St. Paul School District threatens to sue unions over health-care dispute

The St. Paul school district is threatening to sue the unions representing its teachers and teaching assistants if they proceed with a health-insurer switch that could result in the district being hit with a $4 million penalty.

Superintendent Joe Gothard and Board Chairwoman Zuki Ellis put the groups on notice in letters sent Friday in response to union efforts to forge a compromise that district leaders said amounts to bad-faith bargaining using students, taxpayers and other employees as leverage.

The St. Paul Federation of Educators (SPFE) and Teamsters Local 320 voted this spring to move from the district's current insurer, HealthPartners, to the state-run Public Employees Insurance Program (PEIP). But the move, if executed in January as planned, would come in the middle of the district's two-year contract with HealthPartners, triggering a $4 million early-termination fee.

Last week, the unions said they would agree to a district request to put off the move until January 2021, but only if the school system boosted individual and family benefits to reflect the savings members could have received next year, or about $1.5 million total, according to union estimates.

The district countered Friday by saying that the proposal actually would cost $3.6 million, and it rejected the offer.

"Even if the school district agreed with your calculations, a proposal cost of $1.5 million is still unbudgeted and would result in cuts or reallocation from other key budget priorities decided upon through the school district's normal budgeting process. This is an unacceptable outcome," Gothard and Ellis wrote.

They then stated in separate correspondence that if the unions forced the district to break its contract with HealthPartners, and a penalty were imposed, the district would "seek to recoup any and all damages" from the two bargaining groups.

The teachers and other employees have the right to move to the state-run plan, and they voted to do so based on what they believed was the potential for immediate savings and greater stability in health care costs. They added that St. Paul Public Schools did not share concerns about the $4 million penalty until it posted an FAQ online after voting was underway. The district said SPFE never stated when voting would occur.

Union officials have sought unsuccessfully to persuade HealthPartners to drop the early-termination fee or reduce the penalty.

In Friday's letter, Gothard and Ellis said the district, too, has had multiple conversations with the insurer seeking a fee waiver or compromise. "As you heard for yourselves, HealthPartners has consistently stated, in no uncertain terms, that it will hold the school district to the terms of the contract," they wrote.

The district says current commitments should be honored and that it would work toward "a smooth and cooperative transition" to PEIP in January 2021.

In an e-mailed statement Saturday, SPFE President Nick Faber said, "Educators exercised their legal right to seek more affordable health care and made an earnest effort to work with the district. SPPS responded … by shutting the door in our faces and threatening to sue our members."

"The district's actions are representative of the larger culture of disrespect and intimidation that district employees face every day in schools and classrooms," Faber said.

Anthony Lonetree • 612-673-4109