Health Care Reform – What’s Next For Public Agencies?

June 2012
Number 34

The United States Supreme Court has upheld the federal health care reform law, known as the Patient Protection and Affordable Care Act (ACA). While some of the changes have already gone into effect, the most sweeping changes will occur in 2014 and 2018. These changes will have significant effects upon how employers, including school districts and other public agencies, provide health insurance to their employees. Because the implementation of these changes must be negotiated with employee unions, it is important to begin planning right away. Below, we will summarize the biggest upcoming changes to the provision of health care.

The ACA has three fundamental pillars:

  • Health care exchanges,
  • The employer mandate, and
  • The individual mandate.

The employer mandate subjects employers to penalties for not providing access to affordable insurance to employees. The individual mandate provides penalties against individuals who choose not to have health insurance. The health care exchanges are a new insurance market in which people who do not receive affordable health insurance from their employers can buy government-subsidized health insurance. The health care exchanges, employer mandate, and individual mandate all become effective on January 1, 2014.

Additionally, a significant tax on high-value health care plans will become effective on January 1, 2018.

Health Care Exchanges

The health care exchanges will be state-wide marketplaces for individuals to purchase health insurance. California has been aggressively developing its exchange since the passage of the ACA, and it is anticipated that the exchange will be ready by the January 1, 2014 deadline. More information regarding California’s exchange can be found at its website.

Individuals who purchase insurance through an exchange may be eligible for a federal subsidy for the insurance. Such subsidies are available for
employees who:

  • Earn less than four times the federal poverty level. (The poverty level varies by family size and is annually adjusted, but for 2012, the poverty level for a family of one is $11,170, and for a family of four is $23,050),
  • Are either not offered insurance by their employer or the offered insurance either costs more than 9.5% of the employee’s household income or pays less than 60% of covered costs, and
  • The employee purchases insurance through the exchange rather than through the employer.

Initially, the exchanges will only be open to individuals and small employers with fewer than 50 employees. However, it is possible that at some point in the future the exchanges will be opened to larger employers.

Employer Mandate

The ACA generally requires employers–including public agencies–to offer health care insurance to employees, or to be subject to penalties. Additionally, employers of 200 or more employees are required to automatically enroll employees in an employer-sponsored health insurance plan.

Penalties under the employer mandate will generally be assessed against:

  • Large employers (50 full-time equivalent or more employees) who
  • Do not offer insurance to at least one full time employee, or offer insurance, but at least one full time employee’s contribution to the self-only premium exceeds 9.5% of the employee’s household income, and
  • At least one such employee obtains federally-subsidized insurance through a health care exchange.

The plans offered by employers must meet minimum standards of coverage that will be established by the state. These minimum standards are still under development.

Some school districts have bargained health coverage arrangements in which the district makes group health plans available, but the employees pay the full cost of their insurance. This appears to fulfill the requirement of “offering” insurance. The insurance plan offered must meet certain requirements regarding the variety of health services covered, and the plan must pay for at least 60% of covered health care expenses.

However, if just one full time (30 hours/week or more) employee’s contribution to his or her own insurance exceeds 9.5% of the employee’s household income, and that employee purchases subsidized insurance through an exchange, then the employer would be subject to a penalty.

The employer penalty for failing to provide sufficient insurance coverage is the lower of the following, on an annualized basis:

  • $2,000 for each full time employee, except that 30 employees are deducted from the calculation.
  • $3,000 for each full time employee who receives subsidized insurance through an exchange.

Individual Mandate

Individuals who choose not to maintain minimum levels of health insurance will be subject to tax penalties. Those penalties are phased in gradually, and are the greater of:

  • For 2014, $95 per uninsured person or 1% of household income.
  • For 2015, $325 per uninsured person, or 2% of household income.
  • For 2016 and later, $695 per uninsured person or 2.5% of household income.

There are a number of exemptions to the mandate, such as an exemption for individuals whose religion forbids health care.

“Cadillac Tax”

Effective January 1, 2018, there will be a new 40% tax on health plans with premiums that exceed $10,200 for individuals or $27,500 for families. Separate vision and dental benefits are not included in the calculation of this cap.

In sum, the ACA will change who employers must provide insurance to, what that insurance must include, and how the insurance is provided. All of these changes must be negotiated with the relevant unions, and must be implemented by January 1, 2014, except for the “Cadillac tax” which is not negotiable and does not become effective until January 1, 2018.

If you have any questions, please feel free to contact one of our eight offices located statewide. You can also visit our website or follow Lozano Smith on Facebook.

Written By

Daniel A. Osher
Shareholder and Special Education Practice Group Co-Chair
Monterey Office
dosher@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

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Trial Court Rules LAUSD Certificated Teacher Evaluations Must Consider Student Progress Toward Meeting Standards

June 2012
Number 33

A Los Angeles County Superior Court has determined that the Los Angeles Unified School District’s (LAUSD) certificated evaluation process failed to comply with state law that requires teacher performance evaluations to be based, in part, on student progress toward meeting state and district achievement standards.

In Jane Doe v. Deasy (June 12, 2012, No. BS134604), a group of California school children and their parents alleged that LAUSD’s evaluation process violated the evaluation procedures set forth in Education Code sections 44660 et seq. (“Stull Act”). The Stull Act requires that the governing board of each school district establish standards of expected student achievement at each grade level in each area of study. It also requires that the governing board of each school district evaluate and assess the performance of certificated employees (both teachers and administrators) as it reasonably relates to the progress of students toward district-adopted standards.

The court held that the Stull Act specifically requires that school districts: (1) establish standards of student progress; and (2) evaluate certificated teachers and designated administrators as their performance “reasonably relates” to student progress. The court first considered the question of who is required to be evaluated and then what is required in an evaluation that considers student achievement. The court found that principals, assistant principals and teachers can be evaluated based on the progress of students in their schools. The court also determined that California Standards Tests (CSTs) can be used to measure performance based on student progress over time.

Although student progress toward standards must be considered when evaluating teachers and site administrators, the court ruled that LAUSD has the discretion to decide whether student progress is used directly or indirectly in these evaluations. The court determined that regardless of whether the evaluation considers student progress directly or indirectly, there must be a nexus between student progress and the evaluations that involves several components: (1) the evaluator must know what the student progress is with respect to the teacher; (2) the evaluator must know how to use the student progress information; and (3) the evaluator’s determination of the progress must be reflected somewhere on the evaluation form.

Because this is a trial court decision, it is not binding on other school districts and could be appealed. However, this case is important because it interprets existing law as requiring that employee evaluations affirmatively consider student progress. This ruling may serve as an impetus for many districts throughout California to consider increasing the use of student data in certificated and site administrator evaluations. Whether this ruling ultimately requires all California school districts to use student data in their evaluation systems or prompts legislation that compels this requirement remains to be seen.

This case also presents many intriguing negotiations issues that will need to be addressed if your district elects to move toward increased use of student assessment data in evaluations. Our firm is involved at the bargaining table with these issues, and we would be happy to share our insights and experiences with you.

If you have any questions regarding employee evaluations, this decision, how it impacts the evaluation process of certificated personnel in your school district, or the negotiations issues that flow from this decision, please feel free to contact one of our eight offices located statewide. You can also visit our website or follow Lozano Smith on Facebook.

Written By

Dulcinea Grantham
Shareholder, and Labor and Employment Practice Group Co-Chair
Walnut Creek Office
dgrantham@lozanosmith.com

Andrea Epps
Associate
Los Angeles Office
aepps@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Stockton Decision on Categorically-Funded Temporary Employees Now Binding on School Districts

June 2012
Number 32

Last week, the California Supreme Court chose not to review a court of appeal case, Stockton Teachers Association CTA/NEA v. Stockton Unified School District (Mar. 1, 2012) __ Cal.App.4th __ (2012 WL 663158), that clarified when a school district may designate a certificated employee as a temporary employee under Education Code section 44909.

Earlier this year, the Third District Court of Appeal published its Stockton decision which limited a district’s ability to rely upon section 44909 to justify a temporary, rather than a probationary, classification for certificated employees. The court held that a temporary classification was allowed under section 44909 only if the employee is: (a) hired for the term of a categorically funded project or a program or project conducted under a contract with a public or private agency; and (b) terminated at the expiration of the contract, project or program for which they were hired.

Previously, school districts commonly applied section 44909 to allow the hiring of categorically-funded temporary employees who could be released at the end of the year pursuant to section 44954. The court recognized that section 44909 does allow a district to release such employees under section 44954, but only if the employee is terminated “at the expiration of the contract or specially funded project.” The court held that if the contract, project or program is not expiring, a district must treat the employee as a probationary employee for purposes of release (e.g., non-reelection, layoff, or mid-year dismissal for cause). Notwithstanding the Stockton decision, the service of these employees still “shall not be included in computing the service required” to obtain permanent status unless: (1) the person serves at least 75% of the school year; and (2) the person is subsequently employed as a probationary employee in a regular certificated position.

The California Supreme Court’s denial of review establishes the court of appeal’s decision as a binding and precedential interpretation of section 44909. This will affect a district’s hiring, release, dismissal, and layoff of certificated employees who are employed to work in categorically funded positions and those arranged under private or public agency contracts. Districts should review their current staffing for such projects and programs to review whether certificated employees in categorically-funded projects, or in projects or programs pursuant to contracts with public or private agencies, are properly classified. Districts may wish to consult with legal counsel to specifically tailor their employment contracts with guiding language provided in the Stockton decision.

See Lozano Smith News No. 10, March 2012, for more information on the impact of the court of appeal’s decision. If you have any further questions, please feel free to contact one of our eight offices located statewide. You can also visit our website or follow Lozano Smith on Facebook.

Written By

Darren C. Kameya
Senior Counsel, and Labor and Employment Practice Group Co-Chair
Los Angeles Office
dkameya@lozanosmith.com

Rajesh R. Srinivasan
Law Clerk
Monterey Office
rsrinivasan@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Significant Changes To Stop Notice Procedures For Construction Projects, Effective July 1, 2012

June 2012
Number 31

Numerous changes to the California Civil Code on July 1, 2012, will affect the stop notice provisions, which allow a subcontractor to force a public agency owner to withhold funds from the general contractor when the subcontractor has not been paid. The following is a summary of the more significant changes to these procedures.

  • Stop Payment Notices – As of July 1, “stop notices” will be referred to as “stop payment notices.” This change more accurately reflects the nature of these procedures.
  • Notice of Completion (“NOC”) – After July 1, a NOC of the project may be recorded by the owner up to 15 days after completion of the project, which is longer than the current 10 days. (Civil Code § 9204(a).) If the owner timely records a valid NOC (or a valid Notice of Cessation), a subcontractor must give a stop payment notice to the owner within 30 days of the recording. If the owner does not timely record a valid NOC or Notice of Cessation, the time period in which the claimant may give a stop payment notice to the owner increases to 90 days after completion of the project or cessation.
  • Definition of “Completion” – After July 1, “completion” will be defined as the date of the owner’s acceptance of the project or the 60th continuous day of cessation of labor, whichever occurs first. (Civil Code § 9200.) Among other things, this two-prong definition affects the timing of (a) the deadline for recording a NOC, and (b) the expiration of the subcontractor’s 90-day period for giving owner a stop payment notice.
  • Notice Sent by Owner – Currently, if the subcontractor paid $2 when the stop notice was filed with the owner, the owner must send to the subcontractor a notice within 10 days after the recording of a NOC or other specified events, whichever occurs later. Effective July 1, 2012, Civil Code section 9362 will require the subcontractor to pay $10, and the owner then will have to send to the subcontractor a notice of the deadline to file a court action to enforce the stop payment notice. Owner will have to give this notice within 10 days of completion of the contract and within 10 days of any recording of a NOC or Notice of Cessation.
  • Location of Statutes in the Civil Code – The stop notice provisions for public works are being moved from sections 3082-3106 and 3179-3214 in the Civil Code to sections 8000-8154 and 9000-9566. The renumbering may require updates to the public agency’s construction-related documents, including notices sent to the subcontractor and general contractor.

These new statutes contain many changes that may affect the handling of stop payment notices and the recording of notices. For these reasons, be sure to consult with your construction counsel about the implications of these new statutes before and during closeout of your current projects.

If you have any questions regarding the changes to the stop notice provision related revisions to your contraction documents, please feel free to contact one of our eight offices located statewide. You can also visit our website or follow Lozano Smith on Facebook.

Written By

Ruth Mendyk
Shareholder, and Facilities and Business Practice Group Co-Chair
Fresno Office
rmendyk@lozanosmith.com

Arne Sandberg
Senior Counsel
Walnut Creek Office
asandberg@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

IDEA’s Disciplinary Procedural Safeguards May Apply To Students Not Yet Eligible For Special Education

June 2012
Number 30

In two recent decisions, the Office of Administrative Hearings (OAH) provided guidance regarding potential discipline safeguards and procedures for students not yet eligible for special education and related services. In Anaheim Union High School District (2012) OAH No. 2012031076 and Fairfield-Suisun Unified School District (2012) OAH No. 2012030917, OAH found that the school districts violated the Individuals with Disabilities Education Act (IDEA) by failing to provide procedural safeguards in disciplinary matters.

When disciplining students with disabilities, school districts must comply with certain IDEA requirements. For example, prior to changing special education students’ placements for disciplinary reasons, relevant members of a student’s IEP team must conduct a “manifestation determination” to determine whether the student’s misbehavior was “caused by, or had a direct and substantial relationship” to the disability or was the “direct result” of the district’s failure to implement the IEP. (20 U.S.C. § 1415(k)(1)(E); 34 C.F.R. § 300.530(e).)

The IDEA discipline procedures may also apply to students who have not yet been identified as having a disability or have never received special education services before committing the offense for which they are disciplined. (20 U.S.C. § 1415(k)(5); 34 C.F.R. § 300.534.) This is so if the school district has a “basis for knowledge,” that the child has a disability before the child engages in the misconduct. A basis of knowledge exists if one of the following occurs before the child’s misconduct: (1) the parent expressed concerns in writing to a supervisor, administrator, or teacher that the child is in need of special education; (2) the parent requested a special education evaluation; or (3) the child’s teacher or other district staff expressed specific concerns directly to the director of special education or other supervisor about a pattern of behavior demonstrated by the child. (34 C.F.R. § 300.534(b).)

The key issue in both cases was whether the school districts had a basis of knowledge about the students’ disabilities, thereby entitling the students to the IDEA’s procedural safeguards. In Anaheim Union High School District, a 10th-grade student was suspended from school and recommended for expulsion after he was accused of soliciting the sale of drugs on campus. Approximately five months before the student’s offense, the district had created a Section 504 accommodation plan for him, to address his increasing academic difficulties, anxiety, ADHD, lethargy, inattention, and need for frequent breaks during class. The student argued that the existence of his Section 504 plan alone gave the district a basis of knowledge that he had a
disability. OAH disagreed, refusing to create a rule that a Section 504 plan or meeting automatically gives a district knowledge of a student’s disability under the IDEA.

However, OAH found that the district had a basis of knowledge because at the Section 504 plan meeting, school district staff had “expressed specific concerns about a pattern of behavior demonstrated by the child” directly to the assistant principal. (34 C.F.R. § 300.534(b)(3), emphasis added.) Here, OAH determined that “pattern of behavior” includes the types of concerns that were raised by the student’s teachers at his 504 plan meeting: the negative effect of the student’s anxiety, including a recent suicide attempt and resulting hospitalization, inattention, and lack of focus on his ability to access his education. OAH also took into consideration the student’s needs and academic difficulties that continued even after the Section 504 plan was implemented.

In Fairfield-Suisun Unified School District, OAH similarly addressed whether the school district had a basis of knowledge of the student’s potential disability, based on staff members expressing concerns at meetings regarding the student’s behavior. There, a 7th grade student with a history of negative behaviors and social-emotional difficulties was suspended and ultimately expelled for writing sexually explicit and threatening comments in a classmate’s book. The student’s bullying and disruptive behavior became so pronounced that the district held a Student Study Team (SST) meeting for him during the spring of his 6th grade academic year. At the SST meeting, staff expressed concerns that the student lacked empathy, bullied other students, defied school authorities, and attempted to set fires at home. Furthermore, a few days prior to the offense for which the student was expelled, he had threatened to kill one of his teachers. In discussing the threat with district administrators, the mother expressed concerns about her son’s psychotic ideations, Internet searches for guns, and access to guns at his father’s house, and requested psychological support for him. The administrators relayed these concerns to the student’s principal.

OAH clarified that in order for a district to have a basis of knowledge based on a staff member’s expression of concern, the discussion need not be about a suspected, educationally-related disability or specifically mention an assessment for special education. Moreover, OAH held that concerns need not be raised solely to special education administrators, but could also be raised with other supervisory personnel. Thus, the discussions amongst school administrators at the SST meeting and the subsequent meeting regarding the student’s threat to kill his teacher were sufficient to give the district knowledge of the student’s disability.

In both cases, the students successfully established that the school districts had knowledge of their disabilities before they engaged in misconduct, because school staff members had expressed concerns about the students’ behavior to supervisory staff. Because the districts knew of the students’ disabilities, they violated the students’ rights by failing to provide procedural protections, such as conducting a manifestation determination. OAH in Anaheim Union School District also acknowledged in its order the necessity to complete an expedited assessment of the student prior to proceeding with the manifestation determination hearing.

These decisions highlight the importance in understanding the events or discussions that trigger the application of IDEA’s procedural safeguards to students not receiving special education at the time of their misconduct. If a parent previously requested an assessment, expressed in writing that the child needs special education, or if staff members expressed concerns regarding a pattern of behavior to certain administrators or supervisors, the IDEA’s disciplinary requirements may apply.

If you have any questions regarding these decisions, please feel free to contact one of our eight offices located statewide. You can also visit our website or follow Lozano Smith on Facebook.

Written By

Ben D. Nieberg
Shareholder
San Diego Office
bnieberg@lozanosmith.com

Karin M. Wahlstrom
Associate
San Diego Office
kwahlstrom@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Court of Appeal Affirms School District Discretion in Hiring Temporary Certificated Employees

June 2012
Number 29

In an important case for school district employers, McIntyre v. Sonoma Valley Unified School District (May 1, 2012) __ Cal.App.4th __, 2012 WL 1858959, the California Court of Appeal for the First District recently held that certificated employees may be classified as temporary for multiple school years and affirmed prior court decisions holding that school districts are not required to “match” employees on leave of absence with any specific temporary employee.

Ms. McIntyre commenced employment in the Sonoma Valley Unified School District on August 21, 2006 as a temporary teacher. She was assigned to a position that was previously held by a teacher who had retired. In March 2007, pursuant to Education Code section 44954, Ms. McIntyre was notified she would be released from continued temporary employment in the District for the 2007-08 school year.

In May 2007, Ms. McIntyre was notified that the District had certificated employee positions available for the 2007-08 school year and that Ms. McIntyre would be returned to District employment as a temporary employee for that school year. During the 2007-08 school year, Ms. McIntyre was assigned to a class previously taught by a teacher who transferred to another site. In March 2008, Ms. McIntyre was notified that she would again be released from continued temporary employment in the District for the 2008-09 school year.

In May 2008, Ms. McIntyre was notified that the District had certificated employee positions available for the 2008-09 school year and that she could accept a position as a temporary employee of the District for that school year. In October 2008, Ms. McIntyre was notified that the District’s Board of Trustees approved changing her status from temporary employee to second-year probationary employee for the 2008-09 school year. In converting Ms. McIntyre to second-year probationary status, the District included or “tacked on” her service as a temporary employee during the 2007-08 school year. Prior to March 15, 2009, Ms. McIntyre was notified that the Board had taken action pursuant to Education Code section 44929.21 to nonreelect her from continued probationary employment in the District for the 2009-10 school year.

In upholding the District’s nonreelection of Ms. McIntyre, the court rejected Ms. McIntyre’s claim that because she was assigned to positions which were vacated by other employees, she necessarily had to be classified as a probationary employee. The court recognized that California courts have “repeatedly held that a district’s ability to use section 44920’s temporary classification is not dependent on a one-to-one match of an employee on leave to a temporary teacher. . . . Rather, all that is required under section 44920 is that the ‘number of temporary teachers not exceed the total number of probationary and permanent employees on leave at any one time.'”

The court also rejected Ms. McIntyre’s claim that she could not be employed as a temporary employee for multiple school years. The court held that “there is nothing in the Education Code that precludes a school district from hiring temporary teachers to replace teachers on leave on a year-to-year basis without elevating them to probationary status.”

Finally, the court clarified the relationship between several provisions of the Education Code that address temporary employee status. The court held that Education Code sections 44918 and 44920, which were enacted after section 44917, prevail over any conflicting language in section 44917. In clarifying the statutory provisions governing temporary employment status for certificated employees, the court held that section 44917 does not compel probationary status for an employee based solely on the fact that the employee served as a temporary employee for two consecutive years.

If you have any questions about this decision, or how it impacts the classification of temporary employees in your school district, please feel free to contact one of our eight offices located statewide. You can also visit our website or follow Lozano Smith on Facebook.

Written By

Gregory Wedner
Shareholder
Santa Rosa Office
gwedner@lozanosmith.com

Dulcinea Grantham
Shareholder
Walnut Creek Office
dgrantham@lozanosmith.com

 

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.