Mass. Schools Grapple With Rising Health Costs
Feb. 04--Massachusetts residents have become accustomed to watching local school budgets increase over the years.
The annual growth -- somewhat routine -- is typically chalked up as reasonable, and there's not much pushback in a state where education performance repeatedly ranks No. 1 in the nation.
One of the most notable drivers of cost, however, is something not typically found in a classroom -- health insurance.
The Massachusetts Department of Elementary and Secondary Education, or DESE, tracks school expenditures each year, including public funding, grants, private donations and revolving accounts.
In 2017, health insurance for active and retired school employees cost $1.9 billion, accounting for 12 percent of the $15.7 billion spent overall on schools. The costs increased 12.2 percent from 2013, growing at a faster clip than salaries for classroom teachers (11.8 percent).
Add in the costs of pensions, salaries and other teaching services, and about one-third of the $15.7 billion is left over to pay for everything else in education, including instructional equipment, technology, software and transportation.
Amy O'Connor, chairman of the Swampscott School Committee, said Swampscott Public Schools teachers comprise 75 percent of municipal employees who receive insurance from the town. And the town participates in the Commonwealth of Massachusetts Group Insurance Commission.
The town appropriated $5.5 million in fiscal 2018 to cover employee health, dental and life insurance costs. In fiscal 2019, $5.6 million, a $1 million increase, was appropriated, according to Swampscott Town Administrator Sean Fitzgerald's fiscal 2019 budget.
For many school districts -- especially those with less money -- keeping up with the rising cost of health insurance often comes at the expense of materials and programs, explained Education Secretary James Peyser during a Jan. 24 education event in Boston.
"School districts, especially those that are spending at or about foundation levels (minimum funding) have been faced with the choice of essentially funding their health care benefits or funding programs and teachers and classrooms," Peyser said. "Of course, not funding health care benefits is not really an option, so the fact that they were absorbing high health-care costs meant that they had to make choices and tradeoffs."
Schools have subsequently spent less on textbooks and some library materials in recent years. And no other area of spending has declined more rapidly than professional development, a catchall term for trainings and continued education for administrators and teachers to keep abreast of new techniques and theories. Between 2013 and 2017, professional-development spending fell 13.4 percent to $178.7 million.
In some cases, fluctuations in health-insurance costs determine whether a community pays more or less in any given year. The Dennis-Yarmouth Regional School Committee on Jan. 28 approved a 3 percent increase to next year's school budget totaling $62.3 million. However, the total could turn into a 2.5 percent decline pending a vote on health-insurance rates by the Cape Cod Municipal Health Group, where the district buys its health insurance. If the rates don't increase, the school district is expected to adopt the lower budget figure, according to Wicked Local Yarmouth.
Of course, rising health-care costs are not solely a challenge of the school system. From 2013 to 2017, total health care expenditures in Massachusetts -- including money spent in both the public and private sectors -- grew 21 percent to $61.1 billion, according to annual reports by the Massachusetts Center for Health Information and Analysis.
But health-care costs nonetheless became a major focus for schools beginning in 2015 when the state Legislature created the Foundation Budget Review Commission to review how the state calculates how it provides funding to municipalities, known better as Chapter 70 funding.
Ultimately, the commission determined the calculations set in 1993 were outdated, and health insurance, special education and services for English language learners and low-income students were underfunded by about $1 billion per year.
"The actual costs of health insurance and special education have far surpassed the assumptions built into the formula for calculating the foundation budget," according to the report.
Fast forward four years and Republican Gov. Charlie Baker, a former health care executive, has proposed increasing Chapter 70 funding by $1.1 billion over seven years. The proposal includes funding for the four areas detailed in the 2015 report. But the lion share will go toward health insurance, according to a presentation by Peyser, who argues the boost will give schools more leeway to spend in other areas.
"When you see health care what you should really see is teachers," Peyser said. "Funds to health care benefits means you're taking them away from classrooms and education supports. To the extent we can fill that gap, it frees up resources."
Additionally, Baker has proposed changing the way the state calculates health insurance increases, saying it should be based on rates made by the Group Insurance Commission, the administrator of benefits for state employees and retirees.
The proposal comes as a welcomed sign to proponents of greater school funding. But it falls short for some Democrats, who argue Baker's proposal doesn't live up to the recommendations from 2015. Competing legislation has been filed in both houses of the legislature, which would boost pre-K-12 funding by more than $1 billion per year.
"We give the Governor's proposal a C+ for effort. But unfortunately, it falls short in several serious ways," wrote a group of nonprofits and lawmakers, including Rep. Mary Keefe, D-Worcester.
Eli Sherman is an investigative and in-depth reporter at Wicked Local and GateHouse Media. Email him at [email protected], or follow him on Twitter @Eli_Sherman. William J. Dowd, editor of the Swampscott Reporter, contributed to this article.
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