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U.S. schools face tough decisions on Obamacare benefits

U.S. President Barack Obama talks with children outside before ordering at Nancy's restaurant at Oak Bluffs in Martha's Vineyard August 13,
U.S. President Barack Obama talks with children outside before ordering at Nancy's restaurant at Oak Bluffs in Martha's Vineyard August 13,

By Yasmeen Abutaleb

WASHINGTON (Reuters) - Hit by years of budget cuts, some U.S. public school boards are looking to avoid providing health benefits to substitute teachers and supporting staff under President Barack Obama's reform law, education officials say.

According to the law, employers will have to offer health coverage to all full-time employees, defined as those who work an average of 30 or more hours per week each month, or else pay a fine starting in 2015.

School boards, already struggling to manage after years of state budget cuts, are trying to get ahead of the potential costs of Obamacare for the current academic year, education and labor officials say. The need to find creative solutions, or risk cutting back staff hours further, will increase as they finalize their budgets, they say.

In Pennsylvania's Penn Manor School District, Superintendent Mike Leichliter said there is no room in its constrained budget to provide additional employee insurance. Instead of cutting hours, the district used a substitute-teacher contracting service to pay part of the salaries for 95 employees. Money for such a service does not count against the school's budget.

"When we looked at our costs, (healthcare) was one area that really had the potential to skyrocket," Leichliter said. "This is absolutely the worst time for school districts to be faced with mandated increases."

The National School Board Association said many states and school districts have at least explored reducing hours, according to Linda Embrey, a communications officer. Several school officials contacted by Reuters said they could not find a way around cuts.

In Indiana's Fort Wayne Community Schools district, one of the state's largest, administrators reduced hours for 610 of its 4,050 employees, including substitute teachers and support staff, who were working 30 or more hours a week. Providing them with health insurance would have cost $10 million annually, said Krista Stockman, public information officer for Fort Wayne.

"You get to a point where there's a danger that you're cutting too much and that the quality of education you're providing isn't as great," Stockman said. "We're just going to have to do the same amount or more with less."

Most of the employees affected are substitute teachers, classroom aides, cafeteria workers, bus drivers or similar support staff, according to school officials and labor representatives. They had not been receiving healthcare coverage from their employers in the past. Now, instead of getting such employer-sponsored benefits under the reform law, they may be eligible for government-subsidized coverage that will be offered by new state insurance exchanges starting on October 1.

SEQUESTER TAKES A SECOND TOLL

During the 2012-2013 school year, 26 states provided less money to local school districts than the prior year, and 35 states provided less funding than in 2008 (a better year), according to the Center on Budget and Policy Priorities.

This year they are also grappling with across-the-board "sequester" spending cuts introduced after Congress deadlocked over how to fix the deficit. An Obama administration official said those cuts plus the states', and not healthcare reform, are the main reasons for staff losing work-time at schools.

"We are seeing no systematic evidence that the Affordable Care Act is leading to a shift to part-time work," the official said. "There are a variety of factors impacting schools, including sequestration, which is cutting budgets and is a completely separate issue."

The National Education Association is working with union leaders across the country to figure out how to encourage employers to avoid cutting hours as a result of healthcare reform, said Joel Solomon, NEA senior policy analyst. The effort has included a training session for dozens of labor representatives in June, and more sessions are planned for this year.

Solomon said one popular solution offered by the NEA is to help schools get a more precise accounting of employee hours to see whether staff are truly working an average of 30 hours a week each month when holidays and other time off are included. That has helped some schools make less drastic cuts in employee hours, he said.

Many school employees are expected to qualify for Obamacare's tax subsidies, which are available starting in January to people who make within 400 percent of the federal poverty level ($45,960 for an individual and $94,200 for a family of four in 2013).

Even if they don't, the new plans are preferable to what they currently have to buy on the individual market because insurers cannot deny coverage based on prior illness.

In Nebraska, the Plattsmouth Community School District is limiting the hours of permanent substitute teachers, who typically work every day, said Marlene Wehrbein, a labor union official who advocates for employees in the state's public school districts.

"It creates a lot of inconsistency in staffing, and I can't see how that would be good for students," Wehrbein said. "How could you have a teacher teaching English four days a week and then on the fifth day you have someone else?"

(Reporting by Yasmeen Abutaleb; Editing by Michele Gershberg and Prudence Crowther)

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