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State of Ohio | Governor's Blue Ribbon Task Force on Financing Student Success

Committees

Operations and Efficiency Committee

January 12, 2004 Minutes

Committee members present were Chairman Walt Davis, Vice Chairman Dennis Woods, Richard Baker (for Jennifer Sheets), Robert Gardner, William Hartnett, Thomas Johnson, James Mahoney, Barbara Sprague and David Varda. Other Task Force members present included Chairman William W. Wilkins, John Brandt, Daniel Navin and Barbara Shaner.

Presentations:

Chairman Davis called the meeting to order at 10:05 a.m. He introduced Katherine Canada, the Project Director for the Governor's Commission on Teaching Success. Mr. Davis noted that Dr. Canada would provide an overview of the Commission's recommendations. After hearing from Dr. Canada the committee can decide what it wants to recommend that might build on the work of the Governor's Commission on Teaching Success.

Dr. Canada provided an overview of the commission's recommendations, including the rationales for each. She noted that several of the members of the Operations and Efficiency Committee also served on the Teaching Success Commission. Dr. Canada divided the commission's recommendations into four categories:

Recruitment and Retention

The impending retirement of the "baby boom" generation of teachers and principals will have a significant negative impact on all school districts. The shortage of mathematics, science and other areas of teacher shortage are going to be even worse in hard-to-staff school districts. Hard-to-staff school districts have a high percentage of people teaching outside of their fields, high turnover, low student performance, and a high percentage of students who are living in poverty.

The commission recommended focusing resources on hard-to-staff schools, since those were the ones that needed most of the work. Since prospective teachers are more likely to return to areas like those where they grew up, the commission recommended funding of "grow your own" strategies, including assisting under-prepared or non-teachers with getting their teaching certificates. The commission also recommended helping teachers to become principals.

Mr. Woods asked if this approach includes such things as scholarships for seniors. Dr. Canada responded that it does, but it has to go to people within the school district since this is a grow-your-own program. Mr. Davis asked how you keep these individuals from leaving. Dr. Canada responded that retention rates have shown that teachers generally stay where they start. By growing your own, you reduce the number that leave by taking people who care about their own locality.

Recruitment bonuses do not usually work in the long term as people who chase bonuses are the ones who are most likely to leave for other reasons. By giving this type of incentive you also can have the effect of generation wars. The old teachers are not earning the bonuses that new hires are receiving.

Dr. Canada observed that school districts also can improve retention by changing the school environments. Opt-in initiatives allow school districts to choose which initiatives they want to try. School districts should have the flexibility to choose which direction they want to go, following the strengths that they have. For example, a school might change to a flexible school year, stretching out the year so that there are more breaks, but having the school in session the entire year. This can give a more professional environment for the teachers than following the current agrarian school year. According to Dr. Canada, teachers at these "year around" schools say that they would never return to the old calendar.

Another way to improve a school's environment is to create smaller classrooms in larger schools. This opt-in approach to improving school environments is based loosely on a plan in Wisconsin called SAGE (Student Achievement Guarantee in Education). SAGE identified four factors that are needed for student success.

  1. Class size of no more than 15 to 1 in kindergarten through third grade
  2. Community-school collaboration (family involvement)
  3. Implementation of a clear rigorous curriculum
  4. Professional Development that is aligned with curriculum and the use of effective staff evaluation practices.

Since some of these components where already happening in Ohio, the commission did not adopt the entire SAGE package.

Another element to changing environment is to use funding from multiple sources. The rationale for combining funding is that medical, emotional, and physical needs can interfere with academic success. Students' needs are not segmented or fragmented, but funding streams are. With a blended funding model, the dollars would follow the child and not the agency. Mr. Woods noted that Barberton School District does something like this to bring social services agencies together for easy access for the schools.

The committee had a lengthy discussion of how teachers are paid in Ohio. Several members observed that the current teacher compensation method is not well matched to what we are trying to do. Dr. Canada noted that the Legislative Office of Education Oversight is charged in S.B. 2 with examining benchmarking to determine a new minimum starting salary for beginning teachers. Also included in S.B. 2 is a provision for pilots of new systems that are linked to standards-based evaluations that broaden the factors on which compensation is based. This includes career ladders, since just using education level and years of service is not enough.

Mr. Johnson asked if there are any data that show that a teacher gets better with more years of teaching. Mr. Gardner responded that it appears that teachers improve for the first five or seven years, but then plateau. Mr. Baker observed that information from Battelle for Kids will allow school districts to evaluate individual teachers based on their performance. Mr. Harnett opined that good teachers become better teachers if given a good climate, while the same might be true for poor teachers.

Mr. Mahoney observed that there is something wrong with our teacher compensation system since it is possible in this state for teachers to have the same qualifications but have a difference of salary in the range of $40,000.

Dr. Canada noted that S.B. 2 provides for pilot compensation programs, which will be funded as money becomes available. Additional money is necessary to support these pilots to reward all participants so the program has credibility. Mr. Gardner observed that the money would be provided to ensure that no one lost salary. Those who were doing the best would get paid the best.

Dr. Canada noted that salary received the most discussion on the Teaching Success Commission, but it was only one factor among many in job satisfaction. The professional environment and support systems were also very important considerations. Dr. Canada stated that the commission engaged in discussion of medical and dental insurance, but it was decided that was outside their scope of work. Tenure was discussed as a double edged sword. Administrators do not think of the loss of tenure as a way to get rid of teachers, but as a loss of the "golden handcuffs" that keep teachers with a school district. Dr. Canada opined that, even without tenure, it would still be difficult to fire teachers if you did not have stated standards by which to judge them.

According to Dr. Canada the real issue is clarifying expectations. To address the issue of clear, rigorous expectations, the Teaching Success Commission recommended the adoption of clear standards for what all teachers and principals should know and be able to do at all stages of their careers. School districts should develop a framework of essential criteria to follow when creating locally determined evaluation systems. Ohio does a good job at the beginning stages of a teacher's career in saying what needs to be done, but it becomes muddled or disappears completely when you look at what is expected at the later stages of a teacher's career.

Questions

Mr. Woods noted that many urban districts have high salaries, high poverty, low performance, and high turnover. How did the commission's recommendations deal with these factors? Dr. Canada responded that this makes their schools "hard to staff." All those recommendations are targeted specifically at hard-to-staff schools. School districts would be able to choose from a list of programs that they could use to try to retain teachers and provide matching funds. They also would receive funds from the state for those programs.

Mr. Gardner observed that the first five years in teaching is critical, because it is in that time that a teacher puts down roots. When people have the opportunity to leave a bad environment it is usually within the first five years. If you feel secure and feel that you have a voice in how things are dealt with, you will stay.

Mr. Davis asked whether it is too easy to get tenure. If we were to make it more difficult to obtain, would this provide more of an incentive to work hard to secure it? Mr. Davis suggested that schools could still use the "Golden Handcuffs" as a retention device for the best teachers, without having practically everyone in that special protected status. Dr. Canada replied that Ohio is a national model for our induction program. She added that, with the change in 2002 from certification to licensure, new teachers must demonstrate ability to teach before they receive their licenses.

After a lunch break, Mr. Davis introduced Scott Solsman from the Benefits Administration Services division of the Department of Administrative Services and Marianne Steger from the Ohio Civil Service Employees Association. The two described the process that Ohio employs to manage health care insurance costs.

Since 1989 Ohio has employed a separate labor-management committee to work with collective bargaining units in order to try to manage health care costs. In 1989 Ohio created the Joint Health Care Committee (JHCC), which recommends benefit changes, participates in health plan selection and recommends contract changes.

All the unions that represent state workers are represented on the JHCC. The structure is defined by the contracts between the state and the collective bargaining units. The committee has an equal number of management and union participants. The committee, which meets quarterly, is a work in progress. The goal of the JHCC is to make well-founded, researched recommendations to the Department of Administrative Services and to assist contract bargaining teams via "pre-bargaining." The JHCC has three subcommittees: planning, administrative, and communications.

The benefits of the JHCC are that it:

There are things that are win-lose within contract negotiations, but there are many things that are win-win. This process can really illuminate those items that end up benefiting all. If the plans are rational so that people use health insurance well, everyone wins. Wasted money in health care removes money that can be used for better health care or, in bad times, for employing additional people. There have been times when the union is in front of management on issues that might be wasting money that all feel could be better spent elsewhere.

The Planning Subcommittee chooses consultants and all health care providers. It researches health care strategies and has worked to develop disease management programs.

The Administrative Subcommittee monitors health plans for compliance with labor contracts, claim trends, customer service issues, health plan employer data info set, and health management programs. It has created new programs — in some cases, the first of their kind nationwide. The Administrative Subcommittee has impacted statewide or nationwide practices for vendors. It works to resolve system problems from a problem resolution approach, not an adversarial one.

The Communications Subcommittee reviews open enrollment material. It produces a newsletter and maintains a website. It surveys employees on how useful the information is.

Bargaining between Ohio and the union is interest based, in which both sides listen to each others' concerns. Both sides know exactly what possible changes cost or save. Since health care is so complicated, discussions begin about 10 months prior to formal contract negotiations. Mutual trust is a critical component of the JCHH process, as well as respect for each other's position. Actual bargaining is left until the very end, if needed.

The biggest union (Ohio Civil Service Employees Association) does its bargaining first, with health care starting before all other issues. All unions are part of the JHCC, so they are all working on health care early. The final product must be approved by the Ohio Civil Service Employees Association's (OCSEA) full negotiation team.

Communication with union members is extremely important so that everyone appreciates the current health care crisis. The potential for labor conflict is up due to the rising cost of health care.

By working together, the Ohio and employee unions save money. The JCHH is looking currently at joining a multi-state drug purchasing program. It has the potential to save a considerable amount of money because of the additional leverage given to a larger purchaser. The JCHH also has saved money through health management programs and requiring the use of generics drugs.

Mr. Solsman noted that it appears that the size of the employing entity does not have a big impact on the costs of health care insurance. Once you get businesses over about 12 people, there does not seem to be much of a cost savings. The easiest way to save money is to restrict choice in health care insurance.

Questions

Mr. Davis noted that there is one contract for all state employees — at least in the case of health care. Since there are 612 school districts that all negotiate separately, how can we get the same benefits that you achieve? Ms. Steger responded that you can still benefit from a process like the one followed by the state without a centrally bargained contract. If you establish a JHCC sort of thing, you can work through many, if not all of your health care issues.

Mr. Woods asked if school districts that were a part of a larger group would have to accept whatever benefits the negotiating committee recommended. Ms. Steger answered that any agreement could be structured so that rich districts and poor districts could have different arrangements with their employees (different co-pays, for example). More research would have to be seen to see what other states have done and see how it has worked and what was gained.

Mr. Solsman stated that the best way to achieve savings in health care insurance is by structuring the agreements so that usage is controlled.

Mr. Varda noted that school districts pay for the health care insurance of employees as well as retirees. He suggested that maybe we should treat them all in a statewide, standardized manner. Everyone would still contribute to it, but there might be some savings, particularly for small districts that have limited bargaining power when it comes to health care.

Mr. Mahoney suggested that school districts might be given the option of continuing to negotiate their own contracts or join in a centrally bargained one. Ms. Steger stated that, to do this, you would need to compare what employees are currently paying for health care to what they might be paying under a centrally bargained arrangement. This could probably be demonstrated without a full blown study, since there are some more obvious things that can be pointed out. There would need to be a huge risk pool. You cannot just have the school districts with large numbers of sick people in it since the healthy people essentially pay for the sick people in any type of health care plan. Any group plan where people can voluntarily join and leave is unstable, because people can follow the rates. Some states require that all school districts be in the same pool.

Under this system, unions could bargain within the school district to choose the share that the employee and employer pay for the one set of insurance. A school district could also have several different plans, a premium plan with no co-payments, another with some co-payments, and other options from which employees could choose.

Mr. Woods asked if the state could bid out a health care plan and school districts could opt in if they could not get a better rate elsewhere. Mr. Solsman responded that there are many moving parts in a health care plan. Different school districts bring different risk pools to the market. If you can mandate that school districts are in for a minimum of five years it would make the plan more stable. The more stable the risk pool, the more insurance companies like it.

Mr. Davis introduced the meeting's final presenter, Scott Roberts from the Department of Administrative Service's Office of Risk Management. Mr. Roberts briefed the committee on issues related to property and casualty insurance.

Mr. Roberts noted that property and casualty insurance used to be easy to get and relatively inexpensive. After the terrorist attacks of September 11, 2001, the costs have gone way up. History is now not the only indicator of what the future might be. Now insurers have to take into consideration other items that might now be risks, but have not been experienced before.

According to Mr. Roberts, buying insurance is not the first step in risk management. Loss control, prevention, and elimination must take place first, along with an assessment of loss exposures. He noted that it would be preferable for school districts to have their own experts rather than relying on expensive consultants. He observed that school districts could probably save money by pooling with other school districts.

Among others, school districts can help control the cost of property and casualty insurance by:

Mr. Roberts suggested that school districts train someone (maintenance supervisors are a natural) to be a safety expert who can make changes that can limit exposure.

There have been decades (1970s and 1980s) where public employers have found it difficult to find insurance providers. This could happen again.

Following Mr. Roberts' presentation the committee members discussed items for future discussion.

Mr. Harnett suggested that we need to find new ways to encourage school districts to use buildings for more activities.

Mr. Woods opined that school district should have more flexibility with regards to facilities planning. He noted that his school district just opened a new building that had additional gym space. His community would have been limited in its ability to use this space if they had not been able to expand the gym. He wants more flexibility from the Ohio School Facilities Commission.

Mr. Gardner cautioned that we need to have a baseline, because otherwise everyone will be asking for everything when designing a new school.

Mr. Harnett (who sits on the Ohio School Facilities Commission) noted that the commission has given flexibility to school districts in that, if you have x children, you need y square feet of space, not necessarily z classrooms.

Ms. Sprague observed that school districts need quite a bit of flexibility if they want to incorporate social services.

Mr. Gardner opined that the school is the focal point of the community for much of the state. You can get community buy in for the activities in the school.

Mr. Davis requested ideas from the committee to formulate an agenda for the next meeting. He suggested that we consider taking positions on teacher recruitment and retention and health care at the next meeting.

Mr. Harnett observed that the Operations and Efficiency Committee can also endorse things through this committee. We can just reinforce things that previous committees/commissions have come recommended.

Mr. Varda inquired about the status of Ohio's planning on a new regional delivery system. He suggested that we should spend some time discussing this issue. Roger Nehls of the Ohio Department of Education has been working on this and probably can come back with a draft of what the Department has come up with so far.

Mr. Davis suggested that supplemental contracts seem to be a problem.

Mr. Varda stated that, as a percentage of total spending, it was less than three percent of a school district's total budget. He is not sure that this is worth the committee's time.

Mr. Woods added that these contracts only last a year and have to be approved by the local school board to be renewed. If they do not want them to continue they can drop them.

At the next meeting of the Operations and Efficiency Committee on January 22nd, Roger Nehls will offer an update on the progress of the Department of Education's efforts regarding the regionalization of services. Also, the committee will consider and make decisions on recommendations relative to health care and property and casualty insurance, as well as the recommendations of the Governor's Commission on Teaching Success.

Mr. Davis adjourned the committee at approximately 2:05 p.m.


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THE FINAL REPORT
Governor Taft reading with a student.