Eastern Lancaster County School District plans to "outsource" about 100 of its support staff workers to private companies beginning next school year to avoid possible penalties under the Affordable Care Act.
The Elanco school board April 15 approved an agreement with Substitute Teacher Service to provide food service workers and classroom aides for the district.
Instead of working for Elanco, the 89 support staff members will work for the private company, which contracts with several school districts in Lancaster County to provide substitute teachers.
STS will supervise the workers and handle all their paperwork and worker's compensation claims.
In addition, six Elanco school bus aides will be moved off the district payroll to work for Brightbill Transportation, the district's bus contractor, beginning next school year.
The moves were prompted by upcoming mandates in the Patient Protection and Affordable Care Act that could force Elanco to pay up to $600,000 in annual fines for not providing health care for some of the affected employees, Elanco superintendent Bob Hollister said.
The moves also spare the district from paying into a pension fund for the workers, who will no longer be contributing to the Pennsylvania School Employees Retirement System.
The district expects to save about $125,000 per year on pension costs under the outsourcing, said Keith Ramsey, Elanco's chief of finance and operations.
District officials could not guarantee that STS will hire the employees, who will be furloughed at the end of the school year. But STS president Jay Godwin said every food service worker and classroom aide who wants a job will have one.
"These people have been great and loyal, hardworking people," Godwin said. "Absolutely I want them on my team."
Godwin said the agreement with Elanco is the first of its kind for his company involving cafeteria workers. STS provides special-education aides to Bristol Township School District in Bucks County under a similar agreement.
The 89 Elanco workers shifting to the STS payroll will get raises of about 1 percent to 2 percent, Ramsey said, while the six bus aides are likely to take a slight pay cut at Brightbill.
The affected employees currently earn from $11.50 to about $17 an hour, depending on experience.
As part of the outsourcing, the employees will no longer pay 7.5 percent of their salaries into the PSERS fund, and their pensions will be frozen at the end of the school year.
The changes were made to reduce district expenditures and avoid the likelihood of Elanco incurring fines under the Affordable Care Act, often referred to as Obamacare, Ramsey said.
Beginning Jan. 1, Elanco will be required to provide health care coverage to any employee who works 30 hours or more per week.
While most support staff now work less than 30 hours, they sometimes exceed that threshold when called upon to fill in for workers who are sick or work longer shifts because of late buses or other unplanned circumstances, Ramsey said.
If Elanco failed to provide health care coverage for any worker who exceeded 30 hours in a week, the district would face fines of $2,000 for every employee on its payroll, he said.
Outsourcing the support staff to private companies, which are not subject to the same health coverage mandates, eliminates that risk of fines, Ramsey said.
The move also shifts paperwork and training duties from the school district to the two private firms, freeing up time for Elanco administrators to perform other tasks. STS will have a full-time, on-site supervisor to manage the employees.
The outsourced workers will be able to apply for unemployment benefits in the summer, something they cannot do now as district employees, Ramsey said.
The affected employees, who met last week with school district and STS officials, have been "very positive" about the impending changes, Ramsey said.
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