The cuts are mandated by Act 85, a compromise law reached by Gov. Phil Scott and lawmakers during a special session in June. Scott had pressed for teacher health insurance coverage to be negotiated on a statewide basis, but Democrats balked at stripping the collective bargaining process from local unions.
Instead, the savings come from reduced payments to districts from the education fund, leaving school boards and unions to negotiate contracts that achieve health care savings or cut spending elsewhere.
The reduced payments are split over two years, with the lion’s share coming in the current fiscal year. The reductions range from less than 1 percent of the money a district receives from the education fund to 3 percent, with the majority falling under 1 percent. For a full breakdown by district, click here.
The law assumes savings based on an 80/20 split of premium costs for the Vermont Education Health Initiative’s new gold-level plan, and in some cases a contribution to a health savings account or health reimbursement agreement. The new plans take effect in January.
The dollar amount of savings was then estimated based on the difference between a district’s fiscal year 2017 health care costs and its projected fiscal 2018 health care costs based on a half-year of the new plans and its number of union employees as of April 1.
School board and union officials still negotiating contracts just one week before school starts must account for the reduced payments as part of already contentious negotiations over health care and overall compensation — or their districts will have to cut spending elsewhere.
“The health care insurance savings that the district is required to return to the state are much higher than we anticipated,” said Burlington School Board Vice Chair Stephanie Seguino in an emailed statement. “This likely gives us less flexibility in teacher contract negotiations.”
Burlington will receive $494,000 less from the education fund over two years, with $321,000 coming out of payments for the current fiscal year. That $321,000 is about 0.5 percent of the $61.5 million the district gets from the state.
Brock said she believes the district should be able to cover reduced state funding through savings on lower health care premiums. “The district is going to realize a big savings,” she said.
Contract negotiations between the board and the union began in February. The two sides declared impasse in mid-March, with the board rejecting a neutral fact-finder’s report in July. The two sides will sit down for a new round of bargaining Thursday.
In South Burlington, the issue of reduced state payments is magnified by its struggles earlier this year to pass a budget. City voters rejected two spending proposals, in part because of controversy over dropping the district’s Rebels sports team moniker.
However, the budget that finally prevailed in June, prior to the passage of Act 85, was “fairly bare bones” in order to meet demands for property tax relief, said school board Chair Elizabeth Fitzgerald.
That budget already uses $50,000 in savings from lower premiums, meaning South Burlington has fewer options to cover the state’s reduced payments, which total $469,000 over two years, including $305,000 in the current fiscal year.
That creates added pressure in negotiations that have already reached loggerheads, Fitzgerald said, adding that she believes the district is unlikely to achieve enough savings in the new contract to match the reduced payments.
The South Burlington School Board and the South Burlington Educators’ Association failed to reach a new contract after a 10-hour bargaining session with a neutral mediator Monday. The union blamed the school board for walking out of the talks, saying its bargaining team was prepared to stay though the night.
At issue again are salary increases and health care. The union described the board’s health care proposal as “radically out-of-step with the recommendations” of a neutral fact-finder’s report — which the board rejected — as well as other settled contracts from around the state.
Not all districts still negotiating employee contracts feel the same pressure from reduced education fund payments, though some still grumbled about the uncertainty created by the 11th-hour compromise.
“The Legislature seems to sometimes neglect how it will impact school budgets,” said Colchester School Board Chair Mike Rogers. “Until (the reduced payment figures) came out last week, we were kind of up in the air, as far as what we were going to do.”
The Colchester School District is still negotiating with teachers, and Rogers said he was “pleasantly surprised” by the amount the agency is cutting – around $73,000 – a sum that he said the board should be able to absorb without cutting the budget.
Districts that settled contracts prior to the special session knew some health care savings could be required, but an official with one of the state’s largest, the Champlain Valley School District, said the health care savings it negotiated in an already settled contract won’t quite cover the reduced payment for this year.
“(The contract) didn’t anticipate the exact situation that the Legislature settled on, but we did arrive at a settlement that did save us health care dollars,” said Mark McDermott, director of human resources, personnel, policy and legal services for Champlain Valley School District.
Champlain Valley has the second largest payment reduction of any district in the state, totaling more than $778,000. In the current fiscal year, the reduction is $506,000. That’s about 0.87 percent of the $62.5 million it gets from the state and an even smaller percentage of the $75 million budget voters approved on Town Meeting Day.
McDermott said district officials estimate the savings in their contract fall roughly $150,000 short of the $506,000 reduction.
“I don’t want to belittle $150,000, it’s a large amount, but in our consolidated district it won’t hurt our educational quality to find that money somehow,” McDermott said.
Scott’s spokeswoman, Rebecca Kelley, said in an email that the governor’s original proposal would have exempted districts that had already settled, and that “it was always the governor’s intent to recapture savings exclusively through the reduced health care costs.”
Kelley said “legislative leaders” were confident that the deal that became Act 85 would give school districts that had already settled contracts “the flexibility to still realize savings from the transition to the new health care plans.”
A commission created by Act 85 will review contract settlements from across the state and make recommendations about the efficacy of moving to a statewide teacher contract in the future, Kelley said.
