OEBB Opt-Out Policy Options

1
OEBB Opt-Out Policy Options
Attachment 15 November 29, 2007
2
Overview of Findings

• Review legislation
• Review opt-out findings from Watson Wyatt
  District Survey and review of CBAs
• Review of potential opt-out options
• Discuss issues and next steps

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SB 426 section 13(1) (2)
13(1)

• Among other purposes the board may retain the
  funds to pay premiums, control expenditures,
  stabilize premiums and self-insure...The
  following moneys shall be paid into the Oregon
  Educators Revolving Fund.

13(2)

• The following moneys shall be paid into the
• Oregon Educators Revolving Fund
• All unused employer contributions for benefit
  plans
• All refunds, dividends, unused premiums, and
  other payments attributable to an employee
  contribution or employer contribution made from a
  carrier that has provided benefit plans by the
  board and
• All interest earned on the moneys in the fund.

4
Overview of Findings

• Forty districts (24) had some form of opt-out
  policy.
• Thirty-one districts (77) provide a specified
  payment in lieu of benefits. The average payment
  in the Watson Wyatt study was 261 per month.
• Six districts (15) allow for remaining dollar
  allowance provided for benefits to be used as
  taxable compensation.
• Three districts (7) have another type of opt-out
  policy.
• Twenty-eight districts (16) had no opt-out
  policy.
• Ninety-eight (59) of the districts did not
  answer the question on the survey.

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Overview of Findings

• Examples
• A specified amount in lieu of benefits
• Philomath 17J Employees opting-out receive 150
  in a salary adjustment with 25 returned to the
  district and 25 used to reduce college tuition
  costs for teachers.
• Banks School District District provides an
  annual contribution of 1,000 to a non-taxable
  403B plan for employees who opt-out.

6
Overview of Findings

• Examples (continued)
• Any remaining dollar allowance provided for
  benefits
• Lake County School District District places
  health insurance contribution in an HRA for
  employees covered under a spouses plan who
  choose to opt-out.
• Other
• Reedsport School District Pays for full family
  dental coverage if the employee opts-out of
  medical coverage.

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Opt-out Policy Options

• Option 1
• An OEBB-determined direct payment is received by
  the employee from the district for opting-out and
  the remainder of the contribution is transferred
  to the OEBB Revolving Fund for future premium
  reduction and potential self-insurance.

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Opt-out Policy Options

• Option 1
• Pros
• Provides a revenue stream for use in
• future reduction of premium costs and potential
  self-insurance.
• Establishes a standard policy for opting-out that
  follows the intent of the legislation.
• Cons
• Districts receive no opt-out revenue.
• Reduces district/employee group flexibility in
  designing opt-out policies.

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Opt-out Policy Options

• Option 2
• OEBB allows employee and district to retain
  predetermined portions of the contribution with
  the remainder transferred to the OEBB Revolving
  Fund for future premium reduction and potential
  self-insurance.

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Opt-out Policy Options

• Option 2
• Pros
• Provides the districts with an opportunity to
  continue programs in place currently that are
  funded through this revenue stream.
• Cons
• Could reduce the amount of funds transferred to
  the revolving fund.
• Could reduce the level of future premium
  reductions and delays potential
• self-insurance.

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Opt-out Policy Options

• Option 3
• A set percentage (determined by OEBB) of unused
  opt-out contributions are transferred to the OEBB
  Revolving Fund and the remainder is retained by
  districts/employees.

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Opt-out Policy Options

• Option 3
• Pros
• Provides a stable revenue stream for
• use in reducing future premiums and
• potential self-insurance.
• Provides flexibility to the districts/employee
  groups in bargaining opt-out policies.
• Cons
• No set standard for employee opt-out benefits.

13
Issues and Next Steps

• Percentage of contribution OEBB should collect.
• CBA opt-out provisions and when districts will be
  required to participate.
• Other opt-out options and policy issues to
  consider.
• Obtain DOJ approval and present final
  recommendations at 12/13/2007 board meeting.