Ketchikan’s Borough Assembly gave the local school district a reprieve after earlier threatening to bill the school district directly for health care expenses.
It’s the latest development in an ongoing dispute between Ketchikan’s borough and school district over health care payments. Premiums paid by the district and its employees have not kept up with the cost of health care — to the tune of more than $5.2 million as of the end of December.
The borough, which administers the district’s self-insurance program, had previously threatened to stop cutting checks for school district employees’ health care costs at the start of this year.
Ketchikan’s school district must minimize the growth of its health care debt for the rest of this school year and stop the debt from growing by the start of next fiscal year in July. And it has to come up with a multi-year plan to repay the debt and agree to face consequences if it doesn’t.
Those are conditions of an agreement reached between borough and school district officials.
Borough Assembly member Grant Echohawk applauded the agreement. He said it would address the problem and prevent it from happening again.
“I am confident that my colleagues here at this table and also … on the school board are all very concerned about this,” he said. “And not only does this agreement help us get a solid footing to move us forward, but there’s continued communication built into it.”
School district officials had warned that if the borough stopped paying for health care expenses on Jan. 1 as planned, they’d be forced to make immediate cuts to athletics, tutoring and other programs. And even that likely wouldn’t be enough, they said last month.
Borough officials are concerned about the spiraling costs of health care for teachers and staff, saying last month that the school district’s accumulating debt was threatening the overall financial health of the borough.
Assembly member Jeremy Bynum supported the agreement, though he wasn’t sure how enforceable it’d be if the school district continued to lag on health care payments in the next fiscal year.
“I think it has some pretty good language in it to address a lot of the concerns that we have. I believe this is truly a leap of faith, if you could use those words, in the sense that this is only a memorandum of agreement. I would question the legality of how binding it actually is,” he said.
He added language to the agreement aimed at preventing the school district from asking for more money for operations outside the usual budget process. That passed 5-1 over an objection from EchoHawk, who argued that it was unnecessary. The agreement itself passed unanimously.
That was one of three assembly votes aimed at alleviating the health care budget crisis. In another, the assembly voted to increase the school district’s budget by about $700,000 to pay down some of the health care debt, as Mayor Rodney Dial explained.
“What we’re talking about tonight is money that’s actually already been spent by the district. So what the assembly’s talking about is essentially forgiving some of that debt. So it’s not like we’re adding an expense,” he said.
That also passed unanimously.
But the third proposal, which would allow the borough to spend an additional $1.9 million to keep up with the district’s health expenses, faced opposition from the mayor.
Borough Attorney Glenn Brown explained that the measure was necessary to ensure the borough didn’t spend money it wasn’t legally allowed to.
“This ordinance is to keep the borough safe because the loss of reserves from the district’s underfunding of its health fund is endangering the parent organization. In essence, we need to appropriate more money so that the borough doesn’t violate the law,” he said.
Assembly members unanimously approved the appropriation in the first of two votes. But Dial said he planned to veto the measure later this month unless the school district provided a detailed budget to the assembly. He accused the district of dramatically underfunding its health insurance program against the advice of its insurance broker.
“If I can’t see your budget, the detailed budget, then I can’t verify that you’re accurately reporting your finances. If I can’t verify, I can’t approve. That’s my responsibility as mayor to this community,” he said. “If the district has nothing to hide, then they have everything to gain from transparency and working with the borough.”
He accused the district of “stonewalling” borough officials’ request for a line-item budget detailing exactly what the district spends its money on. He said appropriating the money could leave the borough unable to weather emergencies, like a resurgence of the COVID-19 pandemic, or an economic downturn.
He suggested modifying the measure to require the district to cut spending. He said that would put the district on a path to repaying the debt.
The $1.9 million appropriation is scheduled to come back to the assembly later this month for a final vote. If Dial vetoes the measure at that point, a five-member supermajority could override the veto at the following meeting.