KPIs Reveal How Healthcare Spending Impacts California Public School Budgets

In early January, Governor Jerry Brown of California unveiled the state’s $122.5 billion budget for 2017-2018. The budget projects a $1.6 billion deficit, which will be addressed in part by rollbacks of previously planned K-12 education funding increases. California will reduce increases to the minimum level allowed by California’s Proposition 98, which guarantees a certain level of funding based on population and personal income growth in the state.

This scenario could become problematic for California school districts that have enjoyed healthy budget increases over the last four years. These increases spurred hiring, salary increases, new program development and other positive changes for public schools. However, new hires and increased pay could now spell budget deficits for districts and require administrators to take a closer look at expenditures, particularly in those districts where new enrollments have not matched hiring rates.

Healthcare spending is one area where school districts in California could close the funding gap. Previously, increased healthcare spending forced many districts to offer lower salaries to teaching candidates to compensate for higher healthcare costs, but with funding increases scheduled to diminish in the coming months the spending problem has become more conspicuous. Since public schools are sometimes reluctant to cut staff, a reduction of a few hundred dollars per employee could save some positions from being eliminated. Leveraging data from more efficient school districts is one way to develop these informed budget decisions.

Costly healthcare benefits

Healthcare benefit spending in California school districts has steadily grown with hiring to represent a significant cost. On average, California public schools now have 100 more employees enrolled in healthcare coverage than during the 2012-2013 school year, with the average cost per employee increasing to $14,900 from $13,722.

Additionally, total healthcare benefits spending increased by $2.1 billion since 2013-2014. That dollar figure is comparable to the cost of living increase that districts expect to receive in the new budget cycle.

Leveraging KPIs to make informed budget cuts

A tool like TransACT’s ActPoint KPI allows a district to compare its performance to any other in the state so administrators can use the benchmark data to drive informed decisions. In California, for example, district administrators could pull up data from other districts in the county to determine which are the top performers. Then, administrators could connect with the nearby districts to discuss best practices for lowering costs of healthcare benefits spending.