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Education Minnesota urges governor to sign bill saving schools hundreds of millions of dollars

Fri, May 7th, 2010
Posted in Education

ST. PAUL, Minn., May 7, 2010 - A bill that would save Minnesota schools hundreds of millions of dollars while improving health insurance for thousands of school employees now awaits Gov. Tim Pawlenty's signature. The bill, which creates a statewide health insurance pool for all school employees, passed both the Minnesota House and Senate with bipartisan support this week.

"At a time when schools are scratching for every dollar, this bill is a lifeline," said Education Minnesota President Tom Dooher. "This bill saves schools money without cutting a single education program or eliminating any schoolroom jobs. Schools desperately need every dollar we can find to educate our children. These savings could be invested in students and classrooms instead of paying for health insurance. This bill is the kind of common sense reform we need in Minnesota."

A study by the office of Minnesota Management and Budget found savings to school districts of $190 million dollars in just the first three and a half years if the bill becomes law. School employees would save an additional $76.9 million in their premiums, according to the MMB.

By comparison, if a second Race to the Top application for federal education funding were successful, it would bring in less money ($60 million to $170 million) over a longer period (four years).

"Minnesota schools, like everyone else, are suffering under outrageous increases in the cost of health insurance," Dooher said. "This a major threat to education in Minnesota. Districts that can't afford to offer decent health insurance will find it difficult to attract and retain quality teachers."

The MMB report found Minnesota school districts and their employees together paid almost $1 billion for health insurance in 2008. That figure is now believed to be $1.2 billion annually. The report calculated total savings to Minnesota schools of $190,241,000 by the end of FY 2014 (January 2011 through June 2014). That averages slightly more than $1 million per week. The bill's author, state Sen. Scott Dibble, has predicted the measure would save $1 billion in 10 years.

Health insurance costs have skyrocketed in most Minnesota school districts in recent years. Premium increases of 20 percent or more in a single year are common. In Minneapolis, premiums jumped 15 percent this year alone.

Many teachers all over the state now pay $1,000 or more a month in premiums for a family health insurance plan. The school portion of the premium is that much or more. Rural districts are hit particularly hard.

"Several districts can't even offer insurance any longer because it's too expensive," Dooher said. "That number will grow if we don't do something. Thankfully, this bill gives us the power to solve the problem."

The bill would stabilize the health insurance system for schools and employees by putting all Minnesota school employees into the same pool for health insurance. All school employees would be enrolled in health insurance through a program administered by Minnesota Management and Budget. The program would be very similar to the current Public Employees Insurance Program (PEIP), and would use the same method already used to insure state employees. Employees would be able to choose from a variety of health plans.

Money would be saved in four main ways:

• Better bargaining power for health insurance coverage.

• Better buying power for prescription drugs.

• Streamlined administrative efficiency.

• Competition among insurance providers.

Districts that are already self-insured and feel they can make a better deal for health insurance on their own can opt out of the plan.

According to the MMB report, here's the savings breakdown to schools.

FY 2011 (January 2011 - June 2011) $10.6 million

FY 2012 (July 2011 - June 2012) $22.9 million

FY 2013 (July 2012 - June 2013) $59.7 million

FY 2014 (July 2013 - June 2014) $96.9 million

About Education Minnesota

Education Minnesota represents 70,000 professionals working together for excellence in education for all students. Education Minnesota's members include teachers and educational support professionals in Minnesota's public school districts, faculty members at Minnesota's community and technical colleges and University of Minnesota campuses in Duluth and Crookston, retired educators and student teachers. Education Minnesota is affiliated with the American Federation of Teachers, National Education Association and AFL-CIO. More information about Education Minnesota is available at

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