When Klein ISD joined the Teacher Retirement System’s health care coverage plan, TRS-ActiveCare, in 2012, the district’s goal was to provide better coverage and lower premiums for employees compared to staying self-insured as a district.
But under TRS’s health care, the district has seen premiums increase in recent years across all of its plans. KISD staff enrolled in the TRS-ActiveCare 1 HD plan that covers only the employee saw their own annual contributions to their plans increase from $360 to $672 from 2016-17 to 2018-19, and the district is further cutting benefits following its failed tax ratification election in June.
“We’ve been seeing … continued increases in premiums,” KISD Chief Financial Officer Dan Schaeffer said. “Nearly 90 percent of the districts [in the state]are [enrolled]in TRS-ActiveCare, so we’re all dealing with the similar issues.”
SISD and CFISD have also had increases to their annual health care premiums, and officials with both school districts have attributed rising health care costs as a factor for employee turnover. For instance, CFISD’s $1,800 annual employee contribution to TRS-ActiveCare 1-HD—the minimum amount required—and the state’s $900 annual contribution have remained stagnant since 2011, while employees have picked up more costs.
“[Employees] love the district … but we have a hard time holding on to some employees because of health care,” Superintendent Mark Henry said at a board meeting in October. “That’s become our biggest crisis when it comes to retaining quality people.”
As costs for health care coverage are growing and the state’s contribution remains stagnant, local school districts are raising concern over the plan’s affordability. Some officials are turning to the 86th state Legislature for relief, which includes proposed bills that would allocate more funding toward public education as well as a proposal to create a committee to review the affordability of TRS-ActiveCare.
Meanwhile, TRS-ActiveCare representatives said premiums are set to reflect the actual health care use of enrollees by plan and coverage tier, while costs for health care have also been increasing across the board.
“The price of health care continues to increase—this is not unique to TRS-ActiveCare,” TRS’s Chief Health Care Officer Katrina Daniel said. “All employers that provide health benefits are experiencing the rising cost of health care.”
Rising costs for Klein ISD
TRS-ActiveCare was established by the state in 2002 to offer affordable health insurance to small districts that had few options. Although enrollment is optional for districts with more than 500 employees—such as Klein, Spring and Cy-Fair ISDs—they cannot opt out once they have joined the plan.
“We haven’t gone out for bid on our own because we are not allowed to get out of [TRS-ActiveCare]. At this point we don’t have an option to get out,” Schaeffer said.
Three plans for TRS-ActiveCare exist: TRS-ActiveCare 1 HD, which has the highest deductible; TRS-ActiveCare 2, which closed for new enrollment September 2018; and TRS-ActiveCare Select/ActiveCare Select Whole Health, which has the second highest deductible.
In KISD, 4,792 employees are enrolled in the state’s health care plan, and 70 percent of those are employees enrolled in TRS-ActiveCare 1 HD, Schaeffer said.
Between academic years 2014-15 and 2015-16, KISD increased its contribution across all its plans—and employees consequently saw a drop in their premiums—due to enrollment growth and increased state funding for the district, Schaeffer said. For instance, KISD increased its annual contribution from $3,480 to $3,732 for employees insuring only themselves through TRS-ActiveCare 1 HD.
However, from 2015-16 to 2017-18, the district maintained its contribution rate as funding became stagnant, and employees had to pick up more of the tab, Schaeffer said.
“Even with adopting only a 1 percent salary increase for 2016-17 and 2017-18, the district still budgeted a $21 million deficit in 2018, so we literally could not get any further benefits added unless the board wanted to create a further deficit,” he said.
After the district’s failed tax ratification election in June—which would have raised the district’s tax rate by nine cents—KISD was forced to cut its contributions for health insurance.
Now the district is moving toward a flat monthly contribution of $311 for all plan types beginning next academic year, meaning all employees except those enrolled in Employee Only TRS-ActiveCare 1 HD will see further cuts to their paychecks. The move will save the district $3.4 million annually, Schaeffer said, and KISD would still be contributing above the state-required minimum monthly contribution of $150. The state provides a $75 monthly insurance allotment per educator.
Schaeffer said he is enrolled in employee/family coverage but then chose to put his spouse on a different health plan while keeping his children enrolled in TRS-ActiveCare to help offset the rising premiums.
“The decision had to be made of how you cover your family,” he said. “No one was happy about [the cuts], but obviously we have to remain financially stable to continue.”
Effects felt in Spring ISD
TRS-ActiveCare does provide school districts with certain benefits compared to being self-insured. SISD Chief Financial Officer Ann Westbrooks said the primary advantage to being part of the plan is the ability to manage costs.
“With this plan, the district is only responsible for paying the board-approved contribution to the health plan; we are no longer at risk of paying high claims,” she said.
But SISD, which joined the plan in 2011 after being self-insured, has also seen growing health coverage costs. The employees’ annual contribution totaled $11.7 million in 2014 and increased to $15.6 million in 2018. The districts’ annual contribution rose from $7.7 million to $9.5 million in those same years, Westbrooks said.
TRS officials said total employer and employee contributions are not entirely representative of increasing costs. For example, during the time SISD increased its contribution by 15 percent between 2015 and 2018, the number of SISD’s employees enrolled in TRS-ActiveCare also increased by 15 percent, Daniel said.
“The majority of the employee increase … is also due to more employees enrolling in coverage,” she said. “If you adjust for the increase in employee enrollment, the portion due to rising health care costs is less than 5 percent per year on average.”
Still, employees are feeling the effects. Karen McDougald, an SISD instructional specialist who is enrolled in TRS-ActiveCare 2, said she is satisfied overall with her health coverage plan but has noticed increasing costs.
“My only complaint is the premiums keep going up,” McDougald said. “This year, … my paycheck actually went down.”
It is unclear if rising premiums for health coverage plays a role in teacher retention, as Westbrooks said SISD’s teacher turnover rate has continued to improve over the past several years. However, some discontent does exist, according to Westbrooks.
“Our exit interview surveys show about 30 percent dissatisfaction with our health benefits,” Westbrooks said.
At their March 19 board of trustees meeting, SISD officials also discussed the rising costs for teachers enrolled in TRS-ActiveCare as well as for TRS-Care, the health insurance plan offered for retired teachers.
“[TRS-ActiveCare] is sometimes a killer for our teachers and for our other personnel who qualify for this program because sometimes almost their whole paycheck goes to health care costs,” said Deborah Jensen, SISD board member and retired teacher. “We’re asking for teachers to have that ability to choose other health care providers.”
Adjusting premiums is the sole mechanism TRS has to generate additional funding for TRS-ActiveCare, as the minimum state and employer contributions have stayed at $225 combined per employer per month since 2002, Daniel said.
Daniel said TRS continuously monitors medical and prescription drug claims to determine how much of an increase in revenue is needed for the upcoming plan year, which restarts annually Sept. 1. Last April, TRS board of trustees adopted staff recommendations to make medical and pharmacy benefit changes that reduced the average premium increase to 5.7 percent, and Daniel said she does not expect this to increase next year.
However, proposed legislation may bring changes to the state’s health care system. On March 7, state Rep. Jeff Leach, R-Plano, filed House Bill 3987, which would create a committee to study and review TRS-ActiveCare, including the financial soundness of the plans, the cost and affordability of plan coverage and alternative mechanisms for offering health benefit plan coverage. The bill will also extend the study to include TRS-Care as well, a representative from Leach’s office said.
“Session after session, we have worked diligently to increase funding for TRS-Care and TRS-ActiveCare … yet our teachers and retirees continue to be strapped with skyrocketing healthcare costs,” Leach said in an email. “House Bill 3987 works to provide a long-term solution for TRS-Care and TRS-ActiveCare by providing bold, systemic reforms to get the funds back on track towards long-term solvency.”
The committee would include members appointed by the governor, the lieutenant governor, the speaker of the House of Representatives and members employed by TRS and its board of trustees. As of late March, the proposed bill had not yet left the House.
Other legislation filed that could boost school funding in general includes House Bill 3, introduced by Public Education Chairman Rep. Dan Huberty, R-Houston on March 5, which aims to restructure the state’s school finance system by directing $9 billion towards Texas school funding and lowering school property taxes.
The bill does not have a direct influence on teacher health care, but increased funding for districts and teacher’s pay could affect their health care costs, said a representative from the office of Rep. Sam Harless, R-Spring, who co-authored the bill.
Harless has also co-authored HB 9, which relates to the contributions and benefits under TRS. Under HB 9, the state would be required to continue a one-time supplemental payment to TRS. The amount and timing of the payment would be determined by the TRS board of trustees.
“While HB 3 is a comprehensive education reform bill, it puts more money back into our districts and our classrooms,” Harless said. “Other bills are more focused on ancillary teacher issues, such as HB 9 … which deals with changes to teacher retirement.”