P.O. Box 909 ● Trenton, NJ 08605-0909 ● Phone: 609.695.7600 ● Fax: 609.695.0413 ● Web: www.njsba.org/PI

Negotiations 2008: Local School Boards Control Benefit Costs

TRENTON, August 27, 2008 — An increasing number of local boards of education are successfully negotiating containment of health insurance costs—the fastest growing area of employee compensation, according to the New Jersey School Boards Association.

“Teacher compensation constitutes the largest share of the public school budget, but salary is only part of the compensation picture,” explained Marie S. Bilik, the Association’s executive director. “Fringe benefits, including health insurance, make up more than 30 percent of the overall expense of employment and their cost is increasing far more rapidly than salary.

“As a result, we are finding more school boards negotiating provisions that save public tax dollars by implementing practices common in the private sector.”

In Vast Majority of Newest Contracts Of 243 multi-year agreements now in effect, 55 percent include provisions to contain health benefit costs, an NJSBA analysis shows. For the newest of these contracts (those in which year one is 2008-09), the percentage with insurance cost-control provisions is even greater—81 percent. In comparison, just over half of 2007-08 contracts included such clauses. 

Cost-containment provisions include—
• Requiring employee contributions toward insurance premiums (present in 14% of 2008-09 contracts, but a rarity a decade ago).
• Providing less-costly health insurance programs to new employees (39% of contracts).
• Providing a basic employer-pay-all plan with the option of employee-paid upgrades (20%).
• Offering incentives to waive district-provided coverage for those employees covered by other health insurance plans (59%).

Status of Negotiations Currently, 129 school districts are still negotiating agreements for 2008-09, NJSBA reports. The number represents approximately 22 percent of all New Jersey school districts, or 61.4% of the 210 scheduled to begin new contracts this year. At this time last year, a similar percentage was still in negotiations.

“It’s not unusual for 125 to 150 school districts to begin the new school year still negotiating with their teachers unions,” said Marie S. Bilik. “Until a new agreement is reached, teachers are covered by the previous contract and are guaranteed salary, benefits and other protections. Teachers never work without a contract.

“Historically, most contracts are settled during the fall.”

The average salary increase reflected in all 2008-09 teacher contracts is 4.61 percent, roughly the same as last year’s average, according to NJSBA. For contracts settled since January 2008, the rate is slightly lower, 4.57 percent. (NJSBA’s settlement rate data include the incremental raises paid to employees as a result of an additional year of experience. The rates reflect salary only and not any of the cost savings attained through changes in fringe benefits.)

Current salary settlement rates are far below those of the early 1990s, when average raises exceeded 9 percent.

Salary Guide Changes A final contract requires agreement on salary, fringe benefits and other terms and conditions of employment, including how the pay increases will be distributed among teaching staff, NJSBA officials explained.

“Construction of the salary guide remains a major issue in school district bargaining and, often, can be more difficult than negotiating the overall increase in pay,” said Bilik. “For example, local school boards facing enrollment increases or large numbers of teacher retirements will work toward a guide designed to attract entry-level staff and to retain those teachers.

“Negotiating such salary guide changes is a complex process that often extends bargaining and delays final settlement.”

Additional Issues Other trends in school district negotiations include capping payment for unused leave time and placing controls on tuition reimbursement.

• 75 percent of 2008-09 teacher contracts place controls on payment for unused sick leave. Strategies implemented by school boards to contain the cost of this benefit include capping the overall payment, limiting the number of days that can be cashed in, and ensuring that payment is equivalent to the salary in effect at the time the sick day was earned.

• NJSBA also reports that school districts continue to negotiate limits on tuition reimbursement. Such controls include limiting reimbursement to coursework related to a teacher’s classroom responsibilities; establishing “return service obligations” that link tuition reimbursement to a teacher’s employment in the district for a specified amount of time; and placing caps, or strengthening existing limits, on the amount of reimbursement.

The New Jersey School Boards Association, a federation of district boards of education, advocates the interests of school districts, trains local school board members, and provides resources for the advancement of public education.