Great Barrington — What could have been an alarming situation for the Berkshire Hills Regional School District budget for next year was partially defused last week with the news that the school health insurance carrier would not be increasing its premiums for the 2018-19 academic year.
The school committee had, for the last few weeks been reviewing a draft spending package prepared by its finance subcommittee that showed a projected increase for Great Barrington of almost 10 percent. Click here to see the draft as of Jan. 24.
School committee Chairman Steve Bannon, himself a Great Barrington resident, said he could not support a budget that increases his town’s – or any town’s, he said later – budget by 9.85 percent.
But as the committee pondered the ultimate fate of the draft budget, all eyes were on a Berkshire Health Group board meeting at Lenox Town Hall on Monday, January 29, when officials from BHG, the district’s joint health insurance-purchasing entity, met to set its rates.
The school committee had braced itself for the worst. After all, health insurance rates have risen nationwide. Consumers were told to expect double-digit increases – both for private-sector insurance and for those who purchase it in exchanges through the Affordable Care Act. So half a million dollars was budgeted.
And for good reason. Last year, the initial increase in employee health insurance premiums from BHG was slated for 9.3 percent. But the district moved to deductible-only plans, reducing the premium increases to 2.19 percent.
For obvious reasons, that wasn’t an option this year. The total in the budget this year for spending on health insurance for current and retired employees is almost $1.9 million, with a rise of $500,000 budgeted for next year.
“We had budgeted for a 10 percent increase, but it came in at zero,” Berkshire Hills Superintendent Peter Dillon said in an interview.
“I was so elated it was zero,” Bannon added. “A couple years ago they used their reserves to bring it down to 3 percent, then [the reserves] ran out, and they had to hit us with a 14 percent increase.”
BHG’s vote to keep rates flat for next year surprised district officials, but they’re not complaining. Bannon said BHG did not give the district a reason why the premiums will remain flat. Berkshire Hills’ business administrator Sharon Harrison, who represents Berkshire Hills on the BHG board, could not be reached for comment.
Dillon said part of the reason is that the BHG rate “is claims-based and this year our collective claims came in low.”
“I understand they have done a really good job managing claims activity,” added school committee member Rich Dohoney, a Great Barrington resident who also chairs the Berkshire Hills finance subcommittee that typically produces the draft budget. “And they have also been conservative in their budgeting.”
Now the question is to what extent the lack of a health insurance increase will bring down Great Barrington’s assessment for fiscal year 2019, which starts Sunday, July 1.
Dillon thinks it will drop to 7 percent “and some change.” And it’s not yet clear what the impact will be on the other towns’ assessments. Before the BHG vote, the net combined operating and capital budget proposal – after grants and reimbursements – called for spending of a little more than $28 million, an increase of some 6.37 percent from last year.
While the assessment for Great Barrington was slated to increase by almost 10 percent, the increases for the other two towns were already far more palatable: West Stockbridge’s increase would have been slightly more than 4 percent. Stockbridge’s assessment would have actually decreased by more than half a percentage point.
How can that be, you ask? In addition to state and federal aid, regional school districts in Massachusetts are funded by their members’ towns. Bannon, the Berkshire Hills Regional School Committee chairman, said Great Barrington’s required local contribution is slated to rise significantly next year while the contributions of the other two towns were not.
In determining their budgets and assessments to member towns, school committees must deal with a variety of factors. First, the state sets what is called the Minimum Local Contribution, which Harrison has called “one of the most convoluted formulas I have ever worked with.”
The MLC was established as part the state’s 1993 Education Reform Act that overhauled how education was funded in Massachusetts. Beginning in the late 1970s, the state was the target of multiple lawsuits challenging the fairness of local education funding.
Until 1993, Massachusetts had relied on local property taxes to fund public education. As a result of the reform act, the state increased its level of funding for local school districts but also established formulas for minimum levels of budgeting, known as the foundation budget the districts must set aside for their share of education spending. This section of the reform act is known as Chapter 70.
For many taxpayers, the MLC is perhaps the most controversial part of Chapter 70. It uses complex formulas to determine what proportion of a regional school budget individual member towns must “contribute” in order to meet the foundation budget.
Click here to read a primer on Chapter 70 and see the video below from the Massachusetts Budget and Policy Center, a nonprofit and nonpartisan research group:
In a regional district like Berkshire Hills, the total of the three MLCs is essentially a minimum budget, as defined by the state. The state then backfills the difference between the foundation budget and the total MLC with Chapter 70 funding, district officials say.
The remainder of the funding is determined by a charge or assessment to member towns for each student the town sends to the regional school district. Berkshire Hills officials say Great Barrington’s MLC is expected to rise, as is the number of students the town enrolls at Berkshire Hills.
And Great Barrington typically accounts for at least 70 percent of student enrollment in the district. However, next year, the town will contribute 73 percent of the assessment total for the three towns, up a percentage point over this year, with Stockbridge and West Stockbridge chipping in about 13 percent apiece for 2019.
“I usually explain local minimum contribution as each community’s target local share, or ability to pay, based on its property values and residents’ incomes,” said Lauren Green, spokesperson for the state Department of Elementary and Secondary Education.
Click here to see last year’s budget presentation for FY 2018. This year Great Barrington’s minimum local contribution was $6.9 million. For FY 2019, it will be almost $7.2 million. That’s a rise of about 5 percent. In 2017, it was $6.75 million.
“It has to do with perceived wealth,” Bannon said of the MLC.
Indeed, Great Barrington’s perceived wealth has risen considerably over the last few years. The total assessed value of all taxable real and personal property – a key indicator of what the state sees as a town’s “ability to pay” – has risen to $1.44 billion this year from $1.32 billion in 2014. That is a rise of almost $122 million in value, or 18 percent over five years.
See table below of the total value of taxable property in Great Barrington over the last five years, courtesy of the town assessor’s office:
“The big issue for Great Barrington is, once again, the state imposing a pretty dramatic increase on the MLC,” Dohoney said. That MLC increase, Dohoney added, accounts for almost 2 percentage points of the increase in Great Barrington’s assessment.
Bannon told The Edge that, now that Great Barrington’s share of funding the district will not increase by almost 10 percent, he was not entirely sure what would be a reasonable increase.
The question of how high Great Barrington’s assessment will be could be a key to a smooth budget season for the district. All three member towns will hold annual town meetings this spring at which they must approve or reject the Berkshire Hills spending package in addition to town budgets and various other items. In order for the school-district budget to pass, two of three towns must adopt it. Two years ago, Great Barrington rejected it but later passed it. Stockbridge and West Stockbridge passed it on the first try.
Weighing heavily on the minds of the school committee are two recent attempts, one in 2013 and another a year later, to spend more than $50 million to rebuild the aging Monument Mountain Regional High School. Both failed when tax-weary Great Barrington, by far the largest of the three towns in the district, failed to approve an override to Proposition 2½, a state statute that limits tax levy increases.
The school committee will meet Thursday, Feb. 8, to discuss the budget and a variety of other issues. Click here to see the agenda. A discussion of the budget is expected and the date for a public hearing on it will be set.
At 6:30 p.m., half an hour before the regular meeting in the high school library media center, the school committee will be treated to a tour of the high school science labs.
Dillon said the building and grounds committee recently recommended setting aside $116,000 “to support ongoing maintenance at the high school. The prioritized and main concern was upgrading the science labs.”
