Compromise to End Budget Impasse

It is better to bend a little than to break.  I kept that motto in mind when I voted for the third budget and revenue bill that ended the 2017-18 Biennium.  As explained in Representative Pugh’s current column, the budget contains significant investments.  To safeguard those investments and avoid a government shutdown, however, compromises were necessary.  For example, the bill relies on one-time money to fund a reduction in property taxes. In my June column, I explained why I opposed this approach.  In short, it undermines local control of spending for our public schools and leaves a hole in the education fund that will have to be made up next year.

The compromise bill also contains a potentially larger threat to local control of schools.  The budget included a provision that takes away from local school boards the authority to negotiate health insurance benefits for school employees and instead creates a state-level commission with that power.  The Governor, a proponent of this provision, vetoed last year’s budget bill to press his demand for a statewide teacher health care contract.  The resulting compromise then included a task force that evaluated the concept.  Its report, issued in December 2017, endorsed making this a statewide benefit rather than one under local control.  During the 2018 session, the Senate Education Committee developed legislation to implement the idea, and it was incorporated into the final budget bill that just passed into law as Act 11.

The Vermont-NEA, the primary union of Vermont educators, which had opposed the concept last year, changed its position and supported the move to a statewide health insurance benefit. This caused many legislators who had opposed the idea last year to endorse it this year.

I have come to see some of its potential advantages.  A single statewide benefit could reduce disparities between school districts in the health insurance offered to employees.  In addition, costs of negotiating health insurance benefits could be reduced. Finally, depending on the results of a statewide negotiation, cost-sharing arrangements between school districts and employees could provide incentives for more informed use of healthcare, resulting in savings.

Nevertheless, I remain concerned regarding the impact of this change.  The salary levels and other benefits that together make up a teacher’s total compensation package are different in each district. Statewide control on one particular aspect of teacher compensation does not take into account the other elements of compensation packages and working conditions in each district.  Local negotiations with teachers and staff involve different tradeoffs between salary and benefits.  For example, South Burlington school staff earn a lower salary than teachers but are required to contribute less to their health insurance costs.  The ability to make these local tradeoffs will be undermined. Further, the ability to achieve local savings on health insurance costs will be curtailed.  In short, the results of the statewide negotiation will dictate costs at the district level, a loss of local control.

So, how is this going to work?  The Act creates a Commission on Public School Employee Health Benefits consisting of four members appointed by the Vermont-NEA, one member appointed by the next largest school employee union, and five members appointed by the Vermont School Board Association.  Starting in April 2019, the employee and employer representatives on the Commission will negotiate premium and out-of-pocket contributions of school districts and employees, whether a district will provide Health Savings Accounts (HSA) and/or Health Reimbursement Arrangements (HRA), and contributions to HSAs and/or HRAs.  If the representatives are unable to reach an agreement, the parties will submit their positions to a factfinder.  If the factfinding process does not lead to an agreement, any remaining disputes would be resolved by a three-member arbitration panel.  The timeline is set so that the statewide benefit can be incorporated into local collective bargaining agreements that take effect on or after July 1, 2020.  The Act prohibits strikes and imposition in relation to the negotiation of the statewide health insurance benefit.

Rather than move health insurance negotiations to the State level, I would have preferred modifications to the existing timelines and guidelines for local collective bargaining that I have advocated during my tenure in the legislature.  Nevertheless, to end the budget impasse with the Governor and avoid a government shutdown, I was willing to bend on this issue and give this initiative a chance.  If you have any questions on this change, contact me at 863-3086 or