District prepares to settle contract with teachers

Following a negotiations process that took more than two years, the Mat-Su School District and the Mat-Su Education Association are poised to sign a two-year contract this week. Students, parents and others in the community can only wait to see what ramifications of that agreement will present to education in the Valley.

The contract will be based upon the recommendations of an independent arbitrator, and apparently has left neither side sounding the trumpets of victory. "We weren't ecstatic about the report," teachers' spokesman George Stuart said at last week's MSEA rally. "Any arbitrator's report cuts it down the middle. There was some stuff we didn't like; there was some stuff we liked."

Around 400 Mat-Su teachers attended the rally at Palmer High School before the Jan. 21 school board meeting. Many of the teachers stayed for the board meeting, and several addressed the board, urging ratification of the arbitrator's recommendations.

The administration is concerned that rising health care costs and increased teacher salaries will simply compound the problems caused by a shrinking budget.

"Increasing salaries and benefits puts an additional strain on the budget," said district spokeswoman Kim Floyd. "Once this contract is ratified, approximately 90 percent of our budget will be salaries and benefits."

Floyd also expressed a sentiment that has begun to permeate both sides of the battle for diminishing state education funding. "Everybody feels frustrated," Floyd said. "Everybody feels under-appreciated. At this time we need to pull everybody together and start looking at the big picture, and it's not a local picture, it's a state picture."

That sentiment has bubbled beneath the surface of the negotiations for some time. Teachers, administrators and board members all seem to agree that the contract negotiation was a painful process that delayed the more important battle ahead -- the battle for increased education funding from Juneau.

Laura Wick, a Mat-Su teacher, challenged the board, urging them to end the acrimonious negotiation process. "You have a lot of other work to do," Wick said. "You need to find funding to improve student safety. You need to find funding for teachers, and funding for programs."

Board member Dan Contini later said, "Well, I'm not sure where we're going to find it [funding] at. The state doesn't want to give it to us, the federal government doesn't want to give it to us, and the borough won't give it to us. And then we're supposed to lobby for all this money. I'm not sure where I'm supposed to be lobbying for it."

Though the frustrations of negotiating a deal may soon end, all parties will immediately have to come to grips with what that deal is going to mean in the face of severe budget constraints. The board will likely ratify the labor contract on Wednesday, but that news will almost certainly be overshadowed by district's announcement of upcoming budget cuts. Those cuts, according to chief school administrator Bob Doyle, will include layoffs and draconian measures that will make last year's cuts pale in comparison. "The upcoming cuts will redefine education in Alaska," Doyle said.

Mat-Su ahead of cutting curve

Anchorage schools announced their budget cuts last week, and there has been a public uproar over the programs that will be lost. Many people in Anchorage are practically begging for tax increases to save the programs on the block. Those Anchorage program cuts are nothing compared to what the district will have to announce next week, according to Doyle.

"The difference between Anchorage and the Mat-Su," Doyle said, "is [Anchorage] has things Mat-Su doesn't. Anchorage is cutting things we already cut last year, or things we never had."

That, according to the administration, means the cuts in the Mat-Su district will be much more meaningful, and much harder to swallow than the Anchorage cuts. In fact, Floyd said, the Anchorage schools almost appear to be following Mat-Su's lead -- basing their cuts upon the success, or at least the survival rate, of previous cuts in Valley schools.

The budget challenges facing the district were an ever-present cloud hanging over the two-year labor talks. MSEA, throughout the negotiations, charged that there were hidden funds in the district's budget, and that the district was exaggerating the seriousness of its financial status. The district repeatedly countered that the money simply wasn't there. As the final round of negotiations neared a climax, the administration went as far as to invite a panel of independent auditors to pore over the books in an effort to uncover inefficiencies or "hidden" opportunities. The auditors gave the district high marks, and failed to produce unused funds.

No rainy day funds

One of the most serious budget challenges facing the Mat-Su district stems from the funding formula applied by the Mat-Su Borough, according to the labor mediator. By state law, local boroughs can only fund their school districts a percentage of what the state provides in education funding. At present, Mat-Su Borough funds the district at the maximum amount allowed. However, the borough also reclaims 50 percent of unspent funds at the end of the fiscal cycle. That arrangement, according to the auditor's report, places the district in a use-it-or-lose-it situation every year. That means, unlike the Anchorage district, it's virtually impossible for the Mat-Su School District to maintain a meaningful contingency fund and still be fiscally responsible.

"The most peculiar thing about the history of the district's year-end contingency fund is that the district's actions have actually been not only prudent but virtually required by the strange financial relationship between the district and the borough," the report reads. "Whatever the district puts aside as a prudent contingency fund, the borough takes back half of that amount at the end of the fiscal year. In the face of that 50 percent take-back provision, it is imprudent for the district to budget prudently."

Floyd said that while the borough gives essentially as much as it can to education, the take-back provision makes it difficult for the district to engage in meaningful long-range planning. The fact the district must protect the contingency fund as best it can throughout the year, to ward off unexpected expenses, but then must spend as much as possible at the end of the fiscal cycle, helps fuel the belief that the district has a pool of hidden money, according to Floyd.

That belief, according to the mediator's report, is one of two red herrings that have complicated negotiations all along.

The other misconception was that the district had received a windfall from increased enrollment numbers. MSEA contended that the district had more money to deal with because enrollment growth had brought in an additional $800,000 in state funding. The mediator's report points out, however, that the district responded to the enrollment increase by adding 10 additional teachers at a cost of $833,000, a net loss for the district.

Ill will over health care

At the heart of the dispute over whether or not the district had extra funds in its budget were the two primary disputes in the contract negotiation -- pay increases for teachers and shifting of the burden of increasing health insurance costs back toward the district.

The district had proposed a pay freeze, though it would continue to allow for step and column increases for teachers. The union proposed what it considered cost-of-living increases that would amount to a minimum 2-percent increase in the first year and minimum 3 percent in the second year.

The mediator concluded that the district couldn't afford the union's proposal, and the union couldn't accept the district's proposal. He recommended across-the-board pay increases of $500 in 2003-04 and $1,000 in 2004-05. One reason for the increase was that the mediator felt it was important to maintain what he calls the district's "lighthouse" status. Mat-Su schools have a large number of experienced teachers, which might suggest a stronger educational foundation here than in other districts. That should be a benefit to students. The challenge to the district is that those experienced teachers are closer to the top of the pay structure, making the payroll budget in the Mat-Su district top-heavy. A percentage-based increase, especially in a multi-year contract, would reward those teachers at the top with larger increases, potentially throwing the budget into further stress.

MSEA president Barbara Morris said the across-the-board pay increase was one of her two biggest disappointments with the new contract. She said some teachers feel it's unfair that the newer, less-experienced teachers will receive exactly as much as the seasoned veterans. She said a percentage increase would have been more equitable, and would have been feasible. "I think a percentage raise would have been a wash," Morris said. "The newer teachers would have gotten something like $350, and some of the more experienced ones would have gotten $600." She added that some of those details are probably internal issues for later discussion.

Whether the increase is across-the-board or percentage-based, Floyd said when the contract is signed, about 90 percent of the district's budget will go toward salaries and benefits. It's not unusual for school budgets to be payroll heavy, but 90 percent is an unusually high number.

Insurance costs were the other major bone of contention in the negotiations. During the 1990s, Alaska's school districts began to cap their contributions to employee health plan premiums. The Mat-Su School District was the last to implement a cap, in 1999. At that time, MSEA asked for the right to choose its own provider in exchange for the employees' contribution to their own premiums. The association chose NEA Alaska, which provides coverage to about 4,400 teachers, according to the mediator's report.

The first year of split premiums, the district covered the entire cost of health insurance. The second year, the district covered $531 per month, per teacher, and each teacher contributed $100 per month. As premiums continue to rise, the teachers' contributions will begin to outpace their pay increases, and this was particularly alarming to teachers in the face of the district's proposed pay freeze. In effect, the rising cost of health care, coupled with a pay freeze, would have found teachers losing money each year. MSEA proposed a deal that would have shifted much of the burden of health care premiums back to the district, but would also have retained the right of provider choice for the teachers.

The mediator found that increasing the district's burden without allowing it to choose the provider would be unfair. He recommended that the district retain its right to select the provider, but that it increase its contribution to premiums to $658 per month per teacher, reducing the teachers' individual contribution to $50. After that, he suggested that the parties split the increased premiums 50/50, with a 4-percent cap on the district's increased contribution.

There were also some language changes stemming from the negotiations, but pay and insurance were the major factors. While neither party claimed to be thrilled with the mediator's plan, each agreed that it was likely the best they were going to get for the time being. The signing of the two-year deal will likely provide some relief from the constant, sometimes bitter, negotiations that have wracked the district for two years. The pending budget cuts are just as likely to send a shiver through a community that already has serious concerns about the stability of its educational system.

With all that in mind, the Certified Employees Association and the Mat-Su Principals' Association have now reached impasse in their negotiations with the district, setting the stage for more arbitration and possible mediation. It is a cycle, both sides agree, that may only worsen as long as education funds from Juneau continue to dissipate.