Lawmakers skeptical of proposed K-12 efficiency savings
Topeka ? Several members of the House Appropriations Committee said Monday that they are skeptical about some of Gov. Sam Brownback’s proposals to cut costs in K-12 education by adopting recommendations from an efficiency study the Legislature received last year.
Among those are recommendations to put all teachers and other school employees in Kansas in a single, state-run health insurance plan that would only offer low cost, high deductible policies, and to centralize all school district purchasing within the Kansas Department of Administration.
The governor’s budget proposal assumes those two actions will save $47.2 million in the upcoming fiscal year, and $89 million the following year.
Rep. Larry Campbell, R-Olathe, who chairs the K-12 Education Budget Committee, said Monday that he and others on the panel are not fully convinced those estimates are realistic, or that the policies themselves are advisable.
“At this point in time, we’re noting those as our concerns as far as the governor’s recommendation (is concerned),” Campbell said.
Campbell’s committee is mainly in charge of crafting a proposal for a new school finance formula. But it also serves as a kind of subcommittee to the full Appropriations Committee about the proposed budget for K-12 education.
On Monday, he gave the subcommittee’s recommendation just for the internal operations of the Kansas State Department of Education, which is about $46 million a year — only a small fraction of the $3 billion a year that goes to funding public schools.
Earlier in the session, Campbell noted, his committee held a hearing on the idea of centralizing school district purchasing.
“What came out is the fact that many, or most school districts are already in a consolidated effort to purchase,” Campbell said. “They can purchase right now from the state, and some have. I guess to be just general, testimony came out that they’re probably already getting the lowest price.”
The efficiency study was conducted by an outside consulting firm, Alvarez and Marsal, in 2015. Its report, delivered the following January, made 105 recommendations for savings throughout state government that officials from the firm said could save the state $2 billion over five years.
Campbell, however, said he was surprised to learn that when it examined purchasing policies among the state’s 286 school districts, it did not talk with many of the state’s largest school districts.
In addition, he said, “there was no analysis given to the counter harm it would do to local vendors and your local community if you would initiate this.”
Mark Tallman, a lobbyist for the Kansas Association of School Boards, said some school districts routinely buy items from local vendors as a way of reinvesting in their communities.
“The classic example is always, you can buy fuel through the state or another purchaser, or you can buy it from the local co-op who’s there to service your buildings and support your district,” he said. “That’s the trade-off.”
Of even more concern, however, was the plan for consolidating all school district employee health plans into a single, state-run health plan.
Campbell pointed to a recently completed Legislative Post Audit study, which said it probably would not be possible to implement such a plan in the upcoming year. In addition, that study found that although some savings could be achieved with a single health plan, it said the estimates assumed in the governor’s budget proposal were “aggressive.”
That report estimated that a consolidated plan could save about $63 million a year in health care costs for school districts. But about $25 million of that would actually be “cost shifting” by reducing benefits and increasing the premiums and copays for employees.
The Lawrence school district would be one of the districts affected by that change. Under current law, health insurance and other fringe benefits are items that must be negotiated between districts and their local teachers unions.
The Lawrence district currently offers a self-funded plan in which employees do not pay premiums for their own coverage, although they do pay if they want to add their spouses and children to the policy.
Laurie Folsom, president of the Lawrence Education Association, which bargains on behalf of teachers, said young, single teachers would probably be affected the most by switching to a state-run plan.
“Young teachers are paid the least and have the least amount of due process protection, so that would be problematic,” she said. “It would definitely put a burden on the people who can least afford it.”
The Appropriations Committee is still in the process of putting together a budget bill that would fund state agencies for the next two years. That process includes receiving reports from all of its various subcommittees. The concern expressed by those subcommittees often carry considerable weight when the full committee begins compiling the final bill.
The committee is expected to begin debating the final, complete bill sometime next month.