Senate panel hears proposals to change arbitration for school employee health benefits

MONTPELIER, Vt. — The Vermont Senate Education Committee on May 6 considered draft changes to the state’s process for resolving impasses over public school employees’ health benefits, including permission for arbitrators to select parts of competing final offers and two new factors for arbitrators to weigh.

Supporters, led by the Vermont School Boards Association, told the committee that rising health insurance costs are crowding out school budgets and that the arbitration process should allow more nuanced outcomes. “Health insurance is expensive,” said Sue Zaglowski, executive director of the Vermont School Boards Association. Zaglowski urged allowing arbitrators to “select between the last best offer of each party on an issue by issue basis with or without amendment,” language the VSBA requested be added to draft 10.1 of H.480.

The VSBA asked the committee to add two factors for arbitrators to consider: how the value of school employees’ health benefits compares with plans available through Vermont Health Connect, and the percentage increase or decrease in education spending likely to result from each party’s last best offer compared with statewide economic growth.

Those proposals drew strong pushback from education stakeholders. “We do not support the changes how teachers and school boards bargain for health care,” said Jeff Fanning, executive director of Vermont VA (testimony record). Fanning argued reopening the bargaining framework would “introduce unrest” into an already stressed educator workforce and said current law already provides processes and opportunities to present the data arbitrators need.

Committee members and witnesses discussed several factual details during the hearing. Witnesses said the statewide bargaining structure established by Act 11 of 2018 created a Commission on Public School Employees’ Health Benefits made up of five employer and five employee representatives; the current premium split under the statewide agreement is about 80% paid by school boards and 20% by employees. Witnesses reported roughly 34,000 covered lives under the statewide arrangement and roughly 8,300 teachers covered directly (estimates provided in testimony). Witnesses also described how health reimbursement arrangements (HRAs) and actuarial “induced utilization” affect plan pricing.

Opponents warned that allowing arbitrators to mix and match elements from competing offers could produce incoherent or unworkable benefit packages and might shift costs toward individual employees. “If you have the arbitrator selecting a sentence out of this last best offer and a sentence out of that one, you could end up with really incoherent health care arrangements for both school boards and employees that neither side contemplated,” Fanning said.

Committee members debated whether the two additional nonbinding factors would simply prompt better evidence in arbitration or would bias the process. Some senators said the factors were reasonable informational points for an arbitrator to consider; others said the language was imprecise (for example, whether “overall economic growth” meant state GDP) and asked for further refinement and stakeholder discussion.

The committee did not adopt any final change during the hearing. Members scheduled additional testimony and asked staff to invite representatives from the Agency of Education, VHII, pleaders for reference-based pricing and the Green Mountain Care Board to provide more detail at later sessions. The committee also discussed informal stakeholder conversations, including possible joint work with the Green Mountain Care Board to identify systemwide cost drivers.

Next steps: the committee will hear more witnesses at follow-up meetings before deciding whether to include the arbitration language in a final bill or to refer stakeholders to an outside study or negotiated agreement.