A Court of Appeals ruling could bring financial consequences for school districts

A recent ruling by the Michigan Court of Appeals on nine bills that were not sent to the governor at the end of the 2023-24 legislative term could cause financial hardship for local school districts and other public employers.

Former Speaker Joe Tate, D-Detroit, failed to send nine bills to Gov. Gretchen Whitmer to sign before the end of the 2023-24 legislative term, setting off a legal battle that continued into the current term.

Matt Hall, R-Richland Township, the current House Speaker, did not advance the bills to the governor, arguing that he was not required to do so.

The court ruled Oct. 27, however, that the bills must to be sent to the governor.

House Bill 6058, if signed, would amend Michigan’s Publicly Funded Health Insurance Contribution Act, the 2011 law designed to keep government health care costs in check. That law currently lets public employers choose between two options:

• A hard cap, a fixed dollar amount the employer can pay toward employee health benefits each year; or

• An 80/20 split, where the employer covers up to 80% of total costs and employees pay the rest.

The 80% rule would become the minimum requirement for employers if Whitmer signs the bill into law.

Michigan Capitol Confidential reported on the bill Feb. 7:

The public employer would have to choose between paying an inflation-adjusted capped contribution or at least 80% of the cost of a medical benefit plan, according to a House Fiscal Agency analysis.

Based on current public health plans, the analysis said, every increase of one percentage point in contribution rates for public employers adds $5 million to $7 million in annual costs to taxpayers.

The change could be significant for districts that face both declining enrollment and rising expenses. Teacher and support-staff contracts negotiated under the current hard-cap system would have to be reopened or rewritten once they expire.

School boards might not have much room to maneuver.

The Kalamazoo Public Schools district would not be affected because it already pays 80% of costs, Susan Coney, chief of marketing and communications for Kalamazoo Public Schools, told CapCon in an email.

But the rule would have a significant impact on Northville Public Schools, Superintendent RJ Webber said during a phone interview.

Webber said the change would cost the district an additional $1.4 million to $1.75 million annually.

Although Northville is viewed as an affluent district, Webber added, it is not necessarily better funded than others. He told CapCon the district is funded at a state minimum, and neighboring districts receive more money.

“Many school districts already pay exorbitant amounts for health insurance, buying it from an outfit run by the Michigan Education Association,” Michael Van Beek, director of research at the Mackinac Center for Public Policy, told CapCon in an email.

The change to the law, he added, would worsen the fiscal challenges districts face as employee costs rise.