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PPACA tilts some school district equations toward contractors

The Patient Protection and Affordable Care Act is ushering in lots of changes — and for some school districts, those include moving what are now part-time positions off the districts’ payrolls and onto the books of private contractors.

“The concept of the outsourcing is really to avoid a pretty large PPACA penalty,” says Tim Shrom, chairman of the Pennsylvania Association of School Business Officials Health Care Task Force. He also is business manager of Solanco School District and board member of the Lancaster County Business Group on Health.

Contracting out services isn’t a new concept for school districts, but Shrom says PPACA is altering conditions in a way that he expects to result in more contracted workers than in the past. In recent months, numerous districts in Central Pennsylvania have reported considering or actually moving away from employing workers in various positions. Many of them cited the PPACA requirements as a factor, and some noted that the worker salaries would stay the same or increase.

School districts are large employers, with large contingents of part-time workers. Come 2014, the general definition of a full-time-equivalent worker will drop to 30 hours a week, and large employers will be required to provide health insurance that meets certain standards to all FTE employees or pay penalties.

Cutting hours below the FTE threshold is one way to skirt the issue, and Shrom says that is among the actions districts are considering. But cutting is not a good answer in all circumstances, as Penn Manor School District’s special education paraprofessional conundrum illustrates.

The district has 25 to 30 part-time aides who work with special-needs students, mostly one on one, according to Penn Manor business manager Chris Johnston.

“If you start doing a half day with this person and then a half day with that person, those students don’t react well,” Johnston says, explaining why restricting hours would be a problem. But offering the aides health benefits would also be problematic, because the district self-insures and would be at risk for up to $200,000 per person before its reinsurance kicks in. The district has never offered anyone health care below 35 hours, he says.

The solution Penn Manor chose for its paraprofessionals was Substitute Teacher Service Inc., a business that has been working with an increasing number of Lancaster County districts in recent years. STS will also be handling Penn Manor’s substitute teacher needs.

Using STS will cost more than Penn Manor’s current arrangements do — but adding health care coverage and its significant unknowns to the mix now tips the scales in its favor. Johnston also notes that STS is a known entity with a proven track record.

The administrative challenges of correctly handling the 30-hour issue and the financial risks of getting it wrong for even one person also are issues districts have to consider.

“We know what they do,” he says. “We’ve talked to other districts locally.”

Heather Stauffer

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