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School districts dip into reserve funds for raises

School districts dip into reserve funds for raises

March 30, 2010

Despite the 2009 legislature freezing funds for time on the job pay raises for the state’s public school teachers, Idaho’s two largest school districts awarded the increases anyway. They were obligated by multi-year contracts with local teachers’ associations.

State funding for “step”, or years on the job pay raises, was cut off in last year’s legislative session; “lane” pay raises, for continuing education, were funded for the 2009-2010 school year. However, in the Boise and Meridian districts, teachers were awarded step increases because their contracts called for it. “We were obligated to honor that contract, short of a financial emergency,” said Boise schools spokesman Dan Hollar.

“At issue for school districts is, our choice is to come up with the money and live up to our contract, or we’re going to have to break the contract and go to court,” said Meridian schools spokesman Eric Exline. “Those are the two choices we had.”

The money didn’t come from the education budget, but taxpayers footed the bill for the pay raises by different means. The Boise school district used property tax revenue (local tax money), federal stimulus funds (federal tax money), and cash reserves (tax money that wasn’t spent in previous years). According to records obtained by the Idaho Freedom Foundation, the district still has sufficient reserves to stay above the 5.5% reserve threshold, below which the district could declare a financial emergency.

However, the same can’t be said for the neighboring Meridian school district, the state’s largest. Exline told the IFF teachers’ step increases were funded completely with cash reserves. “We did use a fairly good chunk of our funds balance to fund both steps and lanes for people who earned them. There was no additional local property tax money; it was simply money the district has saved over the years, for rainy day spending.”

By raiding the district piggy bank, Exline said Meridian schools had dipped below the reserve threshold for declaring a financial emergency. Under a law passed by the 2009 Legislature, school districts declaring a financial emergency can re-negotiate teachers’ contracts in mid-term, without union approval.

That, however, would seem to be a moot point. The 2010 education budget includes language declaring a financial emergency for all of Idaho’s school districts, enabling them all to renegotiate their contracts.

Hollar says the Boise district will make use of that authority in talks with the union. “The next go-around, as far as any contract, will certainly reflect state statute so even though it may not be specifically stipulated in the contract that it’s a financial emergency, we will point that out, and then we can negotiate paying experience and education.”

Boise Rep. Lynn Luker, R-15th District , says especially during a recession, multi-year contracts should be cautiously entered into, and it helps to have an escape clause written in. “At a minimum, there should be some exculpatory language concerning financial exigencies. As a tax payer, and as someone who looks at these issues, I would certainly ask that prudence and caution be utilized in any of those types of negotiations, for long-term contracts. You need to have a very good reason to back up why you would want to have a multi-year contract in this environment, and you need to have some protections in there to make sure that under financial exigency you can deal with it.”

Records obtained by the Idaho Freedom Foundation show school districts gave out $21.2 million in raises to 37 percent of school administrators and 43 percent of teachers.

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