The Colchester Board of Education has asked members of the local teachers union to take a wage freeze as the BOE’s health reserve fund potentially faces a $1 million shortfall because of increased health claims and faulty monitoring of the fund due to bad data, according to the Superintendent’s budget presentation and a statement issued by Colchester First Selectman Bernie Dennler and Board of Education Chair Stefanie Tracey-Calash.
Colchester is self-insured with stop-loss insurance, using the health reserve fund to cover claim costs up to $125,000 before an insurance company takes over the claim. The reserve fund has decreased from $3.7 million in 2022 to $1.1 million this year, bottoming out at $854,000 during the 2024-2025 school year.
During the 2022-2023 school year, the reserve fund had $3.6 million in total claims, which rose to $6 million during the 2024-2025 school year, and is already looking at $4 million in claims for 2025-2026, according to Superintendent Daniel Sullivan’s proposed budget presented to the BOE during their February 18 meeting.
The proposed $55 million education budget includes a 10.7 percent overall increase, including between $2 million and $2.5 million to reinforce the health reserve fund. Sullivan said during his BOE budget presentation that health insurance and the reserve fund were the biggest drivers of the proposed increase.
“There’s a health reserve issue,” Sullivan said during the budget presentation. “That reserve issue was really driven by the misapplication of a funding methodology with increased claims.”
Sullivan said the funding methodology was provided by an insurance broker around 2019 when there was a stronger reserve, but the methodology was inadequate to keep the fund solvent when faced with increasing claims and costs.
“That has put our health reserve into a precarious spot,” Sullivan said. “That was certainly not done with any intentionality but that doesn’t change the end result that the reserve is not in a healthy place. We were monitoring the account, but we were not using the right data.”
The BOE voted to conduct a forensic audit of the health reserve fund during a February 26 special meeting, hiring Shipman & Goodwin.
Although both the town and the BOE are part of the health reserve fund, the shortfall only affects the BOE because the town has a separate finance department. According to First Selectman Dennler, the town’s Board of Finance has been monitoring the situation over the past year, and the town “expects to make net positive contributions to the fund this fiscal year.”
“It is also important to note that health care costs are rising dramatically. Both the Town and Board of Education expect a significant increase in projected claims next year,” Dennler and Tracey-Calash wrote. “This is a separate issue from the issue of underfunding the Board of Education’s health insurance contributions, but both elements combined are impacting budgets at the same time.”
The superintendent, along with non-union members of the central office staff and the administrator’s union, has reportedly agreed to accept wage freezes to help with the budget gap, but the appeal to teachers to accept a wage freeze did not appear to go over well with teachers who spoke during the budget meeting. Talks are reportedly ongoing between the local teachers’ union and office professionals’ union.
Special education teacher for Colchester Public Schools Kaelea Tewksbury said a wage freeze would cost her $10,000 in wages she was supposed to receive next year under the labor contract, and said that administrative leaders were losing less in pay than teachers, largely because Sullivan’s salary had already increased.
“I’d like to know why the teachers, who are in the trenches with students, who choose to dedicate their careers to working with kids rather than transition to an office job in administration, who work through challenging work conditions and unfair pay are asked to sacrifice eight to twelve percent of their salary while our leaders will lose nothing,” Tewksbury said during public comment. “Why are we in this mess? Because the leaders of this school failed to find a critical error.”
“I am deeply concerned about the proposal asking teachers to accept a salary and step freeze while the overall budget increases by at least ten percent,” said special education teacher Amanda Lenk. “For teachers earning around $60,000 per year, a wage freeze is not just a minor inconvenience, it is a real financial setback that affects our ability to pay increased bills, feed our families, and remain in this profession.”
Tracey-Calash indicated the BOE has suspended talks with the union regarding wage freezes while the board reviews the budget and no teacher salary changes are currently included in the budget.
Dennler indicated in a separate statement that when he took office in November of 2023, the town’s side of the health reserve fund was “in deficit over $700,000,” because “hundreds of thousands of dollars in account payments had been missed,” requiring the town to make overdue payments to get the fund positive again and is now looking at a surplus, which he credited to the town’s finance team.
Sullivan said during his presentation that they had explored joining the CT Partnership Plan which allows municipalities to piggy-back on the state employee health plan, but said it would cost roughly $1 million more and that “insurance brokers tend to believe is only going to continue to go up in cost and quite possibly at a rate higher than the private market.”
“I’m grateful for the ongoing discussions I’ve been able to have with the teachers’ union and our office professionals’ union as we try to seek a path forward that preserves as many jobs as possible during what I imagine will be a difficult budget year,” Sullivan said.
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