Did Teacher Raises Get Eaten by Health Insurance Hikes?

Though education employees haven’t yet received a paycheck with that newly-approved raise, they’ve already been told they’ll pay more for health insurance beginning October 1.

Raises also go into effect on October 1.

Education employees making $75,000 or less, assistant principals, and principals will receive a 4% raise. Education employees earning more than $75,000 received a 2% raise.

Using the reported average teacher salary of $48,193, that means on average, teachers will receive a $1,927 raise for FY16, or $161 per month, before taxes.

The last time public education employees received a raise was in FY14 when a 2% raise was given, which was reportedly a wash due to health insurance premium hikes that year as well.

At the time, House budget chairman Rep. Bill Poole (R-Tuscaloosa) told al.com’s Mike Cason, “A 4 percent pay raise is a healthy pay raise. We haven’t been able to accomplish that in some time based upon the economic downturn that we’ve experienced. So I’m very pleased we were able to do that.” Regarding the different percentages, Poole added, “We prioritized classroom teachers and support staff, those people who are in those classrooms, in those lunchrooms, on those buses every single day.”

Though teachers do have something to celebrate, for some, much of that raise could be eaten up with health care premium increases approved by the PEEHIP board in a 7-6 vote at the end of April. PEEHIP is the Public Education Employees’ Health Insurance Plan.

After the House approved raises in early March, Alabama Education Association (AEA) lobbyist Susan Kennedy told Brian Lyman of the Montgomery Advertiser she was concerned the PEEHIP board might raise premiums.

The legislature passed a resolution requesting the PEEHIP board not raise premiums, saying the intent of providing the raise was to “provide a net increase in take-home pay for all public education employees.” The resolution was only a request, though, and doesn’t have the force of law.

The PEEHIP board is separate from the state legislature, but the board’s decision to increase premiums impacts the net income from the raise.

The PEEHIP board approved monthly increases of $15 for individual coverage and $30 for family coverage. In addition to the family increase, if a spouse will cost an additional $50 per month. Current monthly costs are $15 for individual coverage, $177 for family coverage and $25 for the spousal surcharge.

PEEHIP issued a statement about the premium increase to members telling them discounts are available for members at certain income levels. The statement in part, reads:

“The salary increase granted by the Legislature should provide significantly more income than these increases in PEEHIP costs, and the cost impact would be further reduced by the premium discount offered through PEEHIP’s premium reduction program for eligible members. For example, under the program a member with a family of four and an income of $24,000 per year would pay only 50% of the monthly premium and spousal surcharge amounts, and the same member with an income of $36,000 per year would pay only 60%. It is also important to note that premiums for active employees are not subject to income tax, so the impact on their take home pay will be less than the amount of the premium increases.”

Though PEEHIP’s statement assures raises won’t be eaten up by premium increases, AEA President Sheila Remington told television station WAFF that was not the case saying, “With this increase in PEEHIP, many of our members are not getting a raise.They’re getting less money.”

The AEA is rallying its members to contact the seven members of the 14-member PEEHIP board who voted to increase premiums to tell them “enough is enough”.

Interim State Superintendent Dr. Philip Cleveland is a member of the PEEHIP board, but abstained from the vote. Asked why he abstained, Communications Director Malissa Valdes-Hubert provided this statement:

“Dr. Cleveland’s fiscally conservative views on issues related to the vote led him to abstain. He wants to preserve future funding for educators’ benefits; but does personally understand the hardships that educators face regarding the costs of benefits. Reserves in the PEEHIP Trust Fund must be maintained to ensure that benefits are continued at the same level. Dr. Cleveland was also very supportive of support personnel in the meeting’s discussions as they face impacts as well. Dr. Cleveland plans to work with the Legislature to find a long term solution to the issue of benefit funding rather than putting a band-aid on it.”

Valdes-Hubert added that premiums for Alabama’s PEEHIP members are lower than other southern states. The chart below was provided to the PEEHIP board at the April 27th meeting.

For every public education employee that has health insurance coverage, the monthly cost paid by school districts will rise from $780 to $800. This year, that will amount to more than $900 million.

According to information from PEEHIP, there are 97,550 active members in FY16.

Here’s a look at historical figures for PEEHIP from the Alabama Legislative Fiscal Office’s 2016 Budget Fact Book.

Source: Alabama Legislative Fiscal Office 2016 Budget Fact Book

The only real way to figure it out if premiums are offset by the raise is to do the math.

Please let us know if you are a public education employee whose raise is going to be offset by the rising cost for premiums.