On Tuesday, many Vermont voters will weigh in on school budgets that have grown by the largest margins in recent history.
The reasons for that growth include rising costs for special education, vanishing Covid-19 pandemic aid, deteriorating school buildings and increased expenses related to student mental health.
Another reason is likely familiar to Vermonters across the state: health care is getting increasingly expensive.
Exactly how much Vermont will spend on its schools is still unclear. Last month, Gov. Phil Scott signed a law allowing districts to revise their budgets and delay votes until mid-April.
But according to Vermont’s teachers union, health care costs across all districts are expected to increase by 16.4%, or roughly $47.9 million cumulatively, between the current school year and the 2024-2025 school year.
Roughly 80% of that increase will be borne by taxpayers, according to the union. The other 20% will be paid by those employees. The school districts’ share would make up roughly 17% of the most recent estimate of the growth in school spending, $230 million.
To be sure, property taxes are not the only source of funding for education spending. And the cost of health benefits for municipal and state employees are also going up, and are generally funded through a variety of taxes, including on property.
But rising education spending is a visible example of how Vermonters across the state, even those who do not visit hospitals or clinics, bear the burden of higher health care costs.
The ‘precarious aftermath’
The costs of much of Vermont’s health care is regulated far from the state’s educational apparatus, at the Green Mountain Care Board.
Every year, hospitals come to the five-member board seeking approval for increased prices for medical care in their budgets for the next fiscal year. Commercial insurers also ask the board’s permission to increase premium rates for certain kinds of insurance plans.
Last year, most Vermont hospitals came to the board seeking permission to grow their revenue by double digits — growth that would come largely from increasing prices for medical care.
Hospital administrators told the care board that their organizations needed the additional money to cover the increased cost of supplies, pharmaceuticals and labor, amid a shortage of nurses and other care staff.
Vermont is also contending with a shortage of staff at mental health and long-term care facilities. That has left many patients who no longer need hospital-level care languishing for days or weeks in hospital beds, because there is nowhere for them to go.
Those patients take up valuable hospital real estate, but hospitals do not always receive payments from insurers to care for them.
“The cost and wage pressures that began during the pandemic — and have continued in its precarious aftermath — are not over,” University of Vermont Health Network administrators said in a June memo that accompanied their budget request to the Green Mountain Care Board.
When hospitals are approved for price increases, those higher prices generally lead to higher costs for insurers. In turn, insurers usually seek to increase the premiums they charge for health care coverage. (Reimbursement rates for government-run insurance programs, Medicare and Medicaid, are limited in how much they can increase year-to-year by federal and state laws.)
Last year, commercial insurers asked the Green Mountain Care Board for permission to enact significant premium hikes, among the highest in their history.
The board ultimately cut rates for both hospitals and insurers, but still allowed some significant price increases.
“The driving factors behind the increase in health insurance costs are the same for everyone,” Sara Teachout, a spokesperson for BlueCross BlueShield of Vermont, the state’s largest private insurer, said in an interview. “So really high increases in hospital budgets, really high increases in drug prices, are the two sort of standout factors.”
‘That did not happen’
School employees’ insurance is overseen by the Vermont Education Health Initiative, or VEHI, a nonprofit that provides health coverage to educators and school employees. VEHI offers four health coverage plans, all administered by BlueCross BlueShield.
VEHI says that the 16.4% increase in premiums for those plans is due primarily to increased costs for care, and a rise in the number of members seeking care.
“Continued increases in hospital budgets and in prices for hospital services, plus more expensive pharmaceutical charges, remain the major cost drivers,” VEHI administrators told members in an October letter.
School district employees’ health insurance is determined through statewide bargaining between representatives of the Vermont School Boards Association and the Vermont chapter of the National Education Association, the teachers union.
Roughly half a decade ago, stakeholders, lawmakers and the Scott administration hashed out the statewide bargaining system in an attempt to bring down school employee healthcare costs.
But in testimony to the House Ways and Means Committee on Thursday, representatives of the Vermont School Boards Association said that the process has not lived up to its promises.
The move to statewide bargaining “was supposed to slow the rate of growth in the cost of these benefits,” Sue Ceglowski, the executive director of the Vermont School Boards Association, told lawmakers. “And as we all know, that did not happen.”
Ceglowski called on lawmakers to alter the bargaining process between school boards and employees, which she said could help the parties reach a more equitable compromise and thus bring down costs.
The discussion “has typically been framed by the notion that this is a systemic health care issue, and until that problem is solved, there’s nothing we can do about these rising health care costs,” she said. “And we don’t think that sentiment is entirely correct.”
But Don Tinney, the president of the Vermont teachers union, said in an interview that the union is “not interested in changing the process.”
“The issue is not to be found at the bargaining table between the School Boards Association and Vermont NEA,” he said. “The real issue is the rising costs of health care.”
