The economic downturn that began in 2008 sent many of the nation’s school districts into a financial tailspin. Less economic activity led to smaller streams of tax revenue for schools, which has resulted in mass teacher layoffs, larger class sizes, and painful cuts to student programs.
As bad as the last four years have been, things may soon get even worse.
A number of school leaders in the state of Maine say the new healthcare law (The Affordable Care Act or “Obamacare”) will force them to provide all school employees who work at least 30 hours a week with affordable health insurance by January 2014, or pay tens of thousands of dollars in government-imposed penalties, reports the Kennebec Journal.
In other words, many schools will soon have to spend even greater portions of their budgets on employee labor costs instead of student programs.
For instance, Maine’s School Administrative District 58 currently has 24 school employees who work at least 30 hours a week but don’t receive health insurance from the district.
“My understanding is if we do not offer it to those people who are eligible, the penalty is about $2,000 per year, per employee that is eligible,” District 58 business manager Luci Milewski told the Journal.
If the district decides to provide those employees with health insurance, it will have to make sure the insurance option is considered “affordable” for their employees, “a term the law defines as costing no more than 9.5 percent of an employee’s income,” the Journal reports.
If employees are not offered an “affordable” option, the district would have to pay a $3,000 penalty for each employee who chooses to forego the district’s plan in favor of one offered through the health care exchange system (which must be established as directed by the Affordable Care Act), reports the news site.
“Do we choose to make it affordable or do we choose to pay the penalty per employee?” Milewski asked.
Some district leaders say the new law won’t affect them, since their employees are already receiving health insurance.
But all other school district leaders will be faced with three decisions: They’ll either provide “affordable” health insurance for all eligible employees (a major expense), pay the government-imposed penalties (thousands per employee), or cut the hours of many school employees to under 30 so they don’t qualify for the new entitlement.
Considering that many school employees belong to unions and have collectively bargained contracts, school leaders might find it very difficult to cut employee hours.
If school officials decide to provide insurance or pay the penalties, it will drain tens of thousands of dollars from their already shrinking budgets. Many district leaders will have no choice but to cut some teaching positions or student academic programs in order to pay for the new health care benefit.
President Barack Obama is already pushing for a $30 billion K-12 school bailout to prevent teacher layoffs caused by the weak economy.
But more and bigger education bailouts will be needed once the Affordable Care Act takes root in January 2014.
Providing health insurance to all may be a laudable goal, but it’s going to come at a very steep price, as some school leaders are beginning to discover.