Interview with John Fazer and the Landmark Teacher Contract Settlement at Holton Public Schools
Announcer: Welcome to Inside Michigan Education, a weekly show featuring interviews with community leaders, school administrators, school business officials, and individuals who are passionate about the future of Michigan Education. Now, here is your host for Inside Michigan Education, Rob Huisingh.
Rob Huisingh: Welcome to Inside Michigan Education, now, this week we are joined in the Foxbright Podcast Studio by John Fazer. John is the Superintendent of Holton Public Schools, and he is here today to talk to us about his efforts to resolve one of the longest standing teacher-contract issues, on record, in Michigan. John, thanks for being here, it is a pleasure to have you on our show.
John Fazer: Thanks Rob, it is my pleasure to be here.
Rob Huisingh: John, I always like to start out by having you tell us a little bit about yourself and a little bit about your history and then, maybe, a bit about Holton Public Schools as well.
John Fazer: Rob, I have been a Superintendent now for six years, the past three years being at Holton. The previous three years were as Superintendent at Mason County Eastern School and then prior to that I was a School Administrator in Freemont Public School System. And Holton School District is a real school district, 1,100 students. It is in Northeast Muskegon County, kind of wedged between Reeths-Puffer School District in Muskegon and Freemont School District out of Newaygo County. We are just everyday people, good hardworking people. We have a lot of economically disadvantaged families at this time who are struggling with the economy.
That being said, we have a wonderful student body, we have tremendous support for our kids. We have a high school, a middle school, and elementary school on a beautiful campus. A small school environment, I think kids are safe, parents can get involved. We have a first class staff and just a great small community to put your kids in for education.
Rob Huisingh: You came to the district three years ago and what kind of a situation did you find yourself in when you started out at Holton?
John Fazer: Well, on coming to Holton, I was up north in Mason County Eastern which is about 60 miles north of Holton. We were living in Freemont and still did have a home there. So, I was interested in getting back to the area and Holton had contacted me, they were going through some difficult financial times. Their superintendent had just left and they also had some administrative issues. But, Holton had only $14,000 on the books projected at that time which was meaning, they were heading towards, for lack of a better word, I guess, receivership with the State of Michigan.
I came in with intent to restructure the district and get them back on their feet financially and to continue to grow the education process.
Rob Huisingh: The contract dispute or the lack of a contract had been in place for a couple of years before you arrived on the scene. I can imagine that it must have been something of an objective of yours to get right on it and to solve that dispute when you started three years ago. But that is not exactly what happened and it took a while longer, didn't it?
John Fazer: It took about two years and four months after I got there. So, we were in our fifth year without a contract. Whenever you settle a contract, you attempt to bring both sides together to do its best for the best interest of the company or the district. Obviously, we had the same contract woes that other districts had, one being people wanting wage increases and the second thing wanting to maintain a quality health insurance and trying to find a marriage between those two that would produce the best results.
And that seemed to be very apparent when I got there in reading the previous discussions and then into my initial discussions with the association it was very apparent that health insurance was an issue.
Rob Huisingh: Well, tell us a little bit more about the health insurance issue.
John Fazer: In any situation or business structure, I consider schools a business, the education business. What we do is we provide educational services to students which is our specialty, just like certain companies especially are making certain products. But in the educational setting, you still have to have a business background, a business position for the school, so that you can perform these services and obviously it is whether it is bidding out the cost of gasoline, fuel, bidding the cost of various services.
Now, when it comes to insurance, objectively in a business you want to provide quality health insurance benefits for your workers at the same time keeping it down to the lowest cost you can get it for.
So, of course, in our situation, if we are on the verge of bankruptcy, we want to keep topnotch health benefits, but we also want to make sure paying the competitive market for it. That was one of the issues and the other issue then was matching some of the savings from what we are paying in health insurance, giving it back in wages. And those two have to match the amount of income we are getting in from the State each year. As you know for every district, we have been spending about $2 in new money and only getting in $1 new.
So, that was the dilemma and in the State of Michigan, when you are working with school settings, it is getting the association members to agree to the insurance benefits that you bring to the table or the insurance company that you are going to get them for.
That is the biggest dilemma that is facing schools right now.
Rob Huisingh: Can you talk to us about the cost structure difference between what is a typical plan run and how does that compare to the options that you saw?
John Fazer: Well, we did right away because you like to compare apples to apples and when you are bidding anything, you put together a bid sheet that basically outlines the benefits.
So, what we did is we took the benefits that our teachers currently had and took them word-for-word and then sent them out to various insurance vendors, third party folks. When we got these bids back, we found that depending on the insurance company, their rate per month differed from an example being one of the vendors the cost was $1,320 a month, another vendor was $1,115, another vendor was $1,022, another was $1,201 and $1,096. So, you see, they differed between $1,320 to $1,022.
So, roughly $300 a month, roughly $3,600 a policy, now for a district like Holton where you have 70 teachers, that is nearly a quarter-of-a-million dollars a year where we felt that we could get the same quality health insurance, save the district $250,000 a year. And I too kind of chuckled because over the course of the two years and four months, I was there two-and-a-half years. We are talking somewhere around $650,000 that we could have easily had that money somewhere else either in the wages etcetera.
So, it is just a business structure and that is probably what's the frustrating part. So, we found that to be true and these recall set were apples for apples.
Rob Huisingh: They are absolutely the same coverage from reputable insurance organizations, ranging that high in difference.
John Fazer: Right, the only difference it might some were PPO which just means that your people had to be in the network. But groups that we looked at, two of the groups we looked at, all the doctors in the area, 95% or more in those networks along with the specialist.
So, we did not think that was a significant difference. Also some of the offers that we looked at also had HSA benefits to the employees which were significant, $2,500, $4,000 HSA opportunities. If a person did not use their insurance which many staff members do not, they would have pocketed that. So, we thought it was a win-win all the way around looking at that bidding process.
Rob Huisingh: I run a business, so from my perspective if I go out and I come up with five bids and all the bids are reasonably similar and they are providing the same services at a comparable price, I feel comfortable I can go with the lowest bid, That's not the way it works today in several schools, is it?
John Fazer: It is very difficult because there is always a concern as to in any type of negotiations or discussions who profits and how. And I always like to think that in negotiations, it is a win-win profit where if some there is restructuring of finances, you can go to your employees and it can also go towards the cost of running the operation.
If you make a bad decision, financially as to where you purchase things, it is the employees who lose because you are still going to keep running the company at that expense. But the money that goes for fringe benefits or wages has to come from somewhere.
So, in Michigan, if you get locked into contracts where it says you have to have to a certain insurance company and they refuse to lower their rates or bid comparatively, it is really the membership that loses, and I think it is hard for our association members to understand that when they get into that block, they actually lose, because we are still putting buses on the road, we are still putting books in kids' hands, we are still putting quality education, it is just how forward-- do you want to move forward as an employee.
So, it is difficult and many Michigan schools are locked into contracts that does need specific insurance carriers or third party vendors that administrate that. That is what in Holton, I said, "We can not continue to do that, we can not continue to lose $250,000;" because insurance, you know, was going up over the course of anywhere from 10-15% a year for a number of years, even as high as 20%. Well, in an insurance when you buy $2 million worth insurance premiums, that is $200,000 a year and from the State of Michigan, for instance, we are predicting that if we get a $100 a year increase that is only $100,000. So, we are in the hole just on insurance cost.
John Fazer: So, this is what is hitting a lot of Michigan schools.
Rob Huisingh: Why is it that Superintendents and School Boards in general do not take the position to say, "This is the reality of the business situation we are in, we have comparable choices here, we are going to select this choice because it makes financial sense both for us and for the school and for you as teachers?"
John Fazer: Well, when you get in negotiations, usually what groups decide that at the table, they will keep their discussions at the table; they will go back and forth, negotiate, and leave it there each day. But many times at the table when certain things do not happen or you are saying, "Look, we have got a $1,300 policy and a $1,000, there are the same, there are different company, but there are the same," and the person says, "No, we want to stay with this company." Obviously, you have got a big difference there. If you hold at the table, various tactics could take it outside of the table.
Example, flyers, billboards attempting to discredit the superintendent, attempting to discredit the Board of Education, flyers placed on the windshields at ball games, at events; handing out to people going to Parent-Teacher Conferences that basically tell the public all the things that the Superintendent is wrong or the Board is doing wrong.
My experience over the past six years through two hostile negotiations, that all the facts are totally wrong, you can write what you want to get the public to distrust you. And this pressure plays havoc public relations wise on the district; it can put a tremendous pressure on the Superintendent and can put a tremendous pressure on Board members. Many Board members own businesses or work in the community, attend community functions, and they are put in a bad light.
Now, the idea is to put pressure on you till finally you say, "Hey, it is not worth it." That is why I think it is very difficult for a lot of communities, you can remember a couple of years back, Kentwood in Kenowa Hills had some tremendous fights.
And when you look back on those and I studied them very closely because I was in a very difficult one when I was north also, and everything was truly fact based and you could not argue with the facts, they were doing the right thing. But it takes a lot of intestinal fortitude to stand up day-in and day-out for three years and be bashed. It is easy to just give in and many times that happens and then the district is in turmoil maybe it takes a year.
Rob Huisingh: I can see when sides are vested in winning as opposed to winning-winning that that's when it happens. You achieved something of an interesting settlement with the teachers there, I have it in front of me, but tell us a little bit about it.
John Fazer: As I said initially our goal in the contract and negotiations was to, I guess, use the old term of win-win. Positive where the district could secure funds to move us forward and to keep us growing and actually enhance things and at the same time provide quality benefits for our staff members and enhance their educational scale.
One thing I did not mention is our payment scale; our wage scale for our teachers was the lowest in Muskegon County. You have to be creative in how you grow that and at the same time keep the district solid, which we did. So, one of the things we wanted to do is we wanted our top-end teachers that have been over 15 years, we wanted to enjoy higher wage scales based on their experience and on the qualities they had brought to our school.
So, in this contract settlement we were able to do that, we were able to move some of our teachers anywhere from $3,000 to $6,000, $7,000 increase over the next two years. At the same time we wanted to give the 2% raises that other districts were giving. But in return, we had to have dollars to do that and one of the situations I would mention was we had to competitively work on the health insurance role model.
So, our teachers did take a health insurance that was competitive out in the market. And that was the first thing which saved us approximately, just around $3,000 a policy. Also, we wanted our health, our teachers to begin contributing; our other employee groups two years prior had begun contributing - our Administrative Supervisor Group a $100 a month and our Sports saved $83 a month towards the cost of insurance.
This isn't uncommon in some of our other school districts. The last thing that we wanted is we wanted to make sure that we had our staff members contributing in the future for the rise of insurance. This isn't uncommon in the business world, if insurance goes up the members contribute a portion of it, because in the school settings, some of our insurance policies over the course of the last years were going up $1,500-$2,000 a year a policy.
So, to ask an employee to contribute a $100 of it, a $150 of that increase, we did not think was too pressing. So, in the end, our teachers agreed to contribute a $100 a month towards insurance, they also agreed which is really precedent setting in many ways in West Michigan to contribute, if health insurance goes up the school district, we said we would contribute the first 5% of the increase, and they would contribute the next 5% of the increase, and then, we would split that difference.
So, if it went up 15%, the teachers would contribute 7.5%, we would contribute 7.5%. And that is significant because that in itself is somewhere around a $60,000-70,000 savings to the district. And we also hope that as health insurance goes up and our employees say, "Hey, it is going up too high," then we say, "Well, let us work together, find one that is more reasonable, one that provides us quality benefits." One of our concerns is that the research, I think to the Keiser Institute shows that the average personal uses about 28-34% of their insurance.
So, if you are paying $12,000 for a policy, you may be only using $3,000 or $4,000 of it. So, those were the things that we worked to achieve and it took some long sessions, it took months, but the negotiator across the table, I commend that person because they finally saw that if we work together, our teachers could grow.
Some of them between the wage and longevity are receiving $7,000 to $8,000, $9,000 raises over two years and moving them forward and we as a district are saving a quarter-of-a-million dollars a year and still first class health coverage.
Our administrators have and support staff have a different health insurance company and it is interesting because both of us have the same quality as our teachers now and that one is using a little bit less. So, it is team work, it's working together.
Rob Huisingh: Yeah, it sounds to me looking at it from the outside that you were able to save the district money, you were able to put raises in front of teachers that deserved the increases in pay to become comparable with other teachers in the region and at the same time found a way to join all of the people in a process that put all their -- to work together as teamwork, it is an amazing achievement. I want to commend you for that.
John Fazer: Well, I thank you Rob; I think that thanks goes out to our Board and to the other side of the table and unfortunately in education sometimes, you have got to hold a line and you get into the other talks of strikes, the talks of walkouts and things like that. It is unfortunate but in school districts I think, there has got to be more of holding the line and you do not have to do it at the detriment of anybody because like I say the other two groups, they changed health insurance two-and-a-half years ago and first class health insurance, actually have HSAs where some of them have saved $2,000-3,000 and that wage increase.
So, I think at going back to start, we are talking about that schools have to function as businesses from the business end and educationalists from the education end and hospitals have to function like a business from the business end and then your doctors still function as the first class physicians.
Our teachers function in the class as fantastic teachers, but in my office, we have to continue to be business-minded. That is what keeping school districts on-- a float today. I commend all the Superintendents, all the Boards in Michigan because they are making the best out of what they have.
Rob Huisingh: Well John, certainly, there is much more that I think we could cover here, but I want to thank you for coming in and sharing your situation with us, because I think there are all kinds of Superintendents and Boards out there that could benefit from this information and from your experience. If you would like to contact John Fazer at Holton Public Schools, he can be reached by telephone at (231) 821-1700, again, that telephone number is (231) 821-1700. You can also visit them online at www.holtonschools.com, again that URL is www.holtonschools.com. Until next week, this is Rob Huisingh with Michigan Education.
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