NJSBA Advises Patience in Negotiations

Current year state aid cuts and proposed legislation that would reform the benefits and pension system for public workers, including school district employees, will have significant negotiations implications for school districts.

On Feb. 11, Gov. Chris Christie announced a $475 million cut in state aid to districts for the current fiscal year. The same week, several new bills were introduced in the Legislature that would reform how employee health benefits are provided.

Loss of State Aid The current year state aid cutbacks impact school districts now in negotiations for a contract covering the current school year (2009-2010). Those districts may find that salary offers previously made are no longer feasible in light of the immediate loss of state aid. Districts that are negotiating over contract terms for next year (2010-2011) may be hesitant to make a salary proposal, or to sustain a prior salary proposal, until school aid budget figures are known for the coming year. In short, negotiations may come to a slow crawl while all participants are grappling to understand the budgetary impact.

Health Benefits Proposals The legislation introduced would impact health benefits in several ways. S-3 would require that employees in the School Employee Health Benefits Plan (SEHBP) contribute 1.5 percent of their base salary toward the cost of their insurance benefits. This premium sharing would become effective with the passage of the bill and upon expiration of a current collective bargaining agreement.

Among the other measures in S-3:

• A requirement that health benefit changes negotiated with state unions would apply to all other public employees that participate in the state health insurance plans
• Tighter restrictions on incentives to waive health insurance coverage
• The eligibility threshold for employee participation in SEHBP would be set at 25 hours per week
• A prohibition on any individual being covered under more than one plan

S-4 proposes a cap of $15,000 on payment for unused sick leave, which would only apply to future hires and would only be granted upon actual retirement.

SEHBP Participation Districts that participate in the SEHBP, and are currently bargaining, may experience some immediate relief from the strangling costs of health insurance premiums. Districts that do not participate in the SEHBP may seek to negotiate over changes in level of benefits, to enable the district to move to the state plan.

Whether or not a district participates in SEHBP, these reform measures will have bargaining implications. The bills, as written, do not apply to private insurance companies. Nevertheless, the legislative and executive branches of state government have given clear direction that cost sharing is expected and essential for all public employees. Thus, even where insurance coverage is provided through a private carrier, these SEHBP reforms will strongly influence school boards’ negotiations expectations concerning cost sharing measures.

Bills Likely to Pass While passage of some reform measures is widely considered to be likely, the specifics and the final form for such changes are far from clear, as Gov. Christie is pressing for even more stringent controls.

In the midst of this unpredictable and rapidly changing environment, school boards must exercise patience. While patience has always been important to success at the bargaining table, it is essential as these developments continue to unfold.

Now, more than ever, districts should make use of all available resources, including attorney/labor relations professionals and the NJSBA, to carefully assess their current situation before proceeding with negotiations.

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