The cost of health and welfare benefits for school district employees is putting great financial strain on district budgets, according to a new PACE policy brief.  According to the brief authored by Paul Bruno, employee health benefit costs pose two challenges for districts. First, the cost of providing benefits to each employee has increased substantially over time. Because districts require employees to pay only a relatively small portion of these annual costs, most of the growing costs are directly paid for by districts. Second, most districts continue to provide health benefits to their employees after they retire.  As more workers retire, the costs of these retiree benefits consume a larger share of districts’ budgets. Moreover, districts have often not set aside funds to pay for these benefits while employees earn them. In some districts, this has resulted in unfunded liabilities totaling many thousands of dollars per student. These financial demands make it more difficult for districts to address their other priorities, such as increasing teacher salaries or supplementing services for disadvantaged students. This is particularly true as districts also navigate other financial pressures, such as growing costs for special education programs and teacher pensions. The brief suggests that each district will need to find its own solution to the problem, noting that they want to remain competitive in the job market. State policymakers may have a role to play as well. While taking these steps will not be easy, the author warns that postponing these hard choices will only make them more painful.

Pajaro Valley Unified 16.9 percent Pacifica 14.1 percent Salinas City Elementary 13.6 percent King City Union 13.2 percent Sacramento City Unified 12.6 percent