Budget concerns and the advent of new health insurance requirements next year have caused some of the bigger school districts in the Kansas City area to rethink one of their largest logistical problems — the hiring of substitute teachers.
The result: privatization.
Substitutes at North Kansas City, Lee’s Summit, Hickman Mills and Kansas City schools who had been hired and paid by public school districts in the past are now employed by Kelly Educational Staffing, an arm of one of the country’s largest temporary employment agencies.
The change, which has happened in just the past two years, is part of a nationwide trend as districts look at how to keep expenses low and prepare for the new federal health insurance law known as the Affordable Care Act.
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District officials say the change allows them to find more high-quality substitutes — especially long-term ones — without incurring the extra costs of health insurance that will be required next year.
But the trend is controversial with the Missouri National Education Association, which says it could pave the road to loss of local control over teacher hiring and may put a drain on the state retirement fund.
Kelly Educational Staffing has been on a roll the past couple of years, said Scott Apsey, senior director of operations.
Currently Kelly Educational Staffing works with 4,500 schools in about 800 districts. In 2010-11, it was in 2,800 schools. He attributes that less to the new health care law than to the positive reviews the districts are spreading of the service’s advantages.
Still, the new health insurance law that requires employers of 50 or more to provide health insurance was the catalyst that persuaded North Kansas City schools to opt for Kelly in the 2013-14 year, said assistant superintendent Dan Clemens. Under the law, employees who work an average of 30 or more hours per week during the times school is in session are to be covered.
When North Kansas City looked ahead, it saw a dramatic increase in costs. According to figures presented to the school board, the law would have added $660,000 to the $1.7 million substitute teacher budget to provide health insurance for an estimated 110 teachers who would qualify.
That would have boosted the budget to nearly $2.4 million, significantly more than the $1.9 million being paid to Kelly.
The district can avoid paying health insurance because the substitutes are considered Kelly employees. The health insurance would have to be offered by Kelly. The insurance coverage affects mostly substitutes who take over for a long-term absence.
District officials all said it’s better for the kids to have one long-term substitute than a series of teachers when a full-time teacher must be absent for an extended period of time.
Lee’s Summit estimated, conservatively, that 50 substitutes might qualify for health insurance, adding $355,000 to the budget, said Assistant Superintendent Jeff Miller.
The Lee’s Summit and Hickman Mills districts are the latest to outsource substitute duties to Kelly. Kansas City Public Schools started in 2013-14.
Miller said the change will allow the district to have more high-quality substitutes without limiting hours or providing the costly medical insurance.
“This is a positive story without a doubt,” Miller said. “This is going to work out very advantageously for the students and staff because we are going to have quality substitutes for the district.”
Managing the substitutes is a crucial but time-consuming job for school districts.
Although many of them have software to match substitutes with upcoming vacancies, the substitute pool has to be recruited and interviewed. Payroll has to be managed, and last-minute calls have to be made.
Lee's Summit estimated that without Kelly, the district would pay $338,000 just to administer substitute placement and no less than $355,000 in extra insurance costs, for a total of $693,000. Kelly’s fee is $619,000.
Lee’s Summit schools need, on average, around 112 substitutes per day. At Hickman Mills, the need ranges from around 20 to 55.
But finding someone to fill those spots is not always possible. Sometimes, school districts end up short. When that happens, teachers may be asked to do double duty, or to give up their planning time to fill one of the missing spots.
If it happens often enough, it does a number on teacher morale, said Casey Klapmeyer, associate superintendent at Hickman Mills.
That has been a problem at Hickman Mills. Last year that district filled only about 82 percent of the vacancies on average.
“But some days it would go to the mid to low 60s and those were the days that were killing us,” Klapmeyer.
Lee’s Summit fared better with about a 90 percent fill rate. But Kelly boasts a 95 percent fill rate, and that has made it attractive to districts.
“It’s very disruptive to schools to have people running around at 5 o’clock in the morning figuring out how to get classrooms filled,” said Apsey. “It diverts much-needed resources away from the mission of the school.”
North Kansas City has been happy with the results so far, said Clemens. The district was used to filling about 90 percent of the daily vacancies, he said, but Kelly has recruited a larger pool and now that number is 99.6 percent. The agency offered jobs to all the current substitutes and then added more, he said.
In the past, the district was lucky to have a pool of 300 subs to draw from, but with Kelly there are 500, Clemens said.
“Kelly has eight to 10 people recruiting all the time and interviewing all day long,” he said.
That kind of staff power is something the district cannot afford, he said.
Outsourcing is likely to continue as more big districts get involved, said Klapmeyer of Hickman Mills. More districts may follow as they begin to see themselves competing for a limited pool of subs, he said.
One other advantage cited by local districts was the benefits offered by Kelly to substitutes. Besides health insurance, Kelly pays weekly and offers training and benefits such as 401ks.
In Missouri, being a Kelly employee means retired teachers aren’t limited to 550 hours to continue to draw state retirement benefits.
The Missouri National Education Association doesn’t see this as a positive.
“Public services should be public,” said Peggy Cochran, executive director of the state NEA. “They’re giving up local control over who they’re getting, how they’re being hired and how they’re being evaluated.”
The danger, Cochran said, is that districts could begin to replace full-time teachers with long-range substitutes.
Cochran pointed out that districts still pay the health insurance indirectly through their fees to an employment agency. Those districts that outsource could find themselves with higher fees down the road, she said.
The idea of retired teachers working unlimited substitute hours also was troublesome, she said, because it could potentially strain the system.
“You’re replacing a teacher who is paying into the retirement system and keeping it afloat with someone who is not paying into the retirement system,” she said.
But Todd Fuller, spokesman for the Missouri State Teachers’ Association, said it would be rare for a district to replace a full-time teacher with retired substitutes.
Instead, teachers would appreciate having more substitutes available to fill in, he said. Sometimes teachers can’t take a day off except in emergencies because there aren’t enough substitutes, he said.
Meanwhile on the Kansas side of the state line, outsourcing has not been as prevalent. Kelly officials reported no Kansas districts in the area as clients. Only one area district, De Soto, has used a different temporary agency for its substitutes. But De Soto started that in 2007, well before the Affordable Care Act was enacted.
Most district officials in Johnson County said they have an ample pool of good substitutes to draw from, so filling vacancies has not been much of a problem.