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Town employees’ health care contributions may increase

Talk of dramatic changes to employee benefits and news of school layoffs dominated discussions at the Budget Working Group this week, as members continued their search for up to $700,000 in cuts to deal with a feared shortfall in fiscal 2021 state aid and town revenue.

At the group’s weekly Zoom meeting Wednesday morning, Assistant Town Administrator Marie Sobalvarro reported that town spending could be reduced by as much as $489,000 by reducing the amount the town contributes to the health plans of Harvard’s active employees and 164 retirees.

By lowering the town’s contribution to the health plans of active employees, including teachers, from 75% to 70%, the town would save approximately $229,604 in fiscal 2021, Sobalvarro estimated. But changing the contributions of teachers would require that their recently signed one-year contract be renegotiated.

By dropping its contribution to the plans of retired Harvard teachers and workers from 75% to 51%, the town could reduce its fiscal 2021 expenses an additional $259,424, Sobalvarro said. Those savings would also reduce Harvard’s post-employment benefits (OPEB) liability, allowing for a payment of less than $500,000 to Harvard’s OPEB trust fund planned for this year. But the changes to retiree plans would be dramatic, increasing monthly payments for most family health plans by more than $450 per month.

Members were quick to voice their concerns. “I can’t imagine doubling retirees’ premium share, that $400 extra per month,” said Finance Committee representative Jennifer Finch.” I can’t fathom that.” School Committee member SusanMary Redinger said she thought higher payments could lead teachers to delay retirement plans, while Town Administrator Tim Bragan said he thought it would encourage those nearing retirement to look elsewhere. “That’s assuming other places are hiring,” said von Loesecke.

Meantime, the committee learned Wednesday that School Superintendent Linda Dwight had told hourly workers they would be laid off as of June 16. (See “Schools lay off staff,” page 5.) The decision affects 55 school employees. Dwight told committee members that the schools faced an uncertain future and her administration was assessing at least three reopening scenarios, each with a different impact on the fiscal 2021 budget.

Von Loesecke said she and fellow Select Board member Rich Maiore had been surprised at the impact a change in benefit contributions could have. If the town and schools wanted to save $300,000 without considering benefits, she said, they could be forced to lay off five to seven employees to make up the difference. But before continuing to consider benefits, von Loesecke said she wanted Sobalvarro and school business manager Aziz Aghayev to assess the financial impact of the various scenarios being considered by the state for the reopening of schools this year or next. Any decision to change contributions to benefits will be the responsibility of the Select Board, she said.

In its previous meetings the committee has assessed a range of fiscal tools, from withdrawals from the Stabilization Fund to a reduced OPEB payment. Last week, the Finance Committee voted to withdraw its recommendation to spend $230,000 from the Capital Stabilization and Investment Fund for public bathrooms, landscaping, and other improvements near the middle school ramp. FinCom has been told that all of next year’s estimated $300,000 in free cash will likely be needed to top off the Stabilization Fund, leaving little or no money to refresh the capital fund, which is used to pay for capital projects of less than $100,000. The capital committee will meet June 4 to review its recommendations for debt-funded projects. Previously it voted to recommend the Phase 2 addition to Hildreth House and a new ramp for the middle school, but voted not to support restoration of the old library.

The Budget Working Group meets every Wednesday at 9 a.m. Meetings are open to the public, and agendas are posted on the town website. Members include Select Board Chair Alice von Loesecke and Select Board member Rich Maiore; School Committee members SusanMary Redinger and Sharlene Cronin; Finance Committee members Jennifer Finch and Dick Fellows; School Superintendent Linda Dwight; and representing the town administration, Bragan and Sobalvarro.

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