PSEA goal of avoiding “excise tax” on benefits almost succeeds

The PSEA website has been encouraging members to write their congressmen to protect their health care plans from the excise tax promises in Obamacare on “cadillac” plans (yes — this is the same idea that John McCain put forth and was profoundly damaged by).   Nationally, a deal has been cut — read for the details…

 the excise tax was one of the bigger ones. Union leaders were able to soften the tax’s impact a bit: It won’t take effect until 2013; it will affect plans that cost more than $24,000 per family or $8,900 for individuals, up slightly from the levels in the Senate bill; those levels will be adjusted annually for inflation and adjusted additionally for plans that are expensive because they cover inherently expensive groups, and they won’t include the cost of dental or vision plans after 2015; plans worked out through collective bargaining will be exempt from the tax altogether until 2018; and by then, unions in collective bargaining agreements would be able to buy insurance through a new exchange system the legislation would set up, instead of going through employers. (In the years in between, unions could try to renegotiate their contracts to get higher wages instead of so-called Cadillac healthcare plans.) The changes mean the tax won’t raise as much money to offset the costs of the bill — the tax would raise $90 billion over 10 years, instead of $150 billion as the Senate bill had it.

By the way — just two years ago… June 2008

Providing tax credits of $2,500 to individuals and $5,000 to families as an incentive to buy health coverage.

This provision is not unlike the proposal first made by President Bush at last year’s State of the Union Address. The President called for ending the longstanding tax exemption consumers get on any health insurance benefits paid for by their employer. The President would replace that with a standard $7,500 deduction for individuals and a $15,000 deduction for families.

McCain would also end the employer tax exemption—meaning that if an employer spends the average $12,000 a year on family health insurance, the worker would now have a tax bill on the portion of the $12,000 of benefits paid for by the employer.

Like Bush, McCain would offer a personal tax offset, but he would do the new offset a bit differently than Bush.

McCain would give each single person a $2,500 tax credit and a $5,000 tax credit for a family who had health insurance. A tax credit means that when taxpayers calculate their taxes, instead of taking a deduction, as Bush would do, under McCain’s plan they would subtract the tax credit ($5,000 for a family) from their final tax bill (and they would likely be able to take advantage of the credit during the course of the year to pay their monthly premiums).

Advertisement

How state pensions affect us locally

Here’s the commentary on this topic as it applies locally– as Mr. Nunn has clearly articulated the problem at the state level.

TESD has nothing to do with setting pension rates. The Pennsylvania State Employees Retirement System (PSERS) is a bit like a state-sponsored social security for designated groups of state workers (who also are eligible for and pay social security). The Board of School Directors only negotiates terms of employment — not retirement eligibility. PSERS requires a percentage of compensation to be paid by the employee and the employer — exactly like FICA, but without an annual cap. So each raise for any employee requires additional contributions for FICA, Medicare and PSERS. (the state – yes, your other tax pocket [YOTP], refunds a portion of the contribution for FICA/Medicare).

Here’s the taxpayer’s problem: TE may well have enough “stashed” in fund balance to avoid any staggering tax increase to pay for the increased costs of the state retirement plan Mr. Nunn warns of, but the state doesn’t — so schools are not the only source of this shortfall. YOTP again. What generosity local boards offer to their employees becomes an obligation to the state forever.

Recently, TESD approved an across-the-board compensation increase of 4% for all administrators. Given the teacher’s contract, this was not an extraordinary salary increase. My concern, however, is that it was voted on and approved by the School Board through a consent agenda item in October. October 2008– to go into effect July 2009. (The vote took place several months before the Administration started to warn about the need for cuts due to revenue shortfalls). There has been no mention of merit increases, but the Administrative Compensation plan references them, so they may be yet to come. There are moves being made by administrators — retirements and new job descriptions. I ask that the Board of School Directors deal with these changes in a public motion, and not bury it in consent where we cannot be party to the deliberations. The burden of having your compensation voted on in public is certainly mitigated by tenure and pensions. Transparency should not be something the board fears.

 

Teacher Strikes in PA Jan 22, 2009

I recently shared this in an email with neighbors.

From a recent Chester County Action Alert:

Pennsylvania remains the “Teacher Strike Capitol” of the U.S. In the past 7 years, PA has had 82 teacher strikes, more than all other states combined, including two strikes here in Chester County.

 

Pennsylvania is one of 13 states that still permit teachers’ strikes. We are fortunate in TESD that we have not had to experience this, but as pressures on the economy increase, our starting salary for a teacher right out of college (which is now at $45.1K for a bachelor’s degree with no experience) may well reach a level where “just say no” to the negotiators results in a strike threat. Our current teachers work hard for their money – but 16 years of teaching puts you at our maximum salary – so a 38 year old reaches our “top step” and will still get raises every year from then on. And they get tenure after 3 years in public education. The old claim that teachers are underpaid is no longer relevant in our region. Teachers in TESD work a 7:35 day by contract for 190 days, and they all are eligible for a pension system that results in a pension of 2.5% of their final average salary for each year they teach . In other words: Start teaching at 22 years old and teach for 40 years — retire at 62 after a tenured career at 100% of the average salary of your final 3 years. (free of PA income tax). This year,TE’s most senior teachers earn in from $86.5 to $100K in this contract year– pay based solely on seniority and education. (difference between low and high is due to educational attainment). No one minds paying for great teaching. Negotiations, however, are not just about good teachers and experienced ones. At the end of this four year contract, our most senior teachers will earn salaries ranging from $90K to $110.9 depending on educational level, and newly hired teachers directly out of college will get a starting salary of $52.2 . Market presures and inflation are how Unions demand and boards grant annual increases in starting salaries. The market comes from neighboring districts who offer more salary to new recruits — so in effect boards bid each other up. The teachers across the state meet together every summer to set goals for negotiations and salary/benefit demands. Boards from varying districts do not typically share strategies.

The difficulty of strikes is that it costs your family and your children important educational time – but it does not cost a teacher in Pennsylvania a dime. Work missed is either made up by cancelled vacation time (winter/spring), adding days to the end of the school year (but still ending before June 30) or not made up – but teachers still receive their full salary. They are not docked for any time missed. Teachers are paid for a full school year at their full salary, whether or not the full year takes place. SO _- the decision to strike has no true economic cost to the striking employee. Likewise Pennsylvania requires all teachers to pay “fair share” Union dues whether or not they choose to join the teacher’s union. This bill advocating a “no strike provision” does not alter a union’s ability to collectively bargain – only to keep them from holding families hostage to wage demands by threatening the quality of a classroom education.

 

That sounds dramatic –but it should not. The PSEA (the PA teacher’s organization) is the largest lobbying organization in the state. These issues do not necessarily affect people who can afford their homes — but in this difficult economy, will that be true always? In this economy it may not be true now. Contracts are done years in advance.

Click on my CALL TO ACTION page to read a request for action from Stop Teachers Strikes.org. It is an opportunity to try to help Pennsylvania join the other 37 states in this country that recognize that wage and benefit bargaining should not affect time in the classroom.

 

I was on our local school board for 3 terms and negotiated with our unions multiple times. TE is fair – but the state organization PSEA does try to call the shots way too often. Right now, the ability to strike is NOT a local issue. (but the reality that the union can strike certainly influences the bargaining strategy of the Board of School Directors.) This is about the children in our state. Please take a moment and read about this bill – and if you agree, please write a letter and pass this link on.