health insurance with the teachers. Negotiations mean give and take.
    As we know, VEHI has already developed approved plans for the teachers. The local boards have and will negotiate premium contribution levels, and health savings contributions for and against other teacher benefits, i.e. salaries, other benefits, working conditions, etc.
    The Governor could offer certain health care coverage, i.e a certain plan with certain premiums with certain health savings contributions.
    Then what? What other “benefits” would the Governor have to negotiate with? Salaries? No. Working conditions? No. Other benefits? No.
    If the teachers refuse his offer, then what? Does he impose? Does he offer “more” until they agree? Unlikely. If they make a counter offer of certain health care benefits, plus salary increases, or fewer work days, could the Governor agree to that? Not likely, or legal.
    I just don’t see how the Governor could negotiate one item in a teacher contract without recourse to all the other items in their contract.

    John Freitag: Perhaps you could explain a hypothetical situation where the Governor could “negotiate” teachers’ health plans with the “teachers”.

    • John Freitag

      Hi Bud,
      Sorry for the late reply did not see your comment until today. Statewide collective bargaining for teachers health benefits could be done as the same as the statewide collective bargaining for state employee health benefits. It seems reasonable that all teachers should be able to receive the same high level of health care benefits regardless of where they teach in the State. This does not seem that difficult.
      My own feeling is that it might be best to negotiate salaries on a regional basis with maybe 4 or 5 regions based on the cost of living in each region. Obviously, Chittenden County is more expensive to live in than the Northeast Kingdom and there should be some variation in this aspect of compensation.
      Working conditions might be best left at as local a level as remains after Act 46.
      Hope this helps. Feel free to give me a call as well.

      • Adrienne Raymond

        I agree, that would work well.

    • Adrienne Raymond

      The balance will be % of premium vs HRA/HSA plan contribution. This will balance the overall out-of-pocket contribution. School boards and teachers will balance salary vs working conditions (days off, severance, training expences, etc.) Plenty for all to negotiate.