Published Online: November 6, 2008
Published in Print: November 12, 2008, as Union Proposes Taking Over Salaries, Health Premiums

Union Proposes Taking Over Salaries, Health Premiums

Michigan local would divvy up that share of district's budget.

A teachers’ union in Michigan has proposed an innovative approach to school budgeting that, if approved, experts say would likely be the first of its kind in the nation.

Under the proposal, which district officials are considering, the Grand Rapids Education Association would assume responsibility for managing a set proportion of the 19,000-student school system’s budget. With that guaranteed cut, the union would oversee the tricky and often contentious process of setting raises and also would manage teachers’ health-care benefits.

“We’re saying to the district, ‘Look, give us an actual budget, and we’ll live within our means,” said Paul Helder, the president of the National Education Association affiliate.

If successful, the approach could serve as a model for districts elsewhere, according to experts on collective bargaining issues.

“It may be once the initial logjam is broken, other districts and unions will be interested in looking at different ways of budgeting their always-limited resources,” said Julia Koppich, a San Francisco-based independent consultant known for studying teacher contracts.

Inevitably, the proposal’s future hinges on whether officials can agree on a proportion of the general education fund for the union to assume.

Although district officials have said they are “intrigued” by the overall concept, a spokesman indicated that officials have some concerns about the details—in particular the 57 percent figure the union has put forth.

“[The union’s] assumptions continue to be based on figures that are either not accurate, taken out of context, or simply not based on sound accounting practices,” John Helmholdt said.

Possibilities and Pitfalls

A declining student enrollment—the main determinant of state education aid—has gradually depleted Grand Rapids’ general education fund, exacerbating tensions between the district and union over salary negotiations.

Talks stalled earlier this year after the parties could not agree on teachers’ raises and health-care premiums, leading union leaders to threaten a strike. Contract negotiations are now in mediation.

Among the sticking points, state data show that Grand Rapids spends about 56 percent of its general education funds on instructional costs, including both teacher salaries and classroom supplies—a figure less than the statewide average of 59.5 percent.

Based on that data, the union has accused the district of shortchanging instruction. But administrators say Grand Rapids employs a larger number of noninstructional support staff members in comparison with other districts, reflecting its large population of students with disabilities.

The union’s proposal to direct 57 percent of the district’s general education fund to teachers’ salaries and health benefits would make long-term budgeting easier, as well as offer the union a blank state for revising the district’s compensation policies, Mr. Helder said.

Conceivably, he added, the union could offer a voluntary retirement program, create a profit-sharing initiative, or even abolish the traditional salary schedule altogether.

“The possibilities are limitless,” he said. “Really and truly there are no rules at that point, and members would have to make those decisions. I would guess that would be an interesting series of meetings.”

With bread-and-butter issues like pay and health benefits no longer formally subject to bargaining, future contract negotiations could focus on how to improve teaching and learning, Mr. Helder added.

But the union would also inherit a certain degree of risk under the proposal, said Arch M. Lewis, a research consultant for the Michigan Education Association. The state union backs the plan.

“If health-insurance costs just truly spiraled out of control, the reality is it’s going to be the union who makes the tough decisions about how you allocate resources between people’s salaries and the cost of those benefits,” he said. “The district is assuming no risk any longer for that possibility.”

Dollars and Percents

That reduced risk and the ability to avoid hot-button pay issues are the proposal’s primary benefits for the district. But those benefits would also carry a potential downside: The district would cede its ability to dip into the salary pot during tough budget times, Mr. Lewis noted.

Mr. Helmholdt, the district spokesman, said the proposal has some merit and comes as a sign of good faith from the union. “What is encouraging is that this is a unique proposal. It is completely different from what we have been negotiating,” he said.

Citing legal prohibitions on discussions about contract negotiations, district officials declined to elaborate on how they will respond to the proposal when negotiations resume Nov. 6. But they did intimate that the union’s 57 percent figure might be inflated.

Lisa Freiburger, the district’s chief financial officer, said the 57 percent proposal would not cover the salary and benefits of classroom aides who are considered instructional staff under state accounting rules, but are represented by other unions. It also would not cover other classroom costs such as textbooks, she said.

On the other hand, Mr. Helder countered, the GREA represents some noninstructional personnel, such as speech pathologists, and the figure would cover their salaries and health benefits.

Ms. Freiburger could not estimate whether the mismatches between union affiliation and accounting category might offset each other.

Observers say the accounting glitch is one of several that requires fleshing out. Don P. Wotruba, the director of government relations for the Michigan Association of School Boards, wondered about the political implications of having the teachers’ union assume responsibility for expenses elected officials normally oversee.

“When you turn over those tax dollars to a nonelected group, you really have accountability issues,” he said.

Mr. Helder would not rule out the possibility of a strike if the proposal is ultimately rejected, but he said his top priority is to secure a contract.

“It’s been quite a soap opera out here,” he said. “We’d like to get this behind us and start working together.”

Vol. 28, Issue 12, Page 7

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