9/7/07

School union demands $50 million payoff

Oregon School Employees Association has served notice it may sue all 95 school districts whose employee health coverage has been provided by a trust run by Oregon School Boards Association.

The dispute is over $50 million in reserves held by the school boards group, which OSBA plans to keep as districts switch to a state-run health insurance pool.

The school employees union, which has about 20,000 members statewide, contends the money legally must be returned to school employees or used to cut their health care costs. But OSBA officials have said the money is being kept to help districts with long-term costs of health insurance and with governmental policy.

The two groups are often work together in Salem, advocating for education reforms and funding, even as their respective constituencies face each other across bargaining tables in school districts all over the state.

But the health insurance issue has exposed deep rifts in their alliance.

The employee association was one of the key groups advocating for a statewide health insurance pool for school employees.

The school board association fought against the statewide health insurance pool -- in part because the group has had its own health insurance pool, which covered about 65 percent of the state's school districts. Revenue from running the pool provided a healthy percentage of the OSBA's operating budget.

But legislators eventually approved the state-run pool, which nearly every district in the state will be required to join by 2010.

The school board then bowed to the inevitable and announced that it was shutting down its own operation.

The $50 million in reserves was left over from the school board's pool, and sparked controversy almost immediately.

OSBA announced this spring that the money would be saved for the future instead of being used to buy down the final year or two of rates for its members. And school districts were asked to absorb a higher-than-expected 18 percent increase in health care coverage costs, much higher than the percentage increases of recent years.

But the announcement this week that legal action could be looming raises the dispute up a notch, especially since individual school districts -- the school board group's members, in other words -- are targeted.

"(This) will hopefully get the attention of school board members throughout the state and move them to...do what is right, not what is self-serving," said Merlene Martin, the employees' union president.

Kevin McCann, executive director of the OSBA, said his board members will meet next week to consider the issue, but that the education communities' larger focus should be on how to make the new statewide pool work to contain spiraling health care costs.

"Our board to date has stood by their decision (on the reserve funding)," McCann said. "We know that the actions our board took on this have put school districts in an awkward position. We are concerned and will do what we can to help."

(blog.oregonlive.com)

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