2nd school district to outsource Takes step to avoid cost of Care Act
BY BRIAN WALLACE, Staff Writer
Another Lancaster County school district is "outsourcing" a large group of employees to avoid the cost of complying with the Affordable Care Act.
Penn Manor School District Monday approved an agreement with Substitute Teacher Service to have STS provide 96 special-education classroom aides at district schools next year.
Penn Manor also shifted its substitute teachers from the district's payroll to STS's.
Last week, Eastern Lancaster County School District approved a similar agreement to outsource 89 food service workers and classroom aides through STS.
The moves by Elanco and Penn Manor are the first of their kind by county school districts.
Jay Godwin, STS president, said he's not aware of any other county school districts currently considering a similar outsourcing arrangement, but he believes more will follow the lead of Elanco and Penn Manor.
"I believe these guys are ahead of their time, and this is the way things are going to go," Godwin said.
Districts are under pressure to cut costs in the face of rising pension and health care costs and concerns about the financial impact of Obamacare, he said.
The outsourcing was prompted by mandates in the Patient Protection and Affordable Care Act that will force public schools to provide health care coverage to all employees working more than 30 hours per week beginning Jan. 1.
The staff members at both districts currently work fewer than 35 hours per week and don't receive coverage.
The mandate would have forced Penn Manor to add 30 aides to its health insurance plan at a cost of $9,800 per individual and $23,000 for a family, said Chris Johnston, the district's business manager.
Penalties for not providing the coverage are steep, and Elanco officials feared the district would face fines of up to $600,000 if any of its employees without health care coverage exceeded the 30-hour threshold.
The outsourcing spares school districts from paying into a pension fund for the affected workers, who will no longer be contributing to the Pennsylvania School Employees Retirement System.
Elanco expects to save about $125,000 in PSERS contributions, and Penn Manor will save more than $115,000.
District officials said they acted not so much to cut costs but to avoid increased expenses under Obamacare.
"The Affordable Care Act is a misnomer," said Penn Manor Superintendent Mike Leichliter. "It's proving to us to be anything but affordable."
The school districts cannot guarantee the displaced workers will be hired by STS, but Godwin said anyone who wants a job with his company will have one.
Penn Manor officials met with the affected workers April 18 to explain the upcoming changes. Leichliter said some employees were upset, saying they felt as if they would no longer be "part of the Penn Manor family."
"I can't blame them for being upset," he said. "We're going to work hard to make sure they feel they're part of the team."
Under the outsourcing agreements, STS will provide on-site supervisors at both school districts. It also will handle all paperwork, clearances and worker's compensation claims for the outsourced employees and provide them with required training.
The classroom aides and cafeteria workers, who currently earn $9.90 to $17 an hour, will get raises of up to 2 percent as STS employees. Substitute teachers will continue to be paid the rate of $100 per day.
STS is establishing a 401k retirement fund for the outsourced workers, and they will be offered employee-paid health insurance.
Correspondent Elaine J. Jones contributed to this story.