The Altoona school district could lose out on nearly $1 million in state aid over the next two years if school officials don’t change the way it pays for employee health benefits.
In his two-year budget plan announced Wednesday, Gov. Scott Walker has attached a caveat to a proposed $649 million surge in aid for schools: Districts must be in full compliance with the governor’s 2011 law shifting more pension and health insurance costs onto employees.
The law, known as Act 10, required local governments who offer a state health insurance plan to their employees to pay no more than 88 percent of the average premiums.
Walker’s 2017-19 state budget will now require the same of all school districts, regardless of which health insurance plans they offer.
If Walker’s proposal is adopted and the district does not comply, it would lose $300,000 next year with the proposed $200-per-pupil state aid increase. In 2018-19, the district would lose $650,000 with an additional $204 increase per pupil. The Altoona district has about 1,500 students.
Mike Markgren, Altoona school district business manager, said the district pays on average about 91.8 percent of employee premiums.
The district is non-union and wasn’t on a state insurance plan, meaning it wasn’t required to meet the 12 percent threshold after Act 10 was passed. Although the district met that threshold after Act 10, it changed companies two years ago after seeking lower bids.
The new plan offers eight insurance options to employees, only two of which meet the proposed new requirement. Markgren said that switch saved the district money and allowed it to lower the percentage paid toward premiums by district staff.
“Oftentimes having a higher deductible with a lower percentage of premium paid by employees is better for the overall cost,” he said. “I’m hoping these factors are going to be considered when the final decisions are made on this.”
Locally, other local school districts will be eligible for that additional aid, which would amount to about $7 million over the biennium for Eau Claire, whose district payments for employee health insurance are at 87.4 percent.
Chippewa Falls would see about $3 million over those two years because it meets the governor’s requirements by paying 86.4 percent of employees’ premiums.
Menomonie pays 87.5 percent of health insurance premiums and would get close to $2 million more over the next two years, with $200 for each of its 3,300 students the first year and $404 the second year.
Elsewhere across the state, other school districts may face the crunch.
The Madison school district is at risk of missing out on its $16 million share of proposed new school spending because the contributions don’t reach the 12 percent threshold Walker proposed.
The contribution levels in Madison range from 1.5 percent for lower-paid staff to 10 percent for school district administrators.
“While we have not done an exhaustive review, we are only aware of the Madison school district that did not capture the reform savings,” said Walker’s spokesman Jack Jablonski.
If lawmakers agree to the budget, school districts will be required to “certify compliance” with Act 10 with the state Department of Public Instruction before receiving the funds.
The Madison school district and Walker have been at odds over Act 10 since it was first proposed. Its teachers union was the lead plaintiff in a lawsuit that unsuccessfully challenged the law.
Since the law was adopted, and after the district’s collective bargaining contracts with its employees expired, school board members continued to keep employees from paying toward health insurance costs until last year, when teachers began to pay 3 percent of their premiums.
Board member T.J. Mertz said the proposal undermines the board’s ability to exercise local control.
“(Supporters) of Act 10 have touted the idea of districts being able to compete for teachers and teachers being able to make choices,” Mertz said. “The combination of salary and benefits in the compensation package is one way districts can position themselves in this market.”
State schools Superintendent Tony Evers said he is not concerned about being put in charge of determining whether districts are “compliant” but is concerned about “another piece of local control being taken away.”
“Eighty-eight percent might be a magic number to some; I’m not sure it is for every school district,” Evers said.
The Associated Press contributed to this report.