School contracts approved

Months of contentious bargaining end; budget outlook remains bleak

Posted: Sunday, April 13, 2003

It's over.

Kenai Peninsula Borough School District teachers and support staff workers officially have new contracts.

The school board approved contract agreements for members of the Kenai Peninsula Education Association and Kenai Peninsula Education Support Association on Friday night, ending a heated 16-month bargaining process.

Now, board members said, it is time for the board, administration and staff to move on and tackle together the many other challenges facing the district.

The board met Friday night in a special meeting to deal with pressing business that had been skipped when last Monday's meeting was canceled due to a lack of a quorum. The primary agenda item was approval of the contracts, but the board also met in a work session prior to the meeting to discuss what those contracts would mean to the district's financial future.

The district has been struggling to balance its fiscal year 2004 budget by the state's May 1 deadline, despite uncertainty about both its expenses and revenue. Now that the contracts are settled, the district can accurately predict its labor expenses, which make up about 75 percent of the general operating budget.

However, revenue remains unknown, as the Legislature has yet to agree to a budget.

Melody Douglas, the district's chief financial officer, said the contracted salary and health care increases for employees will not cause additional problems in the 2004 budget.

In the long run, however, rising labor costs may continue to put the district in a bind financially, she said

The new contracts provide a 2 percent salary increase each year for members of both the Kenai Peninsula Education Association and Kenai Peninsula Education Support Association. They also include annual "step increases" for each employee, which increase salary levels based on longevity with the district. In addition, the contracts eliminate a secondary pay schedule that provided lower salaries for employees with comparable experience but less time in the district. The bottom level of the salary schedules will disappear in the second year of the contract, raising beginning wages across the board.

In the health care portion of the contracts, the district agreed to increase its contributions throughout the contract term and to allow employee contributions to drop to $75 per month per employee from $100.

The health care section also includes a "Juneau clause," which dictates that 10 percent of any additional funding from the state will go toward reducing health care payments, and a $20,000 designated fund that allows the district's health care committee to look for less expensive alternatives to the program.

The agreement also included a memorandum of understanding, which implements a retroactive one-year contract, complete with the 2 percent raises and new health care numbers for the current year, and makes the contracts effective July 1, 2003, rather than July 1, 2002. That means the new contracts will extend through fiscal year 2006, and the district and associations will have another two years before returning to the bargaining table.

The negotiation process began in January 2002 and was fraught with complications, including a criminal investigation, two unfair labor practices complaints and a lawsuit. In September, after teams declared impasse, the contract went before a federal mediator to no avail. The process was scheduled to go to arbitration when the teams met in an unorthodox last-ditch effort to settle the contracts without their lawyers. In early March, after 17 straight hours of bargaining, the teams tentatively agreed to the contracts. This month, members of the Kenai Peninsula Education Association and Kenai Peninsula Education Support Association voted to ratify their contracts, with 94 percent and 97 percent of the respective organizations approving the agreements. Friday night the school board took the final step by approving the contracts.

The school board voted 6-1 to approve each contract, with Nels Anderson casting the only dissenting votes. But, Anderson said, it was not because he believes the agreements unfair or undeserved by the employees. Rather, he said he is concerned about the financial ramifications in the long run.

"I believe the contracts are fair and equitable," he said. "I voted no simply because I don't want to fire 60 to 100 teachers to make it work."

According to worksheets prepared by Douglas, the contracts will cost the district approximately $16 million in additional labor expenses through the 2006 fiscal year. This at a time when district enrollment -- and thus state funding -- is dropping steadily, while insurance costs rise dramatically.

In the 2004 fiscal year alone, the district is about $2.9 million short for its preliminary budget, even after raising the pupil-teacher ratio, laying off more than 50 teachers and cutting the extracurricular travel budget. To force the budget into alignment, the district artificially cut the supply budgets in half, admitting that it is not a realistic solution.

Douglas said the state requires the board to submit a budget to the borough assembly by May 1, and the assembly must approve local funding levels within 30 days. However, she said, the district fully expects to revise the budget with more realistic numbers in June, once funding from the state is certain.

Both Douglas and superintendent Donna Peterson said the district has no intention of recommending further teacher cuts to fix the money situation in the 2003-04 school year.

That said, however, several school board members pointed out that the state is not likely to increase its funding to the district by $16 million over the next three years, and that even with additional cuts in other areas the district probably will have to cut more teachers in the future.

The district also is looking at school consolidations and extracurricular activity cuts to reduce expenses in future years.

A preliminary long-range plan for school consolidations was presented to the board in January and was railed by many area communities. The plan did not call for immediate closures, and the board decided to table discussions until later due in part to the public outcry. However, one element of the plan -- consolidation of the two Nikiski elementary schools into a single building effective in the 2004-05 school year -- has moved forward. District administrators initially said the Nikiski community seemed favorable to the plan, but a group of parents is fighting to keep both schools open with a different configuration.

Nonetheless, Peterson is expected to recommend the consolidation of the schools to the board at its April 21 meeting. The board does not plan to take action on the recommendation at that time.

Some school board members also favor further cuts to extracurricular activities as a solution to the budget problems, though others argued Friday that such cuts require more time for community planning. Deborah Germano and Margaret Gilman said they would much rather see cuts to extracurriculars than cuts in the classroom, while other board members, including Sammy Crawford and Debra Mullins, said such cuts would have a tremendous impact on students in the district and require more planning so that communities can come up with their own alternatives. Though discussion of cuts to the extracurricular programs in the district probably will continue, the board seemed unlikely to make more cuts for the 2003-04 school year.

Both the board members and district administrators agreed Friday night that the string of financial problems in the district stem directly from underfunding by the state. However, they said, the Legislature does not seem to be getting the message that people want better funding for schools.

"I don't think people believe the plane's going down," Anderson said. "We've been saying it for 10 years, but we've always been able to fix it."

"That's the saddest part," agreed board President Joe Arness. "There is a feeling out there that we can fix it, because we have before, that we're 'hiding money.'"

Douglas also agreed, saying the district seems to be punished for running efficient operations and having support from borough government.

"The more we're able to help ourselves out, the more we relieve the Legislature of its obligation to come to our aid. That's the real paradox," she said.

Despite the somber tone of discussions of the future, the board meeting concluded with a round of applause from the audience, grateful for the end of the contract negotiations.

Board members echoed the sentiment, thanking the employees for their service and for ratifying the contracts. However, they also asked staff members to start putting their energy into lobbying the state for more financial support for schools.

"To the negotiating teams, I appreciate all your hard work," board member Al Poindexter said in his closing comments. "Now, I hope we all have a lot more hard work in us and a lot more patience for dealing with the budget."

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