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Bargaining Could Save Money

March 10, 2011 By Ben Hanson, Policy Associate

We’ve proven time and time again in this country that labor and management can work together to reach deals that ensure fair worker benefits and wages and help a company or public entity operate cost efficiently. It’s called bargaining.

But in an effort to consolidate more power at the top to limit high-income earners’ tax burdens, conservatives want to abandon a successful model that has helped build America’s middle class.

Instead of scraping a proven method that benefits both labor and management, we should expand it. Remember, to bargain you need leverage. Labor has many strong points it uses to leverage a fair deal for workers—skill level, professionalism, commitment to safety and size.

Public and private entities can pool the size of their labor forces to bargain for a better price for things like health insurance, a major worker benefit driving costs.

One current example is the Operating Engineers’ Union representing Minnesota and the Dakotas, Local 49. Its size, nearly 33,000 members and their families, allows it to better negotiate for many of the health and wellness services it offers. Other prevention and care coordination help manage costs as well. Again, it’s through smarter management and expanding the right kind of care, not just slashing benefits that companies and public entities can gain cost efficiencies.
Perhaps now is the time to revisit an idea for delivering cost effective medical coverage to Minnesota’s school workers. Minnesota has about 200,000 or so school employees, many of whom are insured by their districts. Instead of being able to buy insurance with 200,000+ members of purchasing power, each district has to find insurance on its own, limiting the risk pool and weakening purchasing power.

Legislation passed in 2007, 2008 and 2010 to allow schools to create one large pool, giving educator's bargaining power with coverage providers. This would have been especially helpful for rural districts, which tend to pay higher premiums because of their lower density.

But then-Governor Tim Pawlenty vetoed the insurance pool bill all three times, citing concerns about the cost of insuring retirees and the need for a mandate that he felt would take control away from local school districts.
Ironically, local school districts have been losing more and more decision making power as they lose inflation-adjusted state funding. Budgetary leveraging would give educators, school boards and the communities they serve a better financial footing.

The Minnesota Management and Budget Office issued a 2010 report finding education employees would save $77 million statewide and Minnesota would save $190 million in the first three years of the plan's implementation, in the "best case scenario."

According to a MinnPost story, "Management and Budget would oversee the program, which would offer school employees essentially the same benefits now offered to state employees under the Public Employees Insurance Program."

While some metro area districts were skeptical of the plan during the 2010 legislative session, according to a Star Tribune article written at the time, it has strong advantages for rural schools, and is a creative idea worth further exploration.

Conservative claims about belt tightening are short sighted. Schools have tightened their belts, with four percent inflation-adjusted revenue declines over the last decade. The belt-tightening line excuses policymakers from acknowledging the complexities in rising educational costs. It forces polices like wage freezes and merit pay based on a high-stakes test to control costs.

To grow our way out of the budget mess with better schools and shared prosperity, we must consider creative approaches to benefits like health care savings. We can’t just cut and expect the private sector to take care of things with something as important as education. 

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