Deficit forecast for Green Bay schools
By Kevin Boneske
GREEN BAY – The Green Bay Area Public School District is seeing red in its financial future.
The district’s board of education spent more than an hour Monday, March 4, discussing proposed changes to benefits to take effect July 1, particularly medical insurance, as outlined in a memo from Chief Human Resources Officer Jean Marsch to Superintendent Michelle Langenfeld.
The memo noted the district is projecting a deficit of $4 million to $6 million for the next two years, based on financial modeling for revenues and expenditures.
“If no changes are made to the current medical plan design options, actuarial modeling indicates the district will incur an additional $5 million in medical plan costs for the 2019-2020 benefit plan year,” the memo states. “Based on our medical and pharmacy claims paid and medical and pharmacy trend, a premium increase of 12.63 percent would be needed to sustain current plan design options.”
Recommendations to the health plan proposed last month have been modified with the Green Bay Education Association calling for changes.
Instead of out-of-pocket maximums slated to double for the next school year to $2,000 for a single plan and $4,000 for a family plan, those out-of-pocket maximums are now proposed to increase to $1,350 and $2,700, respectively.
However, a $500 single/$1,500 family deductible plan as proposed last month would remain, double the current deductibles. The percentages for coinsurance would remain at the current 90/10.
The current recommendations now project an additional $3.9 million in medical costs to the district for 2019-20, compared to $3.5 million under the proposal presented last month.
Board Clerk Andrew Becker said he had hoped to get an answer before the meeting on “what is the average out-of-pocket impact on our families,” but an actuary with the district’s insurance consultant wasn’t in the office for a conference call earlier in the day.
“We don’t have our answer, and I’m supposed to vote on this, we all are supposed to vote on this next week,” Becker said.
Becker said he wants to know the average out-of-pocket medical expenses so that district employees wouldn’t be worse off, if what they could receive in raises will offset additional expenses.
Board members discussed the possibility of scheduling a back-up date for another meeting if they couldn’t speak with the actuary before the next meeting March 11, though Becker said he hoped to receive enough information beforehand to be able to vote on the matter next Monday.
Impact on staff
Board Trustee Rhonda Sitnikau raised concerns about the district’s projected budget deficit having to be made up by “the people closest to our students,” particularly teachers.
“I just cannot get over that,” Sitnikau said. “I hear this, I read this, it looks better, but you’re still taking money out of the pockets of the people closest to our students… If you go back and you look at Act 10, you go through the history, you don’t see a lot of pay raises in general.”
Sitnikau said the district has an annual budget of $274 million, with which the priorities should include investing in the workforce.
“We shouldn’t be cutting them,” she said. ”We should be investing.”
Sitnikau said “significant increases” in the district’s budget really haven’t been going for salaries and benefits for teachers.
“Moving to next year and the year after that, because I have at least two more years on this board, I’m probably going to have to go through this conversation again,” she said. “But in the meantime, I’m going to have to wonder if we looked at inefficiencies in the district, or did we not.”
Board President Brenda Warren said the majority of the district’s costs are spent on people, so anytime budget cuts are looked at “it starts to be that we start cutting people.”
“To me, I look at it as a balance of where we’re recouping $1.1 million of a $5 million health insurance cost increase, of which we don’t know far ahead, because our health insurance is directly related to how it’s used during the year,” Warren said.
Even with employees paying more for health insurance next year, Warren said the district will likely still face “a lot of cuts that are going to have to be made at the tune of almost $5 million.”
Langenfeld said the Green Bay schools faced a $9 million deficit when she joined the district in 2011.
“Unlike other places that were able to recover, we never really did,” she said. “If you look at state funding over time, it has been less than ideal.”
Langenfeld said the needs of students in the district are different and changing.
“We’re in a very, very competitive market, and at the same time we are facing declining enrollment, which is one of our realities we have to address,” she said. “We are facing opportunities with children like never before, who we want to serve, and they come to us with different languages… The 21,000 children we are fortunate enough to serve each and every day that come through our doors are deserving of the very best.”
John Kasha, the district’s chief financial officer, informed the board the first year of a biennium with a new governor is going to be “challenging” from a financial standpoint, and the next state budget might not be finalized until next fall.
“You’ll know then at that point where we’re at for the next couple of years,” Kasha said.
Kasha said he doesn’t recommend reducing a budget deficit by using the district’s fund balance, which is being maintained at 15.7 percent of the budget.
Though the board has a policy of the district having a 15 percent fund balance, Kasha said other districts keep a higher percentage in their fund balances.
“I think if we were at 18, 19, 20 percent – there are many districts that are far higher than 20 – then it would be a different conversation (about using the fund balance for a budget deficit),” he said. “But then again, it wouldn’t be sustainable at some point, and the board would have to make a decision.”
Kasha said the district’s bond rating could potentially be lowered if the fund balance fell below the percentage set by board policy, possibly affecting future interest payments.
Though the 2019-20 budget has yet to be put together, Kasha said he projects wages will increase overall in the district by 3.5 percent.
The memo from Marsch noted wages and benefits comprise 68 percent of all district spending.