Sisters schools will largely escape state insurance changes

Changes to the health care mechanism for school district employees have been mandated by the State of Oregon. However, it will be a number of years before the economic effects are felt by school district staff in Sisters - if ever.

"For the teachers, there will be no effect for three years, as we have that under contract. However, the classified employees contract expires in just two years," said Sisters School District Superintendent Ted Thonstad.

The new statewide educators' benefits pool passed in this legislative session now that both the House and Senate are under Democratic control. The new system will likely absorb nearly every district in the state by 2010, which will in effect put the Oregon School Board Association (OSBA) pool out of business.

"I am not an expert on it, but in theory it should yield lower (health insurance) rates for the educators," said Thonstad.

"A lot of districts have insurance through OSBA, but the Sisters School District does not. We have our insurance through Clear Choice out of Bend. So there are no implications for us for the 2007-2008 school year, as we have existing contracts," said Thonstad.

The idea behind the measure is to create a large enough group to be able to take advantage of discounts for health insurance that are not available for smaller groups.

"There was already a large health insurance group for non-educational state employees. What they (the Oregon legislature) have done is chosen to create a new group for state employees to handle the needs of the employees that are in the educational system, instead of adding them to the existing group," said Thonstad.

The OSBA lobbied heavily against the measure in no small part because their health insurance pool provides a huge amount of income for the organization.

"OSBA's major source of revenue is from that pool. OSBA is saying that they need to raise their rates next year. I won't say always, but we have usually been lower than OSBA's rates," said Thonstad.

The new rates to be charged by OSBA will be 17.84 percent higher for the 182 districts that participate in their health insurance pool, plus the handful of community colleges, charter schools and education service districts that also participate.

The large increase has fired speculation at the Oregon state capitol, especially since the OSBA's group rate increases have been much lower since 2004 when they were attempting to bury the Democratic proposal to absorb all school employees into a single statewide health insurance pool to provide lower rates.

"After we introduced legislation, their (OSBA's) rate increase was in the single digits, but both before and after it was in double digits and has been as high as 26 percent," said Jim Sager, the governor's education policy adviser.

The new state bill will result in a large decrease of income for the OSBA, which uses the income to help local districts during contract negotiations and for lobbying on education policy and funding. Traditionally, the OSBA has received approximately 50 percent of its budget from the fees that districts pay to belong to its health insurance trust, and nearly two thirds of the state's school districts participate in the pool.

With the evaporation of that revenue source, OSBA has decided to retain its $50 million or so in savings rather than using it to buy down the 17.84 percent rate increase for its members. The reserves are to be earmarked for lobbying on government educational policy, and the interest generated on the reserves will be used for the group's operating budget which also includes assisting school districts with contract negotiations.

The main concern for Sisters educators is who will be the provider.

"There has been a lot of discussion about this in Central and Eastern Oregon, because we feel that, and I am not sure if this is true, the company that is likely to end up to be the provider for this is Blue Cross," said Thonstad.

"Blue Cross comes and goes over here. They get in fights with the hospitals and the doctors and then their coverage isn't any good over here. So, there is a concern on this side of the mountain. What if Blue Cross gets in a fight again, and then the hospitals and doctors won't accept the insurance?" said Thonstad.

There is some pending legislation that could provide a loophole for the Sisters School District. The new legislation would allow school districts to continue with other providers, if the contract group rate would be less than could be obtained through the state pool.