Madison School District Superintendent Jennifer Cheatham on Friday released a preliminary balanced budget proposal for next year that would stabilize staffing levels after two years of cuts, increase summer school pay and raise property taxes on an average home by up to $94.
For the first time, under new pressure from Gov. Scott Walker’s office, the budget for next school year also could require district employees to pay 12 percent of their health insurance premiums — though the budget plan recommends doing it in a way that wouldn’t actually take any more money out of district employees’ pockets.
Instead, the district could find cost savings and use them to raise wages and salaries to offset any increased premium charges.
“We have found different ways to balance our budgets (over the past few years), despite state revenue cuts or minimal revenue growth,” budget director Mike Barry said. “In classic Madison fashion, we’ve again gone about it in our own way, and we think it’s a better solution.”
Overall, the district’s operating budget for the 2017-2018 school year would rise $8.4 million over the current school year to $389.7 million, according to the proposal.
The budget for the first time also will include spending made possible through a referendum that voters approved in November to permanently raise the district’s annual revenue limit authority by $26 million over four years.
Revenues also will be boosted by an extra $9.27 million through a new agreement with the city of Madison giving the school district access to surplus funds being generated by a successful Downtown tax incremental district.
Revenues from both sources will be “critically important,” Barry said, in funding instruction and stabilizing school staffing levels after back-to-back years of personnel reductions totaling about 150 jobs.
An increase in school funding from the state for next year also is possible, if Walker’s two-year budget plan — calling for $200 more per student in the first year of the biennium and $404 in the second year — is adopted by lawmakers this summer. However, the school district would only receive that added money, estimated at $16 million over two years, if the board complies with Walker’s concurrent directive to require employees to pay no less than 12 percent of their health insurance premiums.
Barry said the board would have to comply with Walker’s order on increased premiums if it becomes part of the state budget lawmakers approve, rather than lose the extra state aid. District employee premiums currently range from 1.25 percent for lower paid staff to 10 percent for top administrators, for an average of 3.5 percent.
The proposed budget estimates upping employee premium contributions to 12 percent would cost $4.5 million.
“We have a plan to capture the cost of the premium increase and reallocate it to wages and salary,” the budget proposal notes. “If the final state budget does not include a 12 percent (employee premium contribution) requirement, the (district) will continue with its current EPC scale of 1.25 percent to 10 percent.”
Increasing compensation to cover premium hikes for employees would be accomplished by finding cost savings mainly through possible changes to the three health insurance plans from which district employees can now choose coverage. Those insurance plans are from GHC, Dean and Unity, in ascending order of plan cost.
The budget team developed three health insurance-related options for board members to consider, with an administration goal of choosing one by May 1.
Those three options are:
- Maintain the existing 3-HMO plan. Barry noted this option would produce no off- setting savings, leaving employees to cover the required premium increase.
- Offer only the lowest-cost GHC coverage, for savings of $5.5 million to put into employee compensation.
- Offer GHC or Dean coverage, capturing an estimated $3 million to $4.5 million in savings for increased compensation.
The budget team is recommending the 2-HMO option.
Beyond covering premium increases, the district savings from that option also would increase summer school pay for teachers by a total of $800,000 — or from $16 per hour to $25 per hour — according to the budget document, as well as spur a $460,000 boost for starting teacher pay, to $41,096.
It appeared the district’s creative approach to meeting Walker’s rules on increased health premiums — which stem from a 2011 law known as Act 10 that shifted more pension and health insurance costs onto government employees — would pass muster with state officials.
“If the Madison School District indeed uses the tools provided by Act 10 to achieve savings, then we believe it is meeting the spirit of the provision and will work with the Legislature to ensure it would benefit from (state aid) increases,” Walker spokesman Tom Evenson said Friday.
Overall, the proposed budget also would increase pay across the board for all district staff by about 2.5 percent, over and above any raises to cover premium increases. It also includes $400,000 to adopt a $15 per hour minimum wage standard for district staff, a provision affecting some 380 educational assistants and food service employees.
The budget proposal released Friday serves as Cheatham’s formal recommendation for a spending plan for the 50-school district for next school year, effective July 1. It should include no big surprises for board members, because it’s based on feedback received by administrators in budget discussions over the past few months.
The board will begin reviewing the proposed plan at Monday’s meeting, with several opportunities for discussion and public comment prior to a June 26 vote.
State Journal reporter Molly Beck contributed to this story.