Health costs sap state aid for schools

Education reform law falls short, report says

By Michael Levenson
Globe Staff / December 9, 2010

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Hundreds of millions of dollars the state has provided to local school districts to improve classroom education has instead been gobbled up by soaring health care costs for school employees, according to a new report that questions whether Massachusetts has fulfilled the ambitious goals of its 1993 education reform law.

From 2000 to 2007, annual health care costs in school budgets grew by $1 billion, while state aid for schools grew by only $700 million, according to the report being released today by the Boston Foundation.

Inflation has added to the problem, the report found, leaving schools underfunded by a total of $1.7 billion.

The report is likely to fuel the debate over whether to give local governments more power to trim employee health benefits without union approval, an issue that has met stiff resistance from organized labor and some state lawmakers.

“Controlling the cost of health care in Massachusetts is now the ultimate education issue,’’ said Paul S. Grogan, president of the Boston Foundation, who called the report “one of the most dramatic and devastating I’ve seen.’’

The report, titled “A Bargain Not Kept,’’ argues that the state has failed to live up to its “grand bargain’’ in 1993 to impose tougher standards on schools in exchange for giving districts the money needed to meet those standards. The 1993 law became a national model for tackling inequities in public education.

Largely because of health care costs, school districts have been forced to make painful spending cuts, in books, teachers, and teacher training. The state has also retreated from its commitment to help poor districts catch up to their wealthier counterparts, the report said.

“These cost increases are huge, and they’re affecting kids,’’ said Edward Moscovitch, an economist who wrote the report and helped write the 1993 law.

Strained by the high cost of providing health care to teachers and other school employees, poor districts in particular are not getting the money they need to adequately prepare students for the MCAS exam and other state standards, he said.

“We haven’t given them the tools they need to fulfill their part of the grand bargain,’’ said Moscovitch. “You can’t hold people accountable if you don’t give them the tools.’’

The report dovetails with the Boston Foundation’s push to loosen union control over health care benefits and the think tank’s longtime support for the 1993 education law.

The study was backed by the Massachusetts Business Alliance for Education, which helped write the 1993 law and has since criticized labor’s role in setting health care benefits.

Among the report’s more striking findings:

■Student-teacher ratios statewide were worse in 2007 than they were in 1996.

■Spending on books fell by more than 50 percent from 2000 to 2007, and spending on teacher training fell by nearly 25 percent during the period.

■Spending per student in poor districts grew by 2.3 percent from 2007 to 2010, while spending on the wealthiest suburban districts grew by 3.4 percent.

The report found that, after the 1993 law was passed, health care costs were rising slowly enough that the state was able to provide poor districts with enough money to help them nearly close the gap with wealthier districts. But those gains have since been erased as health costs have risen dramatically.

In 2000, for example, the neediest districts received 3 percent below what the state had promised them, under the 1993 law. This year, however, those districts slipped to 16 percent below what they were promised, a retreat the report blamed on inflation and health costs outpacing the state’s record spending on education.

“The rise in health care premiums has completely consumed the increased appropriations for education and then some, meaning there was no real positive impact in those districts,’’ Grogan said. “None of this spending, none, can be said to be really for education.’’

The findings present a major policy challenge for Governor Deval Patrick as he prepares for a second term. Patrick has often boasted that the state has maintained record levels of support for schools, even during the recession. He pledged to make reductions in health care costs a top priority, but he has resisted calls to give cities and towns far broader authority to set the terms of employee health care plans.

Paul Toner, president of the Massachusetts Teachers Association, said he was not surprised that rising health care costs have more than absorbed recent increases in state education aid. He pointed out that health care costs have been a problem nationally, not only in schools. Toner said unions are willing to look for ways to reduce those costs, but will not give up their right to negotiate benefits.

“In general, public employee have accepted lower salaries in exchange for better benefits,’’ he said. “It’s not their fault the cost of health care is going through the roof. Whatever the solution is, we have to have meaningful participation in future decisions over health care costs.’’

Linda Noonan, executive director of the Massachusetts Business Alliance for Education, said the study highlighted the extent to which skyrocketing health costs have cut into classroom budgets.

“The impact is felt so severely and so disproportionately on the classroom expenses, the books, the teacher training, the kinds of things kids actually use,’’ she said.

Michael Levenson can be reached at