The Clark County Education Association (a.k.a. teachers union) has once again proved that its leaders care more about their own power than about their members or the community. The latest controversy arose when it was revealed that the health trust created by the union is in dire financial straits. At a closed union meeting on January 29, John Vellardita, executive director of the union, said the health trust was likely “to go belly up in 60 to 90 days.” Peter Alpert, CEO of the trust, later told the Las Vegas Review Journal that the trust could survive longer than that by liquidating its investments, which usually signals the beginning of the end for any organization. If the trust collapses, teachers will be left without medical coverage, and somebody will be left holding the bag for unpaid medical claims — either the teachers themselves, or local healthcare providers.
The Clark County School District (CCSD) provided health insurance coverage for teachers until 1983, when the union decided it wanted to handle teachers’ health insurance. The budget of the Teachers Health Trust they established is currently around $150 million a year, mostly from payments that CCSD makes on behalf of teachers as part of their benefits package. For every dollar that teachers contribute for their health insurance, CCSD puts in almost $5, which ultimately comes from taxpayers.
So how has the organization managed the money entrusted to it by teachers and taxpayers? The trust’s latest financial report, dated June 30, 2012, showed that it lost more than $8.6 million in FY 2012 and more than $5.5 million the year before that, chiefly because the cost of claims exceeded the trust’s revenue. In the January 29 meeting, Vellardita announced that the trust has lost more than $3.6 million since the current fiscal year began on July 1. The June 30 report also showed that the trust had only $546,921 in cash and cash equivalents. Alpert claims the trust now has more than $7 million in cash on hand, but doesn’t explain where it came from.
Of course healthcare costs have gone up dramatically in the last few years, so it shouldn’t be surprising that the trust’s expenses for paying out claims have increased. When Obamacare hits, costs will likely increase, and the trust fund’s resources will be strained even more. During last year’s contract negotiations with the union, CCSD volunteered to take over health insurance coverage for teachers, stating that it could get better rates because of the size of its employee base (more than 30,000 workers). The union refused their offer, supposedly because they felt the quality of benefits would decline. Another reason seems more likely: it’s a question of political power. If the union’s trust provides coverage, healthcare is seen as a benefit provided by the union, not by their employer, even though CCSD (and taxpayers) are actually footing the bill.
Meanwhile, in Carson City, the teachers union is lobbying hard to impose a 2 percent tax on businesses that make more than $1 million, with the proceeds earmarked for education. This tax would be imposed on businesses regardless of whether they are actually making a profit. This would hurt business, kill job growth and harm economic development efforts. But the union doesn’t seem to care, as long as it generates more money for the educational establishment (and them).
Now the union’s trust wants to increase premiums to close its income gap, but CCSD is refusing to take more money out of teachers’ paychecks to fund this shaky enterprise. It would make more sense and cost taxpayers less money to have the district take over responsibility for teachers’ health insurance. At press time, negotiations between the union and CCSD are continuing, but no matter what the outcome is, this whole affair just illustrates where the teachers union’s priorities really lie.
Originally published in Nevada Business Magazine: