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"It’s tough to give a big cost-of-living adjustment to all your employees," Wilcox said, "because we have to pay so much in the Utah Retirement Systems."
A double drain » In fact, the majority of this year’s statewide increase to the WPU — about 60 percent — was eaten up by retirement cost increases, said Bruce Williams, state associate superintendent.
Why? Largely to make up for losses the retirement system sustained during the recession, said Dee Larsen, legal counsel for the Utah Retirement Systems.
Each school district must pay a percentage of eligible employees’ salaries into the retirement system, which then funds teachers’ pensions after they retire. For the past several years, the districts’ required contributions have been steadily rising.
Last year, for example, districts had to kick in 18.8 percent of many employees’ salaries to the system. This school year, that jumped to 20.5 percent.
Though next year’s rate has not yet been finalized, it’s expected to swell again. Larsen said the hope is that the rate will stabilize after that and eventually decrease.
Many districts also saw health insurance increases.
Alpine School District, the state’s largest district, got about $6.4 million in additional WPU money this school year. But it had to pay $2.8 million more into the retirement system and nearly $4 million more toward health insurance costs — consuming about $400,000 more than the WPU increase.
Williams said health insurance costs have generally been rising about 8 percent to 10 percent a year, though that has hit districts in different ways. Some districts, such as Granite, fund their own health insurance plans, and Granite faced no increase this year. Most, however, go through insurance carriers.
"It would have been difficult for them to give significant increases [to employees]," Williams said of districts, "unless they had other revenue sources beside the WPU."
Getting back on track » Laura Black, Canyons Education Association UniServ director, called the 2.5 percent WPU increase proposed by the governor "a start."
But she said 2.5 percent is still not enough.
"The increase they’re proposing in the WPU will barely cover increases in the retirement and Social Security [costs]," said Black, who is also a former Democratic lawmaker.
With no WPU increase, as Horsley notes, schools would likely have to make cuts to existing programs to continue paying for retirement and health care costs.
No one denies it’s an issue.
Senate budget chairman Lyle Hillyard, R-Logan, said he’ll have a better idea of how much lawmakers might boost the WPU when state revenue estimates are updated in February.
He realizes increasing the WPU by only a couple of percentage points won’t do much for classrooms or teachers.
"If we fund a 2 percent increase to the WPU, it will basically all go toward health insurance and retirement," Hillyard said. "If we fund less than 2 percent, [school employees] are going to take a cut in their pay stubs."
Funding enrollment growth alone for next school year will cost more than $60 million, he notes. On top of that, every 1 percent increase to the WPU costs about $25 million.Next Page >
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