There is important context regarding the District's current financial position that is integral information to understand as to how it impacts this year's contract negotiations. Despite increased funding from the state, the District is coming to the negotiation table with the lowest general fund balance and the most active consecutive years in Statutory Operating Debt (SOD) of any district in the state. There are few, if any districts in the entire state who find themselves in a worse financial condition. The graphic below illustrates the District's general fund balance over the past 11 years, including the fact that the District ended the 2022-23 fiscal year at approximately $6.1 million in debt.
The District made some difficult reductions as part of more than $4.5 million in cost containment budget adjustments last spring. Those adjustments should improve our financial position, but after six consecutive years in statutory operating debt, we need to show progress for those decisions. Failure to make progress toward a healthy fund balance means the District would likely need to reduce again.
June 13, 2023: Negotiations between ISD 110 and WEA began.
October 12, 2023: WEA presented its first financial proposal at the 9th meeting
December 4, 2023: ISD 110 and WEA jointly decided to enter into mediation after the 12th meeting
January 22, 2024: First day of mediation
February 7, 2024: Second day of mediation
February 9, 2024: District communicates offer outside of mediation
February 21, 2024: District & WEA small group meeting
March 13, 2024: District & WEA resume negotiations; WEA presents counter proposal
March 25, 2024: District & WEA resume negotiations
April 15, 2024: District & WEA resume negotiations
The initial formal contract proposal brought forth by the WEA back in October of 2023, which includes 5.5% and 4% salary increases over the next two years, would essentially eliminate the $4.5 million in cost containment adjustments that are being accrued as a result of the budget reductions that were approved during the 2022-23 school year.
This contract proposal would keep the District in Statutory Operating Debt indefinitely and necessitate imminent additional rounds of budget reductions to first get the District out of SOD and to then achieve the positive fund balance required under District policy.
After nine months of negotiating and two full days of mediation, the District moved forward from its initial proposal of 1% increases to the salary schedule over the next two years to offer 1% increases in 2023-24 and 2024-25, a 3% increase in 2025-26, and a 5% increase in 2026-27. The offer also includes a one-time stipend of $500 in the first year of the contract. The District feels this is a fair and responsible proposal that will not only allow the District to continue to climb out of Statutory Operating Debt for the remainder of this year and next year, but it also provides significant compensation increases (detailed below) to teachers totaling more than $4.7 million dollars over the next four years.
The District's latest proposal would allow the District to get out of statutory operating debt by end of 2024-25 fiscal year. The proposal does not get the District in compliance with the Board Fund Balance Policy of 5%, however, it helps us retain teachers with competitive wages. The District's proposal does not necessarily demand further budget reductions and it positions the District to potentially go back out to voters for new revenue.
Below are two examples of how a teacher's total salary will increase over the next four years under the District's proposal.
- 1.5% salary schedule increase in year one
- 2.5% salary schedule increase in year two
- 6.0% salary schedule increase in year three
- 9.0% salary schedule increase in year four
- 18% increase in the District’s health insurance contribution in year one
- 13% increase in the District’s health insurance contribution in year two
Unfortunately, this latest proposal from the WEA would drive the District further into debt than it already is. Based on the WEA proposal and no future staffing and budget cuts, the District would find itself with a negative fund balance of -$11.3 million or -17.6% by the end of the 2026-27 fiscal year. This proposal would necessitate nearly $12 million in cuts to staffing and programs and would create a significant negative impact on class sizes.
As the School Board representatives on the District 110 Negotiations Team, we want to give an update regarding the negotiation process with the Waconia Education Association (WEA).
As School Board members, it is our responsibility to help the administration hire and retain our 260 teachers by giving them a fair contract for the invaluable work they do in educating our students. At the same time, we also have a responsibility to the thousands of taxpayers who live within the boundaries of our school district by ensuring that we are being good stewards of the funds the District receives through local property taxes. We must accomplish these two goals, while also ensuring that our 4,000 students continue to have the opportunity to “explore their passions and create their success” through rigorous and innovative academic programs, in facilities that enhance learning, along with a robust selection of extracurricular activities. Given our current financial situation, this is no easy task. In a perfect world, we would have smaller class sizes, higher salaries for teachers and staff, with no additional burden to taxpayers. Unfortunately, our current budget constraints do not allow for that.
The District finished the 2022-23 fiscal year with a general fund balance of negative -$6.1 million. When the 2023-24 fiscal year concludes, it will mark the seventh consecutive year that the District has been in Statutory Operating Debt (SOD). Among the eight public school districts in the state that are in SOD, Waconia has the lowest general fund balance and the most consecutive years in SOD.
When the previous superintendent resigned and we hired Superintendent Gersich, board members at the time, including Chair Geller, Vice Chair DeBoer and Treasurer Myers, committed to interrupting past practices that led to the District living beyond its means and falling into statutory operating debt.
After years of running into roadblocks when requesting information regarding the District’s finances, we now are confident that our administrative leaders are providing frequent updates with transparency and accuracy. After recognizing a pattern of past district leaders overestimating enrollment numbers, we are now using a more conservative model that leads to a more accurate budget process. Last year we engaged in a difficult budget adjustment process that led to $4.5 million in reductions. Many stakeholders at the time urged us to slow down and wait for state funding to arrive before making the adjustments. The board stood firm in its commitment to interrupt past practice. That has proven to be the right decision after the increase in state funding came with several costly mandates and did not solve the District’s debt problem. Those budget adjustments have had a limited impact on students and families and have allowed us to make progress toward getting out of debt and eventually achieving a positive fund balance.
Now we are engaged in a lengthy contract negotiation process with our teachers and the entire board continues to be united and committed to returning the District to a place of financial stability. We value our teachers immensely, but also have to live within our means. We cannot ignore the fact that we currently have the lowest general fund balance of any school district in the state of Minnesota. Once again we have heard some stakeholders urging us to slow down and repay our debt later. We simply cannot do that. During our seven years of being in statutory operating debt, our taxpayers have passed two referendums providing additional funding to our District. It’s long past time to honor our commitment to those taxpayers.
Looking at the latest proposals from both the District and the WEA, only one of those proposals is financially responsible. The District’s current contract offer to teachers offers 1% raises for both this current school year and the 2024-25 school year, a 3% increase for the 2025-26 school year, and a 5% increase for the 2026-27 school year.
Many of you reading those numbers might ask, “What does that mean for your average teacher?” For a relatively new teacher, with a Bachelor’s Degree and five years of teaching experience, they would receive a total increase in compensation of $9,763 over the four years of the agreement. For a more experienced teacher with a Master’s Degree and 10 years of teaching experience, they would receive a total increase in compensation of $15,053 over the four years of the agreement. These are just two examples of how the District’s $4.78 million investment in our teachers would be distributed to WEA members over the next four years. It is our belief that years three and four of this proposal would yield the largest raises ever attained by WEA members.
You might also ask, “What would this contract proposal mean for the District’s general fund balance?” The agreement would allow the District to get out of debt by the end of the 2024-25 fiscal year and would leave the District with a projected fund balance of $444,000 by the end of the 2026-27 fiscal year. While this would not position the District’s fund balance within the recommended range according to organizations such as the Minnesota School Boards Association (MSBA) or the Minnesota Association of School Business Officials (MASBO), it’s the school board’s attempt at a show of good faith, that we are offering the WEA the most lucrative contract possible, while keeping the District out of debt.
The WEA’s most recent proposal from a March 13 negotiations session includes a 1.5% salary increase for 2023-24, a 2.5% increase for 2024-25, a 6% increase for 2025-26, and a 9% increase in 2026-27. This package, totaling almost $9 million, would drive the District further into debt than it already is. Based on this proposal, the District would find itself with a negative fund balance of $11.3 million or -17.6% by the end of the 2026-27 fiscal year. If the Board agreed to the WEA’s proposal, it would necessitate nearly $12 million in cuts to staffing and programs and would create a significant negative impact on class sizes. Making $4.5 million in cuts last year was hard enough. Making $12 million in cuts to a District our size would be unimaginable and frankly irresponsible.
It should also be noted that the District has offered to reach a settlement by entering into “interest arbitration,” which would allow an independent arbitrator to decide which proposal is the most fair given all circumstances. The WEA has turned down that offer from the District.
Contract negotiations are never easy, and are even more difficult when financial resources are scarce. Please know that we will continue to make every effort to reach an agreement that our teachers and community can be proud of.
If you are looking for additional information, please visit the Negotiations section of the Human Resources Department page on the District website (bit.ly/ISD110Negotiations). You will find a wealth of information there, including negotiations minutes, a video from a recent school board meeting, and several visuals that help break down the District’s current proposal. You can also reach out to any Board member to have a conversation. We think you will find us to be approachable and willing to discuss the issues that are important to you and your neighbors.
Dana Geller
Kelly Amott
School Board Negotiation Committee Members