Rising teacher health care costs a major factor in expected property tax spike

MONTPELIER, Vt. (WCAX) – How much is the skyrocketing cost of health care contributing to higher school budgets and a projected spike in property taxes? A number of factors have been blamed for driving up the cost of education this year but officials say health care costs for teachers play a major part.

Roughly 70% of school budgets are spent on staffing and benefits, which includes health care.

“We’ve had double-digit increases in those insurance rates year after year after year — people cannot afford that,” said Rep. Rebecca Holcombe, D-Norwich.

The state spends roughly $50 million on health care benefits for teachers and their families out of the $2 billion Education Fund.

Back in 2018, Governor Phil Scott and Democrats were at odds about finding savings in health plans and putting caps on student-to-teacher ratios. Those discussions led the state to negotiate teachers and staff health care benefits on the statewide level. Back then, the premium for the most popular plan for teacher health plans was about $17,500.

“This coming fiscal year it’s going to over $36,500. With continued double-digit inflation in FY 2031, it will break $70,000,” said Mark Koenig, who chairs the state’s Commission on Public School Employee Health Benefits.

The state teachers union is beginning negotiations on the next round of health care benefits and strongly opposes any effort to reduce benefits or shift premium costs from taxpayers to teachers. “This is a key way to keep educators, to attract educators and keep them here working with Vermont students,” said the Vermont-NEA’s Darren Allen.

So what can be done to tackle the root of health care spending, which regulators say is driven by pharmaceutical and hospital costs?

Green Mountain Care Board chair Owen Foster says they are spearheading an initiative to find efficiencies in hospital spending. “The health care costs we have in this state are not sustainable. Vermonters can not afford to keep paying 15% year over year. We have to do something different,” he said.

Meanwhile, House lawmakers on Wednesday unanimously approved H. 850, a tweak to the state’s education funding formula to fix unintended consequences of education finance reforms from 2022′s Act 127, and buy more time for districts to cut spending.

Governor Phil Scott calls the $30 million in education fund savings a drop in the bucket and says the property tax issue is the continuation of a bigger conversation about education spending. “Regardless of what the end tax bill ends up being, we need to put provisions in place to moderate and decrease the amount we’re spending on schools,” he said.