School District Staff Face Big Health Care Rate Hike

Austin ISD employees are bracing for a big raise in their insurance premiums, and the district is working to educate staff members on their options.

AISD currently offers three tiers of insurance to its 12,000 employees. Two are free to the employees: PPO 2 is a standard health insurance package, while PPO 3 is a health savings account. However, around a third of all district employees choose PPO 1, which requires an employee contribution, and those staffers will see rates increase. In 2012, an employee on a 12-month contract, such as a teacher or administrator, paid $54 a month. For the 2013-14 school year, those staying on PPO 1 will pay $125 a month – up $71, or a 131% increase in their costs. Employees on nine-month contracts, such as bus drivers and catering staff, will be hit even harder: Because they pay for 12 months of coverage out of nine months of contributions, their payments leap up from $72 to $167. That's a rise of $95 a month for some of the district's poorest employees.

AISD Chief Human Capital Officer Michael Houser said the increase came from rising costs. Last year, his staff and that of Chief Financial Officer Nicole Conley found the district's insurance outlay would rise from $65 million to $70 million. "Charging $50 a month wasn't going to get us there anymore," Houser said. In an attempt to delay sticker shock, after consulting with employee union Education Austin they held back on the increase until 2013. However, while PPO 1 rates increase for staff, the district's contribution of $446.25 per employee a month will remain static.

Now the challenge is to inform staff of the changes before open enrollment begins on July 1. Education Austin President Ken Zarif­is was initially disappointed that the district was not better prepared, especially since they had more than a year to plan. He said, "It was about information through fliers and having it on their website, but not really doing a full education roll-out." However, he said they've been responsive to his concerns, and he was now impressed by their renewed outreach commitment, with bilingual videos and campus meetings, and by their continued commitment to totally subsidizing PPO 2 and 3.

Houser said he expects roughly a third of the employees on PPO 1 to switch to free policies. AISD's free coverage may sound generous – Houser said that he had been queried by other local agencies about what they call "Cadillac health insurance" – but he argues it's an important tool in staff retention, since AISD does not compete with surrounding districts on pay. He said, "If I relied on salaries to keep people in AISD, I would have some long, lonely nights down here."