The Promise of Cafeteria-Style Benefits for Districts and Teachers

The education community has long emphasized that “one size does not
fit all” for students, but what about for teachers? In a new white
paper, The Promise of Cafeteria-Style Benefits for Districts and Teachers,
researchers from CRPE propose customizing teachers’ benefit plans as a
cost-stabilizing measure for districts. Currently, most districts offer
teachers a single benefit plan with two options: opt-in or opt-out. 
“Cafeteria-style” benefit plans, however, would give each teacher a set
amount of money to spend on a wide variety of benefits, allowing the
teacher, for example, to purchase a dental but not an optical plan. The
teacher would keep any unspent money as a cash bonus.

The paper proposes three funding models for such plans:

  • Model 1: The district’s per-teacher benefit contribution consists of
    a baseline dollar amount which increases by a given percentage each
    year. The baseline dollar amount is negotiated in advance and may not be
    re-negotiated from year to year, but the yearly percentage increase may
    be re-negotiated.
  • Model 2: The district’s per-teacher benefit contribution consists of
    a percentage of the teacher’s salary. Salaries may be negotiated from
    year to year, but the percentage reserved for benefits may not.
  • Model 3: The district’s per-teacher benefit contribution consists of
    a fixed dollar amount, which may be negotiated from year to year.

Although these models are not likely to save districts money, they
may introduce a new level of stability to districts’ yearly budgets. The
first model, for example, would allow a district to estimate the
probable rise in healthcare costs over the next several years and
negotiate a corresponding, yearly percentage increase in benefit
spending. In exchange for accepting more risk in the event of a
healthcare cost spike (risk usually shouldered by districts), teachers
would receive more options when selecting benefits.

In nearly every teacher contract negotiation in Ohio,
benefits—particularly healthcare benefits—are a point of contention. The
issue has factored significantly,
for example, in the year-long negotiations around the Cincinnati Public
Schools (CPS) contract. With leaner budgets ahead, Ohio districts would
do well to reconsider their traditional practices in many areas,
including the provision of benefits to teachers. As this paper suggests,
a thorough revision of benefits policies could produce a rare win-win
for teachers and districts. Read the report here.

The Promise of Cafeteria-Style Benefits for Districts and Teachers
Noah Wepman, Marguerite Roza, and Cristina Sepe
Center on Reinventing Public Education (CRPE)
December 9, 2010

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