Education Lab

Clovis Unified aims to give bonus for frugality

In a time when salaries around the country are being slashed, one local school district has found a way to reward its workers with a pay bump.

Clovis Unified School District full-time employees could get that unexpected bonus before the school year ends -- a reward for staying healthy.

The bonus pay will come from savings in the district's self-funded insurance costs. With fewer visits to doctors and lower-cost prescription programs in the past 21 months, district officials figured they could hand out a 2% "one-time reward." The board of trustees is expected to consider the plan at its meeting Wednesday night.

The additional money for the 4,321 full-time employees comes at a time when many districts are cash-strapped and are laying off staff or not giving raises. Clovis also is freezing wages but has no layoffs planned.

If trustees give the green light, a check equivalent to 2% of base pay will be in the mail to full-time employees before June 12, the last day of school.

In 2007, with district insurance premiums rising 5% to 10% annually, Clovis employees and district administrators worked out a plan to reduce costs. The district instituted a co-pay for doctor visits, generic prescription drugs and a mail-order prescription program.

At the time, the number of doctor visits was high, said Terry Bradley, Clovis Unified's superintendent.

"They imposed changes upon themselves when they knew they were not going to have salary increases," he said, crediting employee groups. "Our hope was that our spiraling costs would go down and that our [insurance premium] increases would be less than in recent years."

District officials were pleasantly surprised, Bradley said, when actual costs were lower.

The roughly $4 million being divided among school employees is a portion of the savings from insurance costs. That would come to about $925 per employee.

No other district funds will be used to pay the bonus, Bradley said.

All full-time employees who were working for the district as of May 1 will be eligible to receive the money.

Employee representatives said they were encouraged by the pay bonus proposal.

"It's a positive thing all the way around and I think it's really kind of generous," said LisaMarie Slater, president of the faculty senate, which represents the district's 1,809 teachers. "It's a bonus they are passing on to us because we are the people who created that savings with the diligent use of the health plan."

The refund showed that employees were using their health benefits carefully, said Dan Faria, a diesel bus mechanic and president of the California Service Employees Association, which represents 600 of the district's 2,033 nonteaching employees.

"It's for us not having unnecessary expenses on our health care," Faria said. "It was all of us pulling together to get through these tough times."

Fresno Unified School District has had surpluses in its self-insured benefit funds, but bonuses were not discussed with labor leaders, said Ruth Quinto, the district's chief financial officer.

She said those labor leaders might ask the district to follow Clovis Unified's example.

For now, Quinto said, "We have set aside those resources in a health fund reserve so we can offset any future increases in health costs and insulate our employees from any increases for some time into the future."

Paying bonuses for reducing insurance costs does not occur often, said David Vaughn, executive director of Fresno-based California's Valued Trust, an insurance trust that oversees 202 self-insured school districts in California.

He said his organization was able to give employees in districts he represents a $400 reward three or four years ago.

"Even in today's world you do have some good years, but to sustain that over time it will be highly unlikely," Vaughn said. "It's getting harder and harder to do that with all the complexity and everything happening in health care today."

David Osborne, a senior partner with Public Strategies Group, a St. Paul, Minn., consulting firm for governments, said, "It's been done, but it's pretty uncommon, and it's a good idea."

Osborne added that health insurance, because its price has escalated so quickly over the years, has been the biggest problem for governments, other than the recent recession.

"Governments should be encouraged to do things like this," Osborne said.

Clovis Unified employees shouldn't expect a regular bonus, Bradley said, because beginning July 1 employees' share of health-care costs will be cut -- an adjustment similar to what a homeowner might see with a mortgage escrow account.