Outsourcing Substitute Teachers, the ACA’s Unintended Lesson

Nationwide, school districts are scrambling to find more substitute teachers. Leaning on private companies to help them do it, schools are changing the way they find substitutes. When asked why, some of the school districts are pointing their fingers at the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). While some schools are looking to staffing agencies to try and avoid the penalties that stem from the ACA’s employer mandate, other schools claim they are streamlining a burdensome process. The answer to what is really going on lies somewhere in between the ACA employer mandate and the hectic world of school administration.

Outsourced

The problem is simple. Schools need substitutes and sometimes they need more then they can find. Whatever is driving the need, whether the ACA or teacher absence, private substitute staffing services are becoming an alternative to the traditional method where schools fill the spots themselves. The Virginian-Pilot reported that one private company, Source4Teachers, has partnerships with over 160 school divisions in New Jersey, Pennsylvania, Connecticut, and Virginia. Source4Teachers charges school districts a slight markup over what the schools would have paid teachers directly; however, schools that use the company say costs are lower than providing healthcare benefits or paying the ACA employer penalty.

The Hampton Virginia school division reportedly had over 300 of its 350 substitute teachers working more than the 30 hours a week. Because those substitutes would have potentially qualified as full time employees under the ACA’s employer mandate, districts and divisions, like the one in Hampton Virginia, went looking for a way out. According to the Virginian-Pilot, the cost of compliance with the ACA to the Hampton school division would have been $2 million, if the school had continued to employ the same “full time” substitutes. Contracting with Source4Teachers was a means around an expensive end. By contracting with a company like Source4Teachers, school districts are able to eliminate “full time” positions by employing more substitutes with each substitute working fewer hours.

Efficiency

Some reports, including one story in the Boston Globe, suggest that substitute teacher outsourcing is not about the ACA at all. For some schools, outsourcing may be little more than a practical way to resolve a complex problem. In districts where several substitutes are needed every day, administrators often scramble to fill vacancies. Outsourcing the process to a private company, like Source4Teachers or Michigan based Kelly Educational Staffing, eliminates the headache and more efficiently places much needed teachers in classrooms. However, other districts, like the Shelby County School District in Tennessee, are not shy about expressly pointing to the ACA as the motivation behind substitute outsourcing.

Guidance

At the very least, schools are talking about the ACA and the effect the employer mandate will have on traditional substitute hiring. The Missouri School Board Association has issued a document to assist the state’s school boards with navigating the employer mandate of the ACA. Similarly, the Kentucky Department of Education has issued a resource aimed at helping Kentucky schools understand the law. Both of the documents emphasize the fact that substitute teachers may constitute full time employees under the laws requirements related to employee health benefits. In other words, the documents advise schools that, at least in some cases, they either will have to limit the hours each substitute is permitted to work or take on additional costs in the form of penalties or employee benefits. Outsourcing is just one of the ways schools are choosing to deal with the reality.

Legislation

Efforts have been made to change the ACA’s treatment of schools. For example, Luke Messer (R-IN) introduced the Safeguarding Classrooms Hurt by ObamaCare’s Obligatory Levies Act (SCHOOL Act), which seeks to exempt school’s from the ACA’s employer mandate. Legislation like the SCHOOL Act focuses on a supposed harm to schools and classrooms. Yet, some reports suggest that the districts looking to outsourcing are doing so for the very purpose of keeping their classrooms running at full steam. In fact, the use of a staffing service might mean that school districts will have the teaching staff they need more often and more dependably. At least for now, speculation is required to decide where the true harm falls.