Shared sacrifice is only way to maintain workforce (Peter Luke column)

Peter Luke | Bridge Magazine By Peter Luke | Bridge Magazine
on August 28, 2011 at 6:10 AM, updated August 28, 2011 at 11:04 AM

Say your employer just boosted your health insurance costs ... again. Add up the premium sharing, the co-pays and the deductibles and it’s now 30 percent of the total.

Now suppose because your local school district just just laid off two dozen teachers, the new young instructor you hoped your fourth-grader would have is headed to North Carolina. And the teacher she will have instead will lead an expanded classroom of 30 kids.

Combine in one family the impact of more expensive private-sector health benefits with cutbacks in government services and the status quo makes less and less sense. Which is: At the public-sector bargaining table, it’s been a lot easier to layoff employees than to secure financial sacrifice from everyone.

That’s going to change when Gov. Rick Snyder signs Senate Bill 7. It requires most public workers, school employees in particular, to pay more of their health insurance premium than they do now.

There are two options. They'll pay either every dollar above a fixed amount employers will pay, or they'll be liable for 20 percent of the total.

What Republican lawmakers crafted is less a threat to collective bargaining than it is an example of progressive employment policies in other countries.

European unemployment rates are lower than in the U.S. because instead of laying off massive numbers of workers -- thus requiring more hours from those who remain -- every worker simply works fewer hours. And takes home less pay.

The same principle applies here. The workforce is maintained when every worker makes some sacrifice.

The choice between shared sacrifice and layoffs is on the table during current talks between the Snyder administration and state employee labor unions. (Senate Bill 7 doesn’t apply to state civil servants, whose benefits have the constitutional protection of the Civil Service Commission. For all other state employees -- judges, lawmakers, staff for the governor and Legislature -- the law will apply).

Expiring contracts require state civil servants hired after April 2010 to pay 20 percent of their premium, but the vast majority hired before that date pay 10 percent.

Snyder has promised layoffs if he doesn’t get $145 million in concessions. Bringing everyone to 20 percent, according to the Senate Fiscal Agency, gets Snyder the number he wants.

Opposing Democrats -- who essentially voted not to pay 20 percent for their own health insurance -- called the measure an assault on collective bargaining and local control.

But school districts and teachers can still still bargain over what health insurance to have and which benefits it will provide. Arguably, it enhances bargaining if the rank-and-file opt to accept less-expensive insurance now that they’re required to pay a bigger share. As employer costs are also pared, that leaves more money for wages that form the foundation of pensions.

As for the local control argument, municipalities can opt out. (Admittedly, that could be tough since it requires a two-thirds vote of the governing board.) And how much “control” local schools should have is debatable given about two-thirds of their budget is provided by the Legislature.

In the end it again boils down to this: Does it make sense to lay off young teachers in order to preserve benefits for older colleagues? No.

But Senate Bill 7 preserves jobs only to the extent the cost savings don’t provide a pretext to cut state aid even more. A $155 million pool of money tossed in by Republicans as the budget was finalized will be available to districts that cut costs. But the funding, designed to patch a slash in per-pupil funding, has been promised for one year only.

Absent a long-term commitment to repair finances of both schools and municipalities, there will be calls for still more sacrifice or more depressing rounds of layoffs.

The concessions obtained through Senate Bill 7 were part of a “grand bargain” at the state level. Since taxpayers would never endorse a tax increase if they thought the revenue was funding public employee benefits more generous than their own, those benefits would have to be addressed before taxes were.

Well, now those benefits have been addressed.

And while lawmakers say the money saved will stay in districts, schools have reason to be wary given the use of $400 million in school aid fund dollars for the rest of the 2012 state budget.

As revenues grow, is that money going to be restored? At some point, the tax base is going to have to expand. Will it?
