Teacher health care deal creates budget uncertainty

A class at Rochester School. Courtesy photo
When Gov. Phil Scott proposed the state negotiate teachers’ health insurance benefits this year to save money for taxpayers, it was pitched as a win for everyone, including teachers and school districts.

But what emerged from secret negotiations between Scott and lawmakers has left both teachers and school board members feeling more like losers than winners.

Some think the compromise lawmakers struck with the governor is short-sighted because it is wringing money out of school districts just as they are trying to implement new proficiency-based learning and undergoing big changes in how they are governed.

School district mergers going on around the state are meant to bring about savings for taxpayers but have not been given time to play out.

The agreement between Scott and lawmakers left negotiations at the local level — a win for the teachers. School boards have a new tool when bargaining since the state set a benchmark benefit in law establishing that an 80/20 premium split and certain out-of-pocket costs are fair and reasonable. Some teachers now feel they will look greedy if they ask for more than the state recommends, even though for years they have buttressed lower-than-desired salaries with better benefits.

Almost every school district is deep into negotiations on new teacher contracts; more than 20 are at impasse and are awaiting fact-finding or mediation. Those at impasse can also reopen negotiations with new offers, but some board members said they aren’t sure how that would work or if it makes sense to go back to the drawing board.

If school districts don’t take back offers, especially those that are not close to the benchmark benefit, they will have to give up funds they already budgeted for this year and next. The compromise withholds payments to school districts from the state education fund that are based on budgets voters approved in March.

Tim Ashe
Senate President Pro Tem Tim Ashe, flanked by Gov. Phil Scott and House Speaker Mitzi Johnson, announces the budget deal reached between the Legislature and the Scott administration. File photo by Mike Dougherty/VTDigger
Lawmakers said there should be $75 million in savings because the premiums in the new plans cost less, giving school districts room to bargain plans that will save enough money to weather the cuts.

This year, school districts will have to make up for $8.5 million that will be given back to taxpayers, and next year they will have to replace $4.5 million. In August, the Agency of Education and Department of Taxes will let each school district know how much will be cut from its budget. That’s critical information, school board members say, they need now to continue negotiating with teachers.

Getting a handle on the cost of education has been a priority in Montpelier since taxpayers began revolting and sending school budgeters back to the drawing board. The school district merger law, Act 46, originally had spending caps meant to force school districts to control increases. The caps were revoked, partly because of a 7.9 percent increase in health care premiums that pushed up school spending.

Still, not sure what lawmakers would do in January, and because budgeting happens the previous October, many communities spent their reserves to stay under the caps and avoid tax penalties.

Then, in January, Scott proposed a freeze on school spending. In reaction, the Vermont School Boards Association and Vermont Superintendents Association brought several cost containment options to Scott. The one he latched onto took advantage of the Vermont Education Health Initiative, or VEHI, to switch to less expensive teacher health care plans.

Lisa Floyd, a teacher in Randolph, said she understands the need to rein in spending. “We started on the Act 46 path to contain costs, we shifted to VEHI plans to contain cost, and I understand the rationale for making that shift. But I just feel like rather than allowing these two things, Act 46 and VEHI’s new plans, to work and realize savings” the state rushed this through because the budget was being held hostage, she said.

At the same time lawmakers try to get money back into taxpayers’ pockets they are placing increasingly large burdens on school districts.

Four years ago, the Legislature passed sweeping changes to the way the state educates students with Act 77, also called flexible pathways. Two years ago, the state approved Act 46, compelling school districts to talk with neighbors about voluntarily merging into larger governance units. The most intensive work needed from teachers and school boards to comply with these laws is peaking now.

Teachers are focused on setting up proficiency-based graduation requirements for students that are not based on course credits but on a student’s ability to demonstrate mastery or proficiency before moving to the next grade or graduating. The law also requires every student in grades seven through 12 to have personalized learning plans.

Mairead Harris teaches Chinese at Stowe, and she said the schools have been spending a lot of time, money and energy on implementing these laws.

“We have spent so much time trying to figure out proficiency-based learning and how to put it in place without increasing costs for taxpayers. At the same time, school boards are trying to figure out Act 46. All of that takes a ton of time, and to have another demand put on teachers and school boards is a lot to ask.”

Mark Porter, Fran Brock, Burlington
Fran Brock, Burlington Education Association president, left, Mark Porter, Burlington School Board chair, and Ira Lobel, a mediator, address reporters after reaching a tentative contract deal. File photo by Morgan True/VTDigger
Burlington School Board member Mark Porter, who said he spoke on behalf of himself, not the board, said the change from one health care plan to four with numerous moving parts has further strained school boards. It used to be they bargained over only the premium share, but out-of-pocket-cost sharing has been added, he said: “This was a challenging year anyway from the point of negotiations being more complex with new plans.”

The complexity of the new health care plans has caused a drag on bargaining this year, according to a past interview with Jamie Teague, the business administrator for Norwich and School Administrative Unit 70, which comprises the Hanover (N.H.), Norwich and Dresden school districts.

Dresden School Board Member Neil Odell, who is on Norwich’s negotiating team, said he had hoped the administration would have taken over negotiating for teacher health care.

“I still think negotiating this at the state level is the right way to go. The Vermont NEA is already negotiating this at the state level,” he said. “The uncertainty in all of this is whether or not we can work with teachers and support staff to get the savings the Legislature says is out there.”

Some school board members were counting on using the savings for other things. And it isn’t clear to board members how to reopen negotiations that are at impasse.

The way things worked out, Norwich is likely to be looking at a hole in its budget.

“The problem is we have a budget that is voted on and approved, and part of the calculation was being able to use some of the savings we thought we might get out of health care to fund what we thought were appropriate wage increases. [The state] created a hole for us, and we have to find a way to fill it in if we can’t get to that target savings in our contract negotiations,” Odell said.

Norwich teachers and school board reached impasse late last year and are waiting for a fact finder.

Under the old health care plan that will run out at the end of this calendar year, Norwich teachers paid 16 percent of their premium. The Norwich School Board has offered to pay between 78 and 100 percent of premium costs the first year of the contract and between 64 percent and 99 percent in the second year. Odell would like to know how big a hole these numbers will create, but he will have to wait until August. Teachers need to start moving onto the new plans in November.

Porter said Burlington was also counting on savings from the switch in health care to pay for salary increases and possibly some program changes. He said board members are unsure what to do until the state Agency of Education tells them how much they have to cut from their budget if they don’t get the 80/20 split and cost shares.

“What I did not want to see was us sending back money this year, because the 2018 budget already passed and getting less money puts us into fiscal constraints,” he said.

Teachers and their supporters rally in Burlington during contract talks in September. File photo by Andrew Kutches/VTDigger
Burlington’s school board and teachers are also at an impasse, and fact-finding hasn’t begun yet. Porter said he is reluctant to speculate on whether the benchmark benefit will help or if it makes any sense to pull back the board’s offer.

“There are so many unknowns right now, to be trigger happy and pull back from impasse at this point and start all over again wouldn’t be prudent because we don’t have knowledge of what that means,” he said.

Odell agreed that it is too early and no one has explained how to begin to reopen negotiations. “Do I need to cancel that earlier process and sit back down with our teachers and then go back to impasse again?” he asked.

There are 17 to 25 contracts that have already settled, and they cannot renegotiate to accommodate the law and avoid having to cut their budgets. Lamoille South settled and is anticipating about $200,000 in cuts.

Harris, the Stowe teacher, is gearing up for a tough couple of years. She doesn’t know where her district will cut, but usually programs like hers and music and arts are the first to be pulled. “People who teach those things always feel nervous when we hear about cuts of this size because the fastest way to get there is to cut programs,” she said.

The fact that negotiations were going on behind closed doors that directly affected her and other teachers’ future was really frustrating, according to Harris. “We sign a two-year contract to work with a school, but we don’t know the financial future of that school for the next two years. That is a little disconcerting,” she said.

Randolph’s Floyd, who is also a school board member, said some parts of the state are able to pay their teachers much more, and in other areas where that is difficult the school boards have relied on nice health care packages. She isn’t convinced the new VEHI plans are going to be able to offer as attractive a benefit.

“It’s already not as much a benefit as it was, and hearing about the compromise, I think, that along with Act 46, the state government has deferred painful decisions to school boards. This compromise actually passes that off yet again to the local school boards,” she said.

It is a lot of short-term cuts on long-term needs, according to Harris. She isn’t sure where the savings come from unless teachers lose out.

Times are difficult, both nationally and in the state, and everyone is looking for solutions, said Floyd. But she would really like to know, “How did educators become the enemy in all of this?”

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  • Matt Young

    The “mess” was created when the teachers union puppet democrats showed their allegiance to the union and its big $$$$ political donations. Our representatives are supposed to “represent” Vermonts, not special interest groups.

  • Edward Letourneau

    “Times are difficult, both nationally and in the state, and everyone is looking for solutions, said Floyd. This is not true, but it plays to the union supporters and the liberals that want to take money from some and spend it on shinny things that get them elected.

  • Edward Letourneau

    School boards do not understand the system. Its devised by the state liberals, who also don’t understand it.