Health insurance costs drive school budget deficit, district says

Jan. 17—Health insurance and special education costs for the school district have risen significantly in recent years and are making a serious dent in the budget, administrators said at a Thursday evening budget meeting.

Both increases align with national trends: of increasing numbers of special needs students and rising health insurance costs for employers.

They are also examples of costs outside of the district's control that continue to grow as administrators face suspicion from taxpayers that the district's budget shortfall is due to poor money management.

"Is this negligence? We understand it's not." Superintendent Erwin Garcia said. "This is really a situation that is hard to control...The problem with the public is they see us (as) being negligent."

Though the state's education funding has not kept pace with inflation, health care costs have. The district's health care spending is projected to increase by $1.8 million in the upcoming year, after having increased $3.1 million in the past three years, according to Craig Van Nice, the district's executive director of business services.

These costs drive the district's elementary school deficit, which is projected to be $1.5 million this school year, according to Garcia.

To cut costs, the district reached an agreement last year with the teacher's union to provide higher deductible family plans for the next two years. This is as much of a cut to health insurance costs as the district can stomach, as Garcia said that providing bad health insurance plans to teachers who are already "beat up" by being poorly compensated would "empty" the district's teacher pool.

Meanwhile, special education cost the district $700,000 out of the elementary general fund last year, after the district maxed out its special education revenue sources. This means that special education costs were 10% over the $7 million budget, according to Garcia.

This is partially due to the fact that the state does not currently pay for special education for preschoolers, a population expected to grow by 25-30% this year. Legislators have proposed a bill to change this.

The number of special education students in the district overall increased 33% between 2019 and 2022, according to a review by the district. Special education students have "individualized education plans" which determine their accommodations and may require services including speech therapy, occupational therapy, physical therapy and more.

"We cannot say 'Oh no, we're capped on our budget,'" Garcia said. "Otherwise we'd be violating that student's rights."

To add to the cost of providing services for an increasing number of special education students, it can be difficult to hire for specialized positions required to support these students.

For example, the district lost four speech therapists and had no applications to fill the open positions. This is no surprise, given that the district pays speech pathologists a starting salary of $54,000 per year when they could make over $100,000 in private practice, according to Garcia. The district ultimately had to sign a $400,000 contract with a company from Colorado to provide remote speech therapy.

"It would be a violation of (federal law) to deny these services," Garcia said of the contract.

Thursday's meeting eventually progressed into a "will they, won't they" discussion of the legislature and the proposed education funding reforms.

Garcia has been optimistic about proposed legislation that would shore up the district's budget, but the budget committee discussed potential cuts that would be necessary to keep the budget balanced should the legislative winds blow in the other direction.

"Some people have more faith in our legislature than I do," Trustee Zack Terakedis said.

Without funding increases from the state, the district will have to make cuts.

Garcia said that were cuts to become necessary, athletics and music would likely be affected, referencing cuts made by Helena's school board last year.

"The community has got to understand that if we're told loud and clear for three or four years, 'Figure out how to live with what you have,' that's going to require (changes)," Terakedis said. "I think we need to keep saying that all of these things are on the table, because we're not running a deficit."

___

(c)2025 the Billings Gazette (Billings, Mont.)

Visit the Billings Gazette (Billings, Mont.) at www.billingsgazette.com

Distributed by Tribune Content Agency, LLC.