QEO = $386 Pay Cut in Blair, Taylor

By Louisa Downey

We all know the Qualified Economic Offer law has kept teacher pay increases below the cost of living for years. Now, it is leading to actual pay cuts.

Teachers in the Blair-Taylor School District found that out the hard way last fall when they opened their paychecks and got a shock.

"Everyone saw a $386 decrease in pay," said Don Cook, a 28-year veteran teacher in the district. "They also froze the steps - no one got a lane advance for their education or experience. It was a depressing situation."

The pay cuts were spurred by sudden increases in health care costs, which cut into the salary side of the QEO equation.

With another round of sharply rising health costs expected over the next couple of years, teachers throughout the state may be facing similar issues under the QEO.

70% insurance premium hike

The Blair-Taylor problem can be traced to 1999 when the district and association negotiated a change in health insurance companies. "We've shopped around for health care every few years when the premiums have gone up," Cook said.

They chose WPS, which offered the lowest premium. But when the contract came up for renewal a year later on September 1, 2000, WPS raised premiums a staggering 70%.

"We had some claims that were substantial," Cook said. "A couple of staff members had cancer, so our rates went up."

WPS, like most group insurance carriers, uses all the insurance premiums collected from a school district to help cover the claims of the group. If a district has catastrophic claims - a member who has a costly illness, for example - the insurance company tries to recoup some of its losses by raising premiums for the entire group.

"The school board told us at that point that the money wasn't there," said Jim Ganrude, president of the Blair-Taylor United Educators Association and an art teacher for 22 years.

Board imposed QEO in 1999

The Blair-Taylor School Board voted to impose a QEO contract on its teachers in 1999. In theory, the QEO offers a salary increase of 2.1% and a benefits increase of 1.7%. If the cost of benefits exceeds 1.7%, however, the law allows school boards to dip into the salary increase to pay for the benefits.

"In a typical district, an increase of 15% in health care premiums will absorb the 1.7% the QEO allows for benefits," said Randy Logan, WEA Trust Field Operations Manager. Blair-Taylor's insurance premiums ate up not only the combined 3.8%, but an additional $386 of the previous year's salary.

Some teachers in the district lost considerably more, according to Ganrude. "The decrease came to a couple of thousand dollars for a few members of the staff who were due for lane increases or who earned their master's degree last year - those are raises they never got," he said.

Revenue caps compound problem

School district revenue controls - coupled with rising costs for other expenses - have compounded the problem. Revenue controls prevent districts from readily raising the funds necessary to cover the rising costs of health insurance, as well as other costs such as heating fuel and gasoline, both of which have risen astronomically in the past year. The district could go to referendum to seek help from taxpayers, but that is an enormous roadblock, especially in a poor district.

Switched to WEA Trust

Eventually, the district and union agreed to put its health insurance up for bids from other insurance companies. They received the best offer from WEA Trust, a not-for-profit organization created by WEAC, with a large statewide pool of more than 60,000 members. But the damage had already been done, and the district's problems are not easily resolved.

Insurance costs rising everywhere

The situation in the Blair-Taylor school district may become more common as health care costs continue to rise steeply in the future. During the Clinton administration, the specter of a national health care plan encouraged health care providers to keep prices under control.

"With national health care off the agenda for the foreseeable future, providers - particularly pharmaceutical companies - are once again increasing prices," Logan said. "As a result, health insurance premiums are likely to increase by 20% or more this year, compared to only 5% or 10% in recent years."

Another round of bargaining

s with all teacher contracts in the state, Blair-Taylor's two-year contract expires June 30; its new contract year begins July 1.

With another QEO-level offer expected this year, Cook is not optimistic that Blair-Taylor's teachers will fare much better than in 1999.

"The school board has been willing to go to 3.8%, never above, since the law was passed," Cook said.

The district will likely not recover the losses it sustained this year. "That's gone," Cook said. "Any small increase we may get this year has already been used up. It has a snowball effect."

Cook described the effect on staff as "demoralizing." He and other teachers are worried about the district's ability to attract and retain staff. Many teachers have been with the district for 15 years or more, have strong ties to the community and are unlikely to leave, Cook said. Younger teachers are another matter.

"We haven't lost any people yet, but we don't know what effect it will have on attrition in the coming year," he said. Ganrude is also concerned that the district is permanently losing ground. Blair-Taylor has always paid substantially below the state average. But last year marked the first real backslide in the district's history.

'No chance of catching up'

"As a smaller district, we were paid substantially less when the QEO was first passed and we have no chance now of catching up. Our high end was $40,200, but after the problems with our health insurance, we lost across the board. If you have a master's degree plus 24 credits and 20-plus years of service, the maximum you can get now is under $40,000," Ganrude said.

Those teachers closest to retirement are among the hardest hit, Ganrude said, because their pension is calculated based on their highest three years of service.

"I know the staff are not happy with the situation, but we're professionals and we're doing our job," he said.

But after last year's experience, Ganrude said, the negotiating team will take a proactive stance in the upcoming negotiations.

The Blair-Taylor United Educators Association has made a commitment to stand united with local associations throughout the state in subscribing to the 2001-2003 WEAC bargaining goals. That means members will not agree to a contract unless it includes a cost-of-living salary increase of at least 3.4% per cell, no take-backs in benefits, bargaining for WEA Trust long-term care insurance, and bargaining for locally developed school quality initiatives.

"We need to go in with some knowledge and some backing," Ganrude said.