The following appeared in the Sandy Profile newspaper on April 19, 2000.

Looking for money in all the wrong places

To no one's surprise, the Oregon Trail School Board is seriously considering closing the Bull Run school and moving the district's administrative operations into the Sandy Elementary School building. They estimate that the net savings from this move may be in the range of $432,800 in the first year. But since the overall budget deficit is expected to be $1.7 million, that won't really accomplish much. So in the end, the board will engender tremendous hostility from district patrons, and still have a deficit of over $1,000,000. This means that layoffs for several dozen staff will be on the way as well.

Having served on the district Budget Committee for 2 years - during which these same issues were discussed - I always felt that school closures were a big mistake. The reason is that if you look at the budget, you'll find that 80% of general fund revenues go to salaries and benefits. So if you're trying to make up a big deficit, you have to go to where the money is, and it's not in facilities.

Once you begin analyzing the 80%, an alarming fact immediately jumps out: the cost of employee benefits has been skyrocketing. In 1996-97, the "associated payroll costs" were 35% of total salaries. By 1999-00, they had jumped to 46%.

Within this category, one of the largest discretionary costs is employee health insurance. The average annual cost of this program is a stunning $6,120 per employee ($510 per month) for classified and licensed staff. The costs for various executive staff are even higher, ranging has high as $595 per month.

This is far above what other comparably-sized organizations pay. For instance, according to the annual survey conducted by the Portland-based firm William M. Mercer Inc., in 1998 the average total health benefit cost per employee for Oregon and SW Washington employers with 500+ employees was $3,906 per year. Nationally, the average was $4,037.

Employers in the local community are even more frugal. According to a survey conducted in 1998 by five Clackamas County Chambers of Commerce (including Sandy), the average monthly cost of health insurance for those businesses that could even afford it was $151 per month per employee.

Thus, in the Oregon Trail School District, we spend about 50% more than the national average for large employers, and 225% more than local businesses pay.

The sad thing is, simply spending lots of money on health insurance doesn't even make most employees better off. Some employees are very healthy and only need a catastrophic care plan, and others can get low-cost insurance through their spouse. For those people, the $510 per month would be far better spent on such things as increased pay, better retirement benefits, or more staff. But they don't have that choice under the current system.

Cutting back our insurance payments to $300 a month per employee would save approximately $1,050,076 per year. If this change had been implemented 4 years ago, we would be discussing a surplus today, not a deficit.

The dramatic increase in associated payroll costs is not an isolated budget problem. It flows directly from the ill-fated school mergers of the last decade. Simply put, bigger is not better; virtually all costs rise with consolidation.

So here's an idea: let's put the School Board out of its misery, and just give each school their own budget. Tell each principal to allocate the funds as they see fit, in consultation with staff and parents. Let them set their own salaries, develop their own benefits program, and allow them the flexibility to determine their own curriculum and after-school programs. And if they show a surplus at the end of the year, let them keep it for future investments.

In this decision-making model, very few employees would chose a high-cost insurance program, because they would be able to direct those funds to programs that have higher value. This is especially true for the 27 or so newest employees in the district, who are likely to be laid off next year under the current management proposal.

And speaking of management, why do we really need a superintendent? If each school is run semi-autonomously, then all the principals become de facto superintendents. I have complete confidence that they're up to the challenge. Just tell them to send a memo once a month to the school board, and the board members could quit meeting so often and begin to reclaim their lives.

Abolishing the position of superintendent while it's still vacant would probably save another $225,000 annually in future years. Divide up the savings and send the money to each school. If you ask the parents at Bull Run, they'd probably prefer the extra $15,000, instead of having a new superintendent but no school.