News Story

Extra K-12 Cash to Be Tied to Mandatory Health Care Cost Sharing and Other Reforms

Public schools may have to embrace at least a few measures that the Michigan Education Association employee union has fought if they are to get an extra $150 million that Gov. Rick Snyder says he’s willing to give them. As part of the new budget deal, Snyder said K-12 public schools will get back that money if they start following "best practices." The best practices include a higher rate of cost-sharing by employees for health care and making efforts to privatize and consolidate services.

Schools have to match four of five listed best practices to be eligible for the extra money, according to Kurt Weiss, public information officer for the Michigan Department of Technology, Management and Budget. Weiss said the details have yet to be finalized.

The final budget still needs to be voted upon by the Legislature.

The five metrics include:

  • Districts must implement a dashboard similar to what Snyder pitched for the state of Michigan that would show metrics and measure the effectiveness of the district.
  • Districts must have a 90/10 employer/employee cost-sharing on health care expenses.
  • Districts must show a competitive bid for noninstructional services over $50,000.
  • Districts must have a shared service agreement with a neighboring district for things such as payroll, purchasing, busing or custodial services.
  • Districts must produce a consolidation plan that shows cost reductions.

It’s unclear how existing union contracts impact the five metrics. Weiss said those details will be figured out in the upcoming weeks.

Mattawan School District, for example, signed a four-year deal through 2013 that has teachers contributing 5 percent of health care premiums. While this is only half of the 10 percent cost-share that the governor is expected to ask for in his metrics, Mattawan is still above what most districts require. Meanwhile, the average Michigan employee with an employer-provided health benefit pays 21 percent, according to the Kaiser Family Foundation. The average nationwide is 27 percent.

The Grand Ledge Public Schools won’t need to do a thing to meet this particular metric. Teachers there currently pay 46.5 percent of the premium cost for the most popular health plan — more than four times the 10 percent minimum that Snyder is asking for. And this isn’t new: The district says cost-sharing at this level has been the standard in Grand Ledge for 30 years.

Some Republican politicians believe that schools should get the money only if they change how they do business.

“We should give more money if it comes with reforms,” said State Rep. Pete Lund, R-Shelby Township. “There need to be reforms that come along with it. I don’t think anybody is talking about just giving a blank check to the schools.”


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Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.