Crookston School District and Minnesota Legislature – Superintendent Bates says Health insurance hikes will eat up state funding increase, and then some

June 06--Crookston School District Superintendent Chris Bates recalls not too many years ago being up in arms, along with School District Business Manager Laura Lyczewski and members of the Crookston School Board, over health insurance premium increases that came in at around 10 percent.

"We freaked out," Bates said in his office Tuesday, accompanied by Lyczewski to discuss the education per-pupil funding increase approved by the Minnesota Legislature the other day and signed into law by Gov. Mark Dayton. "If we had an increase like that to deal with today, we'd be dancing."

That's because, Bates said, when the district's 2017-18 fiscal year kicks in on July 1, a 23 percent increase in health insurance premiums for coverage provided to eligible school district employees will kick in.

That's the primary reason why, even though Bates and Lyczewski stress that they are extremely appreciative of the educational funding increase OK'ed by the legislature this spring -- 2 percent in 2017-18 and another 2 percent in 2018-19, which will add up to around $633,000 in new money -- they are quick to add that all of that money and then some will be obliterated by health insurance premium increases alone.

After several years in which the legislature kept funding flat and school districts eventually had to make cuts as a result, Bates said he will always appreciate new funding. "We're thankful, we're always thankful," he said. "But, however, as we step back, the economics of running a school district when it comes to health care, you can't continue on this path."

Bates and Lyczewski said that when it comes to health insurance premiums, trends up or down seem to run in two-year cycles. That's why Bates is taking a fairly pessimistic approach to the 2018-19 health insurance costs that will be announced in the spring of 2018. He's guessing that the 2018-19 premium increase will be in the 17 percent range. That will add up to around $1.2 million in additional expense over the biennium, or around twice as much as the educational funding formula increase over the same two years approved by the legislature.

The school board and Crookston Education Association -- the teachers' bargaining unit -- are currently in negotiations on a new contract. The current contract expires later this month, on June 30.

"You can't expect everyone in our system (the bargaining units who negotiate contracts) to look at what we're facing and just say, 'Well, then we'll take zeroes,'" Bates said.

The school district belongs to a health insurance cooperative. "We're contractually obligated to cover what's provided for health insurance," Lyczewski said. "If this were a private business facing these kinds of increases, they might be able to go to their employees and say we have to change some of these arrangement. But we are not a private business."

Bates said school districts aren't alone. Crippling health insurance cost increases are affecting businesses large and small, and farmers, too.

"It makes us really hope that gas prices stay agreeable, and that we have another mild winter so heating costs are manageable," Bates said. "Our challenge for the next two years is figuring out how we make this work. It really puts a premium on staffing levels and every reasonable efficiency you can find. In the last five years, I think we've done a lot of that, so there's really nothing any more than jumps out as an easy target (to save money)."

What's to come, as far as health insurance costs, looms like dark clouds on the horizon, he added. And yet, Bates stressed, he knows how important decent health insurance coverage is to school district employees and their families.

"From the employees' perspective, it's very important to them and their families; of course it is and we all understand that," he said. "It gives them security, and I'm sure they're just as concerned as we are."

When Bates went to St. Paul to speak to legislators previously this spring, the first thing he said District 1B State Rep. Deb Kiel mentioned to him was health care costs. Teacher groups that made similar trips hear similar concerns, he said.

"It's not a teacher issue or an administration issue, it's a school district issue," Bates said. "Everybody realizes that with increases like this, it makes it a real challenge just to make it all work and keep the programs and staff we've got."

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