What does it mean to "do what's best for kids."

In today's post, I want to talk about two ideas that are sort of related. The first is our propensity to explain all of the things we do in public education as doing what's best for kids. Then, in the second half of this post, I want to provide a couple more examples of school districts that are about to make huge cuts after having agreed to settlements way beyond their means. Then I want to argue that putting kids first means controlling costs and providing appropriate revenues, both. If we really mean to put kids first, then we can't take anything off the table, because that's what putting kids first means.

In the last couple of weeks, I heard the Minneapolis Superintendent of Schools interviewed on public radio, and then in a later program, I heard an interview with the new Commissioner of Education. Each of them, when asked about an important decision they made as administrators in Minneapolis said that they made their decision based on "what's best for kids." The Superintendent was referring to a decision to close a high school in North Minneapolis. The Commissioner was referring to a controversial school restructuring. Now I have no reason to believe that either decision was bad; on the contrary, I have to assume that those decisions had lots of good reasons behind them. Then, at the beginning of the legislative session, I heard a Republican leader say that when it comes to education, the majority is going to put kids first.

This idea that we "do what's best for kids" is pretty standard lingo for us in the education business.

But I want to suggest that we, in the education business, tend to use the phrase "what's best for kids" as shorthand for something that we agree with, or at times, something that is really terrible for kids, but that we have decided to do anyway, because we lack the courage to do what is really best for kids. It's a way of defending something without having to explain why its a good idea. Why is building a new school, or closing the school a good idea? Why did we cut 100 positions in our budget? "Because its good for kids."

We close a school because its best for kids. We get rid of a program and put in a new one in its place, because its best for kids. We select the new textbook series that's best for kids, and we choose K-8 programming, or middle school programming, or K-4 programming, because, yes, that's good for kids too. If there's a great big debate between two factions, each of which has opposing views on a decision, well, we make the choice that's best for kids, of course, and that means that the other faction's point of view was, well, not in the best interest of kids, I guess.

Everybody in education has the best of motives. But when we assert that our decisions are, by definition, good for kids, we are going down the wrong road. Some of the things we do in education aren't all that good for kids really. Sometimes, the decisions that we make are flat out rotten for kids, and maybe that's because we have gotten into the habit of believing that if we do it, it must be good for kids.

I've been giving some examples of school districts that are about to make major cuts, lately, as examples of the fiscal chaos that we are going through in Minnesota. When I do that, I mean no disrespect to the fine superintendents, HR leadership, and school boards that find themselves in difficult straights. I understand how they got into these binds, because the pressures that lead us down this road are enormous. The reason that I provide these examples, such as Anoka and Lakeville, is not because I believe that the leadership of these districts are incompetent. I'm providing these examples, rather, to show that the current system forces good people to do some terrible things that they don't really want to do.

A few days ago, the Woodbury Bulletin reported on budgetary problems in the South Washington school district, (District 833), one of our state's larger school districts. The Bulletin reports that District 833 may tap most of its reserve funds, rather than cut programs, to balance next year's budget. The article continues:

The district will face an $11.7 million deficit if the School Board makes no cuts to projected spending in the 2011-12 academic year and the Minnesota Legislatures leaves aid to South Washington County Schools goes unchanged.

Now in its last bargaining round, South Washington County settled with its teachers for a MSBA reported total package increase of 4.16%. For that biennium, the District received no increase, and it raised compensation by a reported 4.16%. Keep in mind, however, that the MSBA total package cost indicator understates the actual increase in costs, so it is likely that the South Washington increases were actually higher than 5%. Just to give you an example, our own district, St. Cloud, settled for a real total package increase of 3 percent, but the MSBA reported our rate of increase at 2.46%.

Is there anybody out there that believes that the leadership in South Washington would provide these increases if they had a choice, or that they believe that the cuts that they are about to make as a result are "good for kids?" These increases are happening because school leadership is so totally resigned to the inevitable annual cuts, that they cannot even conceive of the possibility that school districts budgets could ever go one or two years staying in balance. They have given up all hope of keeping costs and revenues in balance, in good years and in bad.

A recent article in the Rosemont Patch reports on the another impending crisis in the Rosemont-Apple Valley school district, another of Minnesota's largest. According to the Patch:

Superintendent Jane Berenz said at Monday's meeting that even if the state doesn't make any cuts to education this session, the district still will have to cut or find revenue for $14 million for its 2011-12 budget.

These impending cuts follow on last year's cuts in the District. "One of the largest cuts was eliminating 144 full-time equivalent staff for $7.65 million in savings. The district also reduced its supply budget by 10 percent, eliminated middle school sports including football, baseball and softball and reduced energy costs."

If you look at the settlement information on the MSBA website for Rosemont A-V, you find that the District's total package compensation increases were reported at 6.14 percent, which translates into an actual increase that is likely over 7 percent, for a biennium in which the formula was frozen without increase.

Just recently the Minneapolis School District, after holding out for nearly a year past the bargaining deadline of last January 15, finally settled its labor contracts. The teacher settlement alone will cost an additional $10.9 million. The District's refusal to pay these increases, originally, had cost it an $800,000 fine. Before settling for these increase, the District had projected "a huge looming budget deficit of $30 million to $45 million next year." Once the tentative settlement is approved, if it is approved, "negotiations will have to start again this summer for the next school year's contract." A school district official blamed the state of Minnesota's failure to provide enough revenue:

"It's been going on basically for the last eight years—the state of Minnesota hasn't kept up with the rate of inflation, let alone funding all of the mandates or the laws," Madden said. "It gets old to look in the rear view mirror and make all these cuts as opposed to looking forward and saying, 'How can we make sure all these kids are achieving.'"

We don't know where the $50 millions of cuts will occur, in the Minneapolis District which has repeatedly endured a series of painful cuts, but I'm sure that the choices made by the school board and superintendent will be made in the spirit of "doing what's best for kids."

If we are really going to put kids first, then we can't take the things that are good for kids off the table before we start. Democrats can't. Labor can't. School boards can't, and Republicans can't. If controlling labor costs will help education serve kids--that can't be off the table, even if it is painful, if we are going to put kids first. If additional revenues and, yes, taxes, would prevent destructive cuts in education, then putting kids first--doing what's good for kids--requires considering them too. Putting the education of our children first, requires just that, putting everything else aside, and doing what we need to do, to maintain a financially sound education system.

School Finance Cost Drivers: Health insurance, part I

I've been trying to explain some of the cost drivers that confront us in public education. Today, I'm going to talk about health insurance contributions made by the district to our public employees. I apologize that this material isn't simple. I can't help that. When I joined the board of education, it was complex. It's still complex. One of the reasons that I write these posts, is that I believe that its really important for citizens to understand how the finance system works. Our Board of Education has been working really hard to involve members of the community, average citizens and community leaders, in understanding how we budget, and the budget challenges that we face. My thinking is that providing factual detailed information about school finance assists in that purpose. As I share this information, I'm not trying to justify increased spending, or decreased spending, or increased compensation or decreased compensation. My belief is that the facts, once you understand them, speak for themselves.

In a prior post in this series, I explained that in the last year, the legislature raised school district contributions by one half percent per year for the next four years, raising our costs by $500,000 per year, for a grand total unfunded cost increase of $2 million. I explained next how the funding formula for special education reduces our funding by $350,000 per year, so that during the biennium, our funding will be cut by $700,000. I explained, however, that federal law prohibits us from cutting special education expenses to balance the special education budget, requiring us to transfer that out of regular education. Then, in my last post, I explained that lanes increase employee compensation by about $190,000 per year, for a total cost increase of about $380,000 for the biennium. Now to health insurance.

The district has two kinds of coverage agreements with its employee groups. Some groups have fixed dollar contribution agreements--that is, by agreement, we pay a fixed dollar amount towards their premiums, no matter what the premiums will be, until we agree to a higher amount. Some employees, typically licensed employees with single coverage, have their full premiums paid, and our cost of coverage rises with the premium increase, no matter how much the increase.

The District's cost for health insurance contributions rise in two ways. With respect to most of our employees, we make agreed fixed dollar contribution amounts towards family or single health insurance. When we enter into our bargaining agreement with, for example, our custodians, our clerical workers, or our paraprofessionals, the agreement designates a fixed contribution, specified for that particular bargaining unit, towards the total health insurance premium for each employee. Now different bargaining units have different preferences for the level of insurance contribution that we provide. Sometimes, the negotiator for a group will say, we'd like to take some of the total cost of our compensation in this year's agreement, and move some of the dollars off of salary and move it over to health insurance contribution. When they do that, its cost neutral, and we would be foolish to refuse to do that, since we're not changing the total cost to the district.

Now for these bargaining units, the ones with fixed dollar premium contributions, our costs stay the same throughout the two year term of the bargaining agreement. When the bargaining agreement comes to an end, our health insurance costs for these employee groups stay exactly the same. We know exactly what our premium costs will be during the contract, and then under the "continuing contract" provisions of PELRA, we continue to pay that same dollar amount towards insurance for these employees during the period when we negotiate the contract.

What happens under a fixed dollar contribution agreement, when the cost of health insurance rises. That will happen in the second year of the contract, around October, when the insurance carrier announces its rate increase, which may be anywhere from 5 or 6 percent to 20 percent. For employees covered by the fixed dollar contribution agreement, the employee covers the increase. If the employee's insurance premium is $1000, and the District contributes $500, then if the premium goes up to $1100, the District still contributes $500, and the employee has $100 more deducted out of the paycheck. It is easy to estimate the total cost of the package, because we have not agreed to pay the increase.

When employees work under a fixed dollar contribution agreement, they push us very hard to keep their insurance coverage economical and affordable. When the insurance company announces its premium increase, the employee group often wants us to bring those costs down, because they don't want to pay more for their insurance premiums. Indeed, at times there is a bit of friendly friction between the employees with full premium coverage and those without over what kind of group policies we should buy.

I want close this post by emphasizing several things. Sometimes folks rail against health insurance costs for public employees. But providing these benefits is an important attractor --an asset for us in encouraging qualified employees to work for us. The cost of health insurance, paid on behalf of employees is tax exempt, so a dollar of health insurance coverage provides more than a dollar's value to the employee. Providing coverage that employees value represents a wise use of the public's money. The issue for those of us who are involved in the decision making process is to make sure that the plans we select are cost effective, and that we provide coverage that is financially sustainable. Because the cost of health care is going up so fast, this is a great challenge to all governmental units, and I'll have more to say about that in the next post.

OK. That's a lot for one post. I've started in this post to explain the difference between fixed dollar contribution agreements and full premium agreements. I'll continue this discussion in tomorrow's post.