The agreement stipulated, in part, that "MESSA will be allowed to. . .set aside funds for future years by charging its members contribution rates that are greater than the (Blue Cross/Blue Shield) premium rates, provided that the resulting net assets. . .minus MESSA's RSR account with (Blue Cross/Blue Shield) and the value of MESSA's property and equipment less accumulated depreciation, do not exceed 10 percent of MESSA's premium obligations for its health plans for its previous year."

In a nutshell, the agreement limited MESSA's ability to soak school districts for more than it needs to provide very generous insurance coverage for school employees. Sadly, a key provision of that agreement was quietly dismissed by the MEA-friendly Granholm administration last fall, with understandably little public notice.

Consider a recent report on MESSA, reporting earnings of $90.6 million in 2007, "bumping its total end of year assets from $268 million to $359 million, a 33 percent bump."

Why should public school districts, already scraping for nickels and dimes to buy textbooks and classroom computers, have to pay one penny more than necessary to provide insurance for their employees?

The answer may be sickeningly political.

In an April 30, 2008 letter from the state's Office of Financial and Insurance Services, Frank Webster, a former top administrator and converted critic of MESSA, was informed that MESSA's 2008 "asset limit," as determined by the formula spelled out in the settlement agreement, had yet to be determined. Webster inferred from that statement that the "asset limit" provision of the 1996 agreement remains in "full force and effect."

But that was shockingly not the case. In copies of correspondence more recently obtained by Webster, it appears that the provision of the settlement agreement limiting MESSA's net assets from year to year was quietly dismissed by the OFIS last fall. In an Oct. 23 letter to MESSA Executive Director Cynthia Irwin, OFIS Chief Deputy Commissioner Frances K. Wallace agreed that the "net asset limitations referenced in sections 2 and 3 of the settlement agreement are lifted."  These documents can be viewed at MEAexposed.com.

Interestingly enough, Wallace was not given the authority to execute such an amendment until October 31, 2007, when then-Commissioner Linda Watters issued order 07-058-M, giving Wallace authority to change the critical 1996 agreement.  Thus, Wallace made a deal with MESSA on behalf of Michigan citizens she had no authority to make.

With one stroke of the pen, the state, under MEA cheerleader Granholm, gave MESSA renewed permission to raid school board pocketbooks at will, and build its political war chest as large as it wants with taxpayer dollars. Remember, MESSA is free to charge districts insurance premium rates above and beyond what its underwriter, Blue Cross/Blue Shield, would have charged for the same polices. Without the restraint spelled out in the settlement agreement, MESSA becomes an unchecked blue jay in a robin's nest, eating all the eggs and the young birds it wants, until it has its fill.

Taxpayers should be outraged, if not surprised, by the move.

Nobody should be surprised that the governor, under fire from her friends in the teachers union, would throw them a financial lifeline. That's because Granholm, in the heat of the state's budget war last fall, reluctantly signed a bill requiring school boards to seek competitive bids for employee health coverage, and forcing MESSA to provide historical insurance claims data for school boards to inspect.

The MEA was outraged by these very reasonable reforms, and in fact is still fighting the claims data law, under the argument that it invades the privacy of insured school employees.

Considering the timing of the insurance reforms, which passed Oct. 1, 2007, it would appear to some that the governor, in an act of penance, approved the waiver of the MESSA "net asset" provision just weeks later, to keep her most loyal supporters from jumping ship.