DL School employees get bulk of $243,000 rebate check

Some Detroit Lakes teachers and other full-time employees will be seeing extra cash coming their way.

The Detroit Lakes School Board voted to approve a two-year-long grievance settlement with its teachers' union, Education Minnesota.

The grievance stems from a dispute over who should receive $243,000 worth of rebates given back to the school district from its health insurance handler, Lakes Country Cooperative.

A little background

The Detroit Lakes School District offers health insurance as a benefit to employees who work 30 hours or more per week.

It pays 100 percent of single plans and 75 percent of family plans.

The school district gets its health insurance through Lakes Country Cooperative, which is able to buy health insurance in bulk and does so for many school districts across Minnesota.

But as medical inflation continued to dramatically rise around the turn of the century, premiums skyrocketed.

Like for most Americans, this has meant school employees with family health insurance policies were having to pay more out of pocket.

The school district, in an effort to address the issue, began educating its employees on the health care system.

"As we started educating our employees, we said 'folks, if you don't want 20 percent increases, you're going to have to go to a higher deductible health plan -- you're going to have to start making decisions about why you're going to the doctor and for what,'" said Detroit Lakes Superintendent Doug Froke.

Froke said the plan worked, and people started becoming "better consumers" of health care, causing the number of claims to drop.

People had stopped going to the doctor as often, and there was a reward for that.

Lakes Country Coop has a by-law that states if an individual district experienced great claims (in other words, they paid more in premiums than their claims cost them), the district would get a rebate for the "overage charges."

This was the case for school employees both during the 2007-2008 and the 2008-2009 school years, and between the two years $243,000 was reimbursed.

Who gets the money?

Initially the school district told employees 75 percent of the money would go to the district and 25 percent would be distributed to employees who held a family insurance plan during those two years, while nothing would be given to single policyholders.

"Our thought was, the district paid for 100 percent of the single policies and 75 percent of the family plans, so we thought it was a reasonable offer," Froke said.

The teachers' union, Education America, disagreed.

"The teachers (and other full-time employees) were the ones paying extra on these overages, so we believed they had a claim to the refund," said former Detroit Lakes sixth-grade teacher Jim Granger.

Granger, a strong union member, now works as a field representative for Education Minnesota.

So the teachers' union (which was unofficially leading the way for other school employee unions) found a similar, precedent-setting case from 1995 in Fergus Falls, which gave the employees more right to the money.

"So because of this, we went back to the table and offered the employees a similar pay-out system to the one in this Fergus Falls case," explained Froke, "and that was that the school district would keep $60,000 of it, and the rest (approximately $180,000) would be distributed to the family policy holders. We still weren't going to budge on the single policy holders, though, because they never had any skin in the game in the first place; theirs was all paid for."

Although it was a huge concession, union reps held out, first in an initial attempt to get money for single policy holders, then for some clerical fees, which added up to a few thousand dollars.

"We thought (the district) was taking too much for clerical costs, and so although we agreed with the basics of the offer, we filed for arbitration," said Granger.

Granger and fellow union field rep, Mark Richardson said they suspected the two parties would be able to work out the last of the details, but there was a deadline to file for arbitration, so they did so "just in case."

It never came to that, though, as the district and the union hammered out an agreement on the clerical fees, ending a two-year-long financial tug-of-war.

Both sides say the disagreement remained amicable throughout the grievance, but when there is this much money involved, and there is disagreement on the distribution, it has to go "through the process."

"And when there are attorneys involved, it can slow that process down a lot," said Granger, commenting on the two-year timeframe.

The school board approved the grievance settlement at its Monday morning meeting, clearing the way for the cutting of the checks.

Some 175 school employees who held a family health insurance plan from the district between 2006-2009, including some retirees, will split the approximately $180,000.

Froke says they'll cut the checks May 30.