Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
The cost of municipal health insurance has risen much faster than increases in Chapter 70 education aid, crowding out funding for other portions of school budgets that directly affect students, according to a report released today by the Boston Foundation and Massachusetts Business Alliance for Education.
Health costs in school budgets grew by $1 billion from 2000 to 2007 – $300 million more than the increase in state Chapter 70 aid, according to the report, “School Funding Reality: A Bargain Not Kept.”
As a result, spending on books has been slashed by more than 50 percent during the same period, spending on teacher training has been reduced by nearly 25 percent, and student-teacher ratios have increased, according to the report.
For the past five years, the MMA has pointed out the fact that the cost of health insurance for state employees has risen much more slowly than municipal costs, and that the cause of this disparity is the requirement that cities and towns collectively bargain health insurance plan design while the state is exempt from this requirement.
Every school district in Massachusetts – rich or poor – has been adversely affected by soaring health costs, according to the report, as health insurance has drawn resources away from items intended to strengthen learning in the classroom, such as money for textbooks, professional training and additional teachers, in particular.
“Controlling the overall cost of health care in Massachusetts is now the ultimate education issue,” the report states.
Gains made as a result of the state’s increased aid to the poorest districts in the early years of education reform have largely been nullified in the past decade, and per-pupil spending for students in those districts today stands significantly below spending levels for students in the state’s wealthiest districts, the report finds.
The report’s conclusions are the result of new research conducted by Ed Moscovitch, an economist and one of the authors of the original Chapter 70 state funding formula for school budgets.
Boston Foundation President Paul Grogan said the report “puts into clear and compelling focus what many have suspected for some time: that our good-faith efforts to close the achievement gap are being erased by the cost of health care.”
Linda Noonan, executive director of the Massachusetts Business Alliance for Education, said, “Our significant investment in education since 1993, and the gains in student achievement that followed, are at risk due to the uncontrolled costs of employee health care.”
Inflation, driven in significant part by the increase in health care costs and not reimbursed by the school funding formula, created a school funding shortfall of $1.2 billion a year statewide by 2007, according to the report. The gap has grown to almost $1.7 billion for the current school year.
The Massachusetts Education Reform Act of 1993 represented a “grand bargain” – high standards for student learning and accountability for performance in exchange for adequate and equitable funding.
The report examines the funding side of the bargain, the foundation budget, which was the new law’s definition of what constituted adequate funding. The foundation budget set class-size goals and spending goals for professional development and instructional materials. It included an adjustment for inflation and changes in enrollment.
The foundation budget reflected a wide agreement among education and political leaders, with broad support from the business community, that economic resources would always have an important impact on a district’s ability to close the achievement gap, and it provided the extra support for urban districts with large concentrations of low-income and minority students.
In return, districts agreed to be held accountable for the performance of their students to a single, consistent standard of performance.
The impact of health care spending on school districts also forms part of a bigger story about soaring costs and what it has meant across the board for spending and economic investment in Massachusetts. According to the report, health care has consumed fully two-thirds of all increases in state spending between 2000 and 2010, crowding out investment in a host of areas of general interest, but taking a special toll on education, which was seeking to compensate for past deficits.
Cumulatively, the gap between costs and needs across all districts in Massachusetts had grown to almost $1.7 billion by 2010, according to the report. Any attempt to close this gap would require both local resources and increased state aid.
Because of their greater resources, the state’s wealthiest districts are already, on average, spending at the “true” foundation level, which means foundation level adjusted for the real cost of inflation. Moscovitch estimates it would cost somewhere between $800 million and $1 billion a year in increased state aid to raise the foundation budget by $1.7 billion, enough to close the new and widening gap.
The report concludes that controlling the cost of health care in Massachusetts is now the ultimate education issue. Without a change in the trend, it appears impossible for the Commonwealth to keep all districts at true foundation levels. Even new resources provided to education cannot hope to cover the trends that show health care costs continuing to soar.
The report from the MBAE and the Boston Foundation continues the unbroken line of reports and news stories that demonstrate the effect of the requirement that cities and towns collectively bargain health insurance. The top legislative priority for cities and towns continues to be getting the same authority the state has to modify health insurance plans.
• Download “School Funding Reality: A Bargain Not Kept” (758K PDF)