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Health Care Costs Drive Oakland Schools Crisis

By Suzanne La Barre
Friday April 14, 2006

The countdown has begun. If contract negotiations aren’t reached within a week, Oakland teachers will walk out.  

State-appointed school administrator Randolph Ward announced a state of emergency Tuesday, allowing the 42,000-student Oakland Unified School District (OUSD) to hire non-credentialed teachers to replace permanent employees who are scheduled to stage a one-day work action April 20.  

The Oakland Education Association, the union representing 3,200 district employees, has been bargaining with the district for fair contracts for two years.  

The sides are inching toward a compromise and have settled a number of thorny issues including salary, but one item remains unresolved: health care. 

District negotiators last offered to split the cost of future health care cost increases fifty-fifty over three years. Average-income employees would pay nothing the first year, about $20 a month the second year and roughly $54 a month the third year.  

An earlier proposal put forth by the district would have placed a $7,046 a year cap on coverage.  

The union wants members to contribute no more than half a percent of their salaries to health care premiums. A neutral fact-finding report said the district could afford that, a conclusion later disputed by some in the education sector.  

OUSD currently picks up the cost of employees’ medical plans in full, an estimated $39 million a year with annual increases projected at 10 percent. However, it is one of “very few” districts in the Bay Area to do so, the report said. This is due chiefly to the spike in health care premiums nationwide. 

Most Bay Area school districts either cap coverage or grant total compensation packages. Seven of the 17 school districts in Alameda County offer the latter. 

In Berkeley, teachers are mostly covered, but starting next year, they will assume all increases in health care premiums, which could dig into salaries by $50 to $150 a month, said Barry Fike, president of the Berkeley Federation of Teachers. 

Albany Unified, a small, urban school district serving 3,400 students, is among the few to wholly fund employee medical benefits. The district can afford it because, unlike many urban school districts—including Oakland—Albany Unified is growing, said Margaret Romero, Assistant Superintendent of Business Services. Enrollment based on students’ average daily attendance is the primary source of funding for public schools. 

Albany Unified faces skyrocketing medical expenses, nonetheless. This year, the district shouldered an 8 percent hike. Last year, costs went up 21 percent. When contract negotiations come around in 2007, administrators will push for a shared-cost plan, Romero said.  

“It’s always on management’s mind because we have to be able to contain the costs some way,” she said. What Albany Unified has, “is becoming more rare because of the cost of getting medical. The districts can’t afford that.”  

OEA President Ben Visnick warns against drawing comparisons between school districts. With an average pay of about $53,000, Oakland’s teachers are some of the lowest paid in the Bay Area, he said, and affordable medical coverage is the trade-off. 

Healthcare spending nationwide spiked 7.9 percent in 2004, with the amount spent per person coming in at $6,280, a 74 percent increase over the last decade, according to the California Health Care Foundation. Worldwide, the United States ranks first in expenditures and 37th in quality of care. 

“Put your finger on a map, it’s everywhere,” said Marty Hittleman, vice president of the California Federation of Teachers, which represents public and private school employees. “Los Angeles, San Francisco, any school district you go to, they’re having problems with health care.” 

In 2004, the California Public Education Labor-Management Committee formed to find solutions to the health care crisis in California schools.  

“Health care costs are increasing so much for everyone and all our negotiation battles are over health care, [so] we though we’d get together to find out the root of these causes,” said Hittleman, who is a committee member. 

What they’re discovered is that rising prices are largely tied to a dearth of health care providers. Though districts can’t control the industry’s consolidation, they can build regional buying coalitions and educate themselves on how to negotiate with HMOs. 

“Up until now, we’ve just been buyers and pay the price they ask,” Hittleman said. “But if we change that dynamic, we may make some gains.”